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Analysis of Whole Foods Market’s feedback loops Case Study

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The industry in which Whole Foods Market operates is very competitive. It is a fact that this firm has managed this competition very well by creating a niche in the market and developing special products for this niche. However, it is important for the management to realize that success is a process that requires an understanding of the prevailing conditions and making relevant changes whenever this is necessary.

The environment has been very dynamic due to various changes brought about by various forces. The market is heavily affected by political, economic, social and technological forces which continue to change quite often. According to Kratschmer (2011), technology has changed various factors in the production process, their transportation and marketing strategies.

There has also been a change in the political leadership in this country. The changing socioeconomic factors in the United States also have direct impact on the operations of this firm. For the firm to be successful, it must find a way through which it can respond to these forces in a way that would help it become stronger than its competitors in the market.

This organization must be able to learn new better ways and identify opportunities in the market by having a system that would relay a feedback about various forces in the market. This paper involves analyzing Whole Foods Market’s feedback loops and organizational learning opportunities. This research study will focus on the reinforcing loop and balancing loop that play off within this firm to enhance its growth.

Reinforcing Loop

According to Spulber (2007), reinforcing loop mostly take place without the knowledge of the relevant stakeholders. This scholar says that there are some effects that have a compounding impact when they are allowed to take place. Reinforcing loop can have a positive or negative impact on a firm depending on its nature.

This scholar says that this effect may start mildly that the management may not realize. It may come to their knowledge when it is too late or when the effect has created massive impact. At Whole Foods Market, this has been witnessed. The growth of market share of this firm may be considered as a reinforcing loop. Whole Foods Market was founded in 1980 by John Mackey.

When he started this firm, Mackey did not have a lot of resources to fight the giant firms that had already developed in the market by that time. However, this entrepreneur knew what the market wanted and was determined to offer exactly that. According to Morecroft (2007), it is always more difficult to retain customers than it is to make them have their first purchase.

This is because there are cases where a customer would be left with no choice but to make a purchase at the store because of limited choices. Other customers would also be interested in making their first purchase on the basis of their curiosity. However, retaining a customer requires a deep understanding of the market, and the ability of the concerned firm to convince the market that what it offers is the best.

The growth of the market share can be attributed to the dedication that the management and employees of this firm had towards satisfying their customers. It was mentioned that a reinforcing loop has a compounding effect. It actually works in the same manner as interest and principal. As the rate of interest increases, so will the principal. The increased interest will be added to the principal who will in turn increase the interest. If this circle is not put to an end, the principal will massively increase.

This is the same thing that has been happening with the market share of this firm. At first, Whole Foods Market did not have a solid customer base that it could consider loyal. However, the management did not focus on growing its market share.

The management and all the employees focused on offering value to the customers whenever they visited their outlet. The management was keen to understand market needs and offer products which meet their needs. As they did this, a virtuous cycle was being created.

A customer who got satisfied with the service of the firm would become a loyal customer of Whole Foods Market. Their loyalty would not stop with making regular purchase at this store. The customers would invite other customers to come and share the thrilling experience at this firm. One of the factors that attracted customers to this firm was their conviction towards delivering products that are healthy to consumers and their insistence on protecting the health of their patients.

One customer would invite another, the invited customer would invite another and the chain would continue. Although the management of this firm used advertising to market their brand and product offering in the market, one of the main factors that propelled this firm towards its current success was the evangelism that its customers involved in after making a purchase from its stores.

This reinforcing loop effect has also enabled this firm expand rapidly in the European market. This is a confirmation to ABC Company that Whole Foods Market is a firm that is destined for more success in future.

Balancing Loop

According to Dettmer (2007), balancing loop is always very important towards ensuring that a firm grows in the market. In an organization, growth is only common when the management can set a desired goal that should be achieved within a particular time. Setting a new stated- also referred to as the desired state- involves a number of activities. It always starts by understanding the current state of the organization. It is only possible to set a desired state when the current state is known.

When this is done, it would then need the concerned authority to determine the desired state. This would mean that the management would create a gap between the current state and the desired state. When this is done, then there will be the movement from the current state to the desired state in a bid to eliminate the gap created. Several factors have happened within this organization that can trace their development through balancing loop.

However, one of the striking factors has been goal setting and the behavior that always accompanies this. There has been a massive controversy over the health effects of genetically modified foods. A section of the market believes that genetically modified foods are very safe for consumption, while the other section believes that such foods are very harmful in the long run.

The management of Whole Foods Market has been concerned with this issue. In 2010, the management of this firm started a research into this issue with an aim of coming up with a finding that would help determine the right path that this firm should take. The report was finally compiled on March 2013. In this report, the team tasked with this function first defined the current state of this firm.

The team realized that there are some states where Whole Foods Market was stocking genetically modified foods while in others it did not. It all depended on the laws of that particular state and the general perception of the public towards these foods. The next step was to determine the desired state.

The team realized that the desired state was not to eliminate the genetically modified foods from their stores, but to label them as a way of alerting the customers that what they are buying is genetically modified.

The management realized that for this to be achieved, there had to be a change of attitude of employees towards genetically modified foods. Originally, the firm had created a culture where people within this firm believed that genetically modified food was not good.

This attitude had to change in order to achieve a change of behavior of the employees towards this type of food. To achieve this, the management launched an internal awareness campaign to help employees change their behavior towards genetically modified foods.

The desired state was to change the behavior of the employees towards genetically modified foods in order to convince them that these foods could be sold to customers who considered them good for consumption. The only responsibility of this firm would be to inform its customers that they were genetically modified. This change of attitude of the employees has helped this firm achieve its goals in the market.

References

Dettmer, H. (2007). The logical thinking process: A systems approach to complex problem solving. Milwaukee: ASQ Quality Press.

Kratschmer, P. (2011). Organizational Culture is Highly Resistant to Change. New York: GRIN Verlag.

Morecroft, J. (2007). Strategic modeling and business dynamics: A feedback systems approach. Chichester: Wiley & Sons.

Spulber, D. (2007). Global Competitive Strategy, Cambridge: Cambridge University Press.

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