Whole Foods second alternative is to continue with their current operations and strategy while
expanding their business through the creation of new stores, not mergers or acquisitions. This
alternative solves the central problem by Whole Foods continuing to grow and seeking higher
profitability. They can also maintain their dominance in the specialty food store market by
growing in areas they do not have a strong presence in. Regardless of all the negative criticism
the company has been getting involving their image; Whole Foods has actually done a good job
with satisfying the majority of customers and have operated within their standards. So upholding
their social mission is not affected by keeping their current strategy because it seems to be
successful. Building their own new stores will create many positives for the company. The
continuing growth will help build a larger consumer base. Unlike mergers, the new stores being
built can be planned to fit the company’s needs. When acquiring other competitors’ stores
through acquisitions, the stores may not meet the standards that Whole Foods needs to operate a
successful store. Also the problem of customer loyalty can be avoided by opening your own
stores. When acquiring a competitor into your business, many of the consumers may have been
very loyal to the prior store. These customers may not like the idea of Whole Foods store and can
cause negative feedback in the area. As the case study states, when Whole foods acquired one of
its competitors in the Northeast, the company had a strong relationship with its consumers in the
area and they continued to reference the store as its old name. Building new stores may be a
slower way of expanding compared to acquisitions and mergers, but it will allow the company to
do as it wants and eliminates many problems that mergers can create. Using this approach,
Whole Foods can also grow their own market and choose exactly where to place their stores.
The dominance that Whole Foods holds is mainly in the organics and natural foods market. The
company has acquired many of its competitors resulting from its dominance and has made it a
goal to remain on top of the market. An advantage that this alternative strategy presents to this
goal is that Whole Foods will increase its size and number of stores becoming more dominant in
areas that they were not located in. If Whole Foods locates new stores where organic markets are
in high demand and the competition is low they can grab a major share of the market and control
it as well. Of course a disadvantage to this goal would be that Whole Foods locates a store in a
wrong place. Any place where the competition of other stores will affect the share of the market
will decrease their dominance. Other than opening a store in a bad location, this alternative does
not hold any major disadvantages of Whole Foods maintain dominance, because as long as the
company continues to grow and expand, its place in the market is sure to grow as well.
Expanding while using their current strategy and mission will also help Whole Foods uphold its
social mission. Showing that their mission is still followed in the new stores that it plans to open
represents commitment and drive for the company. Some new stores may even show a renewed
focus on such things included in their mission. A negative aspect of this alternative on their
social mission can take place if the new stores opened do not focus on Whole Foods strategy.
Opening and expanded the number of stores will not create a positive effect if they do not stand
for the same things that the company does. Whole Foods will need to keep an eye on the new
stores and see that they are performing in line with the social status of the company.
Customer satisfaction is also an important goal to Whole Foods. Using this alternative will help
to get the company’s stores into more areas where consumers demand their items. The new
stores can include all the same great line of products that the Whole Foods name carries, as well
as a number of items that are local and natural from the specific area. They may also ask the
customers what types of items they want to see in stock as long as they meet the standards of the
company, as they have done in many of their other stores. Disadvantages could occur from this
strategy plan if the stores do not meet the consumers demand. Also if the customers’ satisfaction
is not fulfilled from the current Whole Foods stores then new stores operate in the same manner
will not improve this.
Whole Foods goal of continuing growth is obviously obtained through this alternative action.
Growth in the company leads to more market share and higher profits. The main advantages of
using this action are the actual growth of the number of stores owned by the company and the
ability to locate them where they want. Mergers may help in acquiring an area where Whole
Foods has no presence, but putting new stores in a place can also lead to new market space
where the competition may be limited. The downfall of this alternative for growth purposes is if
the new stores are not profitable and also if Whole Foods has the capital to create these new
stores.
The constraints faced are also affected by this alternative. Outside competition can become
smaller if Whole Foods continues to grow. Under this plan growth is the main point and gives
the company an advantage of owning more percentage of the market. However, if the outside
competition grows at a faster rate than does Whole Foods, it could start to cause problems.
Higher prices also pose a threat to the company. Competitors whose prices are lower is a major
disadvantage to Whole Foods, however with this alternative the higher prices can see Whole
Foods have greater profits with an increased number of stores. The company also faces large
demands. It has claimed to compete against large supercenters as well as small organic markets.
So to meet the larger demand the company continues to grow. Opening these new stores may
even cause the company to increase demand more which in turn will lead to more growth and
profitability. The disadvantage to this is that demands grow too large and the company cannot
meet the customer’s needs. Also if the company must change its core values and standards to
meet this demand then it has failed to uphold its current plan.