Whole foods market is an organization that deals with natural and organic foods and it is located in Austin, Texas. Whole Food has earned itself a crown and respect as a socially responsible entity. One of the strategies used by the whole food market was the acquisition of Wild Oats Market. Whole Food Market (WFM) decided to amalgamate with Wild Oats Market (WOM) in which WFO would assume WOM’ s debt and pay buy its stock (Whole Food Acquires Wild Oats, 2007). Federal Trade Commission (FTC) was against the merger. It claimed that it would eliminate the healthy competition that existed between the two companies. The reasoning was that 30 percent of the WOM’s outlets would be closed and as a result, WOM’s revenue would double and the sales would increase by a margin of 85-90 percent (Whole Food Acquires Wild Oats, 2007).
About 80-90 percent of the Wild Oat shoppers would shift to WFM where they will face high prices due to reduction in competition (Whole Food Acquires Wild Oats, 2007). Despites these claims, WFM went ahead with the merger and acquired WOM. According to WFM, the merger would help them cut costs, have new talent from the new team, and have greater purchasing power that would be of great help in realizing the company’s objectives (Whole Food Acquires Wild Oats, 2007).
In 2006, whole foods market announced its intention to buy 458,000 megawatt-hours of wind energy credits thereby making it the largest user of renewable energy (Kanofsky, 2009). The company did not give details of how much the purchase would cost but guaranteed that it was within budget. The implication of this was that the company would be seen to have a deep touch and concern for the environment. Since the company knew that most of its target customers are environmentalists and love natural products, this was a big advantage to the company. The company’s motive in this strategy was to drive their sales up (Kanofsky, 2009).
Social and Ethical Responsibility
Whole food market is an organization that is committed to social and ethical responsibility. They have a deep concern for the community and the environment at large and this comes out strongly when we look at their core values. Amongst their core values, one of them is caring for the environment and the community (Whole Food Market, Inc., 2012). Their social and ethical responsibility is subdivided into four categories, which include sustainable agriculture, community citizenship, integrity in all business dealings and wise environmental practices (Whole Food Market, Inc., 2012). Sustainable agriculture implies that the organization deals with organic farmers and even encourages other farmers and growers to undertake organic farming. The company provides the necessary support to these farmers and this can be proved by the fact that they provide markets for their products and even seek to expand the markets. Organic farming refers to the use of agricultural methods and practices that do not deplete soil components and soil moisture, and use renewable resources (Whole Food Market, Inc., 2012).
Some of the environmental friendly practices that WFM engages in include recycling, reduction of waste as much as possible and reuse of raw materials and products wherever possible. The company’s deep concern for the environment is evidenced by the fact that it received the U.S. Environmental Protection Agency Green Power Award in 2004 and 2005 (U.S. Environment Protection Agency, 2005). It is in the company’s plan to buy 458 gig watt-hours of wind energy credits. The company gives back to the community by donating 5 percent of its earnings or profits to the society and non-profit making organizations (Whole Food Market, Inc., 2012). The company also observes integrity in anything they undertake and maintain respect, honesty, and fairness in all their dealings with the trade partners (Whole Food Market, Inc., 2012).
There are many environmental issues facing the organic and natural food industry. Climate change is one of them because in the recent past, there have been drastic changes in the climate. As such, the rainfall patterns have changed, the soils have been affected, and temperature changes are unpredictable. Organic foods require clean water, which is free from chemicals such as fertilizers, as well as organic manure. However, with unreliable rainfall, the probability of crop failure is very high which in return results in low supply and high demand (Armstrong & Kotler, 2004). The soils PH have also changed and most of the places in the world require chemical boosters to improve their fertility and this makes it difficult to get natural and organic foods.
Globalization is another factor that has affected the industry both negatively and positively. The industry is facing a big challenge with the introduction of national standards that must be met by organic food companies. This is meant to protect domestic producers and as such, organic imports are rejected in some countries, as they do not meet the national standard. Growth of regional markets is another challenge since customers are not willing to purchase organic food that takes a lot of time during transportation, as they want products that are more fresh (Armstrong & Kotler, 2004).
Organic and natural food companies face huge competition from both within the industry and outside the industry. Many companies and organizations have invested in the food industry, and this has led to increased competition causing a deficit on the supply side, and increasing demand (Armstrong & Kotler, 2004). This has led to high prices as the companies have to offer very competitive prices to the suppliers otherwise they risk being driven out of the business (Armstrong & Kotler, 2004). This has led to high consumer prices, thus leaving the products to industrialized countries that have high levels of income. The non-organic food industries offer wide range of products that are cheap, convenient, and easily accessible. This is a threat to the organic companies and farmers who are in the developing countries since they are unable to export their products for one reason or another: they lack a local market, as the products are perceived to be expensive by the customers.
Economic factors threaten the company as well. To start with, the credit crunch whose effect has been felt globally has presented financial challenges to the food industry. A lot of financing is required from the farmers and all the way to consumers. The farmers need financial backup or credit from banks but with the credit crunch, financing or borrowing becomes difficulty (Armstrong & Kotler, 2004). The consumers also tend to favor products that are less costly, and serve the same purpose. This is a major challenge to the industry as most products are expensive. Majority of the people do not value farming as a career and instead they want white-collar jobs. As such, the number of people willing to do farming is small and this leads to scarcity of the products. There are also certifications and organic labels that ere required by firms for them to trade in organic products. These certifications involve many bureaucracies that are time consuming. In addition, the possibility of counterfeit products that claim to be organic and natural is also possible. This is because corruption and impunity has found its way into the business sector and business people will pay to have the labels even if their products are neither organic nor natural.