Organic Growth Walmart
Organic Growth at Walmart
The latest trend or “craze” per say of the twenty first century has been that of organic foods. The U.S market for organic food at one time was growing at a pace of 20% per year, which is significantly greater as compared to the 3-4% of the food sector as a whole. This undeniable growing demand in organic foods caught the attention of Douglas Degn, an executive vice president of the wildly popular organization, Wal-Mart. With the demand of organic products often outstripping supply, Degn was faced with the decision of whether or not to jump on this shortage and give people what they want out of organics from Wal-Mart, or if he should continue to build on the products they already offer to consumers, in order to raise profits. After analyzing the market and production for organic food and reviewing Wal-Marts business strategy, it is recommended that Wal-Mart pass up the temptations of the organic food industry, and should commit their money and energy in improving the products they already offer.
The reasons why Wal-Mart should stray away from dipping into the organic food pool are many. First and foremost, Wal-Marts business scheme that has driven their organization is buying in mass, bulk quantities, being able to sell these products while largely undercutting their competitors, and still be profitable. In the organic food market, supply has been overpowered by demand, so there is no possible way Wal-Mart would be able to continue this strategy, as there is just simply not enough supply. While the company had mentioned the opportunity of global sourcing, and importing these fresh foods from Chile and elsewhere, this would taint the whole “organic” reputation, and would turn consumers off of their product. Even if they tried to go local, it would be a very tedious task to find enough farmers to fit their quota, and organic farmers would not tolerate them asking to produce more beyond what they are capable of because they are
The latest trend or “craze” per say of the twenty first century has been that of organic foods. The U.S market for organic food at one time was growing at a pace of 20% per year, which is significantly greater as compared to the 3-4% of the food sector as a whole. This undeniable growing demand in organic foods caught the attention of Douglas Degn, an executive vice president of the wildly popular organization, Wal-Mart. With the demand of organic products often outstripping supply, Degn was faced with the decision of whether or not to jump on this shortage and give people what they want out of organics from Wal-Mart, or if he should continue to build on the products they already offer to consumers, in order to raise profits. After analyzing the market and production for organic food and reviewing Wal-Marts business strategy, it is recommended that Wal-Mart pass up the temptations of the organic food industry, and should commit their money and energy in improving the products they already offer.
The reasons why Wal-Mart should stray away from dipping into the organic food pool are many. First and foremost, Wal-Marts business scheme that has driven their organization is buying in mass, bulk quantities, being able to sell these products while largely undercutting their competitors, and still be profitable. In the organic food market, supply has been overpowered by demand, so there is no possible way Wal-Mart would be able to continue this strategy, as there is just simply not enough supply. While the company had mentioned the opportunity of global sourcing, and importing these fresh foods from Chile and elsewhere, this would taint the whole “organic” reputation, and would turn consumers off of their product. Even if they tried to go local, it would be a very tedious task to find enough farmers to fit their quota, and organic farmers would not tolerate them asking to produce more beyond what they are capable of because they are