Whole Foods New Service Proposal Business Plan

Pages: 12 (3362 words)  ·  Bibliography Sources: 10  ·  Level: Master's  ·  Topic: Agriculture

SAMPLE EXCERPT:

[. . .] Many of these might have a cost advantage due to the locations that they operate in or their retail size which makes square footage more cost effective.

Barriers to entry also is inclusive of them having a more timely and reliable access to various distribution channels and networks (such as supermarkets having their own delivery services).

Bargaining power of Suppliers

The timely availability as well as reliability of suppliers with whom one works with downstream in the supply chain is an important consideration. Since Whole Foods has acquired many of the organic organizations downstream, they have a great deal more control of their supply chain than most firms.

The importance of being able to switch over to a different supplier in case one relies on very few or "concentrated" suppliers. In Whole Foods case, the fact that they own many of their suppliers would make it virtually impossible to redesign the supply chain if needed making them dependent on their supplier's performance.

The types of prices that suppliers are able to offer or leverage is considerably low for Whole Food's suppliers since profits would ultimately end up in the same set of books no matter which organization claimed the profits.

The scope and network spread of the suppliers in the industry is rather narrow in the supply chain opportunities since the organic foods market is still developing.

The cost of being able to move from one supplier to another one would be high for Whole Foods since it has a great deal of ownership invested in its current supply chain.

Bargaining Power of Buyers (Customers)

The income distribution of the selected buyer market; with the goal of having customers with middle to high incomes and greater amounts of disposable income.

Levels of similar products and food choices available to such buyers are generally fairly limited in the markets in which Whole Foods choses. It operates with a rather unique product niche that few have been able to effectively imitate.

The perceived quality of our food items to buyers vs. those afforded by other rival competitors is generally high in the Whole Foods markets. They have unique control over their supply chain as well as high turnover so they can guarantee quality and freshness of their products.

The perceived level of importance of our product to the end buyer (whether they prefer organic or non-organic but reduced priced grilled items) is high among certain consumer demographics that place a relatively high value on quality food.

The actual concentration of our targeted buyer market will vary from market to market however since Whole Foods chooses its markets selectively, the markets which they operate in often contain heavy concentrations of buyers in the target market.

Threat of Substitute Products

The pricing of similar or substitute products is rather low in the organic market however if consumers shop outside of the organic market then the threat of substitutes can be great. This would depend on the customers' loyalty towards organic products.

The concentration of such substitute products within our coverage market will also be mixed based on customer loyalty. For example, there are probably many places that can grill foods that might serve as a substitute to the Whole Foods proposal. However, few can do this with the same quality ingredients as Whole Foods.

The perceived quality of such substitute products vs. Whole Foods will generally be low except for in a few rather rare cases such as where farmers markets may be present.

The cost of moving from one substitute product to another one by the end buyer will undoubtedly be fairly high since the product niche is fairly unique in most markets.

The volume of substitute products being sold will be high if all food substitutes are considered and low if only organic products are considered effective substitutes by the market.

Rivalry among Competing Firms

The scale and spread of competing firms will undoubtedly grow into the future as more and more firms try to imitate Whole Foods success.

Price-based competition with our competitive firms will remain low in the short and mid-term; however in the long-term the market could be flooded with new entrants.

Level of product differentiation by those competitors will be low until at least a long-term timeframe is considered and may also vary somewhat in individual markets.

Advertising and marketing efforts by rival firms in attracting clients to their side will be most likely low in most areas.

The concentration of such competitors in the market place & their profit levels will also most likely be low in most areas.

SWOT Analysis

Strengths

Convenience

Customer Service

Location "Your service style is new to the area"

Pricing "Your prices are cheaper than your competitors"

A branded image.

Different variety of food.

Almost the palace fully equipped.

Topline products "organic food and wine"

Weaknesses

Value compared to quality

Time/cost

Employee training

Limited expansion "new and not established"

Competition

Limited funds available.

Offer a product, which is already available on the market.

More of everyday neighborhood restaurant.

Reputation as 1st time in this business.

Opportunities

Industry or life style trends.

Neighborhood friendly restaurant.

New housing development is being built nearby.

Attractive & flexible employment.

Positive environmental commitments.

Threats

Change of Supermarket concept.

Technology involve in the food market.

A high street brand is moving into the area.

Operating costs are set to increase soon.

Effects on core activities "Either one effect the other, people who come to the restaurant or the one who's come to the Market"

Another restaurant has started offering similar products to your own, at a lower price and you are unable to match this.

Environment Discussion

After having completed this five forces model, the SWOT Analysis, and the general environmental analysis what was identified was that it is equally important to have the right types of suppliers and quality ingredients as it is with being able to cater to our end clients and provide a unique and convenient experience that adds value to them and the Whole Foods brand in general. That itself is based on the fact that if we aren't able to get our food items on time and in a consistent manner, then it would be that hard for us to be able to turn around and offer such grilled items on a consistent manner. In addition to that, this exercise also informed about the importance of being able to differentiate our food items on the notion of "quality" as well as "pricing" strategies. Preparing food is a bold move considering the operations current business model. Although this proposal has a great deal of potential, it also carries a significant amount of risk.

Risk Analysis

One risk that Whole Foods will have to successfully mitigate is how to effectively manage the subsidiary operation. While many members of the management team fully versed in retail management, managing a grill that prepares food may fall well beyond their professional expertise. Since the customers will have the option to prepare many of the retail goods in the primary operations, this too could add an overwhelming level of complexity to administering such an operation. This risk could be potentially mitigated by hiring a quality and dedicated staff to service the operation that has experience in the field.

Another risk is that the grill could act to damage the primary business model. Customers could perceive the grill as a distraction from their organic shopping experience and be turned-off by the operations presence. In such an event this might act to bring a diminishing return to the value of the supermarket goods. However, if the grill is positioned in a way in which it is visible, but not overwhelming this could act to mitigate any damages that might occur to the grocery shopping experience. Having a separate entrance for the grill might also act to divert unneeded crowding might also act to protect the grocery shoppers from any inconvenience.

Action Plan

Since there is definitely some element of risk to this proposal, it is recommended that Whole Foods begin with a single location. This will give the organization time to develop the model and workout any issues before taking the proposal mainstream. It could open one concept grill and if that became both successful and manageable it could then considered a phased roll out approach to integrating the grill into more locations.

Making the pilot grill a success is at the heart of the proposal and it should be designed in a way that can be reproduced effectively in other locations. One very important aspect to making the model reproducible will be to minimize the retail footprint that the operation will take up at a Whole Foods location. If the operation can be designed in a way that is easily retrofitted into existing stores then this will also increase the project's chances for success. Ideally,… [END OF PREVIEW]

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Whole Foods New Service Proposal.  (2012, March 29).  Retrieved December 15, 2018, from https://www.essaytown.com/subjects/paper/whole-foods-new-service-proposal/8835153

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"Whole Foods New Service Proposal."  Essaytown.com.  March 29, 2012.  Accessed December 15, 2018.
https://www.essaytown.com/subjects/paper/whole-foods-new-service-proposal/8835153.