WHole Foods Case Study

1. What are the chief elements of the strategy that Whole Foods Market is pursuing? The chief elements of the strategy that Whole Foods Market is pursing is providing the finest quality of products in the market that is free from preservatives and other genetically engineered products that reduce the quality of being organic. This means that it is has the least amounts of processed prods and are naturally preserved. Whole Foods Market strives to eventually dominate the local market and eventually the international market. They promote the vision of Whole Food, Whole People, Whole Planet. 2. Is the strategy well matched to recent developments and conditions in the natural and organic foods segment of the food retailing industry? Yes, their strategy is definitely well matched as Whole Foods focuses on supplying consumers with the healthiest products available. The products are without pesticides, hormones, and other genetically engineered products that could affect health, community, and agriculture. The quality products at Whole Foods have a flavorful taste and are preferred by the demands of health conscious consumers and the current trends of a healthy lifestyle.

3. Do you think John Mackey has a good strategic vision for Whole Foods? Why or why not? What do you like/dislike about the company’s motto “Whole Foods, Whole People, Whole Planet?” Do the motto and the principles underlying it (Exhibit 1) really matter at this company or are they just nice words and cosmetic window dressing? Explain. Yes, John Mackey has a good strategic vision for Whole Foods because it is realistic and above the normal expectations of what a vision should be. As the healthy eating patterns change in the population as well as the demands, Whole Foods strives to supply that demand by offering products that will fit the needs of living a better life style. In doing so, the chemical and hormone free products also help for a more agriculturally sustainable practice. Personally, I like the motto of “Whole Foods, Whole People, Whole Planet”. I like the play on words involving “Whole” in each important factor of their core values. I believe that the principles underlying these visions really matter and that Whole foods does in fact live up to them. The company promotes for fine and high quality products that are organic and free from any genetically altering factors. The company promotes for a high quality of service and a competent team of people representing them. The

company also strives to see a more sustainable agriculture from the products they supply. They believe in being responsible to the community and the planet. 4. Do Whole Foods Market’s core values as presented in case Exhibit 3 really matter? Are they “real” or just cosmetic window dressing? What evidence can you cite to support your answer? Have Whole Foods’ core values contributed to the company’s success? Why or why not? Yes, I agree that the values as presented in case Exhibit 3 really matter to Whole Foods Market. They aim for high quality products and supply thousands of organic food and gourmet products. They have a high regard for quality and standards in what is offered to their customers. Whole Foods focus on the quality of their products selling organic, preservative free products, wild or aquaculture fish and products that are environmentally friendly. Using this information I believe that they are “real” towards their core values which is why their company has been successful in the market. 5. How well is Whole Foods Market performing from a financial perspective? Do some number-crunching using the data in case Exhibits 9 and 10 to support your answer. Use the financial ratios presented in Table 4.1 of Chapter 4 (pages 104-105) as a basis for doing your assessment of the company’s financial statements and financial condition. Finally viewing Exhibits 9 and 10 it looks as if from 2001 – 2007 there is a gradual increase of their net income. The gross profits of the company continue to increase as they acquire and dominate the market with more locations. We can study from these numbers and support the huge increase of Whole Foods Market as they continue to grow. As Whole Foods Market continues to grow, their long-term debts increase significantly from the acquisitions of Wild Oats Markets. 6. How well is Whole Foods Market performing from a strategic perspective? Does Whole Foods enjoy a competitive advantage over its rivals? Does the company have a winning strategy? Whole Foods Market is preforming well from a strategic prospective as they are increasing their locations and markets. They continue to provide healthy high quality foods and brands that are good for consumers, the environment, and their own growth in the industry. Whole Foods Market has been able to acquire the second largest competitor in their industry, Wild Oats Market, which eliminates the competition. They have a competitive advantage to other supermarkets because of their high and fine products that they carry. Whole Foods also has the advantage of a well-known name that’s associated with a higher quality for supermarket

products at more competitive prices. 7. Do you approve of the decision to acquire Wild Oats Market? What pros and cons do you see? I believe that the acquisition of Wild Oats Market was a good approach to dominating the market. In weighing the pros and cons, I think that the pros have outweighed the cons that have resulted in being more beneficial to Whole Foods. The pros of acquiring Wild Oats Market are that it eliminates the competition and allows for more locations in places where Whole Foods was not available. This is a huge possibility for growth on Whole Foods Vision of expanding and being dominant in the market. The cons associated with the acquisition are that it accounts for the rather large long-term debt that Whole Foods picked up. Another terrible thing to account for is the unpredicted recession. As consumers stop shopping and spending more often, Whole Foods Market as with every other business took a devastating blow to the business. Lastly, another acquisition con is the conversion of the clientele of Wild Oats to Whole Foods Market. As with any loyalty, there is hostility when one loses what they love. This will take time but if Whole Foods can win their loyalty by offering what they need they will be able to better flourish.

8. Were John Mackey’s Internet postings unethical or in any way inappropriate? What actions, if any, do you disapprove of? What actions, if any, should the company’s board of directors take with regard to his Internet posting and blogs? Yes, I believe that Mackey’s internet postings were very unethical and inappropriate as there are expectations from the public for every business including CEO’s. I believe that he stepped over the line when he could not keep certain business dealings confidential. It is important that a CEO is a good businessman and it seems as if he were controlled by his emotions rather than keeping the good business standards. Mackey’s bad behavior gives a negative image to the stakeholders that are involved. These include the business itself, the investors, the public, and many more. I would suggest that the directors revoke his title or force a public apology to the FTC and all the stakeholders so that they can have a positive image again. 9. What recommendations would you make to John Mackey regarding the actions that Whole Foods’ management needs to take to get through the recession that began in earnest in 2008? Should the company severely cut back on opening so many new stores? Should the company vigorously contest the reopening of the FTC’s challenge to the Wild Oats acquisition?

Are any other strategy changes needed? My recommendations to Makey for Whole Foods’ management are to create a new strategy in reaching out to new and current clientele given the new economic situations. It is important that every business is able to adjust and make changes to unpredictable factors. I think that the company should cut back on opening until the economy gets better and should not focus on any acquisitions. They should be focusing on keeping the businesses that they and wait till there is a rise in this economic downfall.

References: Federal Trade Commission v. Whole Foods Market, Inc., ET AL. (2008) http://www.ftc.gov/os/caselist/0710114/080729wholefoodsopinion.pdf MINTON, B.L. (2008). The Whole Story About Whole Foods Market. Retrieved from http://www.natural news.com/02281_food_foods_whole.html Thompson, A.A. (2010). Crafting and Executing Strategy. New York, NY: McGraw-Hill/Irwin.