Case Analysis: Case #1, Whole Foods Market
In the identification section, the major issues and strategies of Whole Foods Market through the year 2007 will be identified. I will give a brief overview of the company’s current situation, their strategies, and some of the key issues that are being dealt with by management.
Whole Foods Market is the world’s largest chain of natural and organic food grocery stores. The company was formed in 1980 by John Mackey. They currently have 276 locations in the United States, Great Britian, and Canada. The company has seen major growth in recent years and is striving to become much larger. The company’s motto is “Whole Foods, Whole People, Whole Planet.” They would like for individuals to start living a healthier lifestyle to achieve a longer, more pleasurable life. Whole Foods Market’s main goal is to become not only the best known retailer of natural and organic food, but also to become the best food retailer. Their actions have been to expand the company as much as possible. The first issue discussed will be Whole Foods Market’s expansion strategy. To achieve their goal of world domination, the company has taken an aggressive expansion strategy to kill the competition through acquisitions. The second issue is the management style that Whole Foods Market has taken to implement their stores into various markets. They have taken a strategy of decentralizing the company’s management decisions based on what is best for each location by making decisions based on the culture and surrounding of the environment in which the store is located. The final issue that will be discussed is how the company is striving to be known as the renowned place for superior quality food. They are trying to expand consumer’s knowledge of natural and organic food to increase the market share that it has compared to other retail food sales. Consumption of natural and organic food is on the rise. Many traditional supermarkets are starting to carry organic food. Production of organic food is rapidly growing as well. As organic food is becoming more readily available to consumers, the number of organic sales is growing with it. Analysis and Evaluation
The analysis and evaluation section will analyze the key strategies and issues that were discussed above and determine whether they are producing the desired outcomes. Strategy for Expansion
The first issue that will be addressed is the strategy for Whole Foods Market to expand as quickly as possible. As seen on Exhibit 5 titled “Number of Stores in the Whole Foods Market Chain, 1991-2007, and Selected Store Operating Statistics, 2000-2007”, Whole Foods Market had only 10 stores in 1991. By year 2000, Whole Foods Market had 117 locations and in the year 2007 they had 276 locations. The drastic growth in 2007 was largely due to the 74 stores opened because of the Wild Oats acquisition. Total square footage of all store locations tripled from 3,180,207 to 9,312,107 from the years 2000 to 2007. Whole Foods Market has the strategy to keep store sizes between 45,000 and 70,000 square feet. Whole Foods Market has grown into the largest natural and organic food retailer in the World. Wholes Foods Market rapid expansion strategy seems to be comparable to Wal-Mart’s. While Wal-Mart has been able to become the largest supermarket in the world, they have also had a lot of bad publicity for some of their expansion tactics. They have become known as cutthroat, and have put a lot of small grocers out of business. Whole Foods Market is becoming the natural and organic version of Wal-Mart. However, regardless of the setbacks and accusations about their ethics, Whole Foods’ annual sales of $3.1 billion in 2001 have soared to $6.6 billion in 2007. As shown in exhibit 9 “Whole Foods Market, Statement of Operations, Fiscal Years 2003-2007 ($ in thousands)”, Whole Foods Pre-opening and relocation costs has increased each year since 2003. The...
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