Whole Food

Topics: Organic food, Financial ratios, Incentive program Pages: 11 (2211 words) Published: February 12, 2014


Whole foods was founded in 1980 in Austin, Texas with the staff of only 19 people and by 2009 whole foods was a leading brand in natural and organic food industry with 289 stores in USA, Canada and in Great Britain. Whole Foods offers highest quality, least processed, most favorable naturally preserved and fresh foods available, and it marketed them in appealing store environment with best customer service. As you can see in exhibit # 1, there are substitute for organic food. People can grow in their own backyards, there are so many small farmers market, also people can do hunting and fishing and the biggest substitute is non organic food which is cheaper and easily available anywhere. When the recession hit this industry, sales went down and those people probably switched to non organic food in order to be in budget. The power of buyer is medium to high because there are other sellers who offer similar product at same price and with good customer service. Threat of entrant is low because you need to have a learning curve and also the capital requirement is high in order to start up the business. The power of supplier is low because there are many suppliers and also there is no shortage of supply. Price is little bit higher than non organic food but supply is meeting the demand. Also in this industry backward integration is possible, as whole foods did by opening fish farms which is 60% of their sales. The rivalry is very high because there is a industry growth, and differentiation is not possible. Although they sell exotic products but still their major revenue is from organic meat and vegetables which any one can buy it from supplier and sell it in stores. Also, buyer switching cost is nothing; they can go to a different store next time. In short, this industry is risky but from moderate to high. Exhibit # 2 shows that there is lot of opportunities in this industry. Since whole foods is the industry leader they have more strengths than other competitors. In SWOT analysis strengths are matching with opportunities. Best quality food is connecting with healthy eating awareness and market leader refers to industry growth. Their customer service is also matching with reward system. In short, SWOT analysis shows that there is a industry growth if whole foods avail those opportunities. Whole foods have one of the best incentive programs which keep their employees motivated, as you can see in exhibit # 3, due to their staffing policies they have long term employees who love their jobs. Whole foods spend less on marketing and more on their employees. Each store has a separate budget and each employee gets bonuses according to their store performance or EVA. In 2010, the average wage rate was $16.98 which is very attractive pay and plus they get health benefits and employee discounts with some paid offs. They also have the rule for officers that they can’t make more than 19 times of average pay. Their competitive capabilities are listed in exhibit # 3 which leads them to get their core competencies of fresh and healthy food with best customer service. Although they have good incentive program to keep employees motivated, on the other hand, they also have check and balances over their employees. Due to the decentralization company’s higher level managers make secret visits to make sure the stores are working according to their mission statement and goals. The slogan “Whole foods, Whole people, Whole planet” not only attracts customers but it also motivates the employee. They think they are providing the healthy diet which keeps them motivated. Exhibit # 6 conclusions explains the whole financial position of the company. Whole Foods did not publish their economic value added (EVA) amount in financial statement because they want to determine the relationship between sales and profit projection of their new stores to justify the investment and to guide on closing stores. But I think they didn’t publish the EVA because of...
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