The Firm’s Strategy
One of the major stratagems being pursued by the firm is the differentiation. The firm adopts the differentiation strategy in terms of product provision in order to enhance its competitive advantage. In fact, the firm has ensured that all its business processes including products are unique to the industry.
The major driver for the strategy is the increased competence of the business associates and employees in terms of skills and capabilities (Whole Foods Market, 2013). Besides, the competitive edge depends on the degree in which the firm’s business processes are conducted. In other words, the firm carefully selects diverse brands of items that are highly valued by the customers.
However, highly valued products attract high prices. Whole Foods understands the sensitivity of prices. As such, the firm offers its high quality food products at fair prices that clients can afford. The combination of quality and fair prices is one of the greatest competitive advantages to the firm (Whole Foods Market, 2013).
As indicated, Whole Foods is different from the major competitors in terms of the prepared food brands. The firm offers a wide variety of prepared meals for lunch, dinner and desert (Martin, 2008). Clients have the options of eating on the premises or take out.
Whole Foods takes advantage of the increasing number of clients that normally have their meals on the premises as high end consumers tend to look for ways of curbing spending amid a difficult economic situation (Martin, 2008). Moreover, the retail store prefers the special brands in favor of the common major delicacies found in most of the stores.
Since the firm has a narrow niche of customers and few competing stores are found in most areas it operates, Whole Foods can easily scan and understand the market. The strategies are the main contributors of the firm’s higher profit margins (Martin, 2008).
How the Strategy is Aligned to Porter’s Generic Model
According to Porter’s generic forces model, strategies are actions that help in the formation of invulnerable place in the industry (Porter, 1998). In other words, strategies are actions that increases the firms competitive advantage in the industry in which it operates. According to the model, the strategies can be either defensive or offensive.
Defensive strategies normally take the form of the industry and place the firm to cope with its strengths and weaknesses (Porter, 1998). On the other hand, offensive strategies transforms the underlying causes of the competitive forces and as such changes the environment in which the firm operates.
Porter proposed three broad and standard strategies that the firm can utilize to generate durable defensible situations as well as increase its competitive advantage. The strategies include cost leadership, differentiation and the focus or the niche strategy (Porter, 1998).
The firm’s approach fits directly with the differentiation strategy of the Porter’s model. According to the model, the differentiation strategy means offering services, products and brands that are unique to the industry (Porter, 1998). Essentially, the differentiation strategy requires that the firm creates own market niche.
Approaches to the differentiation strategy include diverse product designs, brand image, variety of features and the new technology (Porter, 1998). All these approaches have been applied by Whole Foods to create its product brands together with competitive prices to create its own market niche. The differentiation strategy has contributed greatly to the growth of the firm in a highly competitive industry.
In fact, the differentiation approach has insulated the firm from the competitive rivalry through the creation of brand loyalty and reduction of price elasticity of demand by making clients to be less sensitive to the price changes of the product (Martin, 2008).
Besides, the uniqueness of the products have created barriers and the reduction of substitutes, which in effect, has led to higher margins and decreases the need for low-cost advantage (Martin, 2008). Moreover, higher margins enable the firm to handle influential suppliers. In fact, the strategy has enabled the firm to alleviate the buyer’s power since few alternatives are available to the purchasers (Whole Foods Market, 2013).
The Firm’s Inputs
According to the congruent model, organizational inputs are ranging from the environment to the strategies applied by the firm (Nadler & Tushman, 1980). Within the continuum are inputs such as resources and the firm’s history.
The resources available to the firm include human capital, technological applications, financial capital, information as well as other intangible assets. Besides, while strategy is considered the most important input in the model, it forms the link between the mentioned inputs and the system mechanism of the entire firm’s transformation process (Nadler & Tushman, 1980).
According to the model, environmental inputs are factors that are outside the firms influence including things that come from an institution or industry, individuals, groups as well as events (Nadler & Tushman, 1980).
Essentially, the environmental inputs must have a potential influence on the organization. In this case, the firm’s environmental inputs include industry research and development, suppliers and most importantly organic food consumers.
Similarly, resources include all assets that the firm can access. The resources include both human and financial capital as well as information. In addition, resources include intangible assets such as recognition by the market niche. Generally, the resource inputs are broad and normally applied by the firm to produce the desired outcome (Nadler & Tushman, 1980).
In terms of the input history, past decisions, activities and behavior are considered as greater effort to attain the current desired results. Essentially, these factors must have a direct influence on the existing organizational operations. Whole Foods is known for its traditional quality organic food offerings, which the firm exploit to increase its competitive advantage.
Whether the Inputs are Congruent to the Strategy
According to the congruent model, the firm’s strategy is the stream of decisions concerning the manner in which the inputs or the organizational resources are transformed to meet the needs of the clients. Besides, strategies are involving the way the firm’s resources are configured to deal with limitations as well as prospects available to the firm within the context of the patterns of the past behavior (Nadler & Tushman, 1980).
In order to attain the desired results, the inputs have to fit within the strategies. Essentially, aligning the firm’s inputs to the strategies is critical for increased performance and success.
As indicated, the congruent model argues that the inputs have to be aligned to the strategies in order to increase performance (Nadler & Tushman, 1980). In other words, the level of performance would depend on the degree of congruity of the firm’s inputs to the strategy.
In this case, the resource inputs fit greatly to the firm’s strategy. Whole Foods has used all its resources in order to ensure increased competitive advantage. In other words, the inputs are aligned to the firm’s strategy to attain the desired competitive advantage.
Essentially, the firm’s resources are highly utilized to increase the performance of the strategy. In fact, the firm has ensured that all its resources are aligned to the strategic goal of ensuring increased competitive advantage. In other words, the firm’s resources greatly fit with the organization’s strategy.
Besides, the firm has fully utilized its human resources to attain the desired product brands. Similarly, the capital resources including financial and other assets have been fully utilized to ensure that the specialized and unique food products are produced to meet the client needs. The target clients’ acceptability of the products confirms the congruity of the resources to the strategy.
The environmental inputs available to the firm including clients have a greater degree of congruity to the strategy of differentiation. The differentiation strategy aims at increasing the target customer value. Within the context of Whole Foods Market, clients and suppliers are considered as individual inputs. The contribution of the suppliers and consumers remains critical in the product development and distribution.
However, in terms of suppliers, the differentiation strategy has ensured a drastic reduction of supplier’s power, which in turn has resulted in increasing the firm’s performance. Essentially, the firm’s environmental resources are highly congruent to its strategy.
However, the history inputs fairly fit with the current differentiation strategy. The firm barely utilizes its historical resources in the determination of the current product offerings. Nevertheless, some of the effective decisions that were made before form the basis of the current strategy.
References
Martin, A. (2008). Whole Foods looks for a fresh image in lean times. The New York Times. Web.
Nadler, D. A., & Tushman, M. L. (1980). A model for diagnosing organizational behavior. Organizational Dynamics, 9 (2), 35-51.
Porter, M. E. (1998). Competitive strategy: Techniques for analyzing industries and competitors. New York, NY: Free Press.
Whole Foods Market(2013). Whole Foods annual report 2013. Web.