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Case Study: Whole Foods MarketTRAN THI TRAM ANHRAHEL HAILUSEIKO OTAKEKIM JU YONG

Whole Foods Market was founded in Austin, Texas, by four local businesspeopleFounders were John Mackey and Renee Lawson Hardy, owners of Safer Way Natural Foods, and Craig Weller and Mark Skiles, owners of Clarksville Natural Grocery. The original Whole Foods Market opened in 1980 with a staff of only 19 people.

Whole Foods HistoryThe Entrepreneurs of the Decade: 2000 to 2009

The original Whole Foods Market opened in 1980 with a staff of only 19 people. It was an immediate success. At the time, there were less than half a dozen natural food supermarkets in the United States. We have grown by leaps and bounds since our first store opened.

Jhon Macky is one of the remarkable peoples, INC magazine select him as the enterprenur of the decades from 2000- 2009, from the list famous entrepreneur also included such as Facebook (Mark) , amazon, alibaba, Apple (steve jobs),

The growth of WFM has been accomplished through mergers and acquisitions, these are the list of notable companies in their own right.WholePeople.com(e-commerce subsidiary)Nature's HeartlandFood For ThoughtHarry's Farmers MarketSelect FishFresh & WildWild Oats Markets

Wellspring GroceryBread & CircusMrs. Gooch'sFresh FieldsBread of LifeAmrionMerchant of VinoAllegro Coffee

Whole Foods History

Whole Food Company (WFC) opened its doors in New Orleans in October 1974. Its mission was to be a grocery store featuring good, wholesome food; not a "health food" store filled with pills and potions. Sales doubled each year for the first four years. By 1978, the store (only 1100 square feet) was doing more than $1 million per year. Success was fueled by a committed staff who were all stockholders in the company.In 1981, WFC opened a larger store on Esplanade Avenue in New Orleans. WFC became the largest outside customer of Texas Health Distributors, the wholesale division of Whole Foods Market. In May of 1988, the Esplanade store became the sixth Whole Foods Market.(Wellspring Grocery,Bread & Circus, Mrs. Gooch's,.)

Core ValuesSelling the highest quality natural and organic products availableSatisfying and delighting our customersSupporting team member happiness and excellenceCreating wealth through profits & growthCaring about our communities & our environmentCreating ongoing win-win partnerships with our suppliersPromoting the health of our stakeholders through healthy eating education

Core ValuesSelling the highest quality natural and organic products availableSatisfying and delighting our customersSupporting team member happiness and excellenceCreating wealth through profits & growthCaring about our communities & our environmentCreating ongoing win-win partnerships with our suppliersPromoting the health of our stakeholders through healthy eating education

Core ValuesSelling the highest quality natural and organic products availableSatisfying and delighting our customersSupporting team member happiness and excellenceCreating wealth through profits & growthCaring about our communities & our environmentCreating ongoing win-win partnerships with our suppliersPromoting the health of our stakeholders through healthy eating education

Variety of different productsCoffee, teaFresh fruits & vegetables, Frozen fruits & vegetablesNuts, seeds, trail mixer, nuts, seed buttersRice, grain, dry bean and spicesNatural cosmetics Baby clothes

Approximately 20,000 different food & non-food product types at each store location. What does Organic really mean?

Whole Foods also offers product categories as diverse as natural cosmetics and baby clothes. All told, they offer approximately 20,000 different food and non-food product types at each store location. Coffee, tea, fresh fruits, fresh vegetables, frozen fruits and vegetables, nuts, seeds, trail mixer, nuts, seed butters, rice, grain, dry bean and spices.

More than 310 stores in North America and the United Kingdom.Team Members: 62,000+Distribution Centers: 10Regional Bakehouses: 7Commissaries: 5Common Stock: traded on Nasdaq, symbol: WFMWellspring GroceryBread & CircusMrs. Gooch'sFresh FieldsBread of LifeAmrionMerchant of vinoAllegro coffeeSaferway

Whole FoodsNature's HeartlandFood for ThoughtAcquired competitor

Still 4.2% of Grocery MarketButIncreasing Organic Food Sales

Organic Industry:Grew by 9.5%, $31.5 billion in sales in 2011. (9.5% up)

Gradual Economic Comeback

The five forces Organic foods industry

Whole Foods

Competitors

$108 billion in 2005

$137 billion in 2011Competitors' Private label brands

Education: Higher earnings and lower unemployment rate US is both especially unequal and has especially low mobilityMore Education, More Money

U.S.Customer analysis

Whole Foods Market goalTo reach1,000 stores in the U.S.TargetOlder citizens and Urban singles

Offer Enjoyable shopping environment

An amazing variety of items approximately 20,000 different food and non-food product types at each store locationMission:Whole Foods Whole People Whole Planet

Technology Financial Organization Physical Whole Foods Microenvironmental AnalysisTangible Resources

More than 310 stores in North America and the United Kingdom. Team Members: 62,000+Distribution Centers: 10Regional Bakehouses: 7Commissaries: 5Common Stock: capital investment over $1.6 billion.

Physical Resource

Whole Foods is a proven and viable business with double-digit growth

Revenue: $ 7.2 million

Income: $ 168 million

Gross Margin: 34.58 %

Organization Resource Technological Resource Excellent team leaders Management chainModern information systemsEnergy sources (largely wind-energy credits)

Financial Resource

financial strength Whole foods Vs other firms

all the companies quick ratios are below 1. That implies all companies did not fully cover their short-term liabilities by their current assets. From the year 2009 the only quick ratio that went above 1 was Whole Foods. This improvement in the quick ratio shows that Whole Foods started rely on the current assets to cover their short-term liabilities. In the above ratio Inventory was not included, however Whole Foods still is managing the short-term assets to pay off the short-term liabilities better than their competitors.

financial strength Whole foods Vs other firms

Debt ratio of Whole foods is less than its competitors, and compare to year 2009, in the recent years of debt ratio is much less than from the previous years, this indicate that Whole Foods survive over a long period of time , because the business abiity to continue trading its current capacity if there were to be demand made on the repayment of long term loan capital.

Human CapitalInnovation ResourceReputation ResourceTacit KnowledgeEducationWork-related Know-howWork-related competenceSuppliersEmployeesCustomers: adults & Children a healthy styleThe detail of process of any food being soldU.S Department of Agriculture standards

Whole Foods Macroenvironmental Analysisc

A very unique business model: The philosophy : customer first, team member second, stockholder third. A very unique brandThe perishable executionCorporate culture is very unique

Competitive Advantage

The value-added pricing strategy (differentiation strategy): keep customers loyal by providing service the customers can't find anywhere else.

General Strategy

Current Strategy Analysis

Operations strategyThe Whole Foods Market operations strategy: expansion and acquisitioncreating higher barriers of entry for their potential competitorsexpanding into new and existing areas, to include the international marketsFinancing strategyapproved a stock repurchase program of up to $200M over four years (2007-2010)The firms Long Run Debt Ratio, Cash Flow from Operations to Total Liabilities Ratio: a good indication of the firms long term riskCurrent Strategy Analysis

Promotional StrategyGreat Deal" campaign:Value Tours Discounting: Current Strategy Analysis

Promotional StrategyAdvertising: Word of Mouth AdvertisingTelevision AdvertisingPrint AdvertisingOnline Advertising (Social network marketing & Google AdWords )Billboard AdvertisingIn-Store AdvertisingWebsites design:E-newsletter sign upCooking tipsCompany blogsProduct and store locatorsCompany and investor informationLinks to Whole Foods pages on social networking sitesSampling:

Current Strategy Analysis

Strategic ProblemsDeterioration of the American economy The uncertain future of the organic segment of the grocery industry, The increased competition of the major players in the food industryThe increased cost of foodThe increasing demand of consumers for high quality, low cost, healthier foods. Scarce resources, the supply of organic and natural grown food The acquisition of Wild Oats and the Federal Trade Commissions subsequent objectionThe location of Whole Foods Market stores

OpportunitiesNational wide AppealEducate value of well-beingLeading organic producerStatus, international awarenessRetail innovation and capitalismHigher demand for organic productsExpansion in UKGrowth in private label products Strength

Organic market leaderEmpowering work EnvironmentCustomer satisfactionFocused grwoth strategySustainable FutureExperienced Top ManagementQuality StandardsCustomer ServiceWell trained staffGood distribution systemRetail Innovation

WeaknessSell of StockHigh PriceTransparency of strategyWeak in operationConservative advertisementIncreased rental expensesTreatNew entrantsSubstitute productsCulture imitatorsCompetitorGovernment takeoverLabeling and other regulationsWeak economic resultEmployment situationSO1.Offer products that can only be found at WFM2.Make WFM an eponym for top quality organic natural food

WO1.Offer the best products for the buck2. More national wide expansion3. Constant innovation and capitalism that is hard to imitateST1.Acquire new quality standards that are hard to substitute2.Stay ahead technology and agricultural concerns3. Diversify retailing efforts WT1.Competitive pricing2.Constant innovation strategy and productsSWOT Analysis

The Whole Foods brand stands for best quality, organic goodsWhole Foods appeals to a greater social responsibility Whole Foods has a strong distribution networkPrivate-label brands provide high-quality at value-pricingCurrent Strategic Advantage

Highest- quality brand reputationDedication to the social ethics of organizationIndustry best customer serviceStrong supply chainPrivate label programGain in terms of Core Competencies

The organic industry will have a hard couple of years But, consumers do not want to compromise their health and will continue buying organicHealth-organic consumers will go for value-priced goodsSocial-organic will also like to see more value, but will shop on ethics

Gain in terms of Future growth, Survival and Customers

External Analysis

OpportunitiesThreatsInternal Analysis

StrengthWeakness

Strategic ChoiceExternal and Internal Analysis

Whole Foods market targets are both broad cross-section of Buyers and a Narrow buyer segment, so should FocusLow-cost strategyDifferentiation StrategyRecommendations for Alternatives strategy

Focused Differentiation Increase marketing and goodwill to grow comparable store sales Look for ways to decrease upstream supply costs Continue long-run expansion Recommendations for Business Strategy

Target Market should be Reaffirm Whole Foods commitment to its core, social-organic market Reach out to the price sensitive, health-organic market Target the cross-over market from the restaurant industry, who are looking for less- expensive dining options Focus marketing efforts on the West Coast and New England, regions with the highest organic market density

Marketing Recommendations

Use Value-Based Pricing to set goods prices that reflect perceived value A price skimming strategy should be continued, since Whole Foods COGS is higher than competitors Try to lower check-out aisle receipts without discounting too deeply Price

Repackage goods to be sold as Cook-at-home Restaurant Boxes Increase private-label meat and seafood offerings Expand service offerings Store-eventsOnline ordering

Product

Advertising Target restaurant cross-overs Get more, Live Healthy Restaurant parody Media placement Current Promotional Strategy Value Tours DiscountingAdvertizingWebsite design(Cooking tips, company blogs, links WFM pages on social networking sites)

Promotion

CRM Loyalty Program Discount club card Require online sign-up For every $1,000, get 10% off voucher Collect direct marketing information Track product preferences and sales accruemenInvite the highest ranked customers to customer appreciation events

Sales Promotions

Reduce store openings by 30% of 2008 levelsDirect store growth in the Pacific Northwest and build a presence in BritainPlace

Community Events Our Community Cares Days Donate 10% of specific days, private-label sales to Participating charities Promote the events through signage and publicitySponsorship Fitness Challenge Tie into product placements Promote through social networking sites and publicityCommunity Stewardship Strategy

20% reduction in work hours for hourly employees A way to avoid further layoffs Affects 10% of employees Save the company $28 million a year Some of the money saved will be used to finance R&DPay Freeze Employees making more than $75,000 will not get raisesShare the sacrifice with those who are losing their hours Pay bonuses in stock options Exceptions to this rule for key managementOperations Strategy

Fund a R&D project to develop computerized, customer assistance modules Size of an ATM machine Gives Farm-2-Fork tracking Provides nutritional information, cooking instructions, and recipes Activated by the Whole Foods loyalty club card Tracks searches-to-sales $20,000 to implement, paid through work hour reduction Use Whole Foods buying power to pressure suppliers Negotiate for lower wholesale prices Threaten globalizing sourcing from Latin America Reduce COGS growth from 22.5% in 2008, to 20% in 2009-2011

Operations Strategy

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