Whole Foods Market Essay Example for Free

Whole Foods Market Essay Summary Whole food market is the world’s leading retailer of natural and organic food industry. A firm believer in the virtuous circle entwining food chain, human being and mother earth, they conduct their business true and consistent to their business mission and vision by producing the highest quality of products for its customers and high profits for its investors. Being a philanthropist and supporter of animal rights, Whole food market has established strong reputation with customers and suppliers. There are rivals in the industry and new entrants are seen penetrating the industry. At the time of the case (2005), Whole foods market is experiencing scarce resources in the organic produces and prime locations for their next business expansion. Questions 1 What are the best strategies to tackle the growing demand for organic food? 2 How can Whole Foods Market expand their business further? 3 Will Whole Foods Market survive into the 10-15 years? Analysis General Environment Global Societies are more health conscious and better educated in many parts of the world. The major market for Whole Foods Market is United States, Canada and United Kingdom. Europe is a potential market growth. Socio-cultural A growing percentage of women working have led to an increase in singlehood and ready-to-eat meal. As more people becomes health conscious, demand for organic food increases as well. Demographic Ageing baby boomer expands the senior population which in turn would increase consumption spending. In Europe, population is increasing and there are significant suppliers of organic foods with build in acceptance amongst the people there. Conclusion Europe is the next breakthrough market to capitalise with growing number of buyers and suppliers of organic products. Industry analysis Overview The natural and organic food retail industry is a fast moving consumer goods industry which requires players to either be a price leader and providing extra conveniences to customers for their pleasant experiences. However, players should never sacrifice quality for quantity as more customers are health conscious and financially capable to switch retailers without hesitation. Bargaining powers of suppliers The limited farmlands of organic foods in United States may not meet with the increasing demand in the future which may lead to price war. However, natural food supplies pose no threat. A moderate threat. Bargaining powers of buyers Consumers have a strong buying power as they are the main buyers in this industry. With increasing ageing baby boomers, singlehood and health conscious adults, demands for better quality of natural and organic foods are likely to increase. A high threat. Rivalry amongst existing competitors Rivalry in the industry is intense as firms continuously try to promote their presence and products. A high threat. Threat of substitute product The only substitute for natural food is organic produce. There is also an increasing demand for ready-to-eat meals over prepared meals. A low threat. Is this an attractive industry? With the increasing population of ageing baby boomers, singlehood and health conscious adults, a growing demand for organic foods and ready-to-eat meals will increase over the years. While the competition is intense amongst firms coupled with high bargaining powers of buyers, the industry is deeming as attractive. Competitor analysis †¢ Trader Joe’s adopts price leadership strategy without sacrificing its product quality. It has 215 stores located primarily in the west and east coast of the United States. They offer upscale grocery fare and employs low cost structures. The second biggest retailer in the industry. †¢ Wild Oats Market has 100 stores located in 24 states and Canada. Relying on employees to learn the industry, Wild Oats is committed to strengthen and streamline its operation to expand its business. The third biggest retailer. Internal analysis Tangible Resources †¢ Natural and organic products †¢ Stringent food quality control †¢ Good financial health †¢ Good access to resources from different geographical regions. †¢ Employ the â€Å"code of conduct† Intangible Resources †¢ Voted â€Å"100 Best companies to work in America† †¢ Promoted in several health magazine †¢ Recognition for charity contributions and awareness to animal rights †¢ Good relationship with its supplier †¢ Good organisation routines †¢ Good reputation with its customers for its highest quality product †¢ Recognised private labelled product Capabilities Production of high quality natural and organic productV, I Careful research setup and productsV, I, N The ability to sell consumer on the entire experiences fromR, V, I, N product to service. The ability to maintain excellent relationship with their supplierR, V, I, N Excellent team-based environmentV, I, N Strictest quality standardsV, N The ability to maintain positive relationship withR, V, I, N investors and employees Excellent staff trainingV Core competencies Whole Foods Market has three core competencies; the ability to go out of its way to appeal to their customers by taking every advantage of the customer expectation exceeding their reputations. Secondly, the mutual but beneficial relationship between Whole Foods and its suppliers that allows for deep discounts and favourable terms. Lastly, to have a strong and committed mission and vision that allows Whole Foods to be perceived by public as a trustworthy firm that values relationships over materials. This in turn has lead to an increase in investors and voted as some of the best companies to work in. The above mentioned are a sacred treasures to Whole Foods Market that separates them from their rivals. Careful research setup and products and excellent team-based environment are probably the secondary competencies they possess. However, these qualities are not rare as most other companies would employ this strategies to gain a competitive advantage. SWOT analysis |S | | | | | |Links with investor and public community |Inability to find location with 40% college | |Links with supplier | | | |degree holder for expansion | | | |Excellent team-based environment | | | | | | | | | | | |well as its acceptance | | |Organic produce may not meet with growing | | | | | |demand | | | | | | | | | | |Limited prime location | | | | Answer 1 What are the best strategies to tackle the growing demand for organic food? As the ageing baby boomer expands the senior population, more adults are becoming health conscious. According to National Nutritional Food Association, demands for organic foods are seen increasing as consumers perceived it to be healthier. It is known that Europe may provide an enormous potential growth because of the large population and holds more organic foods market in terms of supplies and buyers. Since Whole Foods Market is committed to sustainable agriculture without sacrificing quality, it is highly recommended that they established a relationship with the European suppliers to meet the organic demands in United States, Canada and United Kingdom. Whole Foods Market can then draw investors in expanding its business in Europe to further their income. 2 How can Whole Foods Market expand their business further? As the number one retailer in the natural and organic food industry, Whole Foods Market should expand its business to Europe where potential economic growth awaits. Building a positive relationship with the suppliers in Europe can help to meet with the organic demands in United States, Canada and United Kingdom. However, they should never neglect the European consumers because of its large population and acceptance of organic produce. Having built a reputation as a retailer that provides high quality foods, a philanthropist, anti-animal cruelty and firm that provides the best working environment, Whole Foods Market can build a strong and positive relationship with Europe and help to enhance the economic growth. Also by creating job opportunities, Whole Foods Market can help with the level of employment therefore strengthening ties with the Europe. This will be important to gain supports and acceptances from European to help with their sales. 3 Will Whole Foods Market survive into the 10-15 years? Whole Foods Market has an excellent long history for its marvellous reputation and contributions to societies. Despite being a volatile industry, the stock prices have mostly been an upward trend with currently at US$136 per shares. This will continue in the next 10-15 years as FMCG are always in demand. Having a nation that is facing ageing baby boomers, increasing singlehood and working women, Whole Foods Market can expect rapid demands for organic and ready-to-eat meals. Unless they manage to tap into the European suppliers for organic food, customers might switch to other possible retailers if they failed to meet with the demands which are the worst case scenario. As more people are aware of the potential health risks for poor dieting, more consumers will not mind to spend an extra bucks. However, they should not neglect the lower income families by providing them alternatives of budget healthier eating and products. In the next 10-15 years, the probability of new entrants moving into organic food industry might increase once entrepreneurs realises the eating trend of consumers. Price war may take place.