MGMT 350

Group 2:

Yvonne Larios

Kathleen Bartman

Miao Zhang

Sergio Espindola

Whole Foods:

Problem Statement/ Purpose of Statement

Problem Statement:

Whole Foods CEO, John Mackey’s opinions have caused controversy amongst their consumers. As their communication consultants, we must decide how to improve Mackey’s manner of expressing his opinions to prevent public uproar. A company’s CEO indicating their personal thoughts on significant issues will inevitably provoke dispute.

Statement of Purpose:

To recommend a plan that is going to outline appropriate methods for public expression of personal opinion without a negative impact on the company. The report will be based on an analysis of John Mackey’s opinion piece for the Wall Street Journal and will determine the causes and consequences of the article on Whole Foods Market. Preventative measures will include best practices for publishing high profile media for staff at all levels.

375 words each (1500 words total)

1) A brief recap of the relevant facts

The CEO had publicly taken a position at odds with the store’s key customer demography. The prolific CEO, John Mackey, had written an opinion-editorial which was published by the Wall Street Journal on August 11,2009.

In 1978, John Mackey started a natural foods store with his then girlfriend Rene Lawson called SaferWay in Austin, Texas.2 Two years later, John merged his SaferWay store with Clarksville Natural Grocery to form a new store called Whole Foods Market.

Whole Foods now has more than 270 stores in the United States and four in the United Kingdom. Sales in 2008 topped $8 billion.

The company is focused on product quality and selecting food ingredients with minimal processing. The company has a list of unacceptable food ingredients, which includes artificial flavors, colors, sweeteners, preservatives, and more. Whole Foods is ranked third in the U.S. Environmental Protection Agency’s list of Top 25 Green Power Partners.

The company has approximately 54,000 employees and very limited union influence. All employees who work over thirty hours per week are eligible for the company insurance plan. Almost eighty-nine percent of Whole Foods employees are eligible for its health care insurance plan.

John Mackey has served as the chairman and CEO of Whole Foods since 1980.

This Healthcare op-ed issue is not the first time Mackey has been in the spotlight for his actions. He is well known for being blunt.16 On July 20, 2007, The Wall Street Journal revealed that Mackey had been using the pseudonym “Rahodeb” (an anagram of his wife’s name, Deborah) to post blogs criticizing Whole Foods’ competitor, Wild Oats Market, and questioning the value of the company’s stock.

s a premium on foods grown without pesticides and synthetic fertilizer is now a major force. Nationwide sales of organic food increased 142% from $2.1 billion in 2003 to $5.2 billion in 2008. These figures do not account for sales of private label organic food, such as Whole Foods’ “365” label, which would have increased sales levels markedly.

The health benefits of eating organic food, despite its cost, appeals most to two major groups: young adults and high-income consumers.

Even before President Obama was elected in 2008, he was campaigning for health care reform

As of early August 2009, the message from the White House was an eight-point list of “Health Insurance Consumer Protections”

Those basic eight points were expected to remain central to whatever final bill would finally be presented to congress

: • No discrimination for pre-existing conditions

• No exorbitant out-of-pocket expenses

• No cost sharing for preventive care

• No dropping of coverage for seriously ill

• No gender discrimination

• No annual or lifetime cap on coverage

• Extended coverage for young adults

• Guaranteed insurance renewal

Mackey made some fairly standard conservative arguments about why healthcare should not be controlled by the government. His general argument focused on “less governmental control and more individual empowerment.”

Mackey offered his own list of eight points, but unlike President Obama’s, his list would lower the cost of health care for everyone. The list was essentially an explanation of the Whole Foods insurance system in which nearly all employees are given the choice to choose their doctor and a $2500 annual cash spending account for healthcare. This account would encourage employees to be frugal with their healthcare because they have a significant amount of money to lose.

He finished the piece with a lengthy accusation of the American diet as the real culprit, and extolled the virtues of every American adult taking responsibility for their own health.

He specified what a diet ought to be, and showed a recommended diet with a pie chart. It is no coincidence that he recommended “whole foods which are plant-based, nutrient dense, and low fat.”

Mackey defended his position by saying, “health care as a right of all Americans and his support for freedom of choice. As he put it, “I gave my personal opinions. Whole Foods has no official position on the issue.” As he put it, “I gave my personal opinions. Whole Foods has no official position on the issue.”

2) Your analysis of the effectiveness of the communications in furthering the goals of the affected organizations

The Whole Foods Market Corporate Communications team would need every ounce of its collective crisis-management experience to weather this coming storm.

A strong customer segment of Whole Foods is comprised of liberals with left-leaning politics, and they like the company’s involvement in green and social causes.

In a 2000-word post on his blog, he argued that he made no mistakes in ethics, only in judgment.

John Mackey had made it known to the corporate communications group at Whole Foods that he was going to make his opinions known, but he did not indicate that it would be through the nationally distributed Wall Street Journal

Certainly, a large demographic among Whole Foods Market shoppers is the progressive, environmental activist – one who is more likely than the average consumer to write, e-mail, or call the company to protest some of John Mackey’s messages.

one who publicly announces a position on health care that most people assume is the opposite of what his famously progressive customer base would agree with

John Mackey left for a lengthy back-country vacation the day after the article was published.

Between Mackey’s anti-government position, and the typical Whole Foods Market consumer’s liberal views on most issues.

The trade unions, which are not a part of Whole Foods, saw it as an opportunity to strike and took the opposite position of whatever Whole Foods was doing.

By week three of the situation, conservative and libertarian groups had been made aware of the boycott and had started a reverse boycott where in their supporters would go to Whole Foods and shop for groceries in support of Mackey’s position.

the response from the online community played a pivotal role in the situation. Whole Foods has a large Twitter presence for a brick-and-mortar store, with more than a million followers. There were thousands of “tweets” going back and forth even though Whole Foods did not take a position.

Whole Foods has always had a “Fan Page” on the social networking site Facebook. It has over 140,000 fans on its official site. Some 152 of its stores have even started their own Facebook sites, clearly showing a company commitment to this new trend.

However, following the publishing of the op-ed piece, a “Whole Foods boycott” group sprang up on Facebook and grew to over 27,000 members within two weeks.

3) What lessons can be learned

Unfortunately for Whole Foods, many of the negative comments included vows never to shop at the store again. The effects of these boycotts on sales are yet to be determined, but will make an interesting statement about the rights of a CEO to make his opinions known in the context of the company he runs.

4) Your recommendations to your client