Essay on “Acquisition Strategies: Identification and Analysis”
The whole food company was founded in 1980 with a major aim of dealing int he selling of the food stuffs in the united states. The companies expanded within a remarkably short time and opened unusually many selling outlets in the united states, canada and the united kingdom. Curently, the organization has a total of 302 stores, most of which are concentrated int he united states while a few in canada and united kingdom. The company offers produce, seafood, grocery, meat and poultry, bakery, prepared foods and catering, coffee and tea, nutritional supplements, and vitamins. Through this, the organization offers employment to remarkably many people especially in the United States. The approximate number of employees working for whole food organization is 45,300. Whole food is considered the biggest grocery industry in the United States, though receiving some stiff competition from other grocery companies like Kroger, Safeway, and Super Value.
The market of the whole food organization is considered as a mature market because of the duration that the organization has existed. In addition, there was a lot of financial investment into the organization that led to the faster rate of growth of the organization in the mid and late nineties. This faster growth led to the faster rate of maturity of the market that the organization operated.
The environmental factors that either positively or negatively affect the operations of whole food organization are Political, Economic, Social, and Technological factors. These factors are extremely prominent in the running of the activities of any organization as they are likely to bring a positive or negative competitive advantage to the organization.
There have been some politically generated regulations that have to be met by all organizations dealing in the organic foods. The USDA (United States Department of Agriculture) created a certification called NOP (National Organic Program) which “regulates the standards for any farm, wild crop harvesting, or handling operation that wants to sell an agricultural product as organically produced” (Organic Certification, 2012). Therefore, for certification and recognition and be certified, organic producers must attend the regulations and standards.
The economic situation around the world has negatively affected the business of whole food organization. Most countries including the United States have been experiencing inflation and this has made people spend less on the purchase of the foodstuffs. This is even increased further due to the higher prices of the organic foods that whole food deals in as compared to the inorganic foodstuffs.
The social factor has positively affected the business of the whole food organization. Most people around the world are seeking to live a happy and healthy life. Most of people want to get the proper health from the organic foods. This has led to the increase in the rate of consumption of the whole food organization products (Whole Foods Market, 2011).
Technology has negatively affected the business of whole food organization because it has led to the high cost of the organic food products. It is evident that the organic food producer’s use less technology as compared to the inorganic food producers. The less technology has led to less output from the farms hence making organic foods scarce, hence more expensive and less affordable to the consumers.
Porter’s 5 Forces
The five forces in the competition model are the threat of the entry of new competitors, the threat of substitute products or services, the intensity of competitive rivalry, the bargaining power of customers (buyers), and the bargaining power of suppliers.
The threat of the entry of new competitors is a crucial factor for whole food. Other organizations as Wal-Mart has come up strongly and is offering close competition to whole food organization in the selling of the organic food products (Grocery Stores & Supermarkets, 2012).
The threat of the substitute products is also another factor. The organic food products are more expensive than the inorganic food products. This is making terribly many people go for the purchase of the inorganic foodstuffs due to the low price levels. This has led to the reduction of sales at whole food.
Now, the principal competitors that can be pointed out are Trader Joe’s, Sprouts Farmers Market, and local market stores. These are giving whole food a high competitive rivalry of picking up the market share that was initially enjoyed by whole food organization.
The bargaining power of consumers and suppliers are the other two factors. The consumers are likely to switch from the high quality organizations like whole food and go for the mass merchandising organizations like Wal-Mart. Concerning the suppliers; the natural food retailers have a higher advantage over organizations like whole food.