Organic Food Industry Analysis

This assignment delves into the organic food industry, examining its growth trajectory, key drivers, and potential risks. It encourages an analysis of consumer perspectives on organic foods, exploring factors influencing their choices. Ethical considerations and sustainability practices within the industry are also central to the assessment.

Running head: WHOLE FOODS MARKET CASE
Assessment Task Three: Individual Case Analysis
[Whole Foods Market Case]
Name of the student:
Name of the university:
Author note:

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Executive summary
The paper educates on some important business terms, which has now become important to
multinational companies across the globe. Sustainability is the one factor that has driven
multinational companies towards social responsibility related works. Whole Foods is one of such
companies that went one step ahead than any other company. It aligned its business strategies
with the social responsibilities. They offered organic foods to the customers. However, the
company lagged behind in competition after the entrance of big names in the same business.
Walmart, Kroger and Safeway have all hampered the dominance of Whole Foods. Walmart in
particular offered the cheapest pricing, which became one of the reasons behind the downgrading
business trend of Whole Foods Company. The assignment shows that it is very important to
analyze both the potential and the weak aspects of an organization. Whole Foods should identify
that pricing of organic foods have actually hampered their business significantly. The paper has
also recommended one solution to the company in order to get back into the competition but with
a solid response.

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Table of Contents
Introduction......................................................................................................................................3
Analysis and evaluation...................................................................................................................4
PESTLE analysis.........................................................................................................................5
Porter’s Five Forces.....................................................................................................................6
Social responsibility.........................................................................................................................7
a) Impact of social responsibility on the overall business strategy.............................................7
b) Successful pairing of social responsibility and the business...................................................8
c) Constraint factors in implementing the socially responsible business..................................11
Conclusions and recommendations...............................................................................................12
References......................................................................................................................................14

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Introduction
Food industry is one of such industries, which has become a curious discussion to mass
public. Common people across the globe are aware of the benefits and the harmfulness of the
foods they intake to some extent. This has become possible because of lots of discussions on the
food related facts on the different websites, in newspapers and in the local government circulars
across the globe (Naujokas et al. 2013, p.295). It has also become a much talked topic because of
the effect that it produces on mass people. People across the globe are now suffering of some
most major diseases such as obesity. Unhealthy foods are thought to be the main reason behind
the rising cases of obesity across the globe (Sahoo et al. 2015, p.187).
In nowadays, different kinds of chemicals and pesticides are used in cultivating the foods.
Farmers use inorganic substances to satisfy the need of high demands of food in no time.
However, the used pesticides in the food production have on the other hand affected the
naturalness of it in significant number. This is probably the reason behind a comparative lesser
health of people than their ancestors have (Rico et al. 2012, p.75-93). Common people are
helpless. They have some education on the harmfulness that it causes to the health. However,
despite the fact they have to intake such foods. Such helplessness situation has created the much
needed platform to some company to occupy on the created chances (Shafie & Rennie 2012,
p.360-367). This is because of such reason Whole Foods came into existence. The company
aimed at delivering quality and naturally grown foods to the customers.
The main purpose if this assignment is to analyze the business effects of the Whole Foods
Company. The company had given strong values to serve the community and become a socially

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responsible organization. This study also analyses the challenges that might come upfront once a
business intend to deliver on social aspects.
Analysis and evaluation
Theory of sustainability states that a business should take into account the betterment of
all its stakeholders such as employees, customers, environment and the local community (Epstein
& Buhovac 2014). Whole Foods is one of few names that have started the business with a
mission to serve the community. The company has rightly served its mission by strongly
following its core values. It has never used soft drinks such as Coca-Cola and Pepsi in its stores
despite of some criticism from the customers regarding the unavailability of the products. The
strategic operation of the company’s Co-CEO Walter Robb has helped the company in attaining
the success in quick notes. One of such example is the distribution of a fraction of the benefits to
all its employees. Employees in fact are treated as like members of the company (Willer &
Lernoud 2016, p.1-336).
However, there are certain issues as well, which has hampered its reputation. Their
mission is to provide healthy foods to the customers; however, one of the processes that they use
for producing the foods is unhealthy. They follow both the organic and the exotic method to
produce the food. The organic method is healthier as it does not require any spill over of
inorganic substances. On contrary to this, the exotic method is unhealthy. Additionally, the
produced foods are transported by means of vehicles, which cover a long distance to reach to the
scheduled destination. It is a very supportive mean of pollution, which means that foods are
environment friendly but the processes are not such. Apart from this, some of the products of
Whole Foods are found to contain fat or calories. Additionally, they are not labeled with the

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nutritional values as well. This is both unethical and against the set mission. The major issue is
the price, which is offered against the organic foods. The prices are very high and higher than
any other products in the store (Smith-Spangler et al. 2012, p.348-366).
PESTLE analysis
Political Economic Social
 The political situation
in New Zealand is
supportive as they
have eyed on doubling
the figures of
international exports of
dairy products
 They are encouraging
more irrigation and the
storage of water to
respond to an
unexpected drought
 The national lead
government is
interested in enhancing
the capability of
research works by
investing much on the
process
 They are trying to
encourage the farmers
for a positive
production of dairy
products
 Foreign investments
are given importance
but will be scrutinized
for the national interest
 Dairy products are
cheaper in the country
 People are conscious
about healthy foods
 Millennial groups have
passion for dairy
products
Technology Legal Environmental
 Technology is already  There are already legal  It is affecting the

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in place to enhance the
productivity of dairy
products and reduce its
impact on the
environment
 Technology would be
developed to make
better decisions and
mitigate the risks
frameworks guiding
the production of dairy
products
 Plan is there to make it
more competent in
following the
compliance rules &
regulations
environment as
enhancement of dairy
products has adverse
effects on the
environment
 Improvement in
technology is already
in plan to reduce the
effect of dairy industry
on environment
Figure 1: PESTLE analysis
(Source: Kalaugher et al. 2013, p.176-187)
The above analysis shows that there are ample of opportunities for the Whole Foods Company in
New Zealand. Some of the challenges that the company is facing such as the environmental
issues, things are expected to be resolved in future as numerous plans are there in the list of plans
of the local government of the country.
Porter’s Five Forces
Industry rivalry-
The competition in the dairy industry is very high. Fonterra is the leading name, which is
a serious threat to the company. Now, many others have entered the industry and enhanced the
competition. Whole Foods had to suffer an unexpected competition from industry’s big names
such as Walmart, safe way and Kroger Company. These companies have effectively started

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providing organic foods along with their existing products. Whole Foods has also failed in
offering the cheapest pricing for the organic foods, which other companies such as Walmart and
Kroger have successfully done. Additionally, Fonterra is the biggest name in the industry, which
is another threat for the Whole Foods Company. The company had a tough task to stay
competitive against such competitors (Ellickson & Grieco 2013, p.1-14).
Threat of entry-
New Zealand is an open economy and hence the threat of entrants is higher in the
country. The expected outcome is very much evident in the form of Walmart, safe way and
Kroger Company in New Zealand. They have posed severe challenge to the Whole Foods
Company (Lees & Lees 2017, p.1-20).
Threat of substitution-
It is also high. Dairy product is made from milk and other natural resources. The
changing demands of customer will prompt the different brands that exist in the country for
various innovative products in future (Lees & Lees 2017, p.1-20).
Buyer power-
The buyer power in the industry is also very high. This is because people in the country
have different tastes, which can vary at any point in time. They are just needed to be educated on
the different other products that do not exist in the country (Lees & Lees 2017, p.1-20).
Supplier power-

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It is low as things can be controlled by working closely with the farmers. The adverse
effect of the surrounding climate can also be controlled with the help of improved and advance
technology (Lees & Lees 2017, p.1-20).
Social responsibility
a) Impact of social responsibility on the overall business strategy
Answer to question 1:
There are various opportunities that a business creates when its core values are adjoined
to the social responsibility. One of such opportunity is the attainment of a separate audience,
which might be bigger in size than the normal customers. For example, many customers prefer
having organic foods; however, they do not have many options to get their desired foods. Under
such circumstances, if a company like Whole Foods comes up with a concept to offer the organic
foods, it is bound to get a wider reception from the customers. It was the opportunity that later on
drew the attention of other companies like Walmart, Kroger and Safeway. Those companies are
getting the benefits that were there in the industry. The number of customers is increasing with
passage of days as they are growing in education on heath related facts (Crane, Matten & Spence
2013).
However, opportunities do not stand alone; it is rather accompanies with numerous
challenges or responsibilities. One of the challenges is to offer the healthier foods under any
circumstances. This is indeed difficult as it is clearly evident in the criticized activity of Whole
Foods. The company has offered few such products that have fat and calories in those.
Additionally, products were not libeled as well to show its nutritional values. Whole Foods that
has strong core values for social responsibility has itself derailed from the organizational

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mission. Another such example is of Unilever that has acted up against the organizational core
values n few significant times. One of such incidents is of mercury exposure in 2006, which
affected thousands of workers. It happened due to its exposure to the toxic element (Forbes.com
2017).
b) Successful pairing of social responsibility and the business
Answer to question 2:
The Co-CEO of Whole Foods Walter Robb believes that it is important to have strong
culture in order to stay competitive in the market. This is rightly so because strategies can be
easily copied; however, copying a culture requires a huge transformation of existing stage to the
desired stage. There are different aspects of the effects of social responsibility on the business
practices such as positive and negative. Companies are affected both positively and negatively
due to the responsibilities related to the surrounding communities (Farooq et al. 2014, p.563-
580). For example, the entrance of Whole Foods in the organic food production after they sensed
the potentiality of the concept is a mere example of the positivity that social responsibility has on
different organizations across the globe. They capitalized on the created opportunities that came
into the existence with the help of numerous articles on websites and various government
circulars on health related facts.
On the other hand, it has some negative impacts o the organization as well. For example,
Whole Foods have gone through negative faces as well. They have been blamed for offering
foods that fat and calories yet they did not label the products with their nutritional values. It is
difficult to state the reasons behind such practices; however, it has hampered their reputation
significantly. They may have done this to earn more by spending the same. It is really

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understandable that companies feel pressure due to the responsibilities they carry with those
related to the surrounding communities. They are appreciated when they deliver the purest form
of foods; however, they are criticized when they reduce the quality of food. Customers have high
expectations from them, which is why they expect them to deliver the quality food every time. If
companies do not meet up with the set expectations of the customers, they are then criticized for
such practices (Wang & Bansal 2012, p.1135-1153).
Answer to question 3:
The Co-CEO of the Whole Foods Company has initiated a program to work closely with
the farmers in order to make the farmers realize that they are also a part of the business and also
to get the fresh and healthier foods. This is indeed a good move; however, its direct impact
would be very unrealistic. The main reason behind the lagging performance of the company in
the competition is the pricing of the organic foods, which is comparatively cheaper in other
retailing companies such as Walmart and Kroger. The steps that the Co-CEO has adopted would
ensure the production of fresh organic foods, which is very important for gaining back the lost
reputation due to little criticism on the food contents. This might also help to enhance the sales
figure; however, this might not do wonder in favor of the company as product pricing matters a
lot to many customers (Liu & Zhang 2013, p.84-101). Rating producers based on water use,
energy consumption and well being workers would help to categorize the different suppliers.
This would help the company in identifying the potential supplier but going such way this would
also enhance the bargaining power of the selected suppliers. Company would be bound to get
their foods from the selected suppliers only, which means they would not do much experiment in
getting their required foods. They would rather try to bargain the identified potential suppliers,
which further means the company would require to come to a common agreed point. The

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common agreed point might not be the best according to the company as suppliers might not
provide the products on the demanded quotations (Sheu & Gao 2014, p.313-325). Nevertheless,
this is never the solution for the pricing competition in between the Whole Foods and the rival
companies.
Answer to question 4:
Microsoft is one of few companies that have effectively managed its social
responsibilities. It has made the entrance to the company easier to communities, which is evident
in its few program. It gives discounts to the students, veterans and the military personnel. It also
provides donations and assistance. Such discounted offers and the donations enhance the
accessibility rates of the students, veterans and the military personnel with its products.
Additionally, the company gives a significant amount as donations to valuable nonprofit
organizations. It gives donations to support the programs to support the community by helping
the needful and the students in the community. It takes care of their education. Apart from its
concerns for the community, it also gives ample stress on reducing its carbon footprint to support
the environment to have a livable world. The use of renewable energy is one of such examples
(Csreurope.org 2017).
A company with a mismatched focus would find this difficult to be in the competition.
The modern era of competition has taken a different shape, which is heading more towards the
social responsibilities. Customers indeed look for the brands that have better records in the
corporate social works. This is why it is important for any company to have their business
strategies aligned with the social responsibilities as well (Brammer, Jackson & Matten 2012, p.3-
28).

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c) Constraint factors in implementing the socially responsible business
Answer to question 5:
There are various ways to attract investors to start up a new business with core values to
align to the social responsibilities. Such companies need to initiate few programs such as social
welfare like education, helping the poor and providing the relieving works to the natural disaster
affected people. Such programs would not only bring the investors but this would also bring
many more nations from the different parts of world. People from across the globe give huge
donations on such social causes. Another way of attracting the investors can be to advertise the
core values related to social responsibilities. This would educate the investors from the
different parts of world as the business is aligned with social causes. Investors generally invest in
such cause that gives publicity and returns as well. The new venture would give both the
business and the reputation (Aguinis & Glavas 2012, p.932-968).
Traditional business can be defined in two ways such as the one that has less or no
connection to the social responsibilities and the one that is aligned with the social
responsibilities. Traditional business might get investors if they have potential projects with
them; however, they would not be able to get the same number of investors as it is possible with
the organization aligned to extensive social responsibilities. This can also be because there are
risks associated to the every new project; however, social works are free from risks. This indeed
gives utmost publicity to a firm or the associated partners (Nwagbara & Reid 2013).
Conclusions and recommendations
Whole Foods is one of the most reputed companies in the United States. It has earned
reputation in producing the organic foods, which are safe and healthy. The organizational

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mission and its core values connect its bonding to the social responsibilities. According to the
Co-CEO of the company, it is relatively easier to stay competitive by focusing in strengthening
the culture. On contrary to this, it is relatively difficult to be in the competition with just normal
business strategies. This is because strategies can be easily copied by the other competitors. This
is exactly the same what has had happened with the Whole Foods Company. The dominance of
the company in producing the organic foods was fiercely challenged by some highly reputed
companies such as Walmart, Kroger and Safeway. Whole Foods has been challenged for the
pricing of the organic foods. Organic foods are comparatively much expensive than what is
offered by other competitor companies. Additionally, they have also been caught for offering
foods that were unhealthy and contained calories or fat. The violation of the core values and the
pricing of the organic foods have both hampered the earned reputation of the Whole Foods
Company.
To gain back the lost position in the market and to stay firm against the big rivals like
Walmart, it is important for Whole Foods to reduce the prices of organic foods. This can be
done and the prices can be reduced if it closes the program that scrutinize every single suppliers
based on certain parameters. Nevertheless, they should have a large number of suppliers
partnered with them. This would enhance the bargaining power of the Whole Foods Company.
Moreover, they would be able to offer foods on cheaper prices. However, they should never
compromise with the quality of foods. To maintain this, they should work closely to all their
suppliers if it is possible. This would ensure a quality production. Nevertheless, quality of
product in combination to cheapest pricing is the two strategies that really help get more
customers. Getting more customers mean progressive business, which would ensure the business
of the Whole Foods Company get back to the position where they once belonged to.

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References
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