Whole Foods and Trader Joes - Essay Example

? Whole Foods and Trader Joe's 30 March Part I: Vision and Mission ments Vision and mission ments communicate the strategic direction of the organization to internal and external stakeholders. Vision and mission are not the same, although some organizations embed both in their mission statements. Organizational vision is what the organization wants to become, while the mission is what the organization is and where it is at present (Hitt, Ireland, & Hoskisson, 2009, p. 19). This essay compares and contrasts, as well as analyzes and improves, the vision and mission statements of two companies, Whole Foods and Trader Joe’s. The vision of Trader Joe’s is not provided in its website, but based on its timeline of important company events and other company information, it is perceived as supporting a sustainable future, where communities benefit from a company that promotes originality, individual choice, and cultural diversity. For instance, according to Trader Joe’s history timeline, in 1977, it introduced the first reusable canvas bag for shopping needs (Trader Joe’s, n.d.). This shows its dedication to preserving the environment through the principle of reuse. In addition, Trader Joe’s describes how it seeks to find and to sell original and hard-to-find products. This goal is stated in the “About Trader Joe’s” webpage of its company website. Trader Joe’s is focused on originality, as a way of delivering high value to its customers. As for Whole Foods, its vision is clearly stated in its company website: “Our vision of a sustainable future means our children and grandchildren will be living in a world that values human creativity, diversity, and individual choice” (Whole Foods, n.d.). The visions of these firms are similar because they want to provide a better future for the coming generations, by thinking about how their actions impact the latter. They want to support sustainable development principles and practices. Whole Foods depicts in its “Our Mission and Culture” webpage that it supports organic farming and alternative sources of energy. It also recycles and composts waste, while participating in community activities through food banks, sponsoring community events, and donating at least 5% of its net profit to non-profit organizations (Whole Foods, n.d.). Trader Joe’s also manages its effects on the environment by not sourcing GMO materials for its private label products, based on its customer updates from the company website. The vision statements of these two firms are comparable because they base their business proposition on the framework of sustainable development. Moreover, the two firms share the same values, except that Trader Joe’s is more pronounced on being an original retailer. They both believe in and support creativity, diversity, and individual choice. They aspire for creative ways in using diversity, as their leverage against conventional food retailers. Despite a little difference, it is clear that Trader Joe’s and Whole Foods are heading toward the same direction because they see themselves as forming a better impact on their stakeholders, as they think about the future and the quality of lives in that future, unlike other companies that focus on the bottom line alone. After discussing the vision, the missions of these two firms will be described. The mission of Trader Joe's is not identified in its company website, although one source provides it: To give our customers the best food and beverage values that they can find anywhere and to provide them with the information required to make informed buying decisions. We provide these with a dedication to the highest quality of customer satisfaction delivered with a sense of warmth, friendliness, fun, individual pride, and company spirit (Thompson Jr., Peteraf, III Strickland, & Gamble, 2011, p. 20). As for Whole Foods, its mission is: “Our whole business is about making a difference – in the lives of our Team Members and the customers we serve, and in the communities and environments in which we operate.” The missions of the two firms are similar because they include the customers and their employees as their stakeholders. These companies know who they are and who they want to serve. Whole Foods, however, specifically mentions communities and environments as part of its stakeholders. It is clearer on the wide range of markets that it wants to serve. It aims to please, not just shareholders, but also the communities and their environments. Furthermore, the mission statements are similar because they want to be different from other firms by making a difference in society. They do not exist to make money alone, but to promote the good of the communities where they operate. The mission statements clearly define who these organizations are and what they are doing, but they are not clear on the direction they want to aspire for. Trader Joe’s specifies who it is, what it does, and who it wants to serve. It is a company that wants to focus on providing the best value for its clients, who want products from different and new locations, as well as different cultures. Nevertheless, the mission statement is too long and not a creative way of describing the organization’s identity, what it does and why. As for Whole Foods, it wants to make a difference by helping diverse stakeholder groups. However, it is not lucid on how it wants to serve its stakeholders and to what direction, since the mission statement is too short. Like Trader Joe’s, it does not provide a compelling direction that is relevant enough to inspire employees to strive for it (Hitt et al., 2009, p. 19). The recommendations for Trader Joe’s are to provide a shorter mission statement with a gripping sense of its business operations and goals and to highlight its company principles. The principles will help shape strategic and operational decisions because it will remind the management and employees of who they are and what they are supposed to be doing for their stakeholders. For Whole Foods, it is suggested that it should boost its mission statement by being clear on its strategic direction through highlighting its business principles and operations. Their mission statements must be more graphic and persuasive in expressing their organizational identities, target markets and business operations, and strategic direction. Part II: Social Responsibility and SWOT Analysis Whole Foods and Trader Joe’s demonstrate social responsibility by supporting sustainable development principles. They have practices that help them reduce their ecological footprint. Trader Joe’s, for instance, supports recycling and reusing efforts in its stores, as well as Whole Foods. They have business models, where they consciously reduce their waste and other negative effects on the environment. Furthermore, Whole Foods and Trader Joe’s avoid selling genetically-modified products and want to focus on organic food only. They either removed or do not sell products with genetically-modified organisms (GMO) (Smith & Rottenberg, 2002, p. 121). They want to make sure that they are selling products that are fresh or do not come from GMO products that have negative publicity, especially among environmentally-conscious consumers, who are actually the main targets of Whole Foods and Trader Joe’s. Aside from these sustainable practices, these firms seek to reduce product prices for the benefit of their customers. Smith and Rottenberg (2002) described how Trader Joe’s stayed away from large food manufacturers, which tend to provide high-priced products. Trader Joe’s does not deal with large food firms and buys directly from farms to reduce the costs of going through middle-man channels (Smith & Rottenberg, 2002, p. 121). This way, the company can sell products cheaper, and it can pass on savings to its customers. Whole Foods is not known for low prices, but it seeks to directly compete with Trader Joe’s by offering cheaper, but high-quality, private label products (Smith & Rottenberg, 2002, p. 121). Whole Foods and Trader Joe’s want to be perceived as companies that are not bottom-lined centered, but caring for their diverse stakeholders, particularly employees, customers, communities, and farm workers. These activities are appropriate because if Whole Foods and Trader Joe’s want a future where sustainable development is the way of life and businesses, then they must be consistent as environmentally-conscious firms. They must pursue sustainable activities in everything they do, including the materials they use in their shops and how they manage their own wastes, for instance. Furthermore, sustainable development is about offering value without premium pricing strategies. Target Joe’s has the most effective business model for value pricing because it has established a streamlined supply chain network and pursues supply chain management strategies that decrease the overall costs of sourcing and delivering products to its stores. However, these companies can do better by ensuring that they are working with suppliers, who uphold the same values. They can truly promote social change, if they influence and demand suppliers to be environmental stewards too. This essay proceeds to the examination of the SWOT analysis of Trader Joe’s and Whole Foods. Since these companies operate in the same food retail industry and are going to the same direction, they face the same opportunities and threats. The opportunities for the organic food industry are the rising demand for organic food and mergers and acquisitions. Nguyen, Wysocki, and Treadwell (2008) reported that the consumer demand for organic products have risen at a stable rate of twenty percent annually since the 1990s. Estimated organic food domestic sales reached around $17 billion in 2006, with 39 percent coming from fruits and vegetables (Nguyen et al., 2008). Nguyen et al. (2008) added that the demand for organic food is outstripping its supply, which is why there is an increase in imports of organic food too. Thus, organic food retailers have a lucrative business ahead of them. Aside from the rising demand for organic products, mergers and acquisitions have consolidated the industry. Aldi North has acquired Trader Joe’s in the late 1970s. For the past two decades, Whole Foods has acquired competitors, such as Bread & Circus, Fresh Fields, Bread of Life, and Harry’s Farmers Market, among others (Harris, 2006, p. 63). These acquisitions can improve economies of scale and scope, which can allow companies to become more competitive in product variety and pricing. The threats to the companies are the rising activism of farm workers and the continuing effects of the recession. Lujan and Knoll (2012) reported about the fair food agreement that Trader Joe’s signed with the Coalition of Immokalee Workers (CIW). This agreement stipulates that Trader Joe’s will pay a little more for its tomatoes that it buys from farms where CIW members work, and it will ensure that it only buys from farms that follows the CIW-designed code of conduct (Lujan & Knoll, 2012, p. 41). Before this agreement was signed, CIW members picketed at Trader Joe’s stores for two years, which are seen as bad publicity. The activism of farm workers can expose organic food firms to poor community image and lawsuits. Moreover, another threat is the effect of the recession on sales. Some consumers think that organic food is more expensive and time-consuming to prepare than fast food. An economic slump can affect the sales of organic food retailers. This section of the paper explores the strengths and weaknesses of Trader Joe’s and Whole Foods. The strengths of Trader Joe’s are its service, prices, and supply chain management system. Wilson (2012) reported that according to the consumer survey of global consulting firm OC&C Strategy Consultants, participants surveyed Trader Joe’s as the best in service. Trader Joe’s boasts of training its employees well to know about the food they are selling, so that they can offer the right products to their customers. Aside from the perception of quality service, Trader Joe’s is also known for low-cost products, especially when compared to Whole Foods (Fox, 2011, p. 121). The low prices at Trader Joe’s are products of the company’s streamlined supply chain management system. The weaknesses of Trader Joe’s are its limited store and parking spaces. Trader Joe’s stores have smaller areas compared to other large supermarket stores. As a result, customer lines can get long at times, and because of the small store area, some people can have the feeling of being cramped. Moreover, since Trader Joe’s avoids prime real estates, it can result to smaller parking spaces. Some customers find it hard to park their vehicles, which lessen the enjoyable experience of shopping at Trader Joe’s. The strengths of Whole Foods are its high quality products, high number of employees per store, and layout of stores. Whole Foods is known for its high-quality products, which have resulted to its sacrifice of price value to offer high-end food choices. It also has more employees per store compared to other supermarkets. These employees are more able to offer high quality service for more customers. Whole Foods also has an enticing layout for its stores, where the color combination of products showcases the beauty of natural food. The weaknesses of Whole Foods are its anti-unionism and the common perception that it has high prices compared to Trader Joe’s. Harris (2006) criticizes Whole Foods for busting unions, making it similar to Wal-Mart. He believes that though Whole Foods do not pay their executives as high as other firms, the company can do better by increasing wage levels and allowing unionism. Another weakness is the perception that Whole Foods has more expensive products than Trader Joe’s. Trader Joe’s offers more products at lower prices than Whole Foods, which reduces foot traffic to the latter. In order for Trader Joe’s to reduce its weaknesses, it should consider expanding future store areas and parking spaces. To avoid affecting rent expenses, it can offer advanced payments for lower rent to land or building owners. To turn threats into opportunities, it can focus on selling seasonal products that tend to be cheaper than non-seasonal ones. It can also promote discounts for bulk purchases to encourage higher sales per consumer basket. For Whole Foods, it can consider opening a new retail store brand that has low-pricing strategy. This strategy can appeal more to low-income consumers who want organic food too. As for its weaknesses, it should sell more private labels with lower prices to attract more price-sensitive consumers. It should advertise at communities about its lower-priced products and have sales promotions to reduce the perception that Whole Foods is high-priced. References Fox, J. (2011). What is it that only I can do? Harvard Business Review, 89(1/2), 118-123. Harris, M.T. (2006). Welcome to 'Whole-Mart'. Dissent, 53(1), 61-66. Hitt, M.A., Ireland, R.D., & Hoskisson, R.E. (2009). Strategic management: Competitiveness and globalization: Concepts & cases (8th ed.). Mason, OH: Southwestern Cengage. Lujan, C.S., & Knoll, A. (2012). Refraining the debate for farmworker justice. NACLA Report on the Americas, 45(3), 41-46. Nguyen, T., Wysocki, A., & Treadwell, D. (2008). Economics of the organic food industry in Florida. University of Florida IFAS Extension. Retrieved from http://edis.ifas.ufl.edu/fe732 Smith, B., & Rottenberg, S. (2002). Innovating in the food industry. Prepared Foods, 171(6), 25-27. Thompson Jr., A.A., Peteraf, M., III Strickland, A.J., & Gamble, J.E. (2011). Crafting and executing strategy: Concepts and cases (18th ed.). Boston, MA: McGraw-Hill/Irwin. Retrieved from http://highered.mcgraw-hill.com/sites/dl/free/0078029287/942792/gam29287_ch02_013_036.pdf Trader Joe’s. (n.d.). Trader Joe’s timeline. Retrieved from http://www.traderjoes.com/about/timeline.asp Whole Foods. (n.d.). Our mission and culture. Retrieved from http://www.wholefoodsmarket.com/careers/our-mission-and-culture Wilson, M. (2012). Study: Amazon, Trader Joe's and Costco Tops with Consumers. Chain Store Age, 88(6), 22. Read More