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Strategic Analysis Of Whole Foods Market Add in library

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Questions:

1) A critical review of the organisation’s environment. This should encompass both the external/macro and market environments. You should use appropriate strategic models and provide a conclusion as to the nature of the environment faced by the subject organisation.
 
2) A critical review of the culture and leadership of the organisation. You should review these factors and consider their impact on the strategic decisions made. Your review may include consideration of the history of the organisation, its mission and its leadership development.

3) A critical review of the strategic options available to the organisation in the future. Your answer will of course be partly imaginary but should reflect the resources or the organisation and the environment faced.
 
 

Answers:

Introduction

Strategic management refers to the process of formulating and implementing objectives and initiatives by an organisation’s management system, by considering all available resources along with assessing both the internal and external environments that the organisation competes in. Strategic management is all about identifying and describing strategies that managers make use of so as to achieve improved performance and any form of competitive advantage; competitive advantage refers to the state in which an organisation’s profitability is much higher than the average profitability of other organisations or companies of the same industry.

Another definition of strategic management would be the act of managers undertaking decisions that affect the firm’s performance. For this reason, it is highly essential for managers to possess thorough knowledge and be able to produce an analysis of the organisational competitive environment (Shriberg, 2005. For instance, the system must be able to conduct SWOT analysis i.e. effective use of strengths and opportunities and minimization of threats and weaknesses should be ensured. This form of management simply plans for both the predictable and impractical contingencies along with being applicable to both large and small organisations.

In other words, strategic management can be said to be the way in which objectives are simply set and attained so as to identify what direction the organisation is heading in (Shriberg, 2005). It simply deals with the process of creation and implementation of decisions affecting the organisation’s future. One is required to understand that strategic management is a process that is continous in nature, which controls & evaluates the business that the organisation is involved in; it simply evaluates the organisation’s competitors by creating strategies and goals that meet all potential and existing competitors. This is followed by re-evaluating all strategies for their implementation and success, on a regular basis and then deciding whether if any form of replacement is required or not.

Strategic management provides employees within an organisation with a broader perspective for them to understand the importance of their own jobs and how it fits into the organisational plan along with its relation to other members of the organisation. It can be regarded as the art of management of employees that results in maximization of achievement of any form of business goals and objectives (Shriberg, 2005). Employees are required to identify the affect of environmental changes on the organisation and formulate a probable response using strategic management. In the following report, a strategic analysis of Whole Foods Market is conducted; it focuses on the strategic management system implemented by the organisation and its outcomes.

 

1. Critical Review of Organisation’s Environment

Whole Foods Market is a multinational organisation that functions as a retailer of natural and organic foods and has established a dominant position in the natural and organic food industry. Whole Foods Market is considered the largest chain of organic and natural foods in the United States that has competitors with several strategic plans and groups including natural/organic retailers of food, mass merchandisers, traditional grocers etc. However, due to its expansion and scale, Whole Foods Market holds a firm competitive position in this industry along with brand superiority that provides its customers with a premium experience of shopping. It has successfully managed to differentiate itself from other competitors by primarily focusing on organic good products (Bliss, 2011). Due to this reason, this organisation has an approximate share of 33.6% in the U.S, with no other competitive organisation anywhere close to this achievement. Whole Foods Market experiences competition from organisations such as Wal-Mart, Kroger, The Fresh Market and other local farmer markets. However, Whole Foods Market has a competitive advantage over other organisations since it happens to be the first largest mover within the organic retail industry.

Organisational environment refers to the environment that is directly responsible for achievements of the organisation’s goals and objectives. It is essential to recognize the external forces that constantly affect an organisation’s performance along with its effectiveness, thus, making it imperative for an organisation to thoroughly examine the components of its internal and external environment. Detailed examination of such components will provide the organisation with an understanding of the extensive dynamics changes that may and are occurring. The external environment or also referred to as the macro environment simply consists of all those factors that have an indirect affect on the organisation; these include of external forces such as economic, political or legal, technological and socio-cultural forces. On the other hand, the internal environment or also referred to as the task environment consists of factors that directly affect the organisational working; it includes of variables such as suppliers, customers, competition and labour (Business & Legal Reports, 2007). The organisational environment holds utmost importance since its unpredictability will render an organisation to be ineffective; for this reason, the management should ensure affective environmental scanning.

In context of Whole Foods Market, the environmental factors with utmost importance and relevance to the organisation’s business are regulatory factors, market size, supplier channels, demographic trends, technological developments, social considerations along with consumer habits. These factors specifically impact and are more favourable to the natural and organic food retail industry rather than overall industry of grocery due to the possibility of great market growth along with increased or heightened numbers of consumer adoption; the perceived wellness and health benefits allow customers to willingly pay a premium price (Hinkin, 2010). The following is a detailed environmental analysis of Whole Foods Market when compared to regular food retail businesses:

Environmental Factors

General Food Retail

Natural and Organic Retail

Market Growth

$907 Billion

$76 Billion

Annual Growth

-0.9%

5%

Demographic Trends

The food choices of consumers suggest that wellness and health have become an increasing priority. Additionally, all consumers have now become more eco-conscious.

Due to economic improvement, consumers are now considering organic baskets. The is a segment that specifically caters to only “rich” shoppers

Regulatory Factors

Many regulations exist; for instance, FDA approval is required when introducing new food products into the market.

For organic food markets, the regulations become more intensive and heavier in nature; approval from EDA, CPSC, EPA, USDA & ETC is required.

Technological Development

Online shopping is turning into a new trend; for instance may organisations such as Fresh Direct, Amazon Fresh or Relay Foods, operate online.

Several innovations within the organic food industry are being introduced. One example would the introduction of almond milk or hydroponic vegetables.

Suppliers

Wide range of suppliers available.

Only fair-trade, organic & local sourcing and fair-shade are made a priority.

Consumer Preferences or Social Factors

Consumers remain fairly sensitive when it comes to price of food items. The social factors incorporate the movement of social culture towards increasing environmental awareness and increased support towards sustainability. Additionally, the society seems to be migrating towards attaining an “experiencing economy.”

The perceived wellness and health benefits allow customers to willingly trade up and pay a premium price for certain items of food. When it comes to food retail of products that are valued for their quality, health and other involved factors, customers are less likely to be sensitive towards the food item’s price. Additionally, we can always count on “high brand loyalty.”

Political-Legal Pressures

Regulations regarding the good standards exist and are expected to be met by the organisation.

Increased awareness regarding food safety along with increased regulations that specify food standards.


Furthermore, consumer awareness of the organic food introduced by Whole Foods Market is a significant factor affecting the organisation. As previously mentioned, due to the perceived wellness and health benefits allow customers to willingly pay a premium price; in the recent years, an approximate purchase of 82% of organic food products has been recorded. Though, it is important to understand that the supply of organic food products may not always meet customer demands especially in areas with low density of organic farms. For this reason, it is highly essential for the organisation to conduct a strategic assessment that takes into consideration all the environmental factors that may affect the organisation’s performance and growth. Strategic environmental assessment or SEA, is a process outline by the organisation that allows the company to take up and integrate environmental considerations when planning and preparing programs or strategies (Kunreuther, 2009). The main purpose of the strategic environmental assessment is to provide the environment with high levels of protection and promote sustainable development; this is achieved by integrating several environmental considerations when preparing and adopting all essential plans, programmes and strategies. By incorporating the strategic environmental assessment, Whole Foods Market can strategically assess all the factors affecting the environment within its organisation and accordingly take up measures that will reduce the effect of these factors on its performance and growth, ensuring further progress and success.

 

2. Critical Review of Culture and Leadership at Whole Foods Market

Organisational cultural can be defined as the behaviours and values contributing to the psychological and social environment within an organisation. It may include experiences, expectations, values and philosophies that hold the organisation together; these may be expressed in the organisation’s inner workings, self-image, future expectations and the interactions it makes with the outside world. In other words, organisational culture is observable and consistent behavioural pattern within an organisation i.e. something that we repeatedly do. It can be said to be based on shared customs, beliefs, written & unwritten rules, attitudes etc. that may have been developed over a particular period of time and consequently are considered valid by the organisation.

Organisational culture or also known as corporate culture becomes evident and is revealed in the ways the organisation treats its customers, employees & the community and when it conducts business. Similarly, the culture of an organisational becomes apparent when discussing the extent of freedom that is given to employees when developing new ideas, in decision making or personal expression. Additionally, the commitment employees show towards the organisation’s objectives and the hierarchy of information flow & power within the organisation, speak a lot about the organisation’s culture (Kunreuther, 2009). In other words, culture can be regarded as the sum total of rituals and values within an organisation that serves the purpose of integrating its members; it is simply a shared view of “what is” “why is.”

 When discussing Whole Foods Market, there are two key components of the organisation that stand out; the first component is that this organisation has carefully designed systems of practices and programs that allow the organisation to sustain their unique culture across all its stores. For instance, the hiring process is participative in nature i.e. all team members are provided with an opportunity to participate at all levels in the selection process of all immediate members along with senior executives. Furthermore, the organisation arranges for events like “vision days,” “future search,” and “tribal gatherings,” that allow stakeholders and team members to bond, realign with each other’s values & culture and simply co-create an integrated vision (Our core values, 2011). Also, for new and current team members, a two day orientation session is arranged where they are given an opportunity to bond and build relationships, are provided with intensive sessions regarding the core values of Whole Foods Market along with informational sessions on the organisation’s culture. Team building sessions are also an essential component of their orientation program.

The second key component of the organisation that standards out is that the organisation is driven by philosophies i.e. all the activities and practices taking place within the organisation are driven by several organisational philosophies, where two of them are based on the concept of shared fate and higher purpose. Their concept of shared fate simply is based on the idea of “succeeding together and failing together.” For this reason, the organisation ensures participation of members at all levels in the goal-planning and decision making process. All members of the organisation are give and equal participation when deciding on major actions such as strategic initiatives or staffing (Our core values, 2011). Furthermore, the concept of “higher purpose” is based on the idea that their business must serve a higher purpose that that of making profit. At Whole Foods Market, they encourage improvement of health and well-being by providing their customers with better nutrition and supreme quality food products. From what is known, all the members of the organisation are connected to the higher purpose and this purpose remains their priority throughout.

Hence, the well-crafted and defined policies and practices at Whole Foods Market not only allow their team members to efficiently work towards their co-created visions along with their goals & objectives but also has resulted in team members in interested in wanting to achieve them; thus, resulting in a rich organisational culture that is consistent across all their stores in the country. However, it is essential to understand that in order to maintain such a culture within the organisation, the organisation requires to be guided under effective and supreme leadership. Affective leadership development within an organisation is of utmost importance since it indirectly affects various other components within the organisation such as the organisational culture (Daft, 2008).

Leadership development refers to any activity that is carried out within the organisation that allows for enhancement of leadership quality. In the organisational world, organisational success and leadership are intertwined with each other, to a great extent. Considering the traditional point of view regarding leadership, leadership comprises of superiors exercising its authority over subordinates who in turn exercise their own authority over those working for them. However, with the evolving technological, organisational and cultural changes, the definition and requirements of leadership has changed (Our core values, 2011). Due to the workforce’s changing nature, increased dependency on technology and development of distributed work systems, there is demand of change in how leaders are required to interact with their organisation’s members; this has given rise to a distributed view of leadership in general.

The co-founder of Whole Foods Market, John Mackey, is known for his liberal leadership qualities that allow him to strengthen and challenge his organisation by providing them with a modern vision (Mackey, 2011). Often, Mackey is criticized for his approach to carrying out business; his approach of leadership comprises of both values and servant leadership. He believes that over control is the central and major cause of detriment and stress and restricts productivity, thus, encouraging his to take up a route that is completely different to that of the traditional route. Hence, at Whole Foods Market, servant leadership direction is encourage and managed among the employees. This leadership simply identifies a servant leader’s responsibility to first consider the needs of others and then create conditions for them that allow them to become leaders themselves. Under such leadership, team members are authorized to themselves in the values of the organisation. Furthermore, as mentioned above, value leadership is also a type that is greatly emphasized at Whole Foods Market; this leadership is similar to servant leadership since it also uses a normative approach (Our core values, 2011). The key elements of this leadership are identified to be inspiration, service, trust, vision, intuition, empowerment and continous learning. Whether it is servant or values leadership, Whole Food Markets believe in forming relationship patterns that do not rely on values influenced by external control but on those that provide the organisation with personal and social meaning to collectively get the work done, collaboratively make decisions, facilitate planning & sharing and promote mutual responsibility.

 

3. Critical Review of Strategic Options

In order to think strategically, the committee of management that is involved requires them to analyse the organisation’s external and internal environment along with becoming responsive to a change. Sometimes, the challenges that the management will be presented with will be rather difficult to deal with, causing them to making sever decisions regarding the activities being conducted or taking place (Kunreuther, 2009). In such circumstances, it becomes essential for the management committee to have a look at the strategic options available to them that would want to take up so as to successfully overcome the situation. The following are some of the strategic options that Whole Foods Market may be open to:

Strategic Option

Detail

Maintaining

Simply refers to the act of continuing with the services that they are providing their customers and employees with along with the activities that they are conducting.

Retrench

Refers to the reduction or closing of any current services or activities. They may deny working in particular geographical areas.

Quantitative Expansion

Refers to the possibility of increasing the number of employees or clients. They may also consider increasing the extent of provision.

Switch Strategy

Simply refers to the switch their services from one client to a completely unrelated group of clients. They may consider changing their client service conditions or their type of service or their geographical location.

Collaborate

The organisation may want to develop closer of more partnerships with either existing or new clients or agencies. The increase in such collaborative measures will allow the organisation to affectively improve the success rate of their business.

New related strategy

Refers to the created of new strategies by the committee that may be related to the client, or the service being provided or the geographical location of their organisation etc.

Reduce costs

They may want to consider reduction in the costs of a service being provided or an activity being conducted or the costs for a particular geographical location. By reducing their costs, they will allow the organisation to consider spending in additional activities or services, which in turn will allow the organisation to improve the success rate of its business.

Experiment

They organisation may consider experimenting with a new group of clients or a new kind of service or relocating themselves to a new geographical location.

Expand Boundary

Again, the organisation may want to expand their boundaries regarding a service being provided, activities being conducted, new client group and their geographical location.

Piggyback

Simply refers to the act of developing services that are free-earning in nature so as to subsidise other activities; these may include cross subsidy of activities being conducted.

Improve quality

One strategic option would be to improve the quality of the services and activities they provide their clients or customers with. This may also be in the form of changing their geographical location so as to reach out to a wider range of communities.

Unrelated expansion

The organisation may want to consider expanding their services and activities to unrelated organisations, clients, customers etc. They may even provide them with unrelated services in an unrelated area.


It is important to understand that when in need of a change, the pros and cons of the each option being considered, should be given utmost attention while keeping in mind the mission and vision of the organisation during consideration. The management of Whole Foods Market will be required to carefully think through the process they will take up in order to mange this change process. One should understand that any strategic business option should be designed for the purpose of achieving and bringing success to the organisation rather than failure (Shriberg, 2005). For this reason, it is highly crucial for the Whole Foods Market’s management committee to capitalize the stronger capabilities of the organisation and exploit the greatest opportunities that are available to them along with reducing any forms of ricks that may be associated with environmental threats towards the organisation or may become a weakness for them.

As mentioned previously, the primary requirement of a strategic business option should be to develop strategy that covers two major dimensions that are achieving success and avoiding any type of failure especially in situations when things may go wrong. Thus, the strategy taken up by the organisation may provide the organisation with a good chance of achieving along with exceeding it. However, at the same time, it should not expose the Whole Foods Market’s organisation to any risks that may bring down its performance. For this reason, the strategy adapted by the organisation must fully utilize the organisation’s most impressive strengths along with correcting or neutralizing all its major weaknesses. Additionally, the Whole Foods Market must work on either reducing or completely eliminating the impact of all the threats on the organisation. This can be achieved by exploiting any extremely rated opportunity coming their way (Wegmans Food Market, 2007). Also, the adopted strategy must be strictly relevant and practical to the situation of the organisation along with being imaginative; imaginative in the sense of engaging the team members of staff while implementing the strategy. Their organisation may want to focus on “standing out” in the food industry, avoiding becoming an imitation of what other organisations may already be doing or plan to do. Consequently, this will strengthen the organisation’s competitive position within the industry or enterprise. In fact, they have already achieved this since it has successfully managed to differentiate itself from other competitors by primarily focusing on organic good products.

 

Conclusion

Strategic management refers to the process of formulating and implementing objectives and initiatives by an organisation’s management system, by considering all available resources along with assessing both the internal and external environments that the organisation competes in. Strategic management can be said to be the way in which objectives are simply set and attained so as to identify what direction the organisation is heading in. It simply deals with the process of creation and implementation of decisions affecting the organisation’s future. Strategic management is all about identifying and describing strategies that managers make use of so as to achieve improved performance and any form of competitive advantage. Strategic management provides employees within an organisation with a broader perspective for them to understand the importance of their own jobs and how it fits into the organisational plan along with its relation to other members of the organisation. It can be regarded as the art of management of employees that results in maximization of achievement of any form of business goals and objectives.

Whole Foods Market is considered the largest chain of organic and natural foods in the United States that has competitors with several strategic plans and groups including natural/organic retailers of food, mass merchandisers, traditional grocers etc. Whole Foods Market holds a firm competitive position in this industry along with brand superiority that provides its customers with a premium experience of shopping. It has successfully managed to differentiate itself from other competitors by primarily focusing on organic good products. Whole Foods Market has a competitive advantage over other organisations since it happens to be the first largest mover within the organic retail industry.

Organisational environment refers to the environment that is directly responsible for achievements of the organisation’s goals and objectives. It is imperative for an organisation to thoroughly examine the components of its internal and external environment. In context of Whole Foods Market, the environmental factors with utmost importance and relevance to the organisation’s business are regulatory factors, market size, supplier channels, demographic trends, technological developments, social considerations along with consumer habits. In other words, culture can be regarded as the sum total of rituals and values within an organisation that serves the purpose of integrating its members; it is simply a shared view of “what is” “why is.”

Furthermore, organisational culture or also known as corporate culture becomes evident and is revealed in the ways the organisation treats its customers, employees & the community and when it conducts business (Kunreuther, 2009).. The well-crafted and defined policies and practices at Whole Foods Market not only allow their team members to efficiently work towards their co-created visions along with their goals & objectives but also has resulted in team members in interested in wanting to achieve them; thus, resulting in a rich organisational culture that is consistent across all their stores in the country.

 Additionally, at Whole Foods Market, servant and value leadership direction is encourage and managed among the employees. Whole Food Markets believe in forming relationship patterns that do not rely on values influenced by external control but on those that provide the organisation with personal and social meaning to collectively get the work done, collaboratively make decisions, facilitate planning & sharing and promote mutual responsibility (Fairholm, 2011). Similarly, in order to think strategically, the committee of management that is involved requires them to analyse the organisation’s external and internal environment along with becoming responsive to a change. Often, it becomes essential for the management committee to have a look at the strategic options available to them that would want to take up so as to successfully overcome the situation.

 

References

1. Bliss, W. G. (2011, 06). “The Advisor: Cost of Employee Turnover,” BLR publications

2. Business and Legal Reports, Inc. (2007).  “Best Practices in Recruitment and Retention. 'Employee's first, Customers second': Wegmans' Work, “ICMR IBS center for Managment Research.

3. Daft, L., Richard & Lane G., Patricia., (2008). “The personal side of leadership/ Wendy Steinberg Whole Foods Market. The leadership experience. Mason,” Ohio: Thompson Higher Education.

4. Fairholm, G. W. (2011). “Real Leadership, How Spiritual Values Give Leadership Meaning,” Praeger.

5. Hinkin, T. R., & B. J. (2010). “What makes it so Great? An analysis of Human Resources Practices among Fortunes Best Compnies to work for,” Cornell Hospitality Quarterly

6. Kunreuther, F., & Kim, H. &. (2009). “Working Across Generations,” San Francisco, CA.

7. Mackey, J. (2011, January-February). “Co-founder and CEO,” (H. B. Review, Interviewer).

8. Our core values. Whole foods Market Retrieved March 28 2011, from https://www.wholefoodsmarket.com/company/corevalues.php

9. Shriberg, A., Shriberg, D., & Kumari, R. (2005). “Practicing leadership, Principles and Applications,” Hoboken, NJ: John Wiley & Sons, Inc.

10.Wegmans Food Markets Inc. (2007). “Employee's first, Customers second,” Wegmans' Work.  Rochester: ICMR IBS center for Managment Research.

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