Whole Foods
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- Words: 1,288
- Pages: 43
Kelley Parrigin Kat Keivens Bo Ghassemi Kathy Flores Miranda Niederle Sheridan Sands Jessica Nelson Seda McCarthy
Whole Foods Vision • Our vision of a sustainable future means our children will be living in a world that values human creativity, diversity, and personal choice.
Mission • Whole Foods — We search for the highest quality, least processed, most flavorful and natural foods possible .… • Whole People — Our people are our company. They are passionate about healthy food and a healthy planet…. • Whole Planet — We are committed to helping take care of the world around us….
Values • Selling the highest quality natural and organic products available • Satisfying and delighting our customers • Supporting team member happiness and excellence • Creating wealth through profits & growth
• Creating ongoing win-win partnerships with our suppliers • Caring about our communities & our environment
General Environment • • • • • •
Demographics Economic Political / Legal Socio / Cultural Technological Global
The General Environment Demographics • Only one demographic governs WFI: • Each store is located in a neighborhood where 40% have a college degree. • This ensures being in an area where people know about nutrition.
The General Environment Economic – • WFMI has grown with the rising trend of health and fitness consciousness. • It depends on this trend to continue and to grow.
The General Environment Political/Legal – • In the U.S, Japan, and the European Union “Organic” standards are certified by legislation. • In other countries laws or standards may not exist.
The General Environment Socio/Cultural – • Representative on the National Organic Standards Board • Health conscious • Consumer awareness-health education • Sustainable agriculture
The General Environment Technological – • Business Processes – Website – Paperless ordering system
• Green Mission – Power monitors – Wind power – Solar and Biomass
The General Environment Global – • More than 270 stores in North America and the United Kingdom • Whole Planet Foundation • Whole Trade Guarantee program
Threats of new Entrants • Other Organic supermarkets or competitors • Effects on Whole Foods market
Bargaining power of suppliers • The greater bargaining power of Whole Foods Market could also squeeze existing suppliers who will have fewer market options • Supplier challenges – Number of suppliers
• Supplier loyalty – Different manufacturers
Bargaining power of buyers • Buyer dominance – Walmart
• Grocery market insensitivity to economic conditions – For example Walmart vs Wholefoods
Threat of Substitute Products
Rivalry Among Competing Firms Internet Grocers Mass Merchandisers and Super Centers
Local Farmers’ Markets
Whole Foods Restaurants and Fast Food Chains
Supermarkets
Convenience stores
Wholesale clubs
Internal Capability Analysis • • • •
SWOT Analysis Value Chain Analysis Resources and Capabilities Sustainable Competitive Advantage
Strengths • • • • • •
Quality food Customer “Experience” Store and Corporate Culture Image and Branding Loyal Customer Base Great Store locations for target market.
Weaknesses • • • •
Prices are high- “Whole Paycheck” Lacking on International Operations Narrow target market Marketing- rely on word-of-mouth
Opportunities • Expand private label brand – Possibly work with large chains for generic distribution
• Expand food selection • In store classes • Invest in marketing about the benefits of eating healthy and organic.
Threats • Economy- downturn leads to less disposable income and less luxury • Market intrusions and competition • Lax regulations on organic foods
Value Chain Analysis Primary Activities • Partnering with Vendors – Owns and operates downstream suppliers – Low interest loans – New store inventory
Value Chain Analysis Primary Activities • Purchasing Goods – Stringent Quality Standards – Regional and National Suppliers – Local Suppliers
• Managing and Distributing Inventory – JIT operations
Value Chain Analysis Primary Activities • Store Operations – Duplication – Customization
• Marketing and Sales – Full service – Rich sensory experience
Value Chain Analysis Support Activities • Human Resources – Code of conduct – 100 Best Companies – 90% Employee Satisfaction
Value Chain Analysis Support Activities • General Administration – Best Corporate Citizen – Top-notch mgmt – Talented real estate team
Resources and Capabilities Tangible Resources • Financial – Capacity to raise equity – High borrowing capacity – Strong financials
• Physical – Stores – Distribution Centers – Support Facilities
Resources and Capabilities Tangible Resources • Organizational – Just-in-time logistics – Innovative evaluation and control systems
Resources and Capabilities Intangible Resources • Human – Strong bench strength – Widespread involvement & knowledge transfer
• Innovation – Creative solutions
• Reputation – Brand name – Competitive advantage
Resources and Capabilities Organizational Capabilities • Highly adaptive business model • Leveraging supplier relationships • Outstanding customer service
Stakeholder Agenda
Sustainable Competitive Advantage? • Not Likely because…. – Exit barriers are low – Market is being infiltrated by lower priced, more readily available stores. – People looking for one stop shop – Direct Competitors are making it even harder for Whole Foods to differentiate themselves.
Business Strategy • Expansion – Whole Foods is expanding internationally – Expects to have a sizeable market position in Europe 20 years from now – Hopes to become a global company
• Roping in Customers • Captive banners • Giving customers a sense of “virtue”
Business Strategy • Information Sharing – Collects and distributes sensitive information to everyone.
• Community Giving – Donate food and money to fight poverty worldwide
Organizational Strategy • Caps on executive compensation – No exec. Makes more than 14x the employee average
• Teams – Whole Foods is committed to self managing teams which do their own hiring and scheduling. – To be hired, individual must be voted on by 2/3 of their team during “trial” period
Organizational Strategy • "Whole Foods is a social system,It's not a hierarchy. We don't have lots of rules handed down from headquarters in Austin. We have lots of self-examination going on. Peer pressure substitutes for bureaucracy. Peer pressure enlists loyalty in ways that bureaucracy doesn't.“ John Mackey, Founder and Chairman
Ethical Issues • Treatment of animals – Existing standards for humane animal treatment can always be improved – Thrives to help animals flourish and do it in a way that is cheap enough for customers to buy
• 14 Page code of conduct – Addresses expected and desired employee behavior
Financial Analysis • • • • •
NASDAQ since 1992 Retail Grocery Business segment Ranked 26th according to revenue 2008 Sales just under $8B Acquisitions $700M loan
Financial Analysis
Financial Analysis Ratio
Measures
2008
2007
2006
Kroger
Safeway
Industry
Net Profit Margin Net profit / Revenues
Profitability
1.4%
2.8%
3.6%
1.71%
2.16%
3.65%
Return on Equity (ROE) Net Income / Total Equity
Profitability
7.75%
12.56%
14.76%
24.40%
13.29
17%
Revenue per employee
Efficiency
151,056
123,527
135,816
232,184
216,669
367,217
Current Ratio Current Assets/Current Liab.
Liquidity
.93
.85
1.22
.94
.88
1.15
Total Debt/ Equity ratio
Debt/Equity Funding
.62
.52
.01
1.56
.81
N/A
Interest Coverage
Debt Mgnt
6.49
70.69
9,969.03
5.05
5.17
N/A
Financial Analysis The following table shows payments due by period on contractual obligations as of September 28, 2008 (in thousands): Due before Sept 28, 2009
Long term debt obligations
Total $
897,698
Due After 9/2009 and Before 9/ 2011
Less than 1 Year $
—
Due 9/2011 and 9/2013
1-3 Years $
—
3-5 Years $
897,698
Due After 9/2013
More than 5 Years $
—
Estimated interest on long term debt obligations 126,956
40,591
64,010
22,355
—
41,125
2,089
4,179
4,179
30,678
6,017,763
261,467
627,483
641,428
4,487,385
Capital lease obligations (including interest) Operating lease obligations(1) Total
$
7,083,542
$
304,147
$
695,672
$
1,565,660
$897,698 / $2,706,705 (Gross Profit 2008) = 33%
$
4,518,063
Where Can Whole Foods Improve??? • A more centralized strategy if they aim to reach $10 billion in annual sales
Sources
Whole Foods Vision • Our vision of a sustainable future means our children will be living in a world that values human creativity, diversity, and personal choice.
Mission • Whole Foods — We search for the highest quality, least processed, most flavorful and natural foods possible .… • Whole People — Our people are our company. They are passionate about healthy food and a healthy planet…. • Whole Planet — We are committed to helping take care of the world around us….
Values • Selling the highest quality natural and organic products available • Satisfying and delighting our customers • Supporting team member happiness and excellence • Creating wealth through profits & growth
• Creating ongoing win-win partnerships with our suppliers • Caring about our communities & our environment
General Environment • • • • • •
Demographics Economic Political / Legal Socio / Cultural Technological Global
The General Environment Demographics • Only one demographic governs WFI: • Each store is located in a neighborhood where 40% have a college degree. • This ensures being in an area where people know about nutrition.
The General Environment Economic – • WFMI has grown with the rising trend of health and fitness consciousness. • It depends on this trend to continue and to grow.
The General Environment Political/Legal – • In the U.S, Japan, and the European Union “Organic” standards are certified by legislation. • In other countries laws or standards may not exist.
The General Environment Socio/Cultural – • Representative on the National Organic Standards Board • Health conscious • Consumer awareness-health education • Sustainable agriculture
The General Environment Technological – • Business Processes – Website – Paperless ordering system
• Green Mission – Power monitors – Wind power – Solar and Biomass
The General Environment Global – • More than 270 stores in North America and the United Kingdom • Whole Planet Foundation • Whole Trade Guarantee program
Threats of new Entrants • Other Organic supermarkets or competitors • Effects on Whole Foods market
Bargaining power of suppliers • The greater bargaining power of Whole Foods Market could also squeeze existing suppliers who will have fewer market options • Supplier challenges – Number of suppliers
• Supplier loyalty – Different manufacturers
Bargaining power of buyers • Buyer dominance – Walmart
• Grocery market insensitivity to economic conditions – For example Walmart vs Wholefoods
Threat of Substitute Products
Rivalry Among Competing Firms Internet Grocers Mass Merchandisers and Super Centers
Local Farmers’ Markets
Whole Foods Restaurants and Fast Food Chains
Supermarkets
Convenience stores
Wholesale clubs
Internal Capability Analysis • • • •
SWOT Analysis Value Chain Analysis Resources and Capabilities Sustainable Competitive Advantage
Strengths • • • • • •
Quality food Customer “Experience” Store and Corporate Culture Image and Branding Loyal Customer Base Great Store locations for target market.
Weaknesses • • • •
Prices are high- “Whole Paycheck” Lacking on International Operations Narrow target market Marketing- rely on word-of-mouth
Opportunities • Expand private label brand – Possibly work with large chains for generic distribution
• Expand food selection • In store classes • Invest in marketing about the benefits of eating healthy and organic.
Threats • Economy- downturn leads to less disposable income and less luxury • Market intrusions and competition • Lax regulations on organic foods
Value Chain Analysis Primary Activities • Partnering with Vendors – Owns and operates downstream suppliers – Low interest loans – New store inventory
Value Chain Analysis Primary Activities • Purchasing Goods – Stringent Quality Standards – Regional and National Suppliers – Local Suppliers
• Managing and Distributing Inventory – JIT operations
Value Chain Analysis Primary Activities • Store Operations – Duplication – Customization
• Marketing and Sales – Full service – Rich sensory experience
Value Chain Analysis Support Activities • Human Resources – Code of conduct – 100 Best Companies – 90% Employee Satisfaction
Value Chain Analysis Support Activities • General Administration – Best Corporate Citizen – Top-notch mgmt – Talented real estate team
Resources and Capabilities Tangible Resources • Financial – Capacity to raise equity – High borrowing capacity – Strong financials
• Physical – Stores – Distribution Centers – Support Facilities
Resources and Capabilities Tangible Resources • Organizational – Just-in-time logistics – Innovative evaluation and control systems
Resources and Capabilities Intangible Resources • Human – Strong bench strength – Widespread involvement & knowledge transfer
• Innovation – Creative solutions
• Reputation – Brand name – Competitive advantage
Resources and Capabilities Organizational Capabilities • Highly adaptive business model • Leveraging supplier relationships • Outstanding customer service
Stakeholder Agenda
Sustainable Competitive Advantage? • Not Likely because…. – Exit barriers are low – Market is being infiltrated by lower priced, more readily available stores. – People looking for one stop shop – Direct Competitors are making it even harder for Whole Foods to differentiate themselves.
Business Strategy • Expansion – Whole Foods is expanding internationally – Expects to have a sizeable market position in Europe 20 years from now – Hopes to become a global company
• Roping in Customers • Captive banners • Giving customers a sense of “virtue”
Business Strategy • Information Sharing – Collects and distributes sensitive information to everyone.
• Community Giving – Donate food and money to fight poverty worldwide
Organizational Strategy • Caps on executive compensation – No exec. Makes more than 14x the employee average
• Teams – Whole Foods is committed to self managing teams which do their own hiring and scheduling. – To be hired, individual must be voted on by 2/3 of their team during “trial” period
Organizational Strategy • "Whole Foods is a social system,It's not a hierarchy. We don't have lots of rules handed down from headquarters in Austin. We have lots of self-examination going on. Peer pressure substitutes for bureaucracy. Peer pressure enlists loyalty in ways that bureaucracy doesn't.“ John Mackey, Founder and Chairman
Ethical Issues • Treatment of animals – Existing standards for humane animal treatment can always be improved – Thrives to help animals flourish and do it in a way that is cheap enough for customers to buy
• 14 Page code of conduct – Addresses expected and desired employee behavior
Financial Analysis • • • • •
NASDAQ since 1992 Retail Grocery Business segment Ranked 26th according to revenue 2008 Sales just under $8B Acquisitions $700M loan
Financial Analysis
Financial Analysis Ratio
Measures
2008
2007
2006
Kroger
Safeway
Industry
Net Profit Margin Net profit / Revenues
Profitability
1.4%
2.8%
3.6%
1.71%
2.16%
3.65%
Return on Equity (ROE) Net Income / Total Equity
Profitability
7.75%
12.56%
14.76%
24.40%
13.29
17%
Revenue per employee
Efficiency
151,056
123,527
135,816
232,184
216,669
367,217
Current Ratio Current Assets/Current Liab.
Liquidity
.93
.85
1.22
.94
.88
1.15
Total Debt/ Equity ratio
Debt/Equity Funding
.62
.52
.01
1.56
.81
N/A
Interest Coverage
Debt Mgnt
6.49
70.69
9,969.03
5.05
5.17
N/A
Financial Analysis The following table shows payments due by period on contractual obligations as of September 28, 2008 (in thousands): Due before Sept 28, 2009
Long term debt obligations
Total $
897,698
Due After 9/2009 and Before 9/ 2011
Less than 1 Year $
—
Due 9/2011 and 9/2013
1-3 Years $
—
3-5 Years $
897,698
Due After 9/2013
More than 5 Years $
—
Estimated interest on long term debt obligations 126,956
40,591
64,010
22,355
—
41,125
2,089
4,179
4,179
30,678
6,017,763
261,467
627,483
641,428
4,487,385
Capital lease obligations (including interest) Operating lease obligations(1) Total
$
7,083,542
$
304,147
$
695,672
$
1,565,660
$897,698 / $2,706,705 (Gross Profit 2008) = 33%
$
4,518,063
Where Can Whole Foods Improve??? • A more centralized strategy if they aim to reach $10 billion in annual sales
Sources
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