Whole Foods
Managerial economics
Managerial economics: Whole Foods
In many ways, Whole Foods defies current assumptions of what constitutes a successful company strategy. It is an organic niche supermarket that prices its products relatively high in relation to its competitors. Yet it has become wildly successful in recent years, even defying conventional predictions of its likely demise during the credit crisis of 2008. This paper will explore the 'secret' of Whole Foods success using the core principles of managerial economics. Concepts germane to managerial economics include: exploiting the elements of effective leadership; ethics programs and the ethical orientation of the company; risk-taking; optimizing organizational structure; optimizing strategic control; and the need for balance between rewards, culture, and boundaries.
The elements of effective leadership and ethics
When Whole Foods began as the brainchild of current CEO John Mackey, its product was what distinguished it from its competitors. Mackey has been called an effective leader because of his ability to identify an emerging niche market and his unique integration of ethics into the company worldview. Whole Foods, unlike most grocery stores began with the concept that it would offer organic produce alone to consumers and rather than focus upon price it would sell an ethos of an ambient store in which shoppers felt 'good' shopping. Later, it expanded to offer more and more specialty food items spanning from vegan to vegetarian; gluten-free to nut-free. However, many of these items are far more expensive than conventionally-produced foods. This is partially how the store earned its moniker 'Whole Paycheck' given that organic and ethically-raised products are invariably more expensive than the alternatives found in standard supermarkets. However, by fulfilling an unmet need, Whole Foods remains buoyant, given that it does not compete on slashing prices alone. Unlike conventional supermarkets which offer a wider range of goods, there is often a struggle to out-price Wal-Mart. But Whole Foods prides itself on offering something unique. And while more grocery stores are offering organic alternatives (including Wal-Mart); Whole Foods still offers a far wider array of products in this area. Finally,...
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