Introduction:

Whole Foods is not just a food retailer but instead represents a healthy, socially responsible lifestyle that
customers can identify with. The company has differentiated itself from competitors by focusing on
quality as excellence and innovation that allows them to charge a premium price for premium products.
This strategy has formed their success over the last 30 years but like any success story there are limits to
how far it can go before a new direction is needed so that it remains successful for the next 30 years.
Whole Foods carries both natural and organic food offering customers a wide variety of products.
“Natural” refers to food that is free of growth hormones or antibiotics, where “certificated organic” food
conforms to the standards, as defined by the U.S. Department of Agriculture (USDA) in October 2002.
Whole Foods Market® is the world’s leading retailer of natural and organic foods, with 193 stores in 31
states and Canada and the United Kingdom. John Mackey, current president, and cofounder of Whole
Foods opened “Safer Way” natural grocery store in 1978. The store had limited success as it was a small
location allowing only for a limited selection, focusing entirely on vegetarian foods. John joined forces
with Craig Weller and Mark Skiles, founders of “Clarksville Natural Grocery” (founded in 1979), to
create Whole Foods Market. This joint venture took place in Austin, Texas in 1980 resulting in a new
company, a single natural food market with a staff of nineteen. Whole Foods Market remains uniquely
mission driven: The Company is highly selective about what they sell, dedicated to stringent quality
standards, and committed to sustainable agriculture. They believe in a virtuous circle entwining the food
chain, human beings and Mother Earth: each is reliant upon the others through a beautiful and delicate
symbiosis.” The message of preservation and sustainability are followed while providing high-quality
good to customers and high profits to investors. Whole Foods has grown over the years through mergers,
acquisitions, and new store openings.

Objective:

1. To evaluate the strategy of Whole Foods Market if it is still sustainable in an increasingly

competitive market.

2. To identify and understand the sustainable development programs of Whole Foods Market and
how it affects the business.

3. And lastly, to determine a new direction for Whole Foods Market that would lead the business
into a better future.

Point of View

The point of view considered in this case analysis is in the perspective of Top
Management. They are the founders of Whole Foods Market and basically they have a huge say
in the decision making of the company with the help of the internal auditor.
Statement of the Problem
The market for natural and organic foods has been increasingly competitive. As competitors start
to focus on emphasizing organic and natural foods within their own stores, the power of the Whole Foods
brand will gradually decline over time as it becomes more difficult for consumers to differentiate Whole
Foods’ value proposition from that of their competitors. While proud of the past, John had concerns about
the future direction of Whole Foods should head.

Areas of Consideration

Strength

1. High Quality Standards

2. Strong Brand Reputation

3. Highly Motivated Workforce

Weaknesses

1. Dependence Mainly on the US Market

2. High Prices

3. Limited Network of Suppliers

Opportunities

1. Competitive Pricing

2. Global Expansion of Supply Chain

3. Global Expansion of Retail Operations

Threats

1. Global Warming

2. Rise of GMO Products

3. Low cost Competition

Alternative Course of Action

1. Continuing its business strategy which is through opening new stores, merging, and
acquisition.

Advantage:

1. Less competitors in the Market

2. Increase in sales

Disadvantage:

1, Too costly to open, merge or acquire a store.

 2. Implementing new policies for product quality and expanding its supply chain

Advantage:

1. The business were able to evaluate its internal control

2. Innovation and Improvement (Strong Opportunity)

Disadvantage:

1. Will require a lot of time to study the effects of new policies to be implemented

2. High cost of supply chain expansion.

Recommendation

Whole Foods is not just a food retailer but instead represents a healthy, socially responsible lifestyle that
customers can identify with. The company has differentiated itself from competitors by focusing on
quality as excellence and innovation. Thus, I recommend that the Whole Food Market must evaluate or
implement new policies for product quality and expanding its supply chain. Most of Whole Foods
Market’s customers are individuals whose purchases are small compared to the total revenues of the firm.
However, it is easy for customers to move to other retailers, corresponding to the low switching costs. In
addition, Whole Foods Market’s customers have access to information they can use to properly evaluate
the company’s products. As a result, Whole Foods Market must address consumer concerns. Otherwise,
they could move to other retailers. One example is to implement a new labeling rule for GMO-containing
products in its stores. Whole Foods Market has many suppliers, including local, regional, and national
wholesalers and producers in the U.S. and overseas. This external factor weakens the power of suppliers
on the firm. However, Whole Foods Market’s suppliers are mostly large wholesalers, such as United
Natural Foods Inc. (UNFI). Because of their size, these suppliers exert moderate pressure on Whole
Foods Market. Also, the limited supply of truly organic and natural non-GMO foods means that suppliers
could impose demands on the company and expect moderate results. The resulting diversification of
suppliers in Whole Foods Market’s supply chain helps dilute the bargaining power of suppliers.