wholefood market (case no. 7)

CASE NUMBER 7

Group Members

Aysha Khan Marium Vohra Mehak Rasheed Monum faizan Nuzhat Yasmin

OUTLINESSTEP 1 INTRODUCTION AYSHA KHAN

STEP 2 MISSION AND VISION AYSHA KHAN

STEP 3 INTERNAL ASSESSMENT MONUM FAIZAN

STEP 4 EXTERNAL ASSESSMENT NUZHAT YASMIN

STEP 5 STRATEGY FORMULATION NUZHAT YASMIN AND MARIUM VOHRA

STEP 6 STRATEGY IMPLEMENTATION

MEHAK RASHEED

STEP 7 STRATEGY EVALUATION MEHAK RASHEED

STEP 8 CONCLUSION MARIUM VOHRA

COMPANY HISTORY

COMPANY HISTORYName Whole Foods Market, Inc

Founded 1980

logo

Brand value Natural and Organic food

Geographic areas served U.S., Canada, UK

Headquarters U.S.

motto Whole Food, Whole People, Whole Planet

Stores 275 stores(2008)284 stores (2009)435 stores (2016)

John Mackey and his wife began a small natural foods store called Safer Way and were evicted from their apartment for storing products in it, so they were forced to live in their store. After

several mergers a couple years later with Craig Weller and Mark Skiles, the opening of the original Whole Foods market began. Whole

Foods expanded to Houston and Dallas in 1988 and then into the West Coast. During this time, the trend had caught on and other natural food

chains began opening in the Northeast. In 2007, Whole Foods expanded into markets all

across the U.S. and into the U.K.

WFMS STORY

EXPANSION HISTORY

1984- Whole Foods Market began its expansion. 1989- We expanded to the West Coast. 1990-1999- acquiring other natural foods chains throughout

the 90's. 1998- Development of "virtual" store began. 2000- Additional acquisitions. 2001- Whole Foods moved into Manhattan. 2002- Expansion into Canada 2003-2004- Whole Foods Market entered the United

Kingdom. 2007- Merger with Wild Oats

WILD OATS MARKET INC Started in boulder, Colorado in 1987. Acquisition due to competition 35% market share + Wild Oats = 50% market share it helped WFMs to have an increase in the number of

stores and to explore new geographical locations which obviously allowed WFMs to serve more customers.

Acquisitions of Wild Oats was a capital and costly decision and it can affect the financial position of the WFMs.(cons)

This acquisitions is also against the strategy of WFMs to have larger stores because Wild Oats stores are relatively smaller.

PRODUCTS

Sea FoodMeat And PoultrySpecialty(beer , wine & Cheese)Nutrition & Body Care(organic, natural)Floral ItemsGroceryPrepared Food (soups, canned and packaged)

Coffee And TeaVitaminsPet ProductsBakery(cakes, breads and cookies and etc.)Educational products such as Books related to cooking, diets and lifestylesHousehold products

STEP 2:VISION AND MISSION

STATEMENT

• Searching for the highest quality, least processed, most flavorful and natural foods

• Famous at providing organic food Whole Foods

Whole food

• Employing people who are passionate about healthy food and a healthy planet.

• Providing excellent customer service Whole People

Whole people

• Caring about communities and environment • Sponsoring neighborhood events and Donating

to local non-profit groups Whole Planet

Whole planet

MOTTO

‘We are selling the 100% organic and natural products in the world.’

PROPOSED VISION

EXISTING MISSION STATMENT“To promote the vitality and well being of

all individuals by supplying the highest quality, most wholesome foods available.”

Customer Products/ Services Markets

Yes(individuals) Yes(healthy food) No

Technology Concern for survival or growth

Philosophy

No No Yes (highest quality food)

Self-concept Concern for public image

Employees

Yes (all individuals) No No

PROPOSED MISSION

‘To serve customers with superior organic food, customer focused service and continuous

innovation in the world while generating long term profitable growth for shareholders and

contribute for the welfare of society .’

9 COMPONENTS OF MISSION STATEMENTCustomer Products/ Services Markets

Yes Yes(organic) Yes (world)

Technology Concern for survival or growth

Philosophy

No Yes Yes (highest quality)

Self-concept Concern for public image

Employees

Yes(innovation in the world)

Yes(welfare of society) Yes

INTERNAL ASSESSMENT

STEP 3:

FINANCIAL RATIO ANALYSISINCOME STATEMENT RATIOS 2006 2007 2008

Gross profit 34.9% 34.8% 34.0%Net profit margin 5.7% 4.5% 3.0%Direct stores opening expenses 72.6% 74.5% 77.9%Per-opening and relocation cost 1.9% 3.1% 3.4%Earning per share(EPS) 1.46% 1.3% 0.82%

•Gross profit set by company to achieve 34%

•Net profit margin averaging 5% of sales.

•Direct stores opening expense as a

percentage of gross margin shows large

consumption of gross profit.

•Pre-opening and relocation as a

percentage of gross margin shows minimal

consumption of gross profit.

•EPS favorable from 2006-2007 but drops to

insufficient level in 2008.

FINANCIAL RATIO ANALYSIS

•Current ratio declining gradually indicating

cash and receivables are insufficient to

cover current liabilities.

•Debt to asset ratio shows rapid increase in

debt from line of credit and long term loans

and capital leases.

•Debt to equity ratio show debt averaging

50% of the equity stake in assets then

increase to 120%.

•Inventory turnover shows monthly

average to sell its merchandise inventory.

Whole food managementRegional Presidents

ORGANIZATIONAL CHART

Executives officers

ORGANIZATIONAL CHART

Flat Non hierarchical Decentralized Lean, not heavy management Open communication.

ORGANIZATIONAL CHART

RECOMMENDED ORGANIZATIONAL CHART

MARKET POSITIONING MAP

MARKET SHARE AND OTHER COMPANIES

17%

7%

64%

9% 2% 1%

SHAREthe kroger cosupervalu incothers(walmart,fresh and easy,mom & grocer)safeway incwhole food market inc.adil group

The value-added pricing strategy Keep customers loyal by providing service the customers

can’t find anywhere else. Market strategy:

expansion and acquisition. Forward integration Horizontal integration

STRATEGY ANALYSIS

Promotional strategy Discounting Advertising

Television advertising. Print advertising. Online advertising(social network marketing and Google ad

words). Billboard advertising.

Website’s design Cooking tips. Company blogs. Product and stores locators. Company and investor information. Links to whole foods’ pages on social networking sites.

STRATEGY ANALYSIS

PROMOTIONAL STRATEGYSocial media

Gain awareness about our prepared meals and post what are the meals are that day.

Mobile apps

PROMOTIONAL STRATEGY

Radio Television/online:

“values matter”:documentary style TV spots feat supplier, fisherman etc. Modern family, jimmy kimmerl, the voice. You tube:22 video ads

Print: Magazines and newspapers. Men’s health, rolling stone, new York times

MEDIA MIX

VALUE CHAIN

CORE VALUES Selling the highest quality natural & organic products available

Satisfying & delighting our customers

Supporting team member happiness & excellence

Creating wealth through profits & growth

Caring about our communities & our environment

Creating ongoing win-win partnerships With our suppliers

Promoting the health of our stakeholders Through healthy eating

education

STRENGTH

• Brand recognition.• Good quality.• Huge selection/variety.• Large, customized stores.• Organic market leader• Good distribution system.• Positive employee environment.

WEAKNESS

• Concentrated just on US market.• Relative slow growth.• Limited number of suppliers.• Advertising budget is very low.• Large perishable inventory.• Low market share.

IEF MATRIXStrength •Brand recognition.•Good quality.•Huge selection/variety.•Large, customized stores.•Organic market leader•Good distribution system.•Positive employee environment.

Weight0.100.140.100.070.050.050.07

Rating4444333

W.Score0.4

0.560.4

0.280.150.150.21

Weakness•Concentrated just on US market.•Relative slow growth.•Limited number of suppliers.•Advertising budget is very low.•Large perishable inventory.•Low market share.

0.100.050.100.100.060.011.00

121221

0.10.10.10.2

0.120.01 2.78

STEP 4:EXTERNAL

ASSESSMENT

OPPORTUNITIES

Higher quality product Popularity of healthy living Cross over of traditional grocers Promote and build brand identity with organic food Expend prepared food Higher demand for organic product Consumer health benefit through media Discount product line for lower income segment International expansion

THREATS

Increased price pressure from fresh food Increase competition Increasing inflation Growth relies on new stores and acquisition New entrant Economic condition could effect good will Expanded prepared food

EF MATRIX

COMPETITORS

COMPETITIVE PROFILE MATRIX

STEP 5:STRATEGY FORMULATION

Opportunities1. Higher quality product2. Popularity of healthy living3. Cross over of traditional grocers4. Promote and build brand identity with

organic food 5. Expend prepared food 6. Higher demand for organic product7. Consumer health benefit through media8. Discount product line for lower income

segment 9. International expansion

Strength1. Brand recognition.2. Good quality.3. Huge selection/variety.4. Large, customized stores.5. Organic market leader6. Good distribution system.7. Positive employee environment

SO strategies1. Promote and build brand identity for

brand recognition. (S1,O4)2. Use experience to successfully expend

in to international market. (S4,O9)3. Growth in prepared organic food.

(S5,O5)

SWOT MATRIX

WEAKNESS1. Concentrated just on US market.2. Relative slow growth.3. Limited number of suppliers.4. Advertising budget is very low.5. Large perishable inventory.6. Low market share.

Opportunities1. Higher quality product2. Popularity of healthy living3. Cross over of traditional grocers4. Promote and build brand identity with

organic food 5. Expend prepared food 6. Higher demand for organic product7. Consumer health benefit through

media8. Discount product line for lower income

segment 9. International expansion

WO strategies1. Creating a prepared food section

would appeal to more people because of convenience.(W2,O8)

2. If cost for organic farmers are lowered, produced more and arrange a selling price deal between farmers and whole foods.(W2,O6)

Strength1. Brand recognition.2. Good quality.3. Huge selection/variety.4. Large, customized stores.5. Organic market leader6. Good distribution system.7. Positive employee environment

THREAT1. Increased price pressure from fresh

food2. Increase competition 3. Increasing inflation4. Growth relies on new stores and

acquisition5. New entrant6. Economic condition could effect

good will 7. Expanded prepared food

ST strategies1. Concentrate on strength

and what will separate them for all the other stores in order to maintain consistent growth rate.(S2,T4)

2. Promote brand image with quality and value for money.(S1,O1)

WEAKNESS

1. Concentrated just on US market.2. Relative slow growth.3. Limited number of suppliers.4. Advertising budget is very low.5. Large perishable inventory.6. Low market share.

THREAT1. Increased price pressure from

fresh food2. Increase competition 3. Increasing inflation4. Growth relies on new stores and

acquisition5. New entrant6. Economic condition could effect

good will 7. Expanded prepared food

WT strategies

1. Internationally expansion with prepared food. (W1,T2,T7)

2. Expand advertising budget to increase market share for meet competition. (W4,W6,T2)

SPACE MATRIXFP average 4.14SP average -2.71CP average -3.00IP average 4.57

X axis 1.57Y axis 1.43

SPACE MATRIX

Defensive

ConservativeAggressive

Competitive

BOSTON CONSULTING GROUP (BCG) MATRIX

Revenue % Profit % Relative market share

Industry growth rate

33.8% 43.2% 0.70 +15

19.1% 20.4% 0.09 -5

47.1% 36.4% 0.21 +10

(BCG) MATRIX

INTERNAL - EXTERNAL (IE) MATRIX Classification of Cells: I, II, IV classified as: Grow & Build Backward, Forward, or Horizontal Integration Market Penetration Market Development Product Development

III, V, VII classified as: Hold & Maintain Market Penetration Product Development VI, VIII, IX classified as: Harvest & Divest Retrenchment Divestiture

IFE MATRIX

GRAND STRATEGY MATRIX

GSM

QUANTITATIVE STRATEGIC PLANNING MATRIX

Range for Attractive Scores: 1 = Not attractive 2 = Some what attractive 3 = Reasonably attractive 4 = Highly attractive

QSPM

RECOMMENDATION

Product DevelopmentWhole foods are competing in high competitive environment from 2 kind of competitor general store and organic store and as per QSPM result both are highly attractive but Product Development is more just life prepared food, prepared diet food, recipe magazine, and health guider etc..

STEP 6:STRATEGY

IMPLEMENTATION

EPS/EBIT ANALYSIS

EPS/EBIT CHART ANALYSIS

100 150 200 2500102030405060708090

100

54

6976

66

8493

60

7583

C.S.FD.FC.F

WHOLE FOOD MARKET INC.PROJECTED INCOME STATEMENT

WHOLE FOOD MARKET INC.PROJECTED BALANCE SHEET

PROJECTED FINANCIAL RATIOS

WHERE DID THE MONEY GO?

STEP 7:STRATEGY

EVALUATION

BALANCED SCORECARD

STEP 8:

CONCLUSION

EXISTING STRATEGIES FOR 2009

Cutting in half the planned new store opening(30to15) Cutting discretionary spending by 50 percent Suspending its cash dividend Increasing the range of lower priced item Strengthening its value image Launched its whole trade product line

PROPOSED STRATEGIES Backward integration Increase marketing and goodwill to grow comparable

store Look for way to decrease upstream supply Private labeling Establish R & D project Expend online service