Whole Foods Porter's 5 Forces

Whole Foods Market Strategic Management

Table of Contents
Introduction…………………………………………………………………….…….p. 3
Trends in the Organic Foods and the Impact on Whole Foods…………………........p. 3
Application of Porter’s 5 Forces Model………..…………………………….............p. 4
Most Significant Environmental Threat and Whole Foods Combat ………………...p. 6
SWOT Analysis….…………………………………………..………………........…p. 7
Sustaining Competitive Advantage...…………………………………...….………..p. 8
Summary….………………………………………………………….………..…….p. 8
References.…………………………………………………………..……………....p. 10 Whole Foods Market
Introduction
John Mackey cofounder and Chief Executive Officer (CEO) founded Whole Foods in 1980 with the purpose of providing organic foods to the grocery shopping public.
In fact, it can be said that the growth of Whole Foods has fueled the growth and financial success of its suppliers. This relationship has allowed Whole Foods to develop relationships with key suppliers and logistics providers that new and smaller organic food chains are unable to compete with.
Competitive Pressures Stemming from Buyer Bargaining Power and Seller-Buyer Collaboration: As arguably the largest buyer of organic products, Whole Foods is able to leverage relationships from suppliers. When a new Whole Foods stores opens it “takes [in 2007 dollars] about $850,00, to stock a store with inventory, a portion of which was financed by vendors” (text citation). By be able to leverage it suppliers in this fashion, Whole Foods can mitigate financial risk and burden.
Most Significant Environmental Threat and Whole Foods
As consumers have less discretionary income, will they afford to continue shopping at grocery stores that charge a higher premium? As gas prices rise, so to does the cost of growing, harvesting, and shipping products to the store. Gasoline is used in each of the steps from the farmer growing and harvesting the food, to the large trucks that transport it, to the energy required to supply the packaging and the electricity in all of the stores. The rise in fuel will drastically reduce profit margins and may require price increases. To combat the rise in energy costs, it might be possible for Whole Foods to invest more in green energy. Already upgrading their vehicles to run on bio-diesel, it might be possible for Whole Foods to place solar farms on the roofs of their buildings much like Kohl’s Department Stores have. This would be in line with their corporate governance and mission statement and would allow them to harness the power of the sun to sell energy back to energy producers thereby reducing overall costs while taking advantage of the government green energy tax credits currently in place.
SWOT Analysis
Strengths (Internal): Cash Rich – Debt to Capital Ratio of 13.97% (industry Average 37.88%), Positive Earnings of $.51 per Share, Strong Distribution Network, Supplier Relationships, Loyal