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Business Analysis: Whole Foods Market
by Rosie on June 1, 2008
Description: A business analysis for the company Whole Foods Market done from a
strategic management point of view. Written for as term paper for the course Business
Strategy & Policy.
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1. Which of the general environmental segments are most relevant to Whole Foods
Market? Why?
Whole Foods Market is basically a food retailer that centers in selling organic natural
products. Their food base ranges from seafood to baked goods to even pet food. It is single
handedly the largest and most popular organic food retailer in the business. Whole Foods
has lead the way for all other organic and natural food retailers and for years has been able
to conquer over their competition. With the success of this company it is obvious that they
have been successful in gathering the needed information and has been able to create a
success strategy. Part of gathering the information is also to understand the general
environment segments. The general environmental segments are divided into six
dimensions that essential “…influence an industry and the firms within it" (Hitt). The six
segments in the general environment are as follows: demographic, global, technological,
economic, political, and sociocultural. Out of these six dimensions there are only three that
are directly relevant to Whole Foods Market. These three out of six are the segments
relevant to Whole Foods Market: political, sociocultural, and demographic dimensions.
The demographic segment is “…concerned with a population’s size, age structure,
geographic distribution, ethnic mix, and income distribution" (Hitt). Because of the
incredible population changes, there are modifications being made by Whole Foods in
order to provide different ethnic oriented organic food. Whole Foods Market, an organic
food distributor, is now targeting young children as their new base. In fact Whole Foods
Market has gone as far as to develop “…an organic line intended just for children, with
products such as peanut butter and applesauce" (Sandberg). The important of getting
children healthy is now a major issue and that certainly gives Whole Foods an advantage.
As the world’s largest foods retailer they have to be on top of this new raised awareness
and are obviously looked for to provide healthy food. This in turn ties into the
sociocultural segment of general environment table. The sociocultural segment is “…
concerned with a society’s attitudes and cultural values" (Hitt). Whole Foods is interrelated
with the consumers’ feelings on organic food and so understanding their views helps them
create strategies to sway them. Organic food for children has taken a sharp interest in the
U.S. and this is just another area where Whole Foods can take advantage. Back last year
when the pet food scandal hit the fan and family pets started dying, Whole Foods has
organic dog food to showcase. Basically the sociocultural segment is the significant trends
that the consumer is looking for. The sociocultural segment is important and relevant to
Whole Foods Market because it relates to concern for the environment. Growing concerns
to ‘go green’ have helped in the growing success of Whole Foods. People are now flocking
to get healthy and to ways to help cleanse the environment, so how does Whole Foods deal
with that? They support what their consumers do. And then there is the political segment,
which is the “…arena in which organizations and interest groups compete for attention,
resources, and a voice in overseeing the body of laws and regulations guiding the
interactions among nations" (Hitt). This segment is very important to Whole Foods, as well
as any other organic food retailer. It is important because all products have to pass FDA
approval, if not then there goes waste of time and money. Whole Foods Market has been
able to understand this segment, and by doing so has created their own policies when
processing foods. This action not only adds creditability, but also assures that government
regulations will be followed thoroughly.
2. Define and describe the industry environment taking into consideration the dominant
characteristics such as market size, growth rate, scope of rivalry, product/service
differentiation.
The organic and natural food industry is a relatively large and popular one that continues
to grow with every passing day. In the organic industry the “…range of competitors
include chain and independent supermarkets; mass merchandisers and super centers;
convenience stores; wholesale clubs; restaurants and fast food chains; natural food stores;
local farmers’ markets, and internet grocers" (Lytel). Global growth of organic agriculture
has gained much popularity, which continues to accumulate attention. The reason for that
is simple, it is because this industry…
“…can be a profitable, sustainable business for those producers interested in going through
the certification process necessary to enter this market. Organics have grown at a rate of
nearly 20 percent per year for the last seven years, and industry experts are forecasting
continued growth. One study, undertaken by the Organic Trade Association, surveyed
industry leaders about the trends in organics and where they saw the next 20 years taking
them. They forecasted that overall; the everyday use of organic products of all kinds will
be both accepted and routine by the year 2025″ (“Organic Food Trends").
The continuation of market size and growth is expected to continue strong and currently in
the U.S. it is a “…$32 billion industry and a subset of a $450 billion conventional food
industry" (Southworth). Without question, the organic food industry is experiencing hasty
consolidation but it still faces immense competition in these upcoming years from
