B USINESS P OLICY & P LANNING C ASE S TUDY 2012
WWW .
WHOLEFOODSMARKET .
COM
S TEVEN P ELLETIER , J ARRYD P HILLIPS , O THNIEL H YLIGER , S PENCER
J ACOBY , J ERMAINE W EST

Company Overview
Brief History
Current Vision & Mission
Current goals and policies
New Mission and Vision Statements
Core Values
Organizational Chart
External Assessments
Industry Analysis
Opportunities and threats
EFE Matrix
CPM Matrix
Internal Assessment
Strengths and weaknesses
Financial condition
IFE Matrix
Strategy Formulation
SWOT Matrix
Space Matrix
Grand Strategy Matrix
IE Matrix
Matrix Analysis
Possible Strategy
QSPM Matrix
Future Strategic Plans
Objectives
Recommendations
Implementation Issues
EPS/EBIT
Potential issues
Sources

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1978- twenty-five year old dropout John Mackey and twenty-one year old Rene Lawson Hardy, opened the small natural foods store.
1980- John and Rene partnered with Craig Weller and Mark Skiles to merge SaferWay with their Clarksville Natural Grocery.
1981- The worst flood in 70 years devastated the city of Austin.
1984- Whole Foods Market began its expansion.
1989- We expanded to the West Coast.
1990-1999- acquiring other natural foods chains throughout the 90's.
1998- Development of "virtual" store began.
1999- Site went live.
2000- Additional acquisitions.
2001- Whole Foods moved into Manhattan.
2002- Saw an expansion into Canada
2003-2004- Whole Foods Market entered the United Kingdom.
2007- Merger with Whole Foods Market
2008- John Mackey cleared of charges.
August 2008- voluntary multi-state recall.
2009- John Mackey voluntarily gave up his chairmanship
2011- The stock symbol changed

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Our “bottom line” ultimately depends on our ability to satisfy all of our stakeholders. Our goal is to balance the needs and desires of our customers, Team
Members, shareholders, communities and the environment while creating value for all. By growing the collective pie, we create larger slices for all of our stakeholders.
Our core values reflect this sense of collective fate and are the soul of our company.

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We aspire to become an international brand synonymous with not just natural and organic foods, but also with being the best food retailer in every community in which we are located. We believe our heavy emphasis on perishables and locally grown products, along with our unparalleled customer service, is helping us reach that goal, differentiating our stores from other supermarkets and enabling us to attract a broad base of loyal customers. We are well positioned to take advantage of changing demographic trends, and I expect our renewed emphasis on healthy eating to help further differentiate us and solidify our unique position within the food retailing universe.

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We believe that much of our success to date is because we remain a uniquely mission-driven Company. We are highly selective about what we sell. We believe in providing an empowering work environment for our team members, and we are committed to sustainable agriculture. Our motto, “Whole
Foods, Whole People, Whole Planet,” emphasizes that our vision reaches far beyond just food retailing. We strive to promote a strong Company culture featuring a team approach to store operations that we believe is distinctly more empowering of team members than that of the traditional supermarket. We also promote a decentralized team approach to store operations in which many decisions are made by teams at the individual store level.

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While we fulfill a part of our mission every day through selling the highest quality natural and organic foods available, we believe we have the opportunity and obligation to do more in terms of educating our stakeholders about the benefits of healthy lifestyle choices. To underscore our renewed focus, we created a new Core Value this year – Promoting the health of our stakeholders through healthy eating education.

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SELLING THE HIGHEST QUALITY NATURAL
& ORGANIC PRODUCTS AVAILABLE
SATISFYING & DELIGHTING OUR CUSTOMERS
SUPPORTING TEAM MEMBER HAPPINESS &
EXCELLENCE
CREATING WEALTH THROUGH PROFITS & GROWTH
CARING ABOUT OUR COMMUNITIES
& OUR ENVIRONMENT
CREATING ONGOING WIN-WIN PARTNERSHIPS
WITH OUR SUPPLIERS
PROMOTING THE HEALTH OF OUR STAKEHOLDERS
THROUGH HEALTHY EATING EDUCATION

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Organic Market Growth Rates
54,9
40,2
25,5
17,9
2000 2003 2006 2009
Source: Organic Monitor

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Organic Food Growth 2006-2009
$30 000,00
$25 000,00
$20 000,00
$15 000,00
$10 000,00
$5 000,00
$-
$17 221,00
$20 410,00
$23 607,00 $24 803,00
2006 2007 2008 2009
Source: Organic Trade Association’s 2011 Organic Industry Survey conducted 12/22/2010 – 3/7/2011 ($ mil consumer sales).

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3%
United States
Canada & UK
97%

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They could sponsor more town events (not just in-store events) to increase recognition of the brand name and make customers more aware of the products they offer.
Expand private label selection – lower price for customers
Class offerings that educate the new consumer about a new product. (Cooking classes.)
International expansion
More recently, Whole Foods has implemented a new marketing strategy to combat the perception of high prices.
Promote and build brand identity with organic foods, eventually leading to the idea that when people think
"organic" they will think "Whole Foods."
Rewards program – frequent buyer cards (like Kroger cards)
Expand prepared foods.
Customer service enhancement
Create a discount product line for lower income segment

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Increased competition from existing supermarkets that are re-branding in order to compete with them like; Wal-Mart,
HEB, Wegman's (New York), and Publix (Southern US).
Local Farmers’ Markets/Independent Retail Chains
Low spend per trip due to high prices. Individuals buy the specialty item and not the essentials.
Product recalls – Ecoli and salmonella
In a recession environment, consumers are concerned with falling home prices, lower job security, and commodity inflation
Changes in government regulations on organic food would impact consumer spending even further.
Competitors - lower cost or imports; Trader Joe’s, Costco
Consumers are avoiding any products that might be considered lavish or more than a necessity.

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2007-2012

LOSEST
OMPETITORS
OMPARISON

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Recent trends in the industry of grocery stores consist of expanding what they have to offer, trying to draw in customers and keep customers in the store longer. Some examples of these are:
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Interactive web sites
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Recipes
Earning loyalty cards
Providing cooking classes (online/privately or group).
Freshly prepared onsite ready to eat meals.
Sit down spaces to eat, keeping customer’s onsite longer.
Salad bars and coffee areas.
There is also a negative side to industry trends too. With the recession being the main reason for these, some are however; also global problems have taken its toll on all industries. For example:
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Higher gas prices
Mortgage failures
Job losses
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Investment fears
Food inflation
Many grocery shoppers have begun looking for bargains. In the recent economic recession that began to happen in 2008, the wealthy are even showing signs of taking their foot off the gas when it comes to spending and are looking for ways to save a penny wherever they can. A 2008 survey found that many adults are preparing more meals at home (43%), using more coupons (40%), or going out of their way to look for lower-cost items (37%) as a result of higher food costs (Reuters,
2008).
Ref: http://www.reuters.com/article/2008/08/26/idUS192211+26-Aug-2008+PRN20080826

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The company recorded revenues of $7,953.9 million during the financial year (FY) ended September 2008, an increase of
20.7% over FY2007.
High quality food.
Strong brand equity – the Whole Food’s brand is known worldwide for its organic products.
Staff is passionate about promoting the products and sharing that enthusiasm.
Nationally Known Organic/Natural Foods Seller
They have an amazing website with blogs, recipes, sale items, tips, podcasts and more.
The website is well designed and explains the Whole Foods concept very well.
Experience in the Industry
Fair labor wages for the farmers.
Financial position – consistent annual sales growth
Locations based on demographics.

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US government provides money to support the corn growers industry, but not the organic farmer-therefore companies not utilizing organic ingredients can grow more food cheaper and faster.
Price – up to 75% higher
Viewed as a luxury shopping destination.
Weak management team
Customer loyalty is missing
Number of organic food farmers is growing, but slowly and the supply chain for organic foods is underdeveloped and cannot meet the needs of the American food system.
Advertising Budget very low (WOM approach)
They are known as "whole paycheck" because some of the foods are higher priced than other grocery stores.
Diseconomies of scale
Targets a small amount of shoppers

IFE M

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SWOT M
SO Strategies
S1, O1: Use the significant financial growth to get more involved in the local community in order to appeal to a wider group of potential customers
S2, O2: With it's growing presence- and more customers, whole foods have the opportunity to make prices more reasonable.
S3, O3: Good opportunity to use the passionate staff to make cooking courses (classes) a noticeable attraction.
S4, O4: use experience to successfully expand into international markets- yet still appeal to different countries locals.
S7, O5: Expanding into other markets will require a diversified portfolio, which if done correctly will S
S7, O7: Use company's name to create a successful growth in prepared organic foods/ meals.
WO Strategies
W1, O1: they could sponsor some of the organic farmers, if costs for organic farmers are lowered, they will also be able to produce more- could arrange a selling/ price deal between farmers and Whole Foods.
W2, O2: with prices 75% higher, would increase sales if prices (even just certain prices) were adjusted to a more reasonable cost.
W3, O3: In order to be truly experienced in various industries, you need a management team who is experienced who are also mentoring/ molding newer and less experienced managers for the future.
W4, O5: It can and should be a strength to be viewed as a luxury shopping destination, thus a better perception on higher prices and value for money should be encouraged. It can still be luxurious with a more reasonable price range.
W8, O6: in order to appeal to a wider range of customers without decreasing their prices, creating a prepared foods/ meals section would appeal to more people because of the convenience.

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ST Strategies
S1, T1: Concentrate on strengths and what will separate them from all the other stores in order to maintain consistent growth rates.
S2, T2: promote brand image in order to make customers and potential customers aware that they cannot receive the same quality and value for money anywhere else except for Whole Foods.
S3, T3: The employees can have a huge influence on the atmosphere of the stores, would be important to use employee passion to make customers feel more at home and thus increase likelihood on giving tips.
S4, T4: it's important to use staff and industry experience to either inspect foods more, maintain a strict organic profile in order to prevent product recalls.
S5, T5: By maintaining a good relationship with farmers, government regulations may have less of an impact on the organic food than farmers may fear.
WT Strategies
W1, T1: support farmers in order to help them keep cost of farming certain foods
W2, T2: highlight/ promote the benefits of buying from Whole Foods compared to farmers markets.
W3, T3: With new brands expanding into markets, cant afford to be stuck with assembly line trends.
W4, T4: Sales should attempt to remain consistant, and not fluctuate with seasons.
W5, T5: With government regulations and the increase of organic farms, quality may decrease. Important that Whole Foods maintains high level of consistency in food quality.

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With the way in which the business is currently situated it would be in their best interest to use quadrant I, as they can maintain there hold while integrating themselves forward. into new investments and further move them

BCG M

IE M

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Alternative Strategies
Forward Intergration
Backward Intergration
Horizontal Intergration
Market Penetration
Market Development
Product Development
Related Diversification
Unrelated
Diversification
Horizontal
Diversification
Joint Venture
Retrenchment
Divestiture
Liquidation
IE x x
SPACE x x x x x x x x x
GRAND x x x x x x x x
BCG x x x x x x x
Count
3
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3
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2
1
3

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Europe
Canada
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UK
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Ecommerce
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Television
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Prepared meals
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Expand on Green initiatives

QSPM

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More aggressive on purchasing side of business
Create more value for customers on pricing side of business
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Be better stewards of capital
Have smaller and less expensive stores
Promote healthy eating education

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$10,000,000
$2,500,000
$2,500,000
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$15,000,000

EPS/EBIT A
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$ amount needed: 15M
Stock Price: $20
Tax rate: 35%
Interest rate: 4%
# of shares outstanding: $1.283M

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Whole Foods Market Reports First Quarter 2009 Results, http://www.wholefoodsmarket.com/company/pdfs/Q109financial.pdf
Whole Foods Market 2009 Annual Report http://www.wholefoodsmarket.com/company/pdfs/ar09.pdf
YCHARTS http://ycharts.com/companies/WFM/eps_ttm#series=type:company,id:WFM,calc:eps_ttm&zoom=&s tartDate=6/30/2007&endDate=12/31/2009&format=real&recessions=false
Wholefoods Marketing Information http://www.wikinvest.com/stock/Whole_Foods_Market_(WFM)
Wholefoods Historical Stock Information http://finance.yahoo.com/q/hp?s=WFM&a=08&b=31&c=2009&d=08&e=31&f=2009&g=d&z=66&y=
594
Wholefoods Competitor Information http://knowledgeproblem.com/2009/08/10/evolving-competition-whole-foods-costco-trader-joes/
Wholefoods SWOT Information
Business Source Complete – datamonitor.com
Growth Rates
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Market Trends http://www.reuters.com/article/2008/08/26/idUS192211+26-Aug-2008+PRN20080826