BUSINESS POLICY & PLANNING CASE STUDY 2012
WWW.WHOLEFOODSMARKET.COM
STEVEN PELLETIER, JARRYD PHILLIPS, OTHNIEL HYLIGER, SPENCER
JACOBY, JERMAINE WEST
OVERVIEW
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
TIMELINE HISTORY
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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
CURRENT VISION STATEMENT
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.
WHOLE FOODS MARKET GOALS
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.
WHOLE FOODS MARKET POLICIES
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.
NEW VISION & MISSION STATEMENTS
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.
CORE VALUES
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SELLING THE HIGHEST QUALITY NATURAL
& ORGANIC PRODUCTS AVAILABLE
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SATISFYING & DELIGHTING OUR CUSTOMERS
SUPPORTING TEAM MEMBER HAPPINESS &
EXCELLENCE
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CREATING WEALTH THROUGH PROFITS & GROWTH
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CARING ABOUT OUR COMMUNITIES
& OUR ENVIRONMENT
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CREATING ONGOING WIN-WIN PARTNERSHIPS
WITH OUR SUPPLIERS
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PROMOTING THE HEALTH OF OUR STAKEHOLDERS
THROUGH HEALTHY EATING EDUCATION
ORGANIZATIONAL CHART
EXTERNAL
ASSESSMENTS
GLOBAL INDUSTRY ANALYSIS
Revenues (US $ Billions)
Organic Market Growth Rates
Source: Organic Monitor
US INDUSTRY GROWTH
Organic Food Growth 2006-2009
Source: Organic Trade Association’s 2011 Organic Industry Survey conducted 12/22/2010 – 3/7/2011 ($ mil consumer sales).
GLOBAL SEGMENTATION BY LOCATION
United States – 97% of sales
 Canada and UK – 3% of sales
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COMPETITORS
OPPORTUNITIES
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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
THREATS
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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.
COMPETITIVE PROFILE MATRIX
EFE MATRIX
INTERNAL
Assessment
STOCK PERFORMANCE 2007-2012
CLOSEST COMPETITORS COMPARISON 2007-2012
INCOME STATEMENT
BALANCE SHEET
FINANCIAL RATIOS
TREND ANALYSIS
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
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Earning loyalty cards
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Providing cooking classes (online/privately or group).
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Freshly prepared onsite ready to eat meals.
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Sit down spaces to eat, keeping customer’s onsite longer.
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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
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Mortgage failures
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Job losses
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Investment fears
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Food inflation
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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
STRENGTHS
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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.
WEAKNESSES
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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 MATRIX
STRATEGIC
FORMULATIONS
SWOT MATRIX
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.
SWOT MATRIX
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.
SPACE MATRIX
GRAND STRATEGY MATRIX
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 into new investments and further move them
forward.
BCG MATRIX
IE MATRIX
MATRIX ANALYSIS
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
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SPACE
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GRAND
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BCG
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Count
3
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4
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4
2
1
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3
POSSIBLE STRATEGIES
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Market expansion within foreign markets
Europe
 Canada
 UK
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Expand advertisement budget
Ecommerce
 Television
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Product development
Prepared meals
 Expand on Green initiatives
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QSPM
FUTURE PLANS
Expand online services
 Express stores
 Expansion into foreign markets
 Celebrity marketing and reality show market
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OBJECTIVES
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Objectives listed in 2009 Founder’s address
within the annual report
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More aggressive on purchasing side of business
Create more value for customers on pricing side of
business
Be better stewards of capital
Have smaller and less expensive stores
Promote healthy eating education
RECOMMENDATIONS
Market expansion to foreign markets by adding 5
stores
$10,000,000
 Expand advertising budget to increase market
share and sales
$2,500,000
 Expand product to include prepared foods that
will compete with diet system competitors
$2,500,000
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Total cost = $15,000,000
IMPLEMENTATIONS
EPS/EBIT ANALYSIS
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$ amount needed: 15M
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Stock Price: $20
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Tax rate: 35%
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Interest rate: 4%
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# of shares outstanding: $1.283M
POTENTIAL ISSUES
Organic food competitors increasing
 Federal regulations
 Potential future recessions
 Crop disease control
 Employee compensation
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BALANCE SCORECARD
SOURCE OF INFORMATION
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Whole Foods Market Reports First Quarter 2009 Results,
http://www.wholefoodsmarket.com/company/pdfs/Q109financial.pdf
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Whole Foods Market 2009 Annual Report
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http://www.wholefoodsmarket.com/company/pdfs/ar09.pdf
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YCHARTS
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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
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Wholefoods Marketing Information
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http://www.wikinvest.com/stock/Whole_Foods_Market_(WFM)
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Wholefoods Historical Stock Information
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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
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Wholefoods Competitor Information
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http://knowledgeproblem.com/2009/08/10/evolving-competition-whole-foods-costco-trader-joes/
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Wholefoods SWOT Information
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Business Source Complete – datamonitor.com
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Growth Rates
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Market Trends
http://www.reuters.com/article/2008/08/26/idUS192211+26-Aug-2008+PRN20080826