INSTRUCTOR: DR DEANE PHAM
GROUP 6 – FINANCE 56A
NGUYỄN MỸ LINH 11142357
PHÙNG PHƯƠNG MAI
PHAN NGỌC LINH
NGUYỄN MỸ LINH 11142362
NGÔ ĐĂNG HUY
NGÔ QUÝ TRUNG KIÊN
ĐỖ ĐỨC CHUNG
BÙI DUY HƯNG
ĐÀO QUỐC ANH
VŨ MINH NHẬT
Vision, Core values
and Strategy in 2014
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EXECUTIVE SUMMARY
I. Overview.
Whole Foods Market was founded in Austin, Texas by the current co-Ceo _Jonh Mackey.
It is a drug and food retailer that presents a huge selection of organic and natural products. The
company operates in 379 stores that are located in 41 states and the District of Columbia, 7 stores
Great Britain, and 8 in Canada. The case analyzes the company’s mission statement, the core
values, the driving forces (customers, suppliers, competitors, …), and business approaches that
explains a company’s strategy. It also gives a detail view how the organizational culture,
differentiation strategy, and value chain of Whole Foods affects its competitive advantage, value
proposition, gain performance target. The consequences of this study describes that Whole Foods
Market must apply suitable strategies to reach attractive profits while sustaining a competitive
advantage.
The slight problems are that Whole Foods Market may have included employee retention,
food spoilage, and John Mackey’s behavior. Supermarket chain’s ability to copy the Whole
Foods`s pricing strategy may decrease sales by price-sensitive customers and may become a
problem in the future. Furthermore, the main problem that Whole Foods faces is high prices for
their products and their ability to expand operations globally. To emphasize, the evident causes
the problems which involve the supplier’s costs and Whole Foods primary trust on U.S.
suppliers. Furthermore, an assumption that is made in the case was Whole Foods faces inventory
spoilage because of perishable products and the company’s sales are significantly influence by
price sensitive consumers. Those assumptions were made during an analysis and evaluation of
the competitive power of the company’s resources to develop recommendations and available
options that Whole Foods could apply.
Whole Foods Market must apply a strategy that allows it to become a grocery chain in all
over the world that offers high quality organic and natural products while sustaining a
competitive advantage.
II. Current Situation and Recommendations
During its operation period since 1980, Whole Foods has sustained its broad
differentiation strategy and it seems to doing quite well until now.
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To be specific, growth, store location, product line, pricing, marketing and service and
welfare for employees strategies of Whole Foods are clarified clearly and achieve good results.
The statistics and evidence have been provided in detail. Whole Foods’ strategy can be a winning
strategy as it meets the requirements of “The Fit Test” in which the company must be
harmonized with the industry and competitive conditions as well as the conditions from business
environment. The company’s vision to “become an international brand synonymous with
carrying the highest-quality natural and organic foods available and being the best food retailer
in every community in which a Whole Foods store was located” and eight core values also are
considered as achieved goals and real objectives which bring about the value proposition for
Whole Foods. Moreover, Whole Foods’s financial ratios tend to have a growing trend from sales,
dividend per share to CAGR. Whole Foods totally has a competitive advantage over its
competitors in terms of stores, product line or global locations. Furthermore, the strategy goes
along with the capabilities, value chain system and objectives of the company. Rivals like The
Fresh Market Sprouts or Farmers Market cannot beat up Whole Foods on any aspects.
Whole Foods has crafted and executed quite well its strategy. However, it cannot deny
the fact that its broad differentiation strategy turns out to be a niche one as the overprice problem
of the company has been mentioned over decades through familiar term “Whole Paycheck”.
Besides, the emergence into the organic food of Walmart has rung a bell to Whole Foods in
terms of price problem which urges the company to change some of its strategy to sustain the
advantage competition. The suggested movements Whole Foods need to do is followed by these
ones:
• Sell products for less than 20% above its wholesale price.
• Go public that the price is equal to similar products from other firms with private-label
products
• Open more stores with 365 Everyday Value Products on large scale with deeper cutdown
on price
• Open new smaller stores in smaller geographic areas to specify the better scale to rural
sites instead of just focusing on modern and high-class ones
• Update older stores on not only the change of decorations but also added venues or full
renovation
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• Generate a new product line to focus on specialized group of people. For example, it can
be a type of food with highly energy provided for all day long which short-on-time
customers will prefer.
• Develop big farm at big scale with the good diversification to reduce the costs from
suppliers
• Concentrate on online sales through mobile applications and online payment
• Offer some reward program for loyal customers who buy goods with high quantity or
have become membership for a long time (over 5 years)
III. CONCLUSION
Whole Foods Market’s creative business strategy has reached the success over 30 years.
However, once the organic food industry can be developed stronger and stronger, Whole Foods
should find ways to maintain its leading position in the customers’ mind. In other words, the
company should sustain its competitive advantage and broaden its target audience to eliminate
the bad image of “Whole Foods, Whole Paycheck” while still maintaining its reputation of
offering the highest quality products and shopping experience.
CASE ANALYSIS AND ANSWERING QUESTIONS
Question 1
The chief elements of the strategy that Whole Foods is pursuing includes:
– Growth Strategy
Since 1991, Whole Foods’ growth strategy has based on a combination of opening new
stores and acquiring stores from competitors, in which the proposition of acquired stores
is quite large. Since going public in 1991, Whole Foods has acquired nearly 120 stores.
The Exhibit 3 (C-21) shows that this proposition is more than 30% of the total stores it
owns. It can be seen that the acquiring existing stores strategy has always been highly
focused on by Whole Foods even in the recession period.
• In 2007, the acquisition of Wild Oats Markets – Whole Foods’ biggest competitors
marked a big success of Whole Foods and proved the development of this company.
Wild Oats had already owned 109 stores with the average size of 24,000 square feet.
• Whole Foods had strategy to open bigger stores that sell 20,000 to 50,000 items than
the average size of retailers in natural and organic foods industry, in metropolitan
