Strategic Management Case StudyPresentation
h85zel239
Example1__Whole_Foods_PresentationCompatibilityMode.pdf
1/2/2014
1
Case 2: Whole Foods Market
Presented by Team 3 Study Hard, Party Harder
David Dang Dawn Furlo Michelle Zentgraf Li Xie Jackie Albayalde
June 20, 2013
Agenda Presentation Components Speaker
SWOT Analysis - Strengths Dawn Furlo & Jackie Albayalde
SWOT Analysis - Weaknesses Dawn Furlo & Jackie Albayalde
SWOT Analysis - Opportunities Dawn Furlo & Jackie Albayalde
SWOT Analysis - Threats Dawn Furlo & Jackie Albayalde
Current Events David Dang & Michelle Zentgraf
Case Study Question #1 David Dang
Case Study Question #2 Dawn Furlo
Case Study Question #3 Jackie Albayalde
Case Study Question #4 Michelle Zentgraf
Case Summary Li Xie
Q&A Team
Quiz Team
1/2/2014
2
SWOT Analysis Strengths • High quality Products But competitive Price
o Whole Foods products undergo a strict standard test.
free from preservative and other additives
foods that is fresh, wholesome and safe to eat
promote organically grown foods
o Meat/poultry products adhere to higher standard test.
no antibiotics or added growth hormones
annual inspection of all producers by Whole Foods
successful completion of third‐party audit to attest findings
affidavits from each producer outlining production process and how animals are treated
Jackie
SWOT ANALYSIS
Strengths • Wide selection of products and excellent customer service.
o Each store carries produce, seafood, grocery, meat and poultry, bakery, prepared foods, coffee, etc.
o Customers have different shopping experience because of the following:
colorful, inviting, and fun
informative and educational
Jackie
1/2/2014
3
SWOT ANALYSIS
Strengths • Focused growth strategy and innovation
o Made acquisition of other stores, for example Wild Oats.
o New store openings including internationally, with great offerings to customers.
• Strong focus on right sizing o New stores are typically opened based on location.
prime real estate in high urban, highly‐populated locations
targets customers with college degree and with higher‐incomes
Jackie
SWOT ANALYSIS
Weaknesses • "Whole Paycheck"
o When you think of Whole Foods, you think about the cost (expensive)
• Product recalls affect brand image o Due to the contamination of foods and salmonella.
o Incorrect labeling of products.
• Weak international operations o Operations are weak in Canada and the UK
only opened 7 and 5 stores respectively
Jackie
1/2/2014
4
SWOT
Weaknesses • Increasing rental expenses
o High rents results in high operating expenses and decrease in revenues.
• Promotion is weak ‐ o rely heavily on "word‐of‐mouth" advertising
o only less than 5% of their income spent for advertising
o only use health conscious magazine for advertising
Jackie
Opportunities: • Expand private labels
o Lower prices for customers.
o Trends support increase demand for organic/natural food products.
• Advertise more
o Offer coupons, store promotions, and mail advertisements to the community.
• Rewards program
o Frequent buyer cards
• Back to basics
o Buy more local products that customers are willing to pay a little more for.
SWOT ANALYSIS
Dawn
1/2/2014
5
SWOT ANALYSIS
Threats • Intense competition
o May have an adverse effect on profitability
• Rebranding from existing supermarkets
o Safeway
o Wal‐Mart
• Stringent regulations impose additional liabilities
• Changes in economic conditions
o Impact on consumer spending
Dawn
Current News
Detroit Store • Whole Foods opened on June 5th, 2013
o Store opened in Midtown area of Detroit, among middle and lower‐class communities.
o Financed by city and state to further Detroit's economic development.
$5.8 million in state/local grants and tax credits
• Efforts to break social stereotypes associated with the brand
o Whole Foods is becoming more receptive to lower/middle‐class consumers.
o CEO Walter Robb addressed social and racial inequalities. David
1/2/2014
6
Current News
David
June 14, 2013, New York Daily News
Michelle
May 7, 2013, The Wall Street Journal
"I mean, the only impediment you hear is that it’s more expensive, right? Which is less true than it used to be, and if we can get through the price thing, then we can talk about what we want to talk about, which is the quality of the food." - Walter Robb, Co‐CEO of Whole Foods
1/2/2014
7
Question #1
What steps has Whole Foods taken in appropriately planning strategy? Assuming Whole Foods must develop a new business model, how should they go about this?
David
What steps has Whole Foods taken in appropriately planning strategy?
• Marketing of the "4 for $15" pre‐made meals, for busy families who were still health conscious.
o Pre‐made meals strategy helped raise Whole Foods' stock price from $7 in November 2008 to $28 in September 2009.
• Revised expansions from 29 to 17 stores in 2010, to address individual stores' sales, consumer demands, and take into account suppliers and distribution logistics.
Assuming Whole Foods must develop a new business model, how should they go about this?
• Whole Foods depends primarily on word‐of‐mouth advertising to attract new customers. Expanding marketing efforts through other methods (internet and social media) will enable the company to gain more customers.
• Whole Foods should appeal to the middle class: educate consumers, offer deals and discounts, and erase the "prestigious" stereotype.
David
1/2/2014
8
Question #2
What opportunities and threats can be identified through examining Whole Foods in the context of the competitive forces model and a competitor analysis? 1.Risk of entry by potential competitors in order to secure profits
2.Rivalry among established companies can become intense as the desire to grow volume increases and lower profits
Dawn
What opportunities and threats can be identified through examining Whole Foods in the context of the competitive forces model and a competitor
analysis? Continued.
3. Bargaining power of buyers‐the ability of buyers to bargain down prices
4. Bargaining Power of Suppliers refers to the ability of suppliers to raise prices and squeeze profits
5. Substitute Products
6. The Sixth Force: Complementors are companies that sell products that add value and satisfy demand
Dawn
1/2/2014
9
Question #3
What has created the durability of Whole Foods’ market presence? What has given them their competitive advantage?
Jackie
Answer #3 What has created the durability of Whole Foods market presence?
•Barriers to Imitation created the durability of Whole Foods market presence. o According to our textbook (pg. 96), “barriers to imitation are factors that make it
difficult for a competitor to copy a company’s distinctive competencies.”
What has given them their competitive advantage?
1.Large industries – new stores and acquisitions (high investment PPE, distribution, and inventories)
2.Branding ‐ which symbolizes Whole Foods reputation (Natural and Organic foods, no extra additives, no hormones, etc.) For example: “When Consumers Think “Organic”, They Think “Whole Foods”
3.Price differentiation and Quality, and adhere USDA standards (from handling products to receiving, repacking, and to final sale are indeed organic foods)
4.Customer Satisfaction‐ “ word of the mouth”
5.Capabilities ‐ learned and experience employees
•As listed above, these are the Distinctive Competencies that covers the valuable complementary sources (Resources and Capabilities) of Whole Foods, which also gave them a sustainable competitive advantage in the market against its rivals.
Jackie
1/2/2014
10
Question #4
What functional level strategies has Whole Foods employed? Have these strategies been successful?
Michelle
Michelle
Declaration of Interdependence
1/2/2014
11
• Teams
o Completely decentralized
o Empowered Store Team Leaders
o Internal competition
o Democracy
o Transparency
o "Cross‐pollinate"
Michelle
"'How come you are paying this regional president this much, and I'm making this much?' I have to say, 'Because that person is more valuable. If you accomplish what this person has accomplished, I'll pay you that too.'" -John Mackey, Co-CEO
• Delighted Customers
o Well informed
o Community involvement
o Knowledgeable & helpful employees
o Build brand loyalty
o Unique shopping experience
Michelle
1/2/2014
12
Summary SWOT Analysis
- Competing in a highly attractive industry with high competitive strength
- Viewed as the best & primary provider of natural, organic, & healthy food
- Increasing demands continually result in increasing market share and profits
Differentiation Strategy - Be the base of competitive advantage
- Allows a company to differentiate products & services
- Used by Whole Foods is driven by the firm's desire to create a unique concept that customer perceive as different or distinct in some ways
- Differentiate itself from competitors by focusing on quality as excellence and innovation that allow Whole Foods to charge a premium price
Li
Competitive Advantage
• Superior efficiency
- Choosing right size store in each location
- Sharing lessons
• Quality
- Focusing on quality and service
- Setting up high-quality standards
• Innovation
- Selling the consumers on the entire experience
- Providing “Take Action food centers”
•Customer responsiveness
- Giving customer value for their money
- Offering extra services Li
1/2/2014
13
Walter Robb: Whole Foods' another CEO on organic growth
- Interview by Fortune senior editor Geoff Colvin
Walter Robb says, " Whole Foods is built on the idea that we want to encourage the creativity and intelligence of every one of our team members. If I could draw back the curtain, what you would see is a very strong culture of empowerment, and that is the secret of Whole Foods. "
Li
1/2/2014
14
Questions??
Pop Quiz!
1/2/2014
15
Question 1
What are some opportunities for Whole Foods?
a. Advertise More
b. Increase Brand Loyalty with their 365 brand
c. Offer a Rewards Card
d. Give away food
e. a, b, & c
Question 1
What are some opportunities for Whole Foods?
a. Advertise More
b. Increase Brand Loyalty with their 365 brand
c. Offer a Rewards Card
d. Give away food
e. a, b, & c
1/2/2014
16
Question 2
What would NOT be considered a threat?
a. Rebranding of existing supermarket
b. Changes in the customer spending habits
c. Weak government regulations
d. Strong government regulation
e. None of the above
Question 2
What would NOT be considered a threat?
a. Rebranding of existing supermarket
b. Changes in the customer spending habits
c. Weak government regulations
d. Strong government regulation
e. None of the above
1/2/2014
17
Question 3
What does Whole Foods use to differentiate itself from competitors?
a. Price
b. Quality
c. Service
d. b and c
e. all of the above
Question 3
What does Whole Foods use to differentiate itself from competitors?
a. Price
b. Quality
c. Service
d. b and c
e. all of the above
1/2/2014
18
Question 4
What percentage of their after tax profits does Whole Foods donate to not-for-profit charities?
a. 5%
b. 1%
c. 10%
d. 2%
e. None of the above
Question 4
What percentage of their after tax profits does Whole Foods donate to not-for-profit charities?
a. 5%
b. 1%
c. 10%
d. 2%
e. None of the above
1/2/2014
19
Question 5
Recently Whole Foods had to change their policy regarding
a. Religion
b. Language
c. Sexual orientation
d. Tattoos
e. Paid vacation
Question 5
Recently Whole Foods had to change their policy regarding
a. Religion
b. Language
c. Sexual orientation
d. Tattoos
e. Paid vacation
1/2/2014
20
Question 6
Second-quarter profits rose by
a. 10%
b. 2%
c. 15%
d. 20%
e. 4%
Question 6
Second-quarter profits rose by
a. 10%
b. 2%
c. 15%
d. 20%
e. 4%
1/2/2014
21
Porter’s Five Forces Model Main technique used to analyze competition in an industry environment
Li
Porter’s Five Forces Model
Forces Description Rate
Threat of New Entrants
Whole Foods has built an very strong relationship with its suppliers , which makes it difficult for new entries. The increasing competition reduce the opportunity for profit by new entrants.
Low
Intensity of rivalry among established firms
Differentiation strategy protects Whole Foods from existing firms in order to maintain value proposition
Medium
Bargaining power of buyers
Whole Foods Targeted at wealthier and more educated buyers Natural food buyers are also quite health conscious and rely on Whole Foods
Low
Bargaining power of suppliers
There are limited natural food suppliers, firms like Whole Foods will be subject to their demands .
Low
Threat of substitutes Due to the customers limit of income and volatility of eating habits , customers always look for alternative of healthy foods
Medium-High
Li
