Whole Foods Case

CASE # 2 – WHOLE FOODS Assignment Questions 1. Do you think that company’s mission statement/motto “Whole Foods, Whole People, Whole Planet” is reflected in what they do and is it an effective mission statement? • yes, is seems to be withheld by and believed by the employees and executives • it is short and catchy and encompasses the vision and core values of the corporation • it describes all aspects of what they want to achieve, they seem to abide by it 2. Do the core values underlying the mission (case Exhibit 3) really matter at this company or are they just nice words and cosmetic window dressing?What evidence can you cite to support your answer? Have Whole Foods’ core values contributed to the company’s success? Why or why not? • I think that the core values really do matter to this company, it seems that they have been trying to make it a team environment or family atmosphere that everyone is there for the same purpose. At the end of the day people are there for a pay cheque and shareholders are there for profit, but I think that they stay there because they believe in the cause and feel like they are making a difference. I really feel like we’re a part of making the world a better place. When I joined the company 17 years ago, we only had 4 stores.

I have always loved – as a customer and now as a Team Member – the camaraderie, support for others, and progressive atmosphere at Whole Foods Market. ” Page C-24 • Also, showing that the core values really do matter to the company is core value # 3 – Team Member Happiness and Excellence – this is shown by having the employees draw up choices on the benefits that they need, and by creating an atmosphere where input is encouraged Core Value #1 – Selling the highest Quality Natural and Organic Products Available/#5 Caring about our communities and Environment – These were shown to actually matter to the corporation when they stopped selling lobster because the process of getting the lobster was not in line with their commitment and loans to farmers to help them produce high quality products. • I think part of Whole Foods success can be attributed to their core values because it created an atmosphere where all employees are working for the same cause and that they try their best to serve the customer and make the customer loyal. . Describe the current (in the book and today) economic, social and demographic conditions that are affecting Whole Foods. What are the main driving forces? Evaluate the market and competitive conditions in the food retailing industry.

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What key success factors are needed to be successful in the organic foods segment of this industry? • Economic conditions affecting Whole Foods: income levels may be down due to recession and there could be loss of employment, there is more competition – regular grocery stores are carrying their product Social condition affecting Whole Foods: people starting to be more cautious about what they eat, animal rights and hormones in food supply is more easily distributed so more people are aware, environmental concerns about growing practices • Demographic conditions affecting Whole Foods: aging population with more disposable income, they have more awareness of what they should eat 4. What is the fundamental strategy or “value proposition” that Whole Foods Market is pursuing? Is Whole Foods’ fundamental strategy well matched to market conditions in the food retailing industry (one of the criteria for winning strategy discussed in Chapter 1)? • I think that they made a good decision to switching from a growth strategy to a value strategy was a good decision. It enabled them to react to the current conditions while still serving their customers and maintaining their core values. Doing this helped them maintain their competitive ranking while riding out the recession. They adapted to match the market conditions. 5.

Based on the financial statement data in case Exhibits 9, 10, and 11, how well is Whole Foods Market performing?Use the financial ratio information in Table 4. 1 of Chapter 4 (pages 98-99) to assist you in calculating a revealing set of financial ratios and interpreting them. |Whole Foods Market Ratios | |  |2009 |2008 |2007 |2006 |2005 | |Gross Profit Margin |0. 34 |0. 34 |0.

35 |0. 35 |0. 35 | |Return on Total Assets |4. 85 |4. 6 |  |  |  | |Debt to Assets Ratio |0. 46 |0. 55 |  |  |  | |Debt to Equity Ratio |1.

07 |1. 24 |  |  |  | |Current Ratio |1. 54 |0. 93 |  |  |  | • Whole Foods seems to be doing well. Although, there net income has declined they are still profitable. They have a positive return on assets that increased from 2008 – 2009.

Their debt to equity indicates is high. However, we know that they have been expanding rapidly and have funded a lot of the expansion with debt. The same with the debt to asset ratio, it is high and this could cause problems if their creditors demanded repayment of the loans.

In 2008 the current ratio was low. Their current liabilities were higher than their current assets, this also indicates that they may have trouble paying back creditors. In 2009 it changed to 1. 54 which is a more acceptable rate. 6.

How well is Whole Foods Market performing from a strategic perspective? What are Whole Food’s competencies, and strengths? Does Whole Foods enjoy a competitive advantage over its 3 chief rivals — Fresh Market and Trader Joe’s? Does the company have a winning strategy? (Use the “Tests of Good Strategy”) • I think that Whole Foods is performing well from a strategic perspective – when they set their strategy they seem to follow it. For example when they concentrated on the growth strategy they pursued opening many stores and buying Wild Oats. Competencies and Strengths: they are large, they are number 1 in the market, they have good supplier relationships and supply chains for their product. They educate their employees to be knowledgeable, and are able to retain employees, they appeal to many different types of people (vegetarian, vegan, health conscious, gourmet chefs etc. ) They are known and involved in the community 7. Based on a SWOT analysis, do you think John Mackey has a good strategic vision for Whole Foods? Why or why not? • Yes, he has been successful for the last 30 years and has continued to grow.He encompasses his vision into the strengths of the company. The weaknesses are that he seems to have gotten carried away during the acquisition and posted online messages that were not on par with his corporate core values.

The current threats are that there is more competition and that organic food is more widely available. The competition seems to be expanding and taking away consumers that are more price conscious. John Mackey has responded to these threats by changing his strategy and creating more value items to keep the price conscious customers.I think that this is a good strategic vision because it opens the customer base.

8. What recommendations would you make to John Mackey regarding the actions that Whole Foods’ management needs to take to sustain the company’s growth and financial performance? • I recommend that John Mackey should continue adding more value items to their inventory and continue to educate the community and employees. They may want to look into acquiring some of the smaller chains like Trader Joes or Fresh Market to ensure that they don’t grow into bigger competition.