1. What are the chief elements of the strategy that Whole Foods Market is pursuing? Whole Foods uses the competitive advantage of having 100% organic products and the highest quality of natural products. Whole Foods uses growth strategy of expanding a combination of opening its own new stores and also acquiring small, owner-managed chains located in desirable markets. Another use of strategy is their location of stores. The company had a set number of stores each year. Their product line strategy guaranteed 100% satisfaction on all items purchased and too live up to their core values. For pricing, Whole Foods products and offerings were “value-priced”. The prices are normally higher than conventional supermarkets.
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2. Is Whole Foods’ strategy well matched to market conditions in the food retailing industry (one of the criteria for a winning strategy discussed in Chapter 1)? Whole Foods does not pass the fit test in the food retailing industry because other supermarkets dominate the industry and have the potential to have more success in a down economy. Whole Foods does have a sustainable competitive advantage in the industry that is becoming a preferred way of life. This company has the option of producing a superior performance, but it may not be for more than a brief period. As far as the performance test, Whole Foods does have financial strength and maintains competitive strength. Their strategy does produce good company performance.
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 mission/vision ―Whole Foods, Whole People, Whole Planet‖ that is set forth in case Exhibit 1? Do the mission/vision and the core values underlying it (case Exhibit 3) really matter at this company or are they just nice words and cosmetic window dressing? Explain. John Mackey has a great strategic vision for Whole Foods. Personally, I value everything this company is about. The fact that he went to the extreme as to recruit people who are hard workers that have a passion and drive for success. Whole Foods supports the planet and are involved in the local communities. This shows that his strategy is not all about profitability, but for the best for mankind. Whole Foods’ core values are very important and are expressed in the company’s operations. John Mackey has three core values ranked before growth and profitability. This shows the importance of the products, customers, and employees in their strategy.
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?
The core values presented in Exhibit 3 do really matter and are always implemented in the company. It is stated in the Whole Foods Market’s Seven Core Values that “these are not values to change from time to time…they are the underpinning of our company culture”. The company operates, makes decisions, and succeeds based on these values. The company would not be different from other supermarkets if these seven values were any different and if they were not abided by. The values are what give this company a competitive advantage, which leads to success in the company.
5. Based on the financial statement data in case Exhibits 9, 10, and 11, how well is Whole Foods Market performing? Use the financial ratio information in Table 4.1 of Chapter 4 (pages 98-99) to assist you in calculating a revealing set of` financial ratios and interpreting them.
Whole Foods seems to be doing well based on the financial data. The gross profit margin from fiscal year 2005 to fiscal year 2009 is around 35%. This is a good percentage for Whole Foods. It has not changed much over the years, but they are still about to cover some of the operating expenses with revenue. The debt to asset ratio is 45%. This could ensue that there is some risk involved in Whole Foods when debt is used to finance operations. Whole Foods tended to be more successful in 2006 and 2007, but since last year, Whole Foods has increased net income. Whole Foods has steadily increased sales each year. This data shows that Whole Foods is performing well.
6. How well is Whole Foods Market performing from a strategic perspective? Does Whole Foods enjoy a competitive advantage over its 3 chief rivals—Wild Oats, Fresh Market and Trader Joe’s? Does the company have a winning strategy? Whole Foods Market is competing well from a strategic perspective. All of the 3 companies have their own competitive advantages, but Whole Foods has surpassed the advantage. This company has a winning strategy over the rival companies with their core values and experience.
7. What recommendations would you make to John Mackey regarding the actions that Whole Foods’ management needs to take to sustain the company’s growth and financial performance?
I think that the company needs to reinforce the values and ensure the public that the values are still prevalent and are the ground basis for the company. For financial performance, I think that Whole Foods could have a price budget plan for its customers. Organic products are becoming more and more important in the lives of this generation, but the Whole Foods prices do not always fit the budget of its prospective customers. Whole Foods does have the highest quality product, but needs to make sure they are only marking up prices at fair and reasonable prices for the company to be profitable.