Whole Foods
1. (a) Whole Foods operates in the organic, or natural and specialty foods retail industry. Leading the industry, Whole Foods Market is the world 's most successful natural foods grocery chain. Having recently acquired one of its main competitors, Wild Oats Market, Whole Foods currently competes with two other large grocery chainsKroger and Trader Joe 's. The company also acquired Amrion, a company specializing in nutraceuticals (natural supplements with pharmaceutical-type benefits), creating considerable competition with General Nutrition Centers (GNC) nutritional supplements and dietary products. Additional competition is taking place in traditional grocery stores incorporating some organic products on to their shelves.
1. (b) The attractiveness of this industry and its potential for profit are functions of Michael Porter 's five competitive forces model: barriers to entry, bargaining power of both suppliers and buyers, the threat of substitute products, and the depth of competition among rival companies.
Barriers to Entry
Currently, Whole Foods has no significant barriers to entry. Americans are becoming more food and health conscious and Whole Foods is catering to this demand by becoming the premier outlet for all-natural, organic food products, while creating a unique, cohesive brand. The company is growing a loyal customer base, and is offering the majority of its products at competitive prices. With more than 300 stores located in the US, the UK and Canada generating twice the revenue per square foot as almost all its competitors, the capital requirements for success are solid, and the switching costs for customers are low. Perhaps the only real barrier to entry is the minimal 3% requirement by the government for organic farming. With farmers only producing such a small supply of organic product, the lack of supply and increased demand could lead to price wars. Even with its prime locations in highly educated, prosperous cities, current
1. (b) The attractiveness of this industry and its potential for profit are functions of Michael Porter 's five competitive forces model: barriers to entry, bargaining power of both suppliers and buyers, the threat of substitute products, and the depth of competition among rival companies.
Barriers to Entry
Currently, Whole Foods has no significant barriers to entry. Americans are becoming more food and health conscious and Whole Foods is catering to this demand by becoming the premier outlet for all-natural, organic food products, while creating a unique, cohesive brand. The company is growing a loyal customer base, and is offering the majority of its products at competitive prices. With more than 300 stores located in the US, the UK and Canada generating twice the revenue per square foot as almost all its competitors, the capital requirements for success are solid, and the switching costs for customers are low. Perhaps the only real barrier to entry is the minimal 3% requirement by the government for organic farming. With farmers only producing such a small supply of organic product, the lack of supply and increased demand could lead to price wars. Even with its prime locations in highly educated, prosperous cities, current