Whole Foods Market Executive Summary

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Whole Foods Market, Inc. is an Austin, Texas-based grocery industry. While Whole Foods Market operates around the natural and organic foods, it has faced difficulties as a result of the economic recession, increasing competition, and complications from acquisitions. Whole Foods Market must refocus its expansion strategies, which means increasing the number of new stores is the most important plan. Porter’s five-analysis can provide reasons why Whole Foods Market should take actions. The first one would be the threat of new entry; the threat of new competitors in industry is low. Because grocery industry have high-cost and low-margin nature, the unbalanced competition, which leads to more than 70% revenue, is controlled by the largest 50 companies…show more content…
was certified as organic; the suppliers are limited. Another data from Remington (2014), it shows that there were 81 independent organic food-processing companies in the U.S. Today, there are only 15 of them. Multinational companies like Coca-Cola and Nestle produce nearly all of the organic food sold in the U.S stores. When Whole Foods Market ignores the local suppliers, these suppliers are purchased my multinational companies instead. In the end, Whole Foods Market gets the materials from multinational companies. The third one would be the power of buyers. The threat level from the power of buyers is low to medium. After economic recession in 2008, many people found themselves unemployed or underemployed, resulting in them choosing the lower-priced products. Due to this shift, the natural and organic foods are negatively impacted, especially Whole Foods, which responded with offering more private-label products at a lower price (Senauer & Seltzer, n.d). The fourth force would be the competitive rivalry. The competition in the grocery industry is intense, and the threat level is extremely high. Since the new brands have difficulty entering the…show more content…
Due to Whole Foods Market company’s attempt on gaining more market shares, shortage of cash flow, which is means borrowing money from banks, to pay for operating expenses are unavoidable. Borrowing money generated high interest which is based on the Cash flow table in book (p. 101): “Whole Foods Market had a strong cash flow in 2008 because net cash in operating activities increased from $334,992 to $587,721 from 2008-2009, but the long-term borrowing decreased from $717 million to $123 million through 2007 to 2009, the less long-term debt proved Whole Food could save more resources to support its expansion plan”. Also according to the Balance Sheet (p. 100), the company affected by economic recession hit during 2008 to 2009, because the cash equivalents increased from $30,534,000 to $430,130,000. However, the Operations Statement (p. 99) showed the net income of Whole Foods Market still increased from $114,524 thousands to $146,804 thousands from 2008-2009. This situation means that Whole Foods Market has the ability to pay their debt. Furthermore, from the store location strategy of Whole Foods Market, the company was planning to open 9 more stores in 2010 and 17 new stores in 2011 and 2012. In fact, the total cost of a new store is approximately 22 million dollars; that means Whole Foods Market needed about 100 million dollars to support its expansion plan in 2009.

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