Wholefoods - Case Study Example

?Whole foods Whole foods are untreated foods, that is, they are not much refined before consumption. Salt, fat, carbohydrate etc. further ingredientsare not included into these foods. Examples of these foods are fruits, beans, unrefined grains, vegetables, certain types of dairy products. In the pre-industrial period all foods were whole foods. After industrialization the distinction was made (“Wholefood”). Industry’s Businesses and Economic Traits: There are several companies doing businesses with whole foods. Among them the Whole Foods Market, Inc. is the largest in the US. Among other companies Wild Oats Markets Inc. was a big name. The Whole Foods Market is a highly successful business entity as a retailer. It has almost 172 stores in USA. It has the reputation for selling good quality products and in terms of the labour employments. Wal-Mart is another big name in the retailing business of whole foods. The main economic traits of this industry is that these retailers purchase products directly from the producers, the farmers, and sale them in the market. These foods (mainly rice, vegetables, grains etc.) are necessary goods, hence demand for these food items are permanent and subject to be less affected by any changes in consumers’ income (Bluejay). Nature and Strength of Competitive Forces: The high necessity for these foods has made many retailers to supply these foods to the market. Hence, the competition is very much present. But the strategic decisions of few of the large business firms have lowered down the competition. The Whole Foods Market, the biggest name in the whole foods industry, has largely occupied the market. It had a tough competition from Wild Oats Market and hence on 2007 it merged with the Wild Oats Market. Wal-Mart is also creating huge competition in the industry. The competition lies mainly in the purchase of foods from the farmers at lower prices and also selling them at competitive prices. The acquisition of the Wild Oats implies the intention of the Whole Foods Market of charging high prices (Bluejay). Forces behind Industry Changes: The industry for whole foods is changing. The aggressive monopolization and hunt for more profits through high price and lower quality of food products, merging illegally with the small retailers, proving low prices to the farmers and low wages to the employees etc. are affecting the business of the Whole Foods Market and hence, the small retailers across the country are emerging. Not only that the farmers are getting encouragements from the government to supply their food products directly to the marketplaces. The government is also trying to purchase these products at subsidized prices from farmers and to supply them to market as public goods (Bluejay). Market Positions of Industry Rivals: The dominance of the Whole Foods Market in the industry excludes the dominance of all other rivals. In fact, the market shares for the rivals are not much at all. The Whole Foods have the advantage of local market that is growing rapidly and that they are the oldest in the industry and hence, they are getting more support from the local farmers. The acquisitions of different small whole grocers like the Portland Public Market, the Whole Grocers and the Wild Oats have helped it to acquire largest market share in the industry (Scarborough, Wilson and Zimmerer, 84-87). Next Strategic Moves of rivals: The dominant market share of the Whole Foods Market has marked the notable success in the industry. But this has also creates problems for the rivals. The rivals are getting marginalized in the market. Hence, the rivals are trying to initiate few strategies that will help them to earn good market share. They are trying to expand their business in outside USA. For example, recently Wal-Mart has decided to start business in South-East Asian countries. Also they are trying to initiate new pricing policies, such as charging lower price for the same food products as Whole Food is selling. They are also trying to get government help in terms of earning market share (Bluejay). Factors for Competitive Success: The main factors for competitive success of the Whole Foods is the lower pricing for food products compared to all other grocers. The greater interests for the local foods have been one of the main reasons for its success. The quality of foods has been consistently good for them. And the acquisition strategies have consistently helped them to achieve competitive success (Scarborough, Wilson and Zimmerer, 85-87). Prospects for Profitability: The success of the Whole Foods Market has surely suggested that the industry has good prospects for high profit. But the dominance of the company denotes a warning to the new entrants and also to the existing firms. The necessity for these products and the growing demand for food items across the world together will help the firms to earn more and more profits (“Whole Foods Markup”). Conclusion: Abolition of dominance of one large firm in the industry and sufficient government intervention will definitely help other suppliers and also the consumers across the world. References: Bluejay, Michael, Whole Foods Market: What's wrong with Whole Foods?, Michael Bluejay, December 1, 2011 from http://michaelbluejay.com/misc/wholefoods.html Scarborough, Norman M., Wilson, Douglas and Thomas W. Zimmerer, Effective small business management: an entrepreneurial approach, USA: Prentice Hall, 2008 “Whole Foods Markup”, The Bollard, 2007, December 1, 2011 from http://www.thebollard.com/bollard/?p=1712 “Wholefood”, The Free Dictionary, 2011, December 1, 2011 from http://www.thefreedictionary.com/wholefood Read More