XxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxLecturerXxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx13th August, 2012. Introduction Whole food market is a company that is based in Texas and it mainly majors on the offering its customers with natural and organic products (History of Whole Foods Company 2005). The company is rated as been one of the most socially responsible companies in the US (Company Spotlight: Whole Foods Market, Inc. 2004). This paper aims at analyzing whole food market case. This will be done in three steps. The first section will offer a detailed analysis of the whole food market external environment, the second section will offer a detailed analysis of the resources and competitive position of the organization while the their section will identify the generic strategy that the organization uses to gain a competitive advantage and the last section will be a proposal of the strategies that the organization can adopt for the period 2012 to 2017 and a discussion of how the strategies will assists the company in ensuring that they have a sustainable source of competitive advantage for the period.
Opportunities, Factors driving change and prospects for attractive profitsThe organic and natural food industry is very huge and it continues to grow significantly annually.
This is mainly because the demand for whole foods has improved in the past couple of years due to the increasing awareness about the benefits of organic foods. According to industrial estimates, the sales of whole foods exceeded $28.6 billion in 2010 (OTA 2011). In 2010, the sales of whole foods rose by 7.7% and it is expected to continue rising (Gertsberg 2011). Thus, firms in the industry are in a good position to benefit from increase in demand.
Moreover, there is an increase in recent trends that support increased demand for whole food products. In 2010 for example, there was a significant reduction in restaurant eating as well as increased awareness of eating healthy foods. According to Cochran (2011, pp. 15), the opinion that meals prepared at home are healthier than restaurant prepared foods is a view supported by 92% of grocery shoppers. In spite of the recent economic recession, industry reports indicate that the sale of perishable foods has been increasing (Cochran 2011, pp. 35). This increase in sales has also been partly caused by the growing percentage of the population in formal employment with less time to cook.
These recent positive trends in the whole foods market could lead to increased sales which will also force footfall. In addition to increasing demand, the company stands to benefit from the increasing popularity of private labels. The sales of private label brands in the U. S food industry increased from 15.2 % in 2006 to 17.4% in 2010 (OTA 2011). Competitive forces, market position of rivals and strategic moves of rivalsThe various kinds of competitive forces that the industry’s members are facing include internal rivalry, ease of entry into the industry, substitutes/complements as well as the bargaining power of suppliers and customers.
The threat of new entrance into the industry is high (3). This is because established firms including regular stores and supermarkets can join the industry with relative ease. Furthermore, supermarkets and regular stores can offer their products at a lower price and thus the organic food industry can struggle to get customers. According to Datamonitor (2010), organic foods retail stores contributed 37% of the total sales in the industry, supermarkets contributed 28%, multilevel marketers contributed 16%, super naturals 10% and the others [for example practitioners and mail orders] contributed 8%.
Thus organic food retail stores are strongly positioned. However, rivals, for example supermarkets, plan to lower prices so as to ‘steal’ customers from organic food retail stores.