Whole foods focused differentiation strategy

Strategic ManagementNeed Two Replies To Each Discussion Question

Do you think John Mackey has a good strategic vision for Whole Foods? Why or why not?

John Mackey’s strategic vision does describe his aspirations for Whole Foods’ future: “to become an international brand synonymous with carrying the highest quality natural and organic foods available and being the best retailer in every community in which Whole Foods stores were located” (Thompson, 2010, p. C-6). If a vision statement is a vivid idealized description of a desired outcome that inspires, energizes and helps you create a mental picture of your goals, I think he achieved it. Conversely, strategic vision should also delineate the strategic course and long-term direction. He may have missed that target according to Thompson (2010) when “growth objectives for Whole Foods had been to have 400 stores and sales of $12 billion by the end of fiscal year 2010, the economic downturn in the United States that accelerated swiftly in 2008 hit Whole Foods hard and forced a number of strategy changes in 2008-2009” (p. C-6).

What do you like/dislike about the company’s mission/vision “Whole Foods, Whole People, Whole Planet”?

Whole food suggests “food and other items that are free of pesticides, preservatives, sweeteners, and cruelty” (Anonymous, 2012). I like that. It just seems to make sense to eat the best tasting and most nutritious high quality food that is the least processed, most flavorful, naturally preserved, pure, and unadulterated by artificial additives, sweeteners, colorings and preservations (Thompson, 2010).

“Whole people” refers to the quality and treatment of Whole Food’s employees. I like that too. Who enjoys going to a place of business wherein all of the employees are curmudgeons? “Employees are crucial for the achievement of internal quality and consequently for business performance of companies” (Antoncic and Antoncic, 2011, P. 81). They add “The loyalty of employees exists in the company, when employees believe in the objectives of the company, accept the objectives as their own, work for the common welfare, and want to stay in the company” (p. 82). Whole Foods has in place a variety of compensation, incentives, benefits, training programs, performance management systems, empowerment programs, and internal promotions that tend to foster loyalty and commitment within Whole Foods Markets.

Whole planet has more of a (Green Party) politically-oriented insinuation to it. I don’t like that. Its smacks of giving advice on morality or behavior in an irritatingly tedious and overbearing way.

What are the elements of Whole Foods strategy?

Their growth strategy has been to acquire small local and regional firms with limited capabilities. Between 1992 and 2004, they acquired nine competitors and gained fifty-three locations. Their store location and product-line strategies of locating in upscale urban metro areas in high-traffic shopping locations are consistent with strengthening their market position via their scope of operations. And, their pricing strategy is consistent with using a cost-based advantage to attack competitors on the basis of price o value.

Which one of the five generic competitive strategies is Whole Foods employing and justify your answer?

I believe that Whole Foods employs the focused (or market niche) strategy, specifically, a Focused Differentiation Strategy which “aims at securing a competitive advantage with a product offering carefully designed to appeal to the unique preferences and needs of a narrow, well-defined group of buyers” (Thompson, Peteraf, Gamble, and Strickland, 2011, p. 154). Their product line-strategy supports this. If you have a proclivity towards cactus pears, organic meats and pet food, wild-caught seafood, scones, hearth-fired pizza, dried fruits, Allegro coffee, and aromatherapy products, then this is the place for you.

How well is Whole Foods Market performing from a strategic perspective?

According to Thompson (2010), in 2009 Whole Foods Market was the 11th ranked supermarket chain in North America with a 0.9% share of total grocery sales. I suggest that since the ten stores listed above whole foods were all traditional grocery and super-market operations, with Whole Foods the only one in the natural and organic foods format, they are performing very well.

Does Whole Foods enjoy a competitive advantage over its 3 chief rivals—Wild Oats, Fresh Market and Trader Joe’s? Does the company have a winning strategy?

Yes. Whole Foods has the ability to meet its customer’s needs, effectively, with products that its customers highly value. They are able to focus on a narrow market niche and sustain this competitive advantage by doing a better job that their rivals by serving the special needs and tastes of their customers within this niche. They also maintain their competitive advantage through continuous value chain and process improvements by engaging their employees to find innovative ways to drive costs down. Additionally, they maintain a competitive advantage by maintaining a corporate social responsibility program that includes environmental sustainability.

Student Response #2 to Discussion Question 3.2

1. Do you think John Mackey has a good strategic vision for Whole Foods? Why or why not? What do you like/dislike about the company’s mission/vision “Whole Foods, Whole People, Whole Planet”?

I think John Mackey has a good strategic vision for Whole Foods. His vision places emphasis on growth of the organization as well as maintaining the core values and company mission. His strategy has allowed for growth of the organization through numerous acquisitions and the company sustained itself even through the economic decline. The actions he has taken to gain a competitive advantage stay true to the natural and organic products that were at the heart of the development of the organization. He does not change these products just to please more customers. I like that the company’s mission/vision is simple and short, this makes it easy for consumers and team members to recognize it and support it. The one thing I do not like about the company’s mission is that until reading this case I was not aware of the “Whole Planet” piece of the mission. I think Whole Foods could do a better job of raising awareness of the good they do for society based on their mission/vision.

2. What are the elements of Whole Foods strategy? Which one of the five generic competitive strategies is Whole Foods employing and justify your answer? The competitive strategy of Whole Foods is a focused differentiation strategy. Whole Foods targets those who want unique and quality products as well as a unique experience to their consumers. The specific elements of this strategy is to provide natural, organic food of high quality to consumers. Whole Foods’ strategy focuses on the uniqueness of their product more than offering low prices to customers.

3. How well is Whole Foods Market performing from a strategic perspective? Does Whole Foods enjoy a competitive advantage over its 3 chief rivals – Wild Oats, Fresh Market, and Trader Joe’s? If so, why? If not, why? Does the company have a winning strategy? Why?

Whole Foods is doing well in the market of supermarkets for natural and health foods. Their store sales are continuing to increase each year, even despite the declining economy. Additionally, Whole Foods has grown in store locations and has also grown through acquisitions.

When it comes to natural and organic products, Whole Foods does enjoy a competitive advantage over Fresh Market and Trader Joe’s. Wild Oats has been acquired by Whole Foods and is therefore no longer a competitor. Whole Foods achieved a competitive advantage over Fresh Market and Trader Joe’s by narrowing their product through differentiation and also narrowing their target market (Thompson, Strickland, & Gamble, 2012). They have made their brand and shopping at their store a unique experience that consumers have come to love.