Q1. What is Whole Foods Market’s strategy for success in the marketplace? Does the company rely primarily on a customer intimacy, operational excellence, or product leadership customer value proposition? What evidence supports your conclusion?
A. Any organisation’s success in the marketplace depends on its strategy. Strategy includes a set of attributes that makes a firm unique, known as ‘value proposition’. Value proposition can be differentiated into three types: product leadership, customer intimacy, and operational excellence. Product leadership value proposition offer unique one-of-a-kind products and services, with unique features, or innovative solutions. Customers purchase from these companies because of their unique abilities, and often, they can’t get these products anywhere else. Customer intimacy value proposition chooses to focus on the quality of the relationships with customers and offer "complete solutions" as their value proposition i.e. they don’t try to have the lowest price or the most innovative products but customers that value intimate vendor relationships will tend to buy from them. Operational excellence value proposition choose to excel at attributes such as price, quality, on-time delivery, selection, availability, which their competitors can’t match. They tend not to be big product innovators or offer high levels of customer service.
While most successful companies rely and focus on one of these propositions, Whole Food Market to focus on two; product leadership customer value proposition and customer intimacy. Whole Food Market defines their goal to offer highest quality natural and organic products with high focus on ingredients, freshness, taste, nutritive value, safety and appearance. Their goal also includes an important focus on their customers. They define their stores to be inviting, fun, unique, informal, comfortable, attractive, nurturing and educational. They want the stores to become community meeting places where the customers come to meet their friends and to make new ones.
The evidence that supports the conclusion is; the overall rise in the sales by 23%, and an increase of 3.4% of sales as profit margins. In 2004 they set highest records in sales throughout the nation just due to their product offerings and services. The global expansion in Canada and extending the Whole Foods Market brand beyond North America, into Europe is another sign of success. The regions were chosen due to the advanced acceptance of organic food and the lack of language barriers. Also Fortune ranked Whole Food Market 30 this year, and 5 of the 37 large companies listed, in its 100 Best Companies to Work For.
Q2. What business risks does Whole Food Market face that may threaten its ability to satisfy stockholder expectations? What are some examples of control activities that the company could use to reduce these risks?
A. Control activities are the policies, procedures, techniques, and mechanisms are the actions taken by the management to minimize risk. Risks faced by Whole Food Market, along with the control activities are:
Availability of quality natural and organic products and disruption in supply chain- There is no assurance that quality natural and organic products will be available to meet the needs of the company and the consumer, also delay or inability of UNFI, Largest Supplier of perishable goods, to deliver product to the stores can adversely affect the operations. Control activities- The Company should not be dependent on a single supplier for their major part of raw materials; they should a wide variety of suppliers so that absence of one can be fixed by others. •
Too much emphasis on perishable goods- The Company’s emphasis on perishable products may result in significant product inventory losses in the event of extended power outages, natural disasters or other catastrophic occurrences. Control activities- The Company should introduce more non-perishable goods...
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