Nov 20, 2020 in Case Studies

Whole Food Market
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Organizational Level

Outputs

To achieve the overall organization goals, operations in Whole Food Market (WFM) are supported by the WFM headquarters at Austin, distribution centers, regional offices, seafood-processing and bake-house facilities, procurement centers and commissary kitchens, among other facilities. The company has increased over time the range and quality of products it offers to the market. Among the products offered, there are perishable foods such as seafood, grocery, meat and poultry, bakery and ready-made foods, coffee and tea, nutritional supplements and vitamins. WFM main focus has been on natural and organic foods, and it has been the largest player in this market.

Goals

Operating in a dynamic market, WFM has had to readjust its strategies to attain specific goals to ensure continued growth and competitiveness. The fundamental goal in WFM has been return on investment. As any other company, WFM has to mind the welfare of the investors and therefore policies have had to be made with profit maximization objective in mind. This goal, however, has some embedded objectives that have to be met and remain consistent with each other. Specifically, market expansion is an underlying goal in financial performance. As a result, WFM has sought over time to expand its market. Another underlying goal in financial performance is customer sensitiveness. The company seeks to maximize customer utility in terms of range of products, health products, shopping experience and after-sale services. All these goals collectively contribute to competitiveness, a goal central to future performance.

 

Interrelationship of the goals

Performance

WFM has succeeded in providing a wide range of products in its market. Though it specializes mainly in natural and organic products, it offers around 20,000 non-food and food product types in its stores. It also offers different brands of products. For instance, it offers 50 brands of olive oil. The quality of products has also been adequately addressed, the main focus being on the nutritive contents, safety, ingredients, tastes, appearance, and freshness. Organic products have helped address health concerns of the consumers, while the wide range ensures customer sovereignty. The company also offers excellent in-store shopping experience. This is done in terms of customer services offered, education, and stores environment. To improve customer experience, the company has managed to increase the average size of its stores from 30,000sq.ft. in 2006 to 38,000sq.ft. in 2011.

Expansion of the market is evident from the number of stores that have been opened, the countries within which it has been operating and the number of acquisitions made. The high growth has been, in part, a result of acquisitions and mergers of such companies as Bread of Life, Food For Thought, Select Fish, Fresh & Wild, Wild Oats Markets and Wellspring Grocery among others. By 2011, WFM had 311 stores, 299 being operated in the US, 7 in Canada, and 5 in the UK. Though the number of the stores has been increasing over time, their average size has also been increasing. For instance, by 2006, WFM had 180 stores with an average size of 30,000sq.ft. However, by 2011, the 311 stores occupied an average size of 38,000sq.ft. In 2010 and 2011 fiscal years alone, WFM opened 16 and 18 new stores respectively.

The aforementioned achievements have enabled the company to maintain a strong competitiveness against its competitors, which, in part, has helped it maintain good performance. WFM had an average of $877 per square foot. The value of net revenue has been rising from $6.6 billion in 2007 to $10.1 billion in 2011, representing an annual growth rate of 11.22%. The explosive growth in WFMs revenue since 2007 has translated to an assured quarterly dividend of $ 0.2, adding up to 0.87% annually: returns that match those from any saving account. To maintain competitiveness in the market that is attracting new players by day, WFM has embarked on establishing smaller stores in underserved areas. This is mainly in lower income suburbs such as Colo, Frisco, Miss, and South Bend, where stores with footage around 33,000sq.ft. have been established.

However, WFMs operation is too much concentrated in the US, where 97% of all the stores are situated, hence weakening the ability to hedge eventualities. In some occasions, leasing of stores, as has been the case, turns out to be counterproductive. For instance, 20 leased properties in 2011 were dormant. Brand protection, which is an overriding goal, is adversely affected by products recalls owing to such problems as product contamination. Competition is stiffening with the entry of such companies as Wal-Mart, Publix, and HEB Central Market. Volatility of the companys stocks affects investors confidence. For instance, in 2011, stock prices ranged between $34.57 and $72.10.

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Groups

Groups and Goals

The groups identifiable in WFM include the research and development group, employees, executive and the quality standard team. Given the dynamics of the market, the research and development groups goal is to conduct researches on issues that will give the company competitiveness by considering both the external environment and internal constraints and strength. This way, the group provides recommendation and policy changes to the executives. The executives make strategic decision for the success of the WFMs operations. In this regard, they ensure conducive internal environment for employees, fitness to the external environment, and focus to the overriding organization goal. Employees goal is to improve their productivity in line with policy and procedures put in place. Given the volatility of the market, quality standard team ensures that all products getting into the stores meet the quality standards set in terms of nutrition, appearance, taste, and freshness.

Performance

The over 20,000 non-food and food product types in stores are a result of research and development. Various brands of products are also availed, e.g. the 50 brands of olive oil. More healthy snacks such as new roasted chickpea are being issued as an alternative to crunchy snacks such as potato chips. Innovativeness has further been seen around wellness and healthcare of employees in WFM. This includes the health insurance plan, healthy discount incentive program, and total health immersion. To ensure operational focus, executives conduct conference calls on monthly basis and meet physically at least twice annually. Executive focus in the conducive internal environment as a means of capacity building is eminent. For instance, the company had over 53,000 employees, 47,000 of whom were full-time employees in 2007. Further, it has been rated among top 100 companies offering quality staff experience by Fortune Magazine for the last 15 years. The outstanding in-store shopping experiences in terms of customer service, education and after-sale services have been a result of sensitive and impactful interactions between the companys employees and customers.

 
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Individual

Tea and Coffee Specialist

The role of tea and coffee specialist is to merchandise, replenish and order coffee and tea products. They also ensure attractive department consistent with organizational and regional vision. In this case, output can be measured in terms of efficient, friendly and courteous customer service and customer feedback.

Cashier

Cashier performs all cash register services, assists in checkout process and customer service. He maintains quality services consistent with the service vision. Output can be measured in terms of efficiency, speed and accuracy, friendly and courteous services as well as customer feedback.

Grocery Service Team Member

He receives and prepares products, maintains grocery display and floor and sells products according to grocery standards. He ensures a positive image. Output can be measured in terms of sales, customer services, and customer feedback.

Demo Specialist

He introduces new products to customers, educates customers, creates theaters within stores and promotes sales. He also gathers feedback from consumers and shares it with other internal users. Output can be measured in terms of sales realized, customer feedback, and attractiveness of the theaters.

Shift Leader

During a shift, its the role of a shift leader to operate and supervise a store. In this case, he ensures that the standards set by the company are met, and that the companys image is protected through availability, range and quality of products and services offered. Output can be measured in terms of efficiency, sales, and customer feedback.

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Output Congruence

Relationship between the different levels of output may be represented as indicated in the figure below.

There is a strong congruence between the different levels of output. An overall output on individual level is improved efficiency, quality services, availability of the products, turnaround time I service delivery, sales, and customer feedback, among others. However, this can only be achieved through the groups output. In this regard, the quality of the products and services depends on innovativeness of the research and development group. Similarly, the support given to executives in programs aimed at improving internal environment has helped employees improve productivity. This is evident from Fortune Magazine ranking WFM as one of the best company that one would work for. Further, employees welfare is evident from health insurance plan, healthy discount incentive program, and total health immersion. Teamwork among employees also has a great impact on individual output. On the other hand, different groups are able to operate and device policy accordingly depending on the feedback they receive from individuals, and customers through individual employees. Therefore, their success depends on the output of individual employees.

Organizational output depends on individual and group outputs. For instance, the achieved growth in terms of sales and the number of stores results from research and development undertaken and the executive support. To attain market competitiveness, the quality standard team ensures that the products meet the standards required. However, shopping experience depends more on the quality of interaction between customers and employees. This translates to improved competitiveness that has helped the company become the leading retail in organic food. Compliance by individual employees on the standards set by the company has helped to improve financial performance as witnessed in the resent years. Therefore, different groups such as executive, quality of products team and research and development group ensures that individuals work efficiently and effectively so as to achieve the organizational goal. In turn, organizational outputs also help facilitate individual and group output through allocation of resources required to support such activities. For instance, the financial requirement in 30-90 days orientation of new employees is obtained from the companys profit.

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