Competitive Strategic Management: Whole Foods - Case Study Example

Whole Foods definition The company history s back to 1978 when John Mackey and his girlfriend borrowed $ 45,000 to open SaferWay in Austin, Texas as a natural-foods store (Baker, p 2). SaferWays later partnered with Clarksville Natural Grocery and to form Whole Foods Market. The company expansion strategy in mid 1980s was based on organic growth and acquisition of small independent health-food stores thus moving in to New Orleans and Louisiana in 1988 (Baker, p 2). Whole Food acquired Bread of Life of Northern California, Merchant of Vino in Detroit and Nature’s Heartland of Boston thus increasing its market presence in the US. The international expansion started in 2002 through opening of stores in Canada and acquisition of Seven Fresh and Wild stores in the United Kingdom in 2004. In 2006, the company has 42,000 employees across 192 stores in 32 states, Canada and UK (Baker, p 2). Situational analysis (Industry/trends) The organic and natural foods industry is characterized by high annual growth rate due to lack of artificial ingredients and other chemicals.The key industry drivers include the shifts of consumer attitudes towards healthy lifestyles due to the current media focus on the adverse health effects of food hormones. There is a growing focus on the safety and sustainability of the agriculture industry and farmers are increasingly investing in production of organically certified products. The organic and natural food consumers are highly educated, informed and committed to a healthy lifestyle thus are willing to pay premium prices for food and groceries. The industry is experiencing high gross margins of between 30 percent to 50 percent than traditional grocery chains and thus traditional grocery retailers have started increasing their natural food offerings. Accordingly, large discounters like Wal-Mart and Target have ventured in the market thus increasing the competition. Corporate strategies The company aims at attaining growth through organic expansion and acquisition of small and independent natural food stores in order to expand its customer base. The company entered in to UK market by acquiring Seven Fresh and Wild stores and also expanded across through US by acquisitions and opening of new stores (Baker, p 2). The company strategies aim at ensuring ethical and socially responsible business practices that will contribute to profitability. The company is committed to enhancing the welfare of its employees, customers, shareholders and environment through its ‘Whole Foods, Whole People, Whole Planet’ motto (Baker, p 2). The company corporate strategies aim at growing revenues through selling highest quality natural and organic products at premium prices. The company aims at ensuring customer satisfaction and supporting teams’ member happiness and excellence (Baker, p 3). Business level strategies At the business level, the company strategies aim at differentiation of the customer offering through improvement of the in-store shopping experience. The company has differentiated through the design of the stores and ambience offered by the stores. Whole Foods have continued to upgrade its stores expanding the prepared-foods section and creating restaurant area that offers relaxing shopping and dining environment (Baker, p 3). The company is committed to entrenching the culture of team-member empowerment and decentralization of decision-making in order to ensure faster decision making and promote innovation in the company (Baker, p 4). The teams are empowered to make critical decisions regarding product, pricing, staffing and in-store promotion thus creating an incentive for the teams to perform highly. The company is focused on focus strategy since the educated and informed customers are the niche market for the company business. The company business model aims at providing good food, good-tasting and good environment in order to charge premium prices to the customers. Functional strategies Another functional level strategy is effective human resource management practices that aim at ensuring team member happiness and excellence. The company offers above industry average wages and salaries and job security to more than 90 percent of the employees. The company offers profit-sharing opportunities and employees have a chance to purchase the company stock through the stock option (Baker, p 4). The company donated 5 percent of after-tax profits to communities and provided sponsorships to charitable foundations. The company also purchased renewable energy credits for its electricity consumption in stores, facilities, distribution centers and national headquarters (Baker, p 3). Recommendations The acquisition of Wild Oats will offer Whole Foods an expanded geographical presence and allow the company compete with traditional grocery retailers and supermarkets. Wild Oats promoted health and wellbeing through offering additional products such as health and body care, dairy, seafood, and household items thus Whole Foods should expand the breadth of its products to include more household items in order to maintaining the existing Wild Oats’s customers and increase its revenues. The traditional grocery stores have encroached in the natural and organic foods market thus presenting high competition. The merger with Wild Oats requires the company to continue with both organic growth and international expansion. The company should open up more stores and venture in to new markets that are not saturated. The company should aim at opening at least ten stores in all states and expanding in to the South American market in order to attain growth. The company should acquire some of the traditional retail stores like Albertsons in order to reduce competition. The company should compete through differentiation and cost advantages (Stonehouse & Houston, 2003). In this case, the company should offer excellent in-store shopping experience and reduce the operating costs in order to improve the profitability of the company. The company should provide excellent work environment and improve employee morale and loyalty. The loyal employees will contribute to excellent customer service, faster decision making and reduction in recruitment costs. The company should continue with its efforts in social responsibility in order to maintain the positive corporate image since competitors like Wal-Mart have attracted negative criticism for poor environmental record. References: Baker, J. (2008). ‘Whole Foods Market and Wild Oats Merger’, Darden business publishing, university of Virginia, Dec 3, 2008, p 1-16. Stonehouse, G & Houston, B. (2003). 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