BUS599, Strayer University
October 23, 2011
Competitive Forces and SWOT analysis: Whole Foods Market
1. Discuss the trends in retailing of organic foods and the impact of these trends on Whole Foods Market. The organic foods industry is one that shows consistent growth. From year to year, they are undergoing an increase in demand. There are a number of factors that contribute to the industry’s growth. These factors include more consumers being educated, and conscious of health concerns of processed foods having a negative impact on their body and the environment. Trends in the retailing of organic foods would include the ups and downs in the farming industry, healthy lifestyles, the environment, and the fluctuating economy. Majority of consumers are now paying more attention to what they are ingesting. This is in large part to making sure what they are putting into their body is ensuring safety. This healthy lifestyle is not only being used for individuals, but also families. Obesity is increasing from year to year; even schools are taking a step into promoting a healthier lifestyle by changing the items they have for sale. For example, many schools are no longer sale sodas during school hours and have now selected baked chips or sun chips over your regular choice of bagged goodies. The ups and downs of the farming industry will always be a trend pertaining to the retailing of any foods. A bad season can lower the available supplies for businesses causing a shortage. Unexpected weather can cause a bad season. Hurricanes, tornadoes, or any heavy rainstorm can cause crops to be lost. Another belief of consumers is that organic farming has positive effects on the environment. If less preservatives are being used the environment should not be exposed to harmful products such as pesticides. With the state of today’s economy, more people are cooking at home and dining out a lot less, which also plays into the positive effect of organic foods because consumers are more conscious with their selections when shopping. (Dimitri & Oberholtzer, 2009)
2. Evaluate the competitive environment of the firm: Apply Porter’s model and analyze each factor relative to the company. The competitive environment of Whole Foods Market is definitely a member’s only status. In other words, because their business is based on the sales of organic goods and products it is a club that very few may enter. This gives the competition more oomph. In using the Porter’s model to evaluate the environment we must look at the five forces to determine how attractive the industry is. This helps businesses determine whether or not they are capable of competing in this industry. Each of the forces is measured differently, but the measurement is based on high or low with strategic barriers. Buyer power is considered competition pressure from buyer bargaining and seller-buyer collaboration. Buyer power is stronger when there are many options. When buyers have the ability to postpone their purchases, control high volume purchases, and the demand is considered weak show examples of strength. There is buyer weakness when purchases are inadequate, when a buyer switches costs to competing brands, and when a seller’s brand is important to a buyer. The organic foods market has an increasing buyer power because the number of companies that are now offering organic products continues to go up. Consumers have the opportunity to look around and choose what fits their needs, not having to look in just one store. Supplier power is based on the ranking of suppliers when providing the necessities for a business. The supplier power is high when business buyers have few choices to buy from. When business buyers have many choices to buy from, the supplier power is considered low. According to our text there are two contingencies that determine whether or not...