edited presentation final copy- whole foods

5/22/2018 Edited Presentation FINAL COPY- Whole Foods

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BUSINESSPOLICY& PLANNINGCASESTUDY2012WWW.WHOLEFOODSMARKET.COM

STEVENPELLETIER, JARRYDPHILLIPS, OTHNIELHYLIGER, SPENCERJACOBY,JERMAINEWEST
http://www.wholefoodsmarket.com/http://www.wholefoodsmarket.com/http://www.wholefoodsmarket.com/http://www.wholefoodsmarket.com/http://www.wholefoodsmarket.com/http://www.wholefoodsmarket.com/http://www.wholefoodsmarket.com/http://www.wholefoodsmarket.com/http://www.wholefoodsmarket.com/http://www.wholefoodsmarket.com/


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OVERVIEWCompany Overview

Brief History

Current Vision & Mission

Current goals and policies

New Mission and Vision Statements

Core Values

Organizational Chart

External Assessments

Industry Analysis

Opportunities and threats

EFE Matrix

CPM MatrixInternal Assessment

Strengths and weaknesses

Financial condition

IFE Matrix

Strategy Formulation

SWOT Matrix

Space Matrix

Grand Strategy Matrix

IE MatrixMatrix Analysis

Possible Strategy

QSPM Matrix

Future Strategic Plans

Objectives

Recommendations

Implementation Issues

EPS/EBIT

Potential issues

Sources


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TIMELINEHISTORY

1978- twenty-five year old dropout John Mackey and twenty-one year oldRene Lawson Hardy, opened the small natural foods store.

1980- John and Rene partnered with Craig Weller and Mark Skiles to

merge SaferWay with their Clarksville Natural Grocery. 1981- The worst flood in 70 years devastated the city of Austin.

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.

1999- Site went live.

2000- Additional acquisitions.

2001- Whole Foods moved into Manhattan.

2002- Saw an expansion into Canada

2003-2004- Whole Foods Market entered the United Kingdom.

2007- Merger with Whole Foods Market 2008- John Mackey cleared of charges.

August 2008- voluntary multi-state recall.

2009- John Mackey voluntarily gave up his chairmanship

2011- The stock symbol changed


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CURRENTVISIONSTATEMENT

Our bottom line ultimately depends on our ability to satisfy all of our stakeholders.

Our goal is to balance the needs and desires of our customers, Team Members,shareholders, communities and the environment while creating value for all. Bygrowing the collective pie, we create larger slices for all of our stakeholders. Our corevalues reflect this sense of collective fate and are the soul of our company.


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WHOLEFOODSMARKETGOALS

We aspire to become an international brand synonymous with notjust natural and organic foods, but also with being the best foodretailer in every community in which we are located. We believeour heavy emphasis on perishables and locally grown products,

along with our unparalleled customer service, is helping us reachthat goal, differentiating our stores from other supermarkets andenabling us to attract a broad base of loyal customers. We arewell positioned to take advantage of changing demographictrends, and I expect our renewed emphasis on healthy eating tohelp further differentiate us and solidify our unique position withinthe food retailing universe.


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WHOLEFOODSMARKETPOLICIES

We believe that much of our success to date is because weremain a uniquely mission-driven Company. We are highlyselective about what we sell. We believe in providing anempowering work environment for our team members, and weare committed to sustainable agriculture. Our motto, Whole

Foods, Whole People, Whole Planet, emphasizes that our vision

reaches far beyond just food retailing. We strive to promote astrong Company culture featuring a team approach to storeoperations that we believe is distinctly more empowering of teammembers than that of the traditional supermarket. We alsopromote a decentralized team approach to store operations inwhich many decisions are made by teams at the individual storelevel.


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NEWVISION& MISSIONSTATEMENTS

While we fulfill a part of our mission every day

through selling the highest quality natural and

organic foods available, we believe we have the

opportunity and obligation to do more in terms

of educating our stakeholders about the benefits

of healthy lifestyle choices. To underscore our

renewed focus, we created a new Core Value this

yearPromoting

the health of our stakeholders

through healthy eating education.


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COREVALUES

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


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ORGANIZATIONALCHART


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EXTERNALASSESS

MENTS


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GLOBALINDUSTRYANALYSIS

Organic Market Growth Rates

Source: Organic Monitor

Revenues(US

$B

illions)


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US INDUSTRYGROWTH

Organic Food Growth 2006-2009

Source: Organic Trade Associations 2011 Organic Industry Survey conducted 12/22/2010 3/7/2011 ($ mil consumer sales).


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GLOBALSEGMENTATIONBYLOCATION

United States97% of sales

Canada and UK3% of sales


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COMPETITORS


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OPPORTUNITIES

They could sponsor more town events (not just in-store events)to increase recognition of the brand name and make customersmore aware of the products they offer.

Expand private label selectionlower price for customers

Class offerings that educate the new consumer about a newproduct. (Cooking classes.)

International expansion More recently, Whole Foods has implemented a new marketing

strategy to combat the perception of high prices.

Promote and build brand identity with organic foods, eventuallyleading to the idea that when people think "organic" they will think"Whole Foods."

Rewards programfrequent buyer cards (like Kroger cards) Expand prepared foods.

Customer service enhancement

Create a discount product line for lower income segment


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THREATS

Increased competition from existing supermarkets that are re-branding in order to compete with them like; Wal-Mart, HEB,Wegman's (New York), and Publix (Southern US).

Local Farmers Markets/Independent Retail Chains

Low spend per trip due to high prices. Individuals buy thespecialty item and not the essentials.

Product recallsEcoli and salmonella

In a recession environment, consumers are concerned withfalling home prices, lower job security, and commodity inflation

Changes in government regulations on organic food wouldimpact consumer spending even further.

Competitors - lower cost or imports; Trader Joes, Costco

Consumers are avoiding any products that might beconsidered lavish or more than a necessity.


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COMPETITIVEPROFILEMATRIX


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EFE MATRIX


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INTERNALAssessm

ent


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STOCKPERFORMANCE2007-2012


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CLOSESTCOMPETITORSCOMPARISON2007-2012


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INCOMESTATEMENT


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BALANCESHEET


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FINANCIALRATIOS


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TRENDANALYSIS

Recent trends in the industry of grocery stores consist of expanding what they have to offer, trying to draw in customers

and keep customers in the store longer. Some examples of these are: Interactive web sites

Recipes

Earning loyalty cards

Providing cooking classes (online/privately or group).

Freshly prepared onsite ready to eat meals.

Sit down spaces to eat, keeping customers onsite longer. Salad bars and coffee areas.

There is also a negative side to industry trends too. With the recession being the main reason for these,some are however; also global problems have taken its toll on all industries. For example:

Higher gas prices

Mortgage failures

Job losses

Investment fears

Food inflation

Many grocery shoppers have begun looking for bargains. In the recent economic recession that beganto happen in 2008, the wealthy are even showing signs of taking their foot off the gas when it comes tospending and are looking for ways to save a penny wherever they can. A 2008 survey found that manyadults are preparing more meals at home (43%), using more coupons (40%), or going out of their wayto look for lower-cost items (37%) as a result of higher food costs (Reuters, 2008).

Ref: http://www.reuters.com/article/2008/08/26/idUS192211+26-Aug-2008+PRN20080826


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STRENGTHS

The company recorded revenues of $7,953.9 million during thefinancial year (FY) ended September 2008, an increase of 20.7%over FY2007.

High quality food.

Strong brand equitythe Whole Foods brand is knownworldwide for its organic products.

Staff is passionate about promoting the products and sharing thatenthusiasm.

Nationally Known Organic/Natural Foods Seller

They have an amazing website with blogs, recipes, sale items,tips, podcasts and more.

The website is well designed and explains the Whole Foods

concept very well. Experience in the Industry

Fair labor wages for the farmers.

Financial positionconsistent annual sales growth

Locations based on demographics.


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WEAKNESSES

US government provides money to support the corn growers

industry, but not the organic farmer-therefore companies notutilizing organic ingredients can grow more food cheaper andfaster.

Priceup to 75% higher

Viewed as a luxury shopping destination.

Weak management team Customer loyalty is missing

Number of organic food farmers is growing, but slowly and thesupply chain for organic foods is underdeveloped and cannotmeet the needs of the American food system.

Advertising Budget very low (WOM approach)

They are known as "whole paycheck" because some of thefoods are higher priced than other grocery stores.

Diseconomies of scale

Targets a small amount of shoppers


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IFE MATRIX


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STRATEGICFORMULATIONS


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SWOT MATRIX

S1, O1: Use the significant financial growth to get moreinvolved in the local community in order to appeal to a widergroup of potential customers

S2, O2: With it's growing presence- and more customers,whole foods have the opportunity to make prices morereasonable.

S3, O3: Good opportunity to use the passionate staff to make

cooking courses (classes) a noticeable attraction.

S4, O4: use experience to successfully expand intointernational markets- yet still appeal to different countrieslocals.

S7, O5: Expanding into other markets will require a diversifiedportfolio, which if done correctly will S

S7, O7: Use company's name to create a successful growth

in prepared organic foods/ meals.

SO Strategies

W1, O1: they could sponsor some of the organicfarmers, if costs for organic farmers are lowered, theywill also be able to produce more- could arrange aselling/ price deal between farmers and Whole Foods.

W2, O2: with prices 75% higher, would increase sales ifprices (even just certain prices) were adjusted to a morereasonable cost.

W3, O3: In order to be truly experienced in variousindustries, you need a management team who isexperienced who are also mentoring/ molding newerand less experienced managers for the future.

W4, O5: It can and should be a strength to be viewed asa luxury shopping destination, thus a better perceptionon higher prices and value for money should beencouraged. It can still be luxurious with a morereasonable price range.

W8, O6: in order to appeal to a wider range ofcustomers without decreasing their prices, creating aprepared foods/ meals section would appeal to morepeople because of the convenience.

WO Strategies


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SWOT MATRIX

S1, T1: Concentrate on strengths and what willseparate them from all the other stores in order tomaintain consistent growth rates.

S2, T2: promote brand image in order to makecustomers and potential customers aware that theycannot receive the same quality and value formoney anywhere else except for Whole Foods.

S3, T3: The employees can have a huge influenceon the atmosphere of the stores, would beimportant to use employee passion to makecustomers feel more at home and thus increaselikelihood on giving tips.

S4, T4: it's important to use staff and industryexperience to either inspect foods more, maintain astrict organic profile in order to prevent product

recalls.

S5, T5: By maintaining a good relationship withfarmers, government regulations may have less ofan impact on the organic food than farmers mayfear.

ST Strategies WT Strategies

W1, T1: support farmers in order to help themkeep cost of farming certain foods

W2, T2: highlight/ promote the benefits ofbuying from Whole Foods compared tofarmers markets.

W3, T3: With new brands expanding into

markets, cant afford to be stuck with assemblyline trends.

W4, T4: Sales should attempt to remainconsistant, and not fluctuate with seasons.

W5, T5: With government regulations and theincrease of organic farms, quality maydecrease. Important that Whole Foodsmaintains high level of consistency in food

quality.


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SPACEMATRIX


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GRANDSTRATEGYMATRIX

With the way in which the business is currently situated it would be in their best interest to use quadrant I, as they can

maintain there hold while integrating themselves intonew investments and further move them forward.


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BCG MATRIX


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IE MATRIX


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MATRIXANALYSIS

Alternative Strategies IE SPACE GRAND BCG Count

Forward Intergration x x x 3

Backward Intergration x x x 3

Horizontal Intergration x x x 3

Market Penetration x x x x 4

Market Development x x x 3Product Development x x x x 4

Related Diversification x x 2

UnrelatedDiversification x 1

HorizontalDiversification x x x 3

Joint VentureRetrenchment

Divestiture

Liquidation


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POSSIBLESTRATEGIES

Market expansion within foreign markets

Europe

Canada

UK

Expand advertisement budget

Ecommerce

Television

Product development

Prepared meals

Expand on Green initiatives


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QSPM


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FUTUREPLANS

Expand online services Express stores

Expansion into foreign markets

Celebrity marketing and reality show market


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OBJECTIVES

Objectives listed in 2009 Founders address withinthe annual report More aggressive on purchasing side of business

Create more value for customers on pricing side of

business Be better stewards of capital

Have smaller and less expensive stores

Promote healthy eating education


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RECOMMENDATIONS

Market expansion to foreign markets by adding 5stores $10,000,000

Expand advertising budget to increase marketshare and sales $2,500,000

Expand product to include prepared foods that willcompete with diet system competitors $2,500,000

Total cost = $15,000,000


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IMPLEMENTATIONS

EPS/EBIT A


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EPS/EBIT ANALYSIS

$ amount needed: 15M

Stock Price: $20

Tax rate: 35%

Interest rate: 4%

# of shares outstanding: $1.283M


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POTENTIALISSUES

Organic food competitors increasing

Federal regulations Potential future recessions

Crop disease control

Employee compensation


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BALANCESCORECARD


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SOURCEOFINFORMATION

Whole Foods Market Reports First Quarter 2009 Results,http://www.wholefoodsmarket.com/company/pdfs/Q109financial.pdf

Whole Foods Market 2009 Annual Report http://www.wholefoodsmarket.com/company/pdfs/ar09.pdf

YCHARTS

http://ycharts.com/companies/WFM/eps_ttm#series=type:company,id:WFM,calc:eps_ttm&zoom=&startDate=6/30/2007&endDate=12/31/2009&format=real&recessions=false

Wholefoods Marketing Information

http://www.wikinvest.com/stock/Whole_Foods_Market_(WFM)

Wholefoods Historical Stock Information http://finance.yahoo.com/q/hp?s=WFM&a=08&b=31&c=2009&d=08&e=31&f=2009&g=d&z=66&y=594

Wholefoods Competitor Information

http://knowledgeproblem.com/2009/08/10/evolving-competition-whole-foods-costco-trader-joes/

Wholefoods SWOT Information

Business Source Completedatamonitor.com

Growth Rates

Market Trends

http://www.reuters.com/article/2008/08/26/idUS192211+26-Aug-2008+PRN20080826
http://www.wholefoodsmarket.com/company/pdfs/Q109financial.pdfhttp://www.wholefoodsmarket.com/company/pdfs/ar09.pdfhttp://ycharts.com/companies/WFM/eps_ttmhttp://ycharts.com/companies/WFM/eps_ttmhttp://www.wikinvest.com/stock/Whole_Foods_Market_(WFM)http://finance.yahoo.com/q/hp?s=WFM&a=08&b=31&c=2009&d=08&e=31&f=2009&g=d&z=66&y=594http://knowledgeproblem.com/2009/08/10/evolving-competition-whole-foods-costco-trader-joes/http://www.reuters.com/article/2008/08/26/idUS192211+26-Aug-2008+PRN20080826http://www.reuters.com/article/2008/08/26/idUS192211+26-Aug-2008+PRN20080826http://www.reuters.com/article/2008/08/26/idUS192211+26-Aug-2008+PRN20080826http://www.reuters.com/article/2008/08/26/idUS192211+26-Aug-2008+PRN20080826http://www.reuters.com/article/2008/08/26/idUS192211+26-Aug-2008+PRN20080826http://www.reuters.com/article/2008/08/26/idUS192211+26-Aug-2008+PRN20080826http://www.reuters.com/article/2008/08/26/idUS192211+26-Aug-2008+PRN20080826http://www.reuters.com/article/2008/08/26/idUS192211+26-Aug-2008+PRN20080826http://knowledgeproblem.com/2009/08/10/evolving-competition-whole-foods-costco-trader-joes/http://knowledgeproblem.com/2009/08/10/evolving-competition-whole-foods-costco-trader-joes/http://knowledgeproblem.com/2009/08/10/evolving-competition-whole-foods-costco-trader-joes/http://knowledgeproblem.com/2009/08/10/evolving-competition-whole-foods-costco-trader-joes/http://knowledgeproblem.com/2009/08/10/evolving-competition-whole-foods-costco-trader-joes/http://knowledgeproblem.com/2009/08/10/evolving-competition-whole-foods-costco-trader-joes/http://knowledgeproblem.com/2009/08/10/evolving-competition-whole-foods-costco-trader-joes/http://knowledgeproblem.com/2009/08/10/evolving-competition-whole-foods-costco-trader-joes/http://knowledgeproblem.com/2009/08/10/evolving-competition-whole-foods-costco-trader-joes/http://knowledgeproblem.com/2009/08/10/evolving-competition-whole-foods-costco-trader-joes/http://knowledgeproblem.com/2009/08/10/evolving-competition-whole-foods-costco-trader-joes/http://knowledgeproblem.com/2009/08/10/evolving-competition-whole-foods-costco-trader-joes/http://knowledgeproblem.com/2009/08/10/evolving-competition-whole-foods-costco-trader-joes/http://knowledgeproblem.com/2009/08/10/evolving-competition-whole-foods-costco-trader-joes/http://finance.yahoo.com/q/hp?s=WFM&a=08&b=31&c=2009&d=08&e=31&f=2009&g=d&z=66&y=594http://www.wikinvest.com/stock/Whole_Foods_Market_(WFM)http://ycharts.com/companies/WFM/eps_ttmhttp://ycharts.com/companies/WFM/eps_ttmhttp://www.wholefoodsmarket.com/company/pdfs/ar09.pdfhttp://www.wholefoodsmarket.com/company/pdfs/Q109financial.pdf

edited presentation final copy- whole foods

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