Introduction
The purpose of this discussion is to analyze the Whole Foods Case in 2008, with an aim of describing the company’s generic strategy for growth, its expansion strategy and how it pursued its ambitions in food industry. In addition, the discussion will provide an in-depth SWOT analysis for the company’s strategy.
Company’s background
Founded as a local supermarket in Austin, Texas, Whole Foods Market has grown over the last 30 years to be the world’s largest retail chain dealing with organic and natural foods (Kesmodel and Eig 12). In fact, the once small chain stores have become large supermarkets, providing a variety of natural and organic foods to the public.
The company is credited for offering high quality, flavoured and naturally preserved foodstuffs, most of which are not processed. The aim of the company is to offer high quality organic and natural foods that satisfy and delight the public, while at the same time creating profits, growth and caring for both the environment and the community.
Generic strategy at Whole Foods Market
In its core value, Whole Foods Market cared for its customers, the environment, the staff and its foods. The slogan “whole foods, whole people and whole plant” was coined to imply the caring aspect of the company (Thompson Whole foods market 4). To ensure this was done, Whole Foods Market developed a number of strategies.
By providing natural and organic foodstuffs in “least processed” form, the company sought to cater for human healthcare, the environment and welfare of the community. In fact, it has been regarded as one of the most environmentally friendly or green corporations in the United States. With this strategy, the company sought to attract customer’s attention and create trust and loyalty among consumers.
Expansion strategy
First, the company sought to expand beyond its original location by directly opening new stores and acquisitions. Since the company needed to grow at a faster rate, more focused was placed on acquisitions, – a factor that saw a high rate of growth. For instance, in 2007, the company achieved one of its lifetime goals when it acquired Wild Oats Market.
In addition, this signified the company’s ability to venture into new and larger cities and other states, and thus a sign that the company could spread throughout the United States. However, during this time, the economic recession was already underway, which should have proved as a warning to the managers at Whole Foods Market (Thompson Whole foods market 2).
Secondly, the company’s growth strategy involved opening new stores and reallocating smaller or old outlets into larger sites in order to ensure visibility and ample parking for customers (Thompson Crafting and Executing Strategy 11). For instance, the company emphasised on locating its new stores next or near to large estates and busy shopping malls.
They considered congestion as a negative factor, while social factors such as levels of income and education, population’s purchasing potential and other factors as the most important determinants of location. In fact, since organize and natural foodstuffs attract high income earners, the company would normally seek to locate in or close to primer real estates.
SWOT Analysis
Strengths: While its competitors were busy selling processed products, Whole Foods Market emphasized on least processed products, primarily organic and natural foods. Competitors were selling non-processed foods only in small portions, which made the company develop a strong competitive advantage, considering that this was at a time when health enthusiasts and public health bodies increasingly emphasized on the need for people to take non-processed foods.
Secondly, the company has been marketing itself as a ‘highly responsible’ organization, which seeks to cater for the customer’s health, environment and the community. With this as its marketing strategy, Whole Foods Market obtained credit within the community due to its ability to create a strong corporate social responsibility.
Weaknesses: By dealing in highly perishable goods, the company was under the risk of losing millions of dollars in case of a failure in one of its strategies. In addition, the looming economic recession would affect customer purchasing power, as people often tend to cut on costs.
In fact, this became the primary problem affecting the company when the recession finally struck in 2008. In addition, the acquisition of Wild Oats Market came at a time when the latter was experiencing economic hardships, and it would have been difficult to fund the acquired company during the recession.
Opportunities: By focusing on acquisitions, Whole Foods Market had the potential to expand within a short time, especially because the financial risks involved are less significant compared to direct entry into the new markets. Secondly, by and marketing itself as a green company, Whole Foods Market had the opportunity to create trust and loyalty within the community because the issue of health hazards associated with junk and processed foods had been affecting some of its competitors in food industry.
Threats: One of the most critical threats facing the company was the looming recession in 2008, which was on the process of hitting most Americans. Obvious, during any recession, households normally attempt to cut on costs, especially by going for cheap products, cutting on luxuries and some type of foods.
This was the threat at the time because families were willing to cut on the costs they incurred buying some green foodstuffs until the recession was over. Given that the company was dealing in perishable products, the failure by consumers to turn up at the stores meant a great threat to its performance.
Works Cited
Kesmodel, Dave and James Eig. “For Whole Foods CEO, A history of brashness.” Wall Street Journal 3.1 (2007): A1-12. Print.
Thompson, Arthur. Crafting and Executing Strategy. New York, NY: McGraw-Hill/Irwin, 2009. Print.
—. Whole foods market in 2008: vision, core value, and Strategy. Tuscaloosa, AL: The University of Alabama, 2010. Print.