MGMT 670- STRATEGIC MANAGEMENT - Assignment Example

Q1: Comment on competition in the organic foods retail industry. Which of the five competitive forces seem strongest? Weakest? What is your assessment of overall industry attractiveness? Answer: Indeed there is severe competition that is prevalent among the organic foods retail industry. Competing retail outlets try to stock the most famous retail brands, which are in high demand in the retail market. This increases the competition among the different retailers. The five competitive forces that seem strongest in the Organic foods retail industry are: The financial ability of a business outlet, which allows it to have ample finance for expansion and growth of its present business activities.

The possession of a very strong brand name as well as image, which will boost the company’s growth and the reach to the customers. The establishment of a very good supply chain management capability, which will help the smooth inflow and outflow of the retail products along with good customer service. The presence of a very good and attractive customer base and a global presence through a wide global network, that is ready to buy the products available in the retail outlet. The possession of the capabilities and also the competencies by the organic foods retail outlet, which very well matches the key success factors of the industry.

The five competitive forces that are the weakest in the Organic foods retail industry are: Product differentiation from those of the rivals. There is no need for the possession of superior technological skills amongst the different competing organic food retail outlets, since they are not in the process of manufacturing products but are involved only in the selling of the finished products. Joint ventures with the other firms for possession of superior technology is not required in this case, since the organic food retailers only requires good marketing and advertising skills that are needed for selling the product.

The factor of cost advantage over the rivals is not existent in this retail market, since they are not involved in the manufacturing of the different products. Superior type of intellectual skills that is necessary for the other markets, are not required for this industry. This is because the organic foods retail industry mainly thrives on the reach and the timely availability of the retail products, that determine its success rather than the intellectual skills of the persons involved in the business. (www.papercamp.com) Hence a retail outlet that concentrates on expanding its business and the product reach to the different customers, clubbed together with maintaining good customer satisfaction will be sure to become the leader among the different organic food retail outlets.

Q2: Comment on a factor driving change in the organic foods retailing industry? How is it likely to impact the future attractiveness of the industry? Answer: The growing awareness among the worldwide population who are better educated very strongly believe that, the organic foods are healthier and their consumption will only result in maintaining a good and healthy lifestyle. This has made many people to switch over and opt for the consumption of the organic foods, which has given a better boost to this industry.

The demand for the organic foods is growing at a very steady rate worldwide and many statistic data show that, the rate is growing at 20 percent on an annual basis. People have become very health conscious and most of them are opting for eating at the organic food retail outlets, rather than at home. Also there is a growing awareness among the population that, the organic food farming is also highly beneficial to the environment and would rather preserve it. Many studies that were done on organic farming have shown positive results, which shows that it does not affect the soil or the water, as in the case of the other types of farming that utilizes the pesticides and harmful chemicals to enrich the soil.

As a result of this factor and the growing awareness among the food consumers all around the world it can very well be concluded that, the future of the organic foods retailing industry seems to be very bright. (www.papercamp.com) Q3: What is your assessment of Whole Food Market’s financial performance and condition (see: Whole Foods Case)? Use the various financial ratios presented in Table 4.1 of chapter 4 to guide your assessment of the company’s financial statements. Is the company in good financial condition?

Why or why not? Answer: The whole foods market started in the year 1980 in the state of Texas. The whole foods market had become a public limited company in the year 1991 and ever since that, it had seen a rise in the profits and growth every year. The company’s financial returns had been quite astounding and profitability had increased steadily every year except for one year, which was in 2000 because of some unexpected bad divestment policies. The net income for the whole food’s market rose at a compound average rate of 17.

6 percent that was accounted from the fiscal 2003 to the fiscal 2007. The company paid to its investors the first dividend in the year 2004 and ever since that the dividend rate has increased manifold. In the fiscal 2008 the company started to pay to its investors, a quarterly dividend of $0.20. The whole foods market started to generate cash flows from its various operations, which totaled to about $410.8 million in fiscal 2005, that rose to $452.7 million in the fiscal 2006. There has also been a steady growth in the capital expenditure ever since the fiscal 2005 to fiscal 2008.

In fiscal 2005 the capital expenditure totaled to about $324.1 million, in the fiscal 2006 it was $340.2 million, $529.7 million in the fiscal 2007. Out of all these capital expenditures that had been incurred for the consecutive three years it has been seen that, for the new store development the and for remodeling the stores. During the fiscal 2008 the company expects financial expenditures to be in the range of $575 million to $625 million. (www.papercamp.com) All these financial factors for the company if taken into account very well shows that, the whole foods market company is financially very stable and is making rapid strides in the expansion of the business activities overall.

The greatest indicator is the steady increase in the cash flows for the consecutive years, which are very well clear from the financial statements of the company. Thus the company is on a very sound footing financially and also from the operational side. Q4: Appraise WFM’s key resource strengths and competitive capabilities? What competitive liabilities and resource weaknesses does it have? What opportunities might WFM exploit? What threats to its continued success are present? Answer: The following are the WFM’s key resource strengths and competitive capabilities: A good, well educated and devoted workforce has been one of the key strengths for the growth of WFM.

Indeed the staff has been empowered and have been drawn into the WFM’s business, by making them share holders of the company. As a result of this the job satisfaction at WFM has in turn translated into the increased customer satisfaction among the consumers. Apart from this the company has been able to pump in money to open a number of retail outlets and expand itself to different parts of the country. This has increased the reach for its organic food products all over the country and in turn has increased the customer base.

Though the company has priced its organic food products slightly higher than its competitors, still it maintains quality for the products that it offers. As a result consumers very well know that premium quality organic foods are available at the food outlet, which improves the company’s image. Since the organic food industry has been growing at a very fast pace so many new entrants are there in this market segment. Thus the competition has been growing very severe in the past years and this could prove to be a threat to the WFM Company.

The WFM could very well exploit the modern man’s health conscious approach towards the consumption of quality foods for improving and sustaining its business. (www.papercamp.com) Q5: How well is WFM performing from a strategic perspective? Does WFM enjoy a competitive advantage over Trader Joe’s and other rivals? If so, what is the nature of its competitive advantage? Does the company have a winning strategy? Answer: From a strategic perspective the WFM Company is very well enjoying a greater advantage, when compared to other fresh entrants.

Thus the company is strategically well poised than any other companies operating on the same platform. When compared to Trader Joe and other retail outlets, WFM still enjoys a very good competitive advantage in terms of the number of stores and the customer reach to the outlets. Though the pricing at the Trader Joe had been comparatively lower when compared to the WFM, still customers prefer the WFM organic food products because of the reason that, they would be very well getting the best value for the products that they purchase from WFM, since they sell only premium products.

Thus this could be very well referred to as the winning strategy that the company possesses, since they have well established a brand image within the minds of their customers. This is the winning strategy that it possesses, by increasing the customer satisfaction by selling value added products. (www.papercamp.com) References: Vanessa Urban “Wholesale Food Market in 2008: A Case Study” www.papercamp.com, July20. 2010. Web. February16. 2011