Case Study Description of Whole Foods under Amazon
In August 2018, Amazon acquired Whole Foods Market for $13.7 billion. Whole Foods was struggling with high costs and faced growing competition from traditional supermarkets offering more organic products. Prior to the acquisition, Whole Foods began rolling out a new order-to-shelf (OTS) inventory management system that many observers believed had led to shortages. For years, store team leaders at Whole Foods were empowered to make inventory decisions and tailor their stores to meet local needs, but OTS came with strict rules for purchasing and displaying goods which upset many employees. Should Amazon push Whole Foods to improve performance by emphasizing efficiency and standardization? Or should it aim to maintain a sense of empowerment among employees?
Authors :: Dennis Campbell, Tatiana Sandino, James Barnett, Christine Snively
Swot Analysis of "Whole Foods under Amazon" written by Dennis Campbell, Tatiana Sandino, James Barnett, Christine Snively includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Foods Ots facing as an external strategic factors. Some of the topics covered in Whole Foods under Amazon case study are - Strategic Management Strategies, Developing employees, Organizational culture and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Whole Foods under Amazon casestudy better are - – there is backlash against globalization, increasing household debt because of falling income levels, technology disruption, increasing energy prices, challanges to central banks by blockchain based private currencies, there is increasing trade war between United States & China, increasing government debt because of Covid-19 spendings,
increasing transportation and logistics costs, increasing inequality as vast percentage of new income is going to the top 1%, etc
Introduction to SWOT Analysis of Whole Foods under Amazon
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Whole Foods under Amazon case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Foods Ots, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Foods Ots operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Whole Foods under Amazon can be done for the following purposes –
1. Strategic planning using facts provided in Whole Foods under Amazon case study
2. Improving business portfolio management of Foods Ots
3. Assessing feasibility of the new initiative in Finance & Accounting field.
4. Making a Finance & Accounting topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Foods Ots
Strengths Whole Foods under Amazon | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Foods Ots in Whole Foods under Amazon Harvard Business Review case study are -
Diverse revenue streams
– Foods Ots is present in almost all the verticals within the industry. This has provided firm in Whole Foods under Amazon case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Cross disciplinary teams
– Horizontal connected teams at the Foods Ots are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
High brand equity
– Foods Ots has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Foods Ots to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Strong track record of project management
– Foods Ots is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Operational resilience
– The operational resilience strategy in the Whole Foods under Amazon Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Ability to lead change in Finance & Accounting field
– Foods Ots is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Foods Ots in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Low bargaining power of suppliers
– Suppliers of Foods Ots in the sector have low bargaining power. Whole Foods under Amazon has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Foods Ots to manage not only supply disruptions but also source products at highly competitive prices.
Ability to recruit top talent
– Foods Ots is one of the leading recruiters in the industry. Managers in the Whole Foods under Amazon are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Innovation driven organization
– Foods Ots is one of the most innovative firm in sector. Manager in Whole Foods under Amazon Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Organizational Resilience of Foods Ots
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Foods Ots does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Successful track record of launching new products
– Foods Ots has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Foods Ots has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Sustainable margins compare to other players in Finance & Accounting industry
– Whole Foods under Amazon firm has clearly differentiated products in the market place. This has enabled Foods Ots to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Foods Ots to invest into research and development (R&D) and innovation.
Weaknesses Whole Foods under Amazon | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Whole Foods under Amazon are -
Interest costs
– Compare to the competition, Foods Ots has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
High bargaining power of channel partners
– Because of the regulatory requirements, Dennis Campbell, Tatiana Sandino, James Barnett, Christine Snively suggests that, Foods Ots is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Products dominated business model
– Even though Foods Ots has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Whole Foods under Amazon should strive to include more intangible value offerings along with its core products and services.
Skills based hiring
– The stress on hiring functional specialists at Foods Ots has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Slow decision making process
– As mentioned earlier in the report, Foods Ots has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Foods Ots even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Whole Foods under Amazon HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Foods Ots has relatively successful track record of launching new products.
High cash cycle compare to competitors
Foods Ots has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Aligning sales with marketing
– It come across in the case study Whole Foods under Amazon that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Whole Foods under Amazon can leverage the sales team experience to cultivate customer relationships as Foods Ots is planning to shift buying processes online.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Whole Foods under Amazon, it seems that the employees of Foods Ots don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Foods Ots supply chain. Even after few cautionary changes mentioned in the HBR case study - Whole Foods under Amazon, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Foods Ots vulnerable to further global disruptions in South East Asia.
Increasing silos among functional specialists
– The organizational structure of Foods Ots is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Foods Ots needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Foods Ots to focus more on services rather than just following the product oriented approach.
Opportunities Whole Foods under Amazon | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Whole Foods under Amazon are -
Leveraging digital technologies
– Foods Ots can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Foods Ots to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Foods Ots in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Finance & Accounting segment, and it will provide faster access to the consumers.
Loyalty marketing
– Foods Ots has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Finance & Accounting industry, but it has also influenced the consumer preferences. Foods Ots can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Foods Ots can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Whole Foods under Amazon, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Foods Ots can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Building a culture of innovation
– managers at Foods Ots can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Finance & Accounting segment.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Foods Ots can use these opportunities to build new business models that can help the communities that Foods Ots operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Learning at scale
– Online learning technologies has now opened space for Foods Ots to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Low interest rates
– Even though inflation is raising its head in most developed economies, Foods Ots can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Finance & Accounting industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Foods Ots can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Foods Ots can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Foods Ots is facing challenges because of the dominance of functional experts in the organization. Whole Foods under Amazon case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Threats Whole Foods under Amazon External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Whole Foods under Amazon are -
Increasing wage structure of Foods Ots
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Foods Ots.
High dependence on third party suppliers
– Foods Ots high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Foods Ots in the Finance & Accounting industry. The Finance & Accounting industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Easy access to finance
– Easy access to finance in Finance & Accounting field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Foods Ots can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Foods Ots with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Foods Ots can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Whole Foods under Amazon .
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Foods Ots business can come under increasing regulations regarding data privacy, data security, etc.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Regulatory challenges
– Foods Ots needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Finance & Accounting industry regulations.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Foods Ots will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Foods Ots needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Foods Ots.
Consumer confidence and its impact on Foods Ots demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Weighted SWOT Analysis of Whole Foods under Amazon Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Whole Foods under Amazon needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Whole Foods under Amazon is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Whole Foods under Amazon is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Whole Foods under Amazon is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Foods Ots needs to make to build a sustainable competitive advantage.
