Running Head: STRATEGIC LEADERSHIP

Strategic Leadership at Whole Foods Market

LDR 660
Vicky Roberts
Siena Heights University
April 25, 2016

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During the 1980s in Austin, Texas, the opening of one small store named Whole Foods
Market, was the birth of a natural and organic grocery store chain which has since dwarfed into
an organization now encompassing over 400 stores with 70,000 employees in North America and
the United Kingdom (Meyer, 2015). The Whole Foods Market (WFM) I chose to visit and
inquire about, is located in Ann Arbor, Michigan. I spoke with an employee named Kelly, at the
customer service desk, after entering the store. I immediately commented on the enthusiastic and
joyful culture resonating strongly in the WFM environment communicated by the staff. Kelly
testified to the accuracy of the enjoyable ethical working culture and shared her own WFM
employee testimony true to the organizations focus on quality and commitment. Upon the
completion of her masters and being a previous employee, her strategic return to Whole Foods
Market was inevitable based upon other organizational work experiences, not measuring up to
the appropriate WFM stakeholders high operational standards. Through her actual life
experience Kelly demonstrated to me the importance and validity of Whole Foods Markets
higher purpose statements relevancy to standards and values ensuring quality of processes and
products for everyone involved.
Strategic Management Process
Leaders at WFM use the higher purpose statement to develop and implement a business
strategy, coupled with the mission and vision statement, to lay the ethical foundation for the
everlasting competitive advantage in the organic grocery store industry (Rothaermel, 2015). All
three of the following statements can be found on the website www.wholefoodsmarket.com.
Higher purpose statement. Whole Foods Markets higher purpose statement is as follows:
With great courage, integrity and love, we embrace our responsibility to co-create a world

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where each of us, our communities and our planet, can flourish. All the while, celebrating the
sheer love and joy of food.
Mission statement. The mission statement at WFM is also called Declaration of
Interdependence and communicates what the organization does at every level, while striving to
create more perceived value for its customers through differentiation of products and quality. It
reads as follows: Whole Foods Market is a dynamic leader in the quality food business. We are
a mission driven company which aims to set the standards of excellence for food retailers. We
are building a business in which high standards permeate all aspects of our company. Quality is a
state of mind at Whole Foods Market.
Vision statement. The vision statement defines what the company wants to accomplish as a
goal. Here is the statement: Whole Foods Markets vision of a sustainable future means our
children and grandchildren will be living in a world which values human creativity, diversity and
individual choices.
Whole Foods Market backs up its purpose, mission and vision, with strategic commitments
of action. A great example is the Ann Arbor stores Community Giving Day post, located on
the east wall, which employee Kelly pointed out to me. Since the opening of the Ann Arbor
Whole Foods Market on Ann Arbor-Saline Road, it has contributed $123,900 to the community.
The last community giving day raised $3,900 for the Whole Cities Foundation. The next
community giving day will be Tuesday, May 10, to benefit Arbor Hospice. The organizations
quantitative actions, achieve competitive advantage, through pro-active behavior communicating
Whole Food Markets ethical organizational values.

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Ethical Standards
The governing ethical standards of behavior at WFM builds the foundational groundwork for
the companys continued success through integral behavior while accomplishing goals. The
business, corporate and functional strategy, is implemented daily through actions based upon
eight core values of competency. According to Whole Foods Markets website, the eight values
formulate the ethical culture which is the guidance used to aspire to do business fairly everyday
with customers, workers and supplier partners. The core values are what is truly important to
WFM as an organization. The values do not change from time to time, situation to situation, but
are the under-pinning of the companys culture consistently. Here are Whole Foods Markets
eight core values found at www.wholefoodsmarket.com:
#1. We sell the highest quality natural and organic products available.
#2. We satisfy, delight and nourish our customers.
#3. We support team member excellence and happiness.
#4. We create wealth through profits and growth.
#5. We serve and support our local and global communities.
#6. We practice and advance environmental stewardship.
#7. We create ongoing win-win partnerships with our suppliers.
#8. We promote the health of our stakeholders through healthy eating education.
Analysis of Internal Environment SWOT Analysis
The eight core WFM competencies, coupled with resources and capabilities, aides in
defining the organizations strategic options used to leverage its internal strengths to exploit
external opportunities. The purpose, to mitigate internal weaknesses and external threats

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(Rothaermel, 2015). A thorough SWOT analysis achieves the analytical goal (Meador, Britton,
Phillips, & Howery, 2006).
Strengths.

Passion for high quality products 100% guaranteed customer satisfaction

Customized facilities used to relate particular products to target customers

Large size stores unusual in natural food stores WFM larger than 30,000 sq. ft.

Employees very well trained

Weaknesses.

High prices organic 25%-75% more than conventional grown foods

Large size stores

External opportunities.

Increases attractiveness of health/organic food industry

Bought biggest competitor, Wild Oats, resulting in growth through acquisition

Continue to promote the industry

Continues community service efforts to build brand awareness and loyalty

Threats.

High organic food prices

Local grocery stores increasing organic food options

Non-organic foods are cheaper

Large WFM stores could encourage customers to shop at small local stores faster to get
in and out

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Analysis of External Environment PESTAL Model of Forces

Whole Foods Market evaluation of its external environment is paramount in determining how
to sustain its competitive edge through the identification of external forces, creating
opportunities or threats, according to the PESTEL model of forces (Meyer, 2015).
Political. The political business environment can be influenced by the government through
mandates, regulations and court decisions. Here are actions which can influence WFMs
performance based upon governmental factors, altering consumer behavior:

Regulations on organic and GMO food (opportunity)

Free trade agreements (threat)

Low labor standards in developing countries (opportunity)

Capitalize on Whole Trade Guarantee to build its brand & attract more customers
(opportunity)

Economic. WFM must strategize according to the economic environmental factors, to

minimize the issue of higher labor costs leading to higher supply costs and higher selling
prices. The factors include:

Economic stability (opportunity)

Higher employment in the United States (opportunity)

Rising labor costs in developing countries (threat) because supply chain significantly
depends on producers in developing countries

Sociocultural. The dimension identifies social conditions which influence consumers,

employees and investors. The influential conditions are:

Increasing emphasis on healthy lifestyle (opportunity)

Increasing cultural diversity (opportunity)

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Increasing wealth gap (threat)

Technological. The factors influence the application of knowledge and innovation to

develop new products and processes to increase business efficiency and are as follows:

Increasing automation in business (opportunity)

Increasing mobile technology usage (opportunity) by providing on-line services and

WFM app for coupons

Patenting of GMOs (threat & opportunity)

Ecological. The factors pertaining to conditions of natural environment for the healthy
continued existence of mankind. The environmental/ecological external factors are:

Global warming/climate change (threat) to farmers productivity in WFM supply chain

More complex standards on business waste disposal (opportunity)

Higher emphasis on business sustainability (opportunity)

Legal factors. The factors pertaining to effects of laws on WFM business are:

Environmental protection laws (opportunity) WFM has sound environmental policies

improving its brand image

Inadequate labor laws in developing countries (threat)

Anti-trust law (threat) reduces WFMs ability to maximize its growth through
acquisitions and mergers, a major part of expansion strategy

Competitive Advantage
VRIO framework. Whole Foods Market has a competitive advantage due to resources,
competency and capabilities satisfying the VRIO framework model (Rothaermel, 2015). The
core competencies drive the competitive advantage in the industry with WFMs unique strengths,
reinforced by its resources. The organic/health products sold at WFM, have perceived value

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based upon being valuable (healthy), rare (certified organic and 11,500 non-GMO verified
products), costly to imitate (organically grown products, animal welfare and meat quality
inclusive of free-range to grass fed & non-hormonal products, wild seafood rated for ecological
sustainability, non-toxic cleaning products) and the firms organization (WFM in Ann Arbor
buys from local and close growers around the mid-west when possible) as a strategic position
used for continued market penetration (Roberson et al., 2010).
Whole Foods Markets competitive advantage is focused upon solid intangible resources
based upon a reputation for quality. Here are the organic standards, the consumers trust and
depend upon, which can be found on WFMs website:

No toxic or persistent pesticides or herbicides

No sewer sludge or synthetic fertilizers

No GMOs

No antibiotics

No synthetic growth hormones

No irradiation

The resources benefit the company through knowledge of products, reputation, brand name
(including WFM 365 products), and an ethical culture, which adds to a valuable trustworthy
network of contacts in the form of suppliers and community.
Business Strategy Formulation
Whole Foods Market is a Fortune 500 Company which positions itself against larger
retailers and grocers, not considering Trader Joes and Sunflower Markets as a natural food
market threat within their industry, to gain competitive edge through differentiation (Roberson et
al., 2010).

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Differentiation. WFM success over the years is attributed to differentiating itself from its
competition through the strategic adoption of commitment to natural foods. The objective is met
through the knowledge of where the food comes from, important to customers, which is
indicated on the labeling of its products. Whole Foods Market does the work for you, offering
25,000 certified organic products. Organic foods must be certified by an accredited agency in the
United States, by the United States Department of Agriculture, indicating required percent of
organic ingredients in a product on its label. The 3 organic category classifications are as
follows and listed at www.wholefoodsmarket.com:
1. 100% organic must contain only organically produced material
2. Organic product must be made with a at least 95% organically produced ingredients
3. Made with organic ingredients product must contain at least 70% organic ingredients
Cost leadership. The organization implemented, along with differentiation strategy, a unique
value proposition. The implied value is WFMs emphasis on being a retailer which sells natural
and organic foods promoting products conducive to high quality and exceptional human health,
essential to human life and progress. The organization is taking steps to improve its price image,
introduction of more less costly store brand 365 products, to increase its consumer base
(Zwiebach, 2013).
Innovation. WFM organizational culture has aided in its successful growth based upon a
business strategy formulated to offer the customer an unmatched in store experience, resulting in
conversion of customers into Whole Foods Market brand ambassadors, as the first national
certified organic grocer (Regani, 2007).
Strategic entrepreneurship. The organization is a change agent in the food retail industry,
pursuing an organic/natural grocery store concept, producing for the consumer a unique

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enjoyable food shopping experience as its innovative strategy fending off a hard-to-crack defense
with an every changing offense (Rothaermel, 2015). Whole Foods Market has created a new
grocery/food shopping experience, exploiting existing ones, through strategic innovation,
concepts and management, gaining a competitive advantage in the retail food industry. The
innovative grocery store chain, with the catch phrase feel good about where you shop, takes it
a step further by seeking out suppliers contributing only organic certified products to its quality
natural food line (Johnston & Szabo, 2010).
Corporate Strategy Formulation
CEO John Mackey, founder and co-chief executive officer, selects the goal oriented actions
taken at WFM to determine where and how to compete in the dimensions of products and
services, industry value chain and geography. The corporate strategy is Mackeys responsibility.
It is based upon his decision to gain and sustain competitive advantages addressing where growth
will evolve successfully, in stages, and how to compete in the market based on the WFM premise
of being highly selective about its products being sold, while dedicated to quality standards and
core values (Meador, Britton, Phillips, & Howery, 2006).
Vertical integration. WFMs channels of distribution for output, determined by the value
added, can be defined by its Responsibly Grown program development. The purpose: quality
standards for the consumer which have been promised. The program was developed with the
assistance of scientists, local growers, and sustainable agriculture experts to address pesticide
management and farmworker welfare for responsibly grown products. Drivers of vertical
integration at Whole Foods Market (Zwiebach, 2013):

Scale

Scope

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No GMOs (phased out)

Monopoly seekers

Transaction costs economics

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Diversification. Improved product variety at WFM, through organic quality measurement

standards, has increased product classifications as follows and are listed on
www.wholefoodsmarket.com:

Food ingredients do not allow hydrogenated fats or artificial colors, flavors,

preservatives or sweeteners in any foods sold.

Fresh produce and flowers created Our Responsibility Grown rating system
addressing pest management and farm worker welfare.

Animal welfare and quality meat free range and grass fed beef animals raised with no
added hormones and no antibiotics, ever.

Seeking the most sustainable seafood responsibly farmed and rated for ecological
sustainability.

Body care you can believe in 50% potentially harmful chemicals we do not allow in
products on our shelves.

Cleaner cleaning products nontoxic cleaning products to protect families and the
planet.

Acquisitions. Whole Foods Market average store size is between 30,000 40,000 square
feet. The organization does at times acquire smaller stores, but its strategic acquisition focus is
on clearing out marginal players in its sector of the grocery store industry. Recently, WFM
purchased six Johnnies Foodmaster locations in Boston and is considering the possible
investment in Tescos Fresh and Easy in the Southwest. One of the organizations larger

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acquisitions was the purchase and takeover of the Wild Oats grocery store chain, its biggest
competitor (Zwiebach, 2013).
Alliances. Strategic alliances have been formed with farms and processing facilities which
produce/grow organically certified products only. The standard is optional for retailers, but not
for Whole Foods Markets unique chosen quest for exceptional organic quality. Organic
certification takes numerous steps and processes to insure a quality product of organic integrity.
Therefore, the chosen alliances must adhere to its standards of quality as the first national
certified organic grocer.
Networks. The companys network strategy, as the leading natural and organic grocer, has
created the Whole Story blog for its passionate consumers doing incredible things in the
community which is located on its website www.wholefoodsmarket.com. In 2014 the WFM
blog received the International Association of Culinary Professionals Award (IACP) for the
sites quality and content.
In the quest to continually improve WFM shoppers are invited to attend a Whats
Brewing meeting, which has the meeting times posted on its website daily. Its purpose: to
consult the real Whole Foods Market expert the customer.
Conclusion
The knowledge I have gained from the assignment/interview has demonstrated to me the
importance of the organizations leader to understand and communicate quality standards.
Quality dedicated to not only the product, to meet consumers needs and value, but the
provision of an interdependent environment for the benefit of its workforce. Whole Foods
Market core competencies collaboratively communicate its objective of considering quality the
highest form of value, standards beyond standards, not duplicated by another grocery store. My

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interview with Kelly at the Ann Arbor WFM confirms the objective through her personal
enthusiastic testimony.
The information I obtained from the interview and research of the publically traded
company, Whole Foods Market, related to the course materials with many similarities. A great
example is the relevance of the internal analysis and the companys core competencies. The
eight competencies are posted in large letters on the front wall of the WFM in Ann Arbor,
located on Washtenaw Avenue. Until I took this class, I did not realize the depth and
significance of the eight core competencies as part of the business strategy and strategic
leadership process for the organization. When coupled with the mission and vision statement,
the AFI strategy framework, analyze, formulate and implement, can begin to improve quality
and performance organizationally resulting in Whole Foods Market competitive edge.
At WFM, the overall role of its business strategy is focused on values. On the
organizations website, www.wholefoodsmarket.com, the strategic objective of the company is
stated as follows; At Whole Foods Market healthy means a whole lot more. It goes beyond
good for you, to also encompass the greater good. Whether youre hungry for better, or simply
food-curious, we offer a place for you to shop where value is inseparable from values.
To achieve lasting endurance, Whole Foods Market addresses the three dimensions of the
triple bottom line as a sustainable competitive strategy. A framework geared toward the
fulfillment of ecological and social obligations to stakeholders, interdependently connected, as a
network of internal and external constituents. The fulfilled obligations contribute to WFMs
strategic process and in return creates trust, impacting Whole Foods Market, with a consistent
reputation, customer goodwill and the firms positive financial performance. Interlock this

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strategy with the PESTAL analysis, indicating WFMs potential for continual sustainable
growth, and the organic markets future looks very promising (Meyer, 2015).

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References
Johnston, J., & Szabo, M. (2010, June 10). Reflexivity and the Whole Foods Market
consumer: The lived experience of shopping for change [Electronic version].
Agriculture and Human Values, 303-317. doi 10.1007/s10460-010-9283-9
Meador, D., Britton, M., Phillips, P., & Howery, A. (2006). Case Analysis Whole Foods
Market. Retrieved from http://pnphillip.asp.radford.edu/whole%20foods
Meyer, P. (2015, September). PESTEL analysis and recommendations [Electronic version].
Business Management. Retrieved from http://panmore.com/whole-foodsmarketpestel
Regani, S. (2007). Whole Foods Markets growth strategies and future prospects
[Electronic version]. Center for Management Research, 1-24. Retrieved from
http://www.thecasecentre.org/educators/products/view?
Roberson, A., Zelezen, A., Brahamarar, A., Pilipenko, B., Ghandi, K., & Werner, M.
(2010, December 10). Competitive strategy at Whole Foods Market [Web log post].
Retrieved from http://www.thunderbird.edu
Rothaermel, F. T. (2015). Strategic Management 2e. New York, NY: McGraw-Hill Education.
Zwiebach, E. (2013, May). Whole Foods mulls larger stores, acquisitions. SN Supermarket
News. Retrieved from http://www.supermarketnews.com

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