Whole Foods Market, a supermarket chain which emphasizes "natural" and organic products, centers their core competencies and values on product quality, pleasing customers, creating a positive environment for employees, education on healthy eating, prosperity, environmental stewardship and positive partnerships with suppliers. Listed as one of the world's healthiest countries, Germany is an ideal location for Whole Foods to expand and share its experience. Initially, Whole Foods is going to expand to one location in Munich, Germany. Munich is the third largest city in Germany, which also offers surrounding farms to serve as suppliers for Whole Foods. Germany has by far the greatest demand for organic products in the European Union and is second only to the USA at a global level. Recognizing the failures of other chain expansions to Germany, such as Wal-Mart, Whole Foods is going to utilize a transnational approach, which will address cost efficiency and local responsiveness. The following paper will give a methodological approach for the premise of Whole Foods entering the German Market, organizing Whole Foods’ business activities, and implementing a global marketing plan for Munich as the basis for Whole Foods entrance and expansion into the German market.
Phase 1 - Plan Global Business Enterprise
A. Identify Global Business Opportunity
1. Potential Market
Whole Foods is going to enter the German market beginning with its third largest city, Munich. According to the United States Census, Germany is the world’s fifth largest importer and exporter with $89.36 billion already through this July (United States Census, 2012). Organic foods in Germany have tripled between 1998 and 2008 and the country has faced a shortage of organic foods since 2007. Munich, Germany is surrounded by farms and agricultural producers to providing a supplier network for Whole Foods to meet the German market’s demand for organic food products. 2. American Organic Growth
Whole Foods was founded in 1980 in Austin, Texas by four founders: John Mackey, Renee Lawson Hardy, Craig Weller, and Mark Skiles. At the time there were less than a half dozen natural food markets in the United States (Whole Foods, 2012). From 1980 to 2012 they have developed into 310 stores primarily in the United States, and have recently added stores in Canada and the United Kingdom. The business model for Whole Foods is to support local farmers of natural and organic produce, meats, and poultry. According to their website, they “carry the finest natural and organic foods available, maintain the strictest quality standards in the industry, and have an unshakeable commitment to sustainable agriculture”. 3. Comparative Advantages
Germany is the largest market for organic products in the European Union with an annual turnover of more than 6 billion Euro, or 8 billion dollars, in 2010. Until 2008 the German organic market had been growing at near double digital rates annually, and in 2009, this growth leveled off as demand for organic products in conventional food stores decreased by several percentage points. Sales through specialized organic food stores are still increasing. The share of organic production in German agriculture is estimated to be about six percent of the total agricultural area and eight percent of the farms (export.gov, 2012). B. International Competitors
1. Local Competition
Whole Foods has to compete with major player in the German food market. They are Alnatura, Metro Cash & Carry, Aldi, Lidl, and Viktualienmart. Of all competition, small vendor stands, butchers, and bakeries, pose as the largest competitor. It is deep-rooted in the German culture to purchase quality meat at a butcher, fresh baked bread at a bakery, and the fresh fruits and vegetables for the day at a produce store or stand. Very few Germans like to purchase food in bulk or even...