It is a case analysis for “Marriott International “. I will attach the guidelines, and an example below on ” whole foods” as reference.the only section that needs to be completed is> The brief history of the company>Present situation- of the industry:analysis of the general environmental forces acting on the industry:Porters 5 forces model- Of the company: financial analysis: SWOT analysis:Analysis of core competenciesIt should be 6-7 pages long, cited work needs to be from authorized sites the sources in mla format. ( Page attached to help with references) please let me know if you need any
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Case Analysis – Whole Foods
Strategic Management (MGMT 4195)
M/W 2:00 p.m
4/29/2019
Madison Steimer, Kyle King, Avery Kenyan, Morgan Mayfield, Sam Johnson,
Jessica Moon
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Table of Contents
1. History of the company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2. Present situation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3. Strategists (TMT) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4. Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5. Description and analysis of present strategy . . . . . . . . . . . . . . . . . . . . . . . 12
6. Description and analysis of firm’s structure . . . . . . . . . . . . . . . . . . . . . . . .14
7. Culture/ ethical environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
8. Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
9. References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
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History of Whole Foods
In 1980, owners of Safer Way Natural Grocery Store, John Mackey & Renee Lawson
Hardy, joined with owners of Clarksville Natural Grocery, Craig Weller & Mark Skiles, to found
Whole Foods Market in Austin, Texas (Whole Foods Market, n.d. ). The two smaller shops had
the idea of joining as a team to form one of the first natural food supermarkets and changed the
way customers could shop for these specific products. Convenience, excellent customer service,
and a “can do” attitude allowed WFM to soar.
In 1985, WFM reveals the “Declaration of Interdependence” which restates and affirms
their loyal dedication to their customers, team members, investors, suppliers, the environment, as
well as, the local communities. This document further serves as a statement of their purpose and
aligns the business. Since then, the document has been updated four times and most recently in
2018 (Whole Foods Market, 2018).
WFM can attribute much of its success to the mergers and acquisitions of 10+ natural
food stores during the 1990’s. Then, in 1992, WFM goes public with a split-adjusted IPO price
of $1.06 per share (Whole Foods Market 2017). Almost a decade later in 2001, their Manhattan
store opens up and receives a lot of publicity and traction globally. This then leads to their
international expansion into Canada in 2002 and eventually across the United Kingdom in 2004.
Most recently, In 2017, Amazon acquires WFM for $13.5 billion and presents indicators that
changing their strategy overall so that more people can access the natural foods store is in the
near future.
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Present Situation
Whole Foods is a part of the Grocery Store Health food store industry. The main
competitors of Whole Foods are Sprouts Farmers Market, Kroger, Trader Joe’s, Publix and select
other grocery stores. With Whole Foods being bought out by Amazon, the Whole Foods market
opens up to a lot more than just the food store industry. Whole Foods is known for their strict
standards for food quality, so the industry is more of a strict part that does not include all of the
grocery stores.
General Environment
Whole Foods Market Analysis is based off of political factors, economic factors, social
factors, technological factors, ecological factors, and legal factors. Whole Foods is responsible
for addressing political and consumer safety factors. Environmental policies favor Whole Foods
Market because the company has sound environmental standards already. These standards meet
consumer safety policies. This company must ensure the safety of products coming from its
suppliers as one of its consumer safety policies as well.
Economic factors in this market include fluctuations of incomes and costs of
transportation, such as gas prices. With the economy being in the shape that it is, household
incomes are improving, so this makes the consumer have higher buying power. However, with
higher household incomes, comes higher demand from companies like Whole Foods, and this
could lead to shortage on supplies. Lastly, if transportation costs increase, then this could lead to
higher operating costs of the firm.
There are many social factors that a company like Whole Foods must address. For
example, the healthy lifestyle that Whole Foods supplies to. Whole Foods is known for their
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healthier options of products, so they must keep up with their image and only stock organic
products. It is said that people in urban areas are less likely to plant their own organic produce,
so they turn to Whole Foods. Whole Foods must keep up with this social factor to make sure that
they satisfy these customers with organic products.
Whole Foods, just like any company in this day and age, is under the influence of
technology. In this market, technology is used to advance food production and to keep track of
the inventory that a company has. Whole Foods must keep up to date with the technological
trends so that they do not fall behind their competitors, but they must also keep up to date to keep
a solid flow of supply chain within the company. Lastly, technology can help with the overall
operational efficiency at the company.
Some legal factors that Whole Foods may have to address include regulations by the US
Department of Agriculture that monitors and evaluate the food quality, production, and sales.
These regulations could hinder the company because it is a seller of produce and other food
products that could supply to Whole Foods. If Whole Foods does not follow these factors, then
the consequence could be higher costs of operations (Thompson 2018).
Porter’s 5-Forces Model
Whole Foods Porter’s 5-Forces Model are supplier power, buyer power, competitive
rivalry, threat of substitutes, and threat of new entrants. The power that suppliers hold in organic
produce influences the company’s decisions on what it can and cannot hold in stock. An example
of one of these major suppliers is United Natural Foods, Inc., and they can increase the price to
sell to Whole Foods. If UNFI increases their prices, the Whole Foods will have no choice but to
increase their prices to the consumer. Buyer power is different because consumers and other
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buyers can choose which companies to buy their products from. This threat could lead to a
decrease in revenues for Whole Foods.
The competition that Whole Foods has to deal with including substitute companies like
Walmart and Costco are very fierce. Also, there is an increase in companies that provide organic
and natural products. There are many substitutes that their competition could have an advantage
on Whole Foods. For example, Walmart and Costco offer a much cheaper price for their
products. Even though, they do not serve the same quality that Whole Foods serves, price may be
a bigger factor than quality to some consumers. Lastly, the threat of new entry into this market is
affecting Whole Foods. It is an easy market to enter, and there has been an increase in smaller
companies joining this market (Thompson 2018).
Financial Analysis
Amazon recently purchased Whole Foods for $13.5 billion in August of 2017, and it is
said that Amazon has big plans to change and mold Whole Foods. Whole Foods seems to be
making a change from its mostly urban healthy food store to a hybrid grocery store and
warehouse strategy for Amazon Prime. This transition of change that has taken place for Whole
Foods makes it seem that it will be a logistics hub and physical store for Amazon and what
Amazon intends on selling.
Amazon’s most recent earnings were a record profit of $2.88 billion. The potential for
Whole Foods is very large, for if Amazon Prime keeps becoming more popular and more
consumers become Prime members and Whole Foods shoppers, then the organic market will
continue to turn in to a go to store for grocery shoppers. Whole Foods has decreased their prices
while also increasing their spending on promotion. This goes along with many deals that
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Amazon Prime members get at any Whole Foods stores. Yahoo finance reported that 41% of
Whole Foods’ new customers were Prime members.
Whole Foods is trying to be the head company that leads the shift from grocery shopping
at brick and mortar stores to online grocery shopping. The Food Marketing Institute and Nielsen
both predict that online grocery shopping could be a $100 billion market in four years. Whole
Foods’ financial analysis will be based off of the e-commerce shopping more than the brick and
mortar sales, especially with the buyout from Amazon (Byington 2018).
SWOT Analysis
Strengths
The strengths for Whole Foods are that it carries a very strong brand image from its
customers. This allows Whole Foods to be a favorite from customers who are deciding where to
purchase groceries from, for customers prefer companies who have a strong positive brand
image. Production and quality are very high at Whole Foods, and this allows the company to
differentiate itself from other companies like Walmart and Costco. Whole Foods also has a great
internal organizational culture and a very motivated workforce. These intangible strengths are
very rare and hard to come by, so this is a very big strength for Whole Foods (Business Teacher).
Weaknesses
Whole Foods has a high dependence on the U.S. market. The majority of Whole Foods
branches are spread around America, and this makes Whole Foods vulnerable to America’s
economic changes. For example, if this economy were to get in another recession, and the
economy would struggle, then Whole Foods would also struggle. Whole Foods also has
relatively high prices. Although, their quality is far superior, their prices are still very high for
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the type of product they are selling. Lastly, Whole Foods has a limited network of suppliers, and
this affects its supply chain operations.
Opportunities
Whole Foods can take advantage of global expansion of retailers. This is an opportunity
that Whole Foods can go overseas and reduce its reliance on the U.S. market and economy.
Whole Foods also has an opportunity to expand the supply chain globally, and can incorporate
organic producers in its supply chain. This will allow for more and more brand recognition to
customers that prefer organic and naturally grown products.
Threats
The market that Whole Foods is in has high competition especially from juggernauts like
Walmart, Costco, and Kroger. The amount of substitutes that customers could choose over the
high priced, high quality products that Whole Foods offers is also high. The rise of GMO
products, or genetically modified organisms products, is also on the rise and a threat to the
company’s products. Lastly, global warming poses a threat, for it could reduce food production
significantly.
Whole Foods’ Core Competencies
Whole Foods is not like any other grocery store. The thing that separates Whole Foods
from the rest of the competition is its high quality, natural, and organic foods. These standards of
excellence that Whole Foods keeps is why they are as popular as they are. Another great core
competency that Whole Foods has is the fact that they contribute in the community and help out
within the environment. They support local businesses and are always doing some kind of work
within the community (WholeFoodsMarket).
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Strategists
Wholes Food Market Consist of 4 chief officers, 12 presidents, 8 global vice presidents,
and 3 executive vice presidents (Leadership Team. 2019, March 28). John Mackey as the
Co-founder and CEO of Whole Foods Market, has led the company to a successful $15.7 billion
Fortune 500 company, and being listed as a Top 100 best company to work for 20 years in a row
(John Mackey – Biography). Most of the Operating officers are new since 2007 after being
acquired by Amazon. Jason Buechel the COO was one of those new officers and specializes in
Store Operations, Point of Sale, Mobility, Workforce Management, Cloud Computing, Tender
Authorization and Digital Signage (Leadership Team. 2019, March 28). Sonya Gafsi Oblisk is
the Chief Marketing Officer and was initially hired on in 2006 as a Global VP of Marketing
(Leadership Team. 2019, March 28). Her experiences with Walmart as Sam’s Clubs Marketing
VP and a Global Marketing Manager at Coca Cola have her well suited for this position with
Whole Foods. Keith Manbeck has experience at Kohls with multiple senior VP roles and as the
CFO at Nike (Leadership Team. 2019, March 28). With all these experiences at their top
positions Whole Foods new Strategist seem to have the experience and background suited for
this position.
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Board of directors
Whole foods has nearly a whole new Board of Directors since being acquired by Amazon
in 2017. Across the board these directors have experiences in other high marketable companies
like Footlocker, Best Buy, and Panera Bread. Some of the directors have over 30 years of
experience in their expertise of marketing, operations, acquisitions, and C-level management
jobs (Christina Cheddar Berk,Sarah Whitten. 2017, May 10). Gabrielle Sulzberger who was the
only previous chairman still left on the Board of Directors, is the Chair of the Board (Whole
Food Market Services. 2017, May 10). Also she is the only person on the Board of Directors that
is considered an insider and the rest are all outsiders. The Management changes from the
previous board members came from investors who are pushing Whole Foods to sell the company
due to gradually diminishing profits and sinking stocks.
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Description and analysis of present strategy
Since Whole Foods was acquired by Amazon in 2017, Whole Foods has become one of
Amazon’s many strategic business units. Amazon has several revenue streams – retail products,
retail third party sellers, Amazon Web Services (AWS), subscriptions (Amazon Prime), and
other (gift cards). Almost 70% of its revenue comes from retail products which is why Amazon’s
corporate-level strategy is related constrained. All of their revenue streams are connected
through Amazon’s online platform as well as through distribution centers and the sharing of
internal knowledge, but each stream is its own entity. Amazon gets their retail products by
purchasing them from suppliers and then reselling them on Amazon.com (​Amazon Retail vs.
Amazon Marketplace: What’s the difference, 2017, September 27)​. The retail products ranges
from household items to electronics to clothing to healthcare and more. Furthermore, Amazon
Web Services is not related to third party retailers or Amazon Prime except for that they are all
based online. So where does Whole Foods come in? Whole Foods offers a small percentage of
revenue towards Amazon’s total profit , but it can’t compete with Amazon’s online revenue
streams since Amazon’s reach is worldwide whereas Whole Foods is just a brick and mortar
store in limited areas (​Breaking Down How Amazon Makes Money, 2017, December 19)​.
According to the missions statement of Whole Foods, they aspire to be a food retailer that
offers products that are healthy for its customers while also using the company resources to
contribute to the planet. Their overall mission is focused on sustainability, and they make sure
that all their stores align with that mission (Our Mission & Values, 2018, June 1).
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Whole Foods uses a focused differentiation business-level strategy. They are different
than other grocery retailers because they have a section of their stores dedicated to providing
fresh food and a dining area for their customers. Whole Foods wants to provide a fun experience
for shoppers. The company also stands out because they have a mission for sustainability. They
do their best to offer organic and all-natural products that other grocery stores don’t offer. Since
their products are organic, they must charge higher prices to make a profit (DiLallo, M.,2014,
October 21). In addition to offering a unique shopping experience and organic foods to
customers, Whole Foods now offers discounts for Amazon Prime members as well as free
delivery. They even sell Amazon products in store like the Echo, so not only can customers shop
for groceries but they can also shop Amazon products too. It truly is a different and unique
grocery experience (Hirsch, L., 2018, July 25). With the higher prices and differentiation that
makes Whole Foods stand out, they are mostly located in affluent areas, usually around Atlanta
and its bordering cities (if you were to look on Google maps). This is what makes their
business-level strategy “focused”.
Whole Foods does not have a large international presence. Outside of the United States,
they are located in Canada and the United Kingdom (Whole Foods Market’s number of stores
worldwide, 2017​). ​These countries are similar to the United States in that they are in the top ten
for countries with highest GDP and standard of living (​Bajpai, P., 2018, August 16)​. In addition,
the international stores are located in city areas. For example, the stores in Canada are located in
Vancouver and Toronto (Store List – Canada, 2016, July 22), and the stores in the United
Kingdom are in London (Whole Foods Market, 2018). All the stores are located in major cities
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which means the international strategy of Whole Foods is is the same as their domestic strategy place stores in highly affluent cities.
Description and analysis of firm’s structure
At the core of Whole Foods’ structure lies their four-tier hierarchy which consists of
global headquarters, regional offices which act as control centers, distribution facilities, and
finally the stores themselves. This hierarchy allows there to be a distinct chain of command that
flows from the C-suite executives all the way down to store managers. Whole Foods currently
operates with 12 regions, and thus 12 regional offices, which each have the ability to shift
product offerings and other business activities that allow the company to be as flexible as
possible in order to make sure they are properly serving each region (Smithson, 2018, September
8). Within each store there are teams that are constantly engaging in sales competitions between
product lines. There is also a way to rate the teams in terms of their customer service aptitude
which factors into the competition. This is done as a way to motivate employees to better serve
customers needs and ultimately ensure that each store has the desired profitability.
With Whole Foods having regional offices that act as their own independent
headquarters, the company is allowed greater flexibility than most. While promotional
campaigns and certain sales goals are set from the global headquarters for each region, the
regional managers have far more control over what takes place in stores under their supervision
than companies that attempt to homogenize their brick and mortar locations. This does create a
bit of a disconnect in terms of product lines and brands because what is found at one Whole
Foods location may not be carried at a location operating within a different region. An advantage
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of allowing the regions to operate more independently is that is can better tailor the product
offerings to the tastes and trends seen in that particular area.
In June 2017, Whole Foods was purchased by Amazon for just under $14 billion, and this
acquisition has allowed the company to have access to all the distribution networks of Amazon
while keeping their brand name. Becoming a subsidiary has not changed their corporate
structure, and in fact it could be argued that it has improved the efficiency of regional managers
when they want to switch up product offerings.
Culture/ ethical environment
In a society where thinking green is the new social responsibility and food labels are the
new food Bible buyers crave to stay health aware. It’s only fitting that Whole Foods …
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