Whole Foods Market Inc.: Expansion in Canada Case Study Solution
Porter’s Five Forces Model:
Threat of New Entrant:
The new entrance of competitors in the industry will have to face the issue of high cost. For the initiation of business in the food and beverage industry, the rules and policies which are certified by USDA are not easy to be followed and is costly. So, for the new entrant it might not be easy to compete against a renowned brand such as WFM who is trending very well in the market. However, there is a continuous competition against the competitors and the new entrants in the industry. The threat of new entrants is relatively low. The strong competitors in market if starts selling organic foodstuff only it might pose a threat to these strong organizations.
Bargaining Power of suppliers:
The bargaining power of suppliers ranges from low to medium and medium to high. The organization is focused in the provision of standards of high quality which cannot be met by every supplier. The organization deals with those agriculturalists or manufacturers who have hold over the business organization in local areas. The suppliers of WFM posed a challenge to the organization to inhibit the superior suppliers from buying small and price control. If it is so, leading in growth of products of WFM because of the increase in the price of suppliers. Thus, the bargaining power of suppliers ranges from medium to high.
Bargaining power of buyers:
The bargaining power of buyer is considered as low. The customer wants organic and healthy food which is not cheap in comparison to regular foodstuff. Thus, the bargaining power of buyer is determined by the food quality but not the price of food products.The switching of customers to another brand’s products is not easy no matter they offer products at cheaper rates. The price does not affect the choice of customers.
Threat of Substitute:
The threat of substitute is relatively low due to the fact that there are limited number of companies in the industry of organic grocery stores which are trusted by their customers.The only reason behind the switching of customer to another brand will be less interest of customer in the organic food. The strongest barrier in contradiction of substitute products is loyalty. Whereas, there is a chance that few customers might directly contact the small manufacturers of products.
Rivalry Competitiveness:
The competition among the present organizations competing in the food and beverage industry is high. To increase the market share, the present competitors can offer organic foods to their potential customers. The introduction of organic food is the market has been trending which attracts a number of organizations for the better expansion of their business. Thus, WFM is acquiring different stores to slow down the level of competition.
PEST Analysis:
Political:
Whole Foods Market is mainly focused on organic foods. The USDA – United States Department of agriculture is a system which is responsible for the development and implementation of policies should need to be followed by WFM. The organization invests more for regular inspections to be passed and evaluates the processes of organization to be certified for the sale of organic foods. The organization is enforced to spent high cost to get the organization approved and certified. This affects the organizational prices. On the contrary, taxation is a great challenge for every organization at different levels.
Economical:
The organization targets people earning handsome amount for the sale of its products to the people who can afford to purchase organic and natural products.The income is economic factor meaning that the purchase power of customer increases with the increase in income resulting in high demand of products. In 2008, when a lot many people lost their jobs the purchasing power of customers greatly decreased. Thus, the rate of unemployment and money shortage gave rise to an issue of organic product luxury and good fortune of organization. The stock of the company remained constant from previous year.
Social:
Earlier, the awareness about the healthy food was increasing among people resulting in the growing demand for the increasing need of natural diet. The new trend in the food and beverage industry is organic food. Additionally, the relocation of many grocery stores in various regions of the state except rural areas is one of the important social factor. It is concerned with the style of living that is pursued by the customers. In this era, customers seek for fast services and stores at short distances. One of the competitor namely Target has relocated to big cities in their small stores. Thus for the customer preferences, EFM should adapt this strategy. (Alotaibi, 2015)
Technological:
The replacement of system of core legacy with accessible solutions and advances in the technology of leverage is to provide customers with a better-quality end-to-end experience of shopping. The substantial achievements of the organization for past year which includes Workday implementation, an online system of HR management. The WFM has launched a mobile application which focuses on the utility of shopping, the information of store, events and recipes, Apple Pay partnership and the customer platform initial rolling out was centered on a system of unified point of sale. The implementation of online delivery service by WFM in over 60 stores and more than 15 cities. (Martrous, 2016)
Competitive Analysis:
The industry of food retailing is one of the most competitive industry worldwide. The competition of WFM is conventional, international, local, regional, line of superstores, clubs of warehouse membership, and stores of natural foodstuff, restaurants, online retailing and companies providing home delivery.The competition of the company is based on the selection of product, quality of product, services provided to customers and their prices or all in one combination. WFM has more than 300 stores in UK and North America. It sales a large number of organic deli and bakery food items which are certified and it is not sold by other grocers’ competitive grocery market. But due to limited number of grocery stores in comparison to its customers, it is less available to its customers resulting in the recall of products. The top competitors of WFM are Kroger and Trader Joe’s. The portfolio of Kroger has diversification in the effective formats which includes stores of food and drug combination, discounters of food stuff, up-scale format of perishable-oriented neighbors and splendid centers. The launch of the brand to compete the organic and natural products of premium quality by Kroger on its own. However, the actual product line of Kroger includes baby food, cereal, milk, pasta and snacks. On the contrary, Trader Joe has expanded its business in about 25 different states. The estimated sale of Trader Joe in a year is about $8 billion. The growth strategy of Trader Joe is to mainly focus on the stores which are not well-planned which might pose a threat with respect to culture, affiliation of brand, and the proposition of value. Particularly for this reason,the opening of only five stores took place in 2010 by Trader Joe. (Martrous, 2016)................
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