Expansion Strategy analysis for Whole Foods
With a right business model and dedicating to the core values and stringent quality standards and the whole healthy ecological chain between the Whole Foods and customers, Whole Foods has obtained a rapid growth and market success. Though with strong influence from global economic recession, there seems to be no reasonable cause for Whole Foods to stop keeping expansion and acquire more profits and contribute more to the natural and organic foods movement across the US, helping the industry gain acceptance among growing numbers of consumers and gradually transforming the diets of individuals in a manner that would help them live longer, healthier, more pleasurable lives. Moreover, it is necessary to reanalyze the expansion plan and lay a solid foundation for the future operation strategy so as to secure the continuing grows of profits. There are four reasons for supporting this argument as below. First of all, cash flow fuels growth. Whole Foods had very strong cash flows even after the Wild Oats acquisition and in the global economy recession. the company’s board of directors suspended dividend payments on common shares for the foreseeable future. Capital expenditures during fiscal 2010 were expected to be in the range of $350-$400 million, with about 65 percent of this amount being for 17 new-stores development. So financial issues should not be a hurdle for the expansion plan under the booming demand from customers for natural and organic foods. Secondly, the recovering economy will stimulate the purchasing power. In 2010, the U.S. economy was beginning recovery though it was in the middle of the recession. As the recession deepens, customers have returned to buying cheaper food. But with the economy growing the organic foods consumers will go back to their track to choose natural organic foods. As we can see during the first quarter of 2010, the sales grow 3.5 percent and total revenue grow 7 percent compare to...
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