Whole Foods Value Chain

Only available on StudyMode
  • Download(s) : 740
  • Published : April 15, 2013
Open Document
Text Preview
Contents Page

1. Introduction……………………………………………………………………...Page 1

2. Environmental Factors…………………………………………………………...Page 1

3. Value Chain……………………………………………………………………...Page 2

4. Conclusion…………………………………………………………………….....Page 4

5. References………………………………………………………………...……..Page 5

Introduction
Whole Foods started in 1980 when it’s CEO, John Mackey merged his store, SaferWay, with a competitor, Clarksville Natural Grocery. Since then, Whole Foods has expanded to 275 locations in North America and United Kingdom with 47,000 employees, making it the world’s leading supermarket retailer of natural and organic products (Harbin and Humphrey, 2013). With a mission to promote the vitality and well- being of individuals, Whole Foods strives to maintain the strictest quality standard in the supermarket industry (Lee and Linowes, 2009). The objective of this essay is to understand how the value chain of Whole Foods reflects the internal and external realities faced by the company. Environmental Factors

Due to the increased awareness of threats like genetically modified foods, additives and preservatives, health and organic food gained popularity and show no sign of slowing down, increasing the attractiveness of the industry. For Whole Foods, who holds a strong position in market, this means potential for a bigger market share, putting itself in an even stronger and profitable position (Meador, Britton, Philips and Howery, 2012). However, Whole Foods will still be affected by changes in the demographic, economic segments of the external environment. As Whole Foods emphasizes on high quality standards, its products tend to command higher prices as compared to its competitors therefore the two market groups that present an opportunity for the growth of Whole Foods are the ageing baby boomers and urban singles (Harasta and Hoffman, 2007). Being more health-conscious, the baby boomers are the main driver and can afford to spend more on organic products that are perceived as healthier as their children have grown up and began their own family. Urban singles is another potential market for Whole Foods as with no family to provide for, they tend to pursue a higher standard of living thus are more willing to pay a premium prices. The country’s economy situation plays a part as if there is a recession, more people will turn to cheaper food alternatives and tend to avoid unnecessary spending (Lee and Linowes, 2009). This creates a problem for Whole Foods as organic products are seen as expensive and a form of personal indulgence, deterring cost-conscious consumers from shopping in Whole Foods.

Value Chain
As the world’s largest supermarket retailer of natural and organic products, Whole Foods has some values which create a competitive advantage against their rivals. Below is a diagram of the value chain analysis which will be used to explain support and primary activities that brought about Whole Foods’s success.

Developed by Michael Porter in 1985, the value chain is used to portray how customer value accumulates along the chain of activities that lead to an end product (Institute of Management Accountants, 1996). This acts as an internal process a company performs in the process of creating a product. The way each individual activity performs is a reflection of the organization’s history, strategy, approach to implementation of the strategy and the underlying economics of the activities themselves (Institute of Management Accountants, 1996). Activities directly involved in transforming inputs into outputs, delivery and after-sales support are known as primary activities while support activities assist in the success of the primary activities (Institute of Management Accountants, 1996). Whole Foods’s 3 main primary activities are inbound logistics, operations and services. With “Whole Foods, Whole People, Whole Planet” as its mission statement, inbound logistics, which is the receiving, storing and...
tracking img