An Assessment Of Whole Foods Value Chain. Memorandum Case Study

An Assessment Of Whole Foods Value Chain. Memorandum - Case Study Example It is quite heartening that in such a competitive environment Whole Foods has been able to record revenues of $5,607.4 million during the fiscal year ended September 2006 with an increase of 19.3% over 2005. This has been possible on account of a strong value chain at Whole Foods. The revenue growth forms a core component of the strength of the company. Some of the strengths can be enlisted as; Strong revenue growth: During the previous five years when the market forces became much more competitive credit goes to the management of the company for coming out with impressive revenue figures. As compared to the industry average of 6.2%, during 2002-2006, Whole Foods recorded a revenue growth of 19.8%. Wide range of products: Company's product profile appears equally impressive with natural and organic products like seafood, meat and poultry, bakery, Gift Cards, prepared foods, specialty (beer, wine and cheese), nutritional supplements and vitamins, grocery, body care, books, floral products, pet products and household products. Focused growth strategy: Company's decision to contest1 the decision of Federal Trade Commission (FTC) challenging the merger of Whole Foods Market and Wild Oats, provides a glimpse into the aggressive strategy that the company has adopted over the years. In the year 2006 itself company opened 13 new stores with a view to reaching out to newer customer base. Company has also been successfully pursuing the acquisition strategy to leverage the economies of scale. Dedicated Workforce: The Company could not have written the success story without an active support and cooperation from the dedicated workforce. But there are some weaker areas which need constant attention as well; Lesser presence on the International horizon: Though the company has been able to establish itself firmly in US, its international is still limited to couple of stores in UK and Canada only. Minimal media presence: Today we are living in a media savvy society, therefore having a good presence in media and advertisements provides an edge to a company and its products. But so far Whole Foods has relied more on word-of-mouth publicity and keeps ignoring the strengths and advantages of being in media. For example in 2006 the company spent only 0.4% of total revenues on advertising. Rising rental costs: Whole Foods has been operating with rented space at many places. This forms a major cost component for the company. With rising rental costs and decreasing profit margins, the situation may become alarming if the requisite attention is not paid to the issue. For example, during the fiscal year 2006 itself the company paid approximately $153.1 million as rental expenses. Primary activities in the value chain include (Appendix-1); Inbound logistics: Raw material supplies, knowledge sources, consultancies, supplier management etc. Production: The inbound logistics are put in use to give out a finished product or a full-fledged service component. Outbound logistics: Taking care of distribution network, inspecting the quality of goods and services, planning out marketing and sales strategies etc. Marketing and sales: It forms an important component of the value chain as it is the main interface between the company and the customer. Service: Once the product or service is delivered to the customer, then comes taking a feedback from the customer. This has become very important in order to establish the company's brand equity and customer's loyalty. Futuristic needs are also projected by way of accepting