Strategic Report: Amazon's Acquisition of Whole Foods Market Analysis

This report provides a comprehensive analysis of Amazon's acquisition of Whole Foods Market. It begins with an introduction to both companies, followed by an evaluation of the strategies and understandings behind the acquisition. The report includes a sustainability analysis, a PESTLE analysis, a Five Forces analysis, a Value Chain analysis, and a SWOT and TOWS analysis to assess the strategic fit and market dynamics. The feasibility of the acquisition is evaluated across physical, intellectual, human, and financial resources. The report also examines the acceptability of the acquisition from the perspectives of various stakeholders, including customers, investors, and employees. The rationale and motivation behind the acquisition are discussed, along with potential anticipated problems and recommendations for future success. The report concludes with a summary of the key findings and implications of the acquisition.

Running head: MANAGEMENT
Management
Name of student
Name of University
Author note

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Table of Contents
Management....................................................................................................................................1
Introduction on Amazon and Whole Foods.....................................................................................3
Evaluation of the Strategies and Understandings............................................................................4
Sustainability of Whole Foods market.........................................................................................4
Pestle Analysis.............................................................................................................................5
Five Forces...................................................................................................................................8
Value Chain................................................................................................................................10
SWOT Analysis.........................................................................................................................10
TOWS........................................................................................................................................12
Feasibility Amazon........................................................................................................................14
Acceptability of Amazon and Whole foods...................................................................................16
Rationale & Motivation.................................................................................................................18
Potential Anticipated Problems.....................................................................................................20
Recommendations..........................................................................................................................21
Conclusion.....................................................................................................................................21
References......................................................................................................................................22

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Introduction on Amazon and Whole Foods
The report is prepared to demonstrate about the acquisition of Whole Foods Market by
Amazon .com and thus it will illustrate about the main strategies implemented by the company to
forecast and evaluate the suitability. While Amazon.com is a multinational technology
organization that has focused on the e-commerce platform and cloud computing technology to
deliver products and services to the people worldwide, Whole Foods Market is the supermarket
chain that has been acquired by Amazon and it is known for its delivery of organic products
(Phillips and Zhdanov 2013). Jeff Bezos is the owner of the organization and it is one of the
second largest private employers at present in US with over 550,000.
The ANSOFF matrix clearly shows that the first and foremost reason for acquiring
Whole Foods Market is to improve its efficiency in managing market penetration and at the same
time, allow for diversification, development of new products and services along with the growth
and development of market to increase the customer base. The super market chain of more than
450 retail stores were purchased by Amazon, which was basically to attract the investors and this
eventually resulted in the addition of 11 centers for food storage along with nearly 500 centers

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for distribution of the products and services by Amazon (Amazon.com 2019). This has been a
great approach for business expansion and at the same time, become a large retail chain to
increase the range of products to artificial flavors, colors, sweeteners, preservatives,
hydrogenated fats that are USDA Certified. Amazon has anticipated growth in its shares from
Whole Foods customer base, which has allowed evolvement and transition in all operational
aspects for the fulfillment of customers’ needs and preferences (Kansal and Chandani 2014).
Evaluation of the Strategies and Understandings
Sustainability of Whole Foods market
The products and services delivered by Whole Foods Market are quite sustainable and are
considered as of great quality that has been certified by the USDA as well. The rating system
shown below represents good growth in terms of quality and consistency in delivering according
to the needs and expectations of the clients. With the acquisition, Amazon.com has managed to
increase its wide variety of products as well as made sure to overlap the existing customer base,
without needing to remove them as they can get everything under the same roof. Amazon.com
has expanded into a new category from a position of strength and this has resulted in capturing
new market share along with influence in negotiations with the vendors by pushing the
competitors’ profit margin down. The prices are kept lower for the products offered by Whole
Foods Market without compromising on the quality of those, which has further helped in
achieving operational efficiency and accomplishment of consumers’ demands and expectations
with ease (Park, Yoon and Kim 2013). The products and services of Whole Foods Market are
available online with the acquisition, which is a sustainable approach to expand market share and
surpass other retailers within the competitive business environment (Amazon.com 2019).

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Pestle Analysis
Pestle Data (Facts) Analysis (implications) Application
Political The rules and
regulations on organic
products and GMO food
items could create new
opportunities for the
acquisition to be
successful.
The free trade agreement s
and lower labour standards
further created more scopes
to open overseas and enter
new markets easily
Application of labour
standards and to enter
new markets
Economic The higher employment
rate in US allowed the
This could also affect the
supply chain by increasing
From the economic
perspective, the rising

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acquisition of Amazon
and Whole Foods
Market to create new
employment
opportunities for people
(Chang, Chang and
Wang 2014)
its supplies’ costs;
furthermore make the
acquisition to sell products
and services at increased
prices.
labour standards could
create some issues and
threats, because of the
dependence of supply
chain on the
developing nations’
producers.
Social The healthy lifestyle
choices and cultural
diversity have also made
the acquisition of
Amazon and Whole
Foods Market to open
up ways of influencing
co consumer buying
behaviours.
The companies have gained
scopes to deliver diverse
product mix for fulfilling
the cultural diversity needs,
furthermore maintain
steady growth in spite of
the increased wealth gap.
Adopting culture and
applying product mix
strategy to improve
social wellbeing
Technological The automated business
processes and patenting
the GMOs improved the
business performance,
which further made the
acquisition of Amazon
and Whole Foods
The customers could now
access adequate supply of
products and at the same
time, gain wider access to
both the products delivered
by Amazon.com and Whole
Application in
workplace for
improved business
performance (Claro et
al. 2013)

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Market successful by
providing enhanced
online services through
usage of mobile smart
phones.
Foods Market.
Environmental The higher rate of
pollution and global
warming could threaten
the ecosystem and as
such, affect the
productivity of farmers
in fields.
With the acquisition of
Amazon and Whole Foods
Market, new initiatives and
environmental approaches
are undertaken to manage
waste disposal and
sustainability.
The application
environmental laws
and rules could help to
preserve the
ecological balance in
nature as well as
deliver eco-friendly
products and services
for ensuring higher
level of customer
satisfaction.
Legal The Environment
protection laws, rules
and guidelines and labor
laws have allowed both
these companies to
evaluate their suppliers
The suppliers are provided
with good amount of
money and the investors
have been drawn to
capitalize on the Whole
Trade Guarantee and the
To maintain proper
values and ethics

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according to fair labor
practices.
brand image and reputation
have improved since then
(Gustafson et al. 2013).
Five Forces
Force Description Result
Rivalry The competition is high with
the presence of Tesco,
Walmart, etc.
With the acquisition of
Whole Foods Market,
Amazon has gained a
sustainable competitive
position among the other
retail supermarket chains.

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Competition = Bargaining
power of consumer
The buyer power is
moderate, because Amazon
already held a sustainable
position
With the acquisition of
Whole Foods Market, it has
become easy for influencing
the buying behaviors of
consumers, which has made
customers remain inclined
towards the company
without shifting to other
producers of organic
produces (Ahi and Searcy
2013).
Supplier The supplier power is high
because the production of
goods and services is
dependent upon the capacity
of suppliers of the organic
produces (Conlon and
Mortimer 2013).
The suppliers supplying raw
materials and resources are
also responsible for making
any changes to price of
products and services after
the acquisition of Whole
Foods and Amazon.
New Entrant The threat of new entrants is
high, because with the
emergence of many retailers,
there have been constant
This could hinder
management of
opportunities to compete
within the business

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introduction of new products
and services
environment
Substitution The company standards are
maintained, which has
helped in marketing the
products effectively
this has helped in avoiding
the threats of substitute
products made available in
the marketplace and the
threat is low (Göbel et al.
2015)
Value Chain
The primary activities include inbound logistics, operations managed through acquisition of
Whole Foods, outbound logistics and management of marketing, sales and post sales services.
The support activities include maintaining a proper infrastructure, management of human
resources, development of technology and managing procurement. The skilled and

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knowledgeable employees within the workplace have gone through training and developmental
sessions, which has helped in making investments on huge amounts of resources and thus created
higher level of motivation too (Gereffi and Fernandez-Stark 2016).
SWOT Analysis
Strengths
 With the acquisition of Whole Foods
Market by Amazon.com, the
distribution network has become strong
and this has helped in expanding
distribution centers to reach up to high
potential markets
 Highly skilled and knowledgeable
workforce
 The strong brand portfolio and good
suppliers’ connections (Tyson and
Walske 2016)
 Good marketing strategies through
advertisements and promotional
campaigns after acquisition
Weaknesses
 Even after the acquisition of Amazon
and Whole Foods market, the level of
innovation is poor compared to other
players within the industry
 The ration of profitability and Net
Contribution percentage after
acquisition of Amazon and Whole
Foods Acquisition are also quite low
and are below the industry average
standards
 Due to the increased numbers of
inventories, the need for raising more
capital is essential, which was a
daunting task for gaining long term
growth (Grönman et al. 2013)
 The new entrants in the market have
been difficult to cope up with