School of Graduate Studies

Masters of Project Management

STRATEGIC MANAGEMENT
Individual Assignment

Submitted By: HERMELA TEDLA

ID NO: SGS/0220/2012 A
 1. What are the strengths and weaknesses of Whole Foods?
Whole Foods’ Strengths

 High-Quality Standards – Quality is the selling point of a product. Whole Foods has
made its motto to provide the highest quality standard food products in its store. It
enabled the whole foods to expand its consumer base. Whole Foods has set the bar high
by banning ingredients commonly present in the products of other food retailers.
Artificial flavors, sweeteners, colors, and hydrogenated fats are prohibited. The company
also forbids any form of fishing, farming, or ranching activities that do not meet its high
standards. The boom in business has given the company leverage to increase some its
prices. Its target demographic comes from well-educated and more upper middle class
background who are willing to pay more to ensure good quality of food.
 Brand Recognition – A company’s future can only be determined by its brand image.
Customers generally opt for companies with high brand recognition. Moreover, Whole
Foods enjoys a solid brand reputation since its inception. It enables Whole Foods to stand
out from the rest of its competition and in turn convert that popularity by attracting an
ever growing customer base. The profits, volume, and sales generated by that consumer
demographics have secured the supermarket’s future.

Whole Foods’ Weaknesses

 Consumer Perception- Wholesales experienced low sales growth due to overpricing and
overcharging its consumers. This has led to many backlashes. The widely held consumer
perception is that the company deliberately presents them with products that are
expensive. It has been given the title of “Whole Paycheck” owing to the belief that the
prices can take up the consumer’s entire salary. It has weakened the brand’s image.
 Dependency on American Markets – Whole Foods is at its most vulnerable because of its
dependence on the American markets. It does not offer sustainability if the American
economy collapses due to unpredictability of the global economy. The company already
dealt with lower profits during the recession. A hit from another incoming recession
might cause irreparable damage to its interests.
 2. What are the opportunities and threats facing Whole Foods?
Whole Foods’ Opportunities

 International Expansion – Whole Foods overreliance on the US markets is already well-

known. It gives the company room to diversify its operational resources and pursue
international expansion. It already has functioning branches in Canada and the UK which
it needs to invest more into further expansion. It also needs to target Europe and Asia as a
potential booster for its revenue. The margin of growth can still be attained if it follows
through on the strategy.
 Alliances – Amazon announced that it would purchase Whole Foods and make its
products available on its sites. This led to massive success for the company in terms of
revenue growth and an increase in employee participation.
 Diversification – To tackle issue of expensive items, Whole Foods has launched a new
low price market in the form of 365 by Whole Foods Market. The new company focuses
on bringing healthy and affordable food to people regularly. 365 by Whole Foods Market
was created to cater to the middle class and millennial with organic food choices. The
stores are relatively smaller than the original superstores. However, they are still
complementary products. Whole foods establishment was accused of overpricing for
years, and they have invested a lot in this branch to address these concerns.

Whole Foods’ Threats

 Increasing Competition – the company has not managed to prevent competition from its
major competitors like Walmart. Whole Foods continues to face intense competition;
even Target has given it a run for its money. Both Walmart and Target utilize competitive
pricing as a means to outperform Whole Foods which has been ineffective so far
 Bad Publicity – The Company has faced severe media backlash and negative publicity
because it handled its customer overcharging. It resulted in a large number of complaints
against the organization. The company was hit with a lawsuit. Since then, its sales growth
have declined and drawn bad publicity.
 3. Does Whole Foods have a distinctive competency? If yes, what is
it?
The Whole food market is an American store that supplies natural foodstuff to the American
market. The store majored in the natural foodstuff because few companies majored in the supply
of green and natural foodstuffs in the country. Another reason as why the firm rose was that the
food industry in the country has changed from natural foodstuffs to processed and preserved
foods that were not fresh.
They are supported by complementary industries such as: Health Industry, Health Insurance
Companies, Health Care Specialists. Whole Foods' size offers its more direct rivals a competitive
advantage. The existence of an economic moat is demonstrated by profit margins and economic
benefit estimates.

4. Give strategic alternatives and recommend the best strategy you

think is appropriate for the company
Whole Foods Market uses a broad differentiation generic strategy (based on Porter’s model). In
this generic strategy, the company separates itself from competitors. This separation is achieved
through unique features that define Whole Foods Market’s output. For instance, the company’s
main selling point is the organic or natural characteristics of its products. Also, in this generic
strategy, Whole Foods Market targets all market segments. For example, the firm’s products are
suitable for all customers regardless of age and gender. The company is effective in using this
generic strategy, as reflected in the popularity and continued growth of the Whole Foods Market
brand.

One of the strategic objectives of Whole Foods Market based on the generic strategy of broad
differentiation is to maximize product quality. For example, the company always seeks products
with the least possible artificial ingredients because these products stand out compared to
competitors. Another strategic objective of Whole Foods Market based on its generic strategy is
to expand its supply chain. This supply chain involves farmers or producers that comply with
Whole Foods Market’s quality standards.

Market Penetration. Whole Foods Market uses market penetration as a primary intensive
growth strategy. This intensive strategy supports the company’s growth by increasing market
reach and revenues. For example, Whole Foods Market opens new stores in the United States to
gain a bigger market share. This intensive growth strategy uses Whole Foods Market’s generic
strategy to ensure profitability of new stores based on the attractiveness of natural or organic
products.

Market Development. Whole Foods Market uses market development as its secondary intensive
strategy for growth. This intensive growth strategy applies when the firm enters new markets or
new market segments.. This intensive growth strategy uses Whole Foods Market’s generic
strategy of broad differentiation by attracting new customers in new markets to high quality
natural and organic products in its stores.

Product Development. Whole Foods Market only uses product development as a supporting
intensive strategy for growth. This intensive growth strategy involves offering new products to
gain more customers or revenues. For example, in 2000, Whole Foods Market started offering
fish certified as sustainable by the Marine Stewardship Council. In 2008, the
company eliminated disposable plastic bags in its stores to make its retail service more attractive
to environmentally conscious consumers. This intensive strategy for growth strengthens Whole
Foods Market’s generic strategy through product quality or uniqueness.