The acquisition by Amazon of Whole Foods is a huge turning point for the retail industry. Amazon’s tentative steps into brick and mortar and fresh food areas are actually surprising. At one stroke, Amazon has managed to get hold of a countrywide cold chain, a worldwide sourcing network, deep fresh sourcing proficiency, and absolute integrity in private label food. Amazon Whole Foods has become the biggest strategic threat to traditional grocers. Amazon has aimed at serving in the best way possible by the expansion of the whole appeal of Whole Foods stores to a wider range of customers. Whole Foods has brought a lot of valuable capabilities to Amazon. Amazon has received the option of pairing their extremely effective, technology-driven, centralized approach to retailing with a regional insight in a completely efficient and complementary manner (Thomas, 2017). This report would be looking at the strategic position of the organization currently by carrying out analyses of their strategies, ethical position, and leadership. In terms of that, the organization’s internal and external environment, corporate strategy, culture, leadership and CSR issues would be discussed. To carry out the environmental analyses PESTLE and Value Chain models would be used.
Analysis of the External Environment – PESTLE
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Political |
Amazon Whole Foods have the option of improving their standards for making sure of appropriate labeling of organic and GMO-free products. They get the option of expanding their business on the basis of the advantage of free trade agreements. They can capitalize on Whole Trade Guarantee for building their brand and draw the attention of more customers. The business has started taking steps in addressing the opportunities they now have access to on the basis of this dimension. |
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Economic |
Amazon Whole Foods have the opportunity of growing on the basis of the economic stability and the slowly rising employment rate in different countries. Escalating labor costs in developing countries acts as a threat as the supply chain of the company largely depends on the manufacturers of these countries. The rising costs direct to increased supply cost and increased selling price at the stores. It is necessary that the business develops strategies for reducing these issues in this dimension (Sarbah and Otu-Nyarko, 2014, p.231). |
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Social |
Amazon Whole Foods have the opportunity of growing on the basis of superior quality organic food products that have the capability of satisfying the latest healthy lifestyle trend. The business also has the opportunity of offering an increased assorted product mix for matching the mounting cultural diversity of their target customers. Nevertheless, the increasing wealth gap acts as a kind of threat due to the fact that it weakens the middle class, the section of the society who is a major source of the business’s revenues. |
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Technological |
This section of the Amazon business has the maximum option of implementing automation technologies for increasing the effectiveness of their business (He, 2015). Moreover, the business has the option of providing better online services by means of customer’s mobile devices. Even so, the patenting of their GMOs (genetically modified organisms) act as a threat for their admittance to proper supply. Nevertheless, this factor even provides an option of reducing or removing GMO-based products at their stores. |
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Environmental |
Global warming possesses a huge threat to the productivity of the farmers in the supply chain section of Amazon Whole Foods. Conversely, the business has the option of further improving their performance in the sectors of sustainability and waste disposal. |
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Legal |
Amazon Whole Foods already includes some well managed environmentally sound policies. However, more of these can help better the standing and brand image of the business. This business even has the option of capitalizing on their Whole Trade Guarantee for building the reputation of the company. The Whole Trade Guarantee assesses the suppliers on the basis of the fair labor practices. Conversely, as a threat antitrust law can be considered as it decreases the business’ capability of maximizing their growth with the help of acquisitions and mergers. The business has made use of acquisitions as a strategy for major expansion. |
Table 1. PESTEL Analysis
Image 1. Value Chain Analysis
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Inbound logistics |
· They have no long-term arrangements or contracts with the suppliers · Inbound logistics is based on Fulfillment by Amazon (FBA) · They take complete responsibility for customer service, logistics, and product returns. · Efficient logistics infrastructure is a competitive advantage for them (Hollensen, 2015) |
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Operations |
Three segments of operations are there – North America, International and Amazon Web Services. |
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Outbound logistics |
· They have fulfillment centers all across the world · The business extensively uses robotic technology for managing receipt, shipment, stowing, and picking, all at high density and low costs · Depends on overnight delivery services · Possesses the interest of committing to huge financial investments · They wish to gain complete independence from third-party logistics service (Kumar, Tiffany and Vaidya, 2016, pp.639-665) · There is the presence of Amazon flex and Amazon Prime Air |
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Marketing and Sales |
· Their global marketing expenses have constantly mounted · Their marketing message promises to offer the biggest collection of products and services, fast delivery, attractive prices and overall best customer service (Savino, Manzini and Mazza, 2015, pp.1-18) · The different elements inside the marketing communication mix like sales promotion, public relations, print and media advertising, events and experiences, and direct marketing get used in an integrated manner for communicating the message to the target audience · Whole Foods completely depends on all of the behind-the-scenes logistics. |
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Service |
· They strive at being the most customer-centric organization. · They offer outstanding customer service · They have two types of customers – sellers and buyers (Laudon and Traver, 2013) · Returning processes are completely managed online via the customer accounts · They top the list of the best known global brands · All issues are addressed and dealt with fast and effectively |
Table 2. Value Chain Analysis
Amazon’s corporate strategy is to be the one-stop shop for retail, and a key bit of that is to guarantee everyone sees Amazon’s prices as low. Whole Foods, habitually nicknamed “Whole Paycheck,” was the contrary acknowledgment. In any case, the association revealed it is cutting down prices at Whole Foods on the day the course of action close. One reason behind the statement is it required the market to consider what it will do, in spite of the way that it couldn’t totally execute the movements until the sales systems of the associations got composed. This does two things. It in any occasion pulls in curious purchasers to the physical stores to see what products bring down in price and the significance of the cuts. Second, it will also overhaul the benefits of Amazon Prime members, make it altogether harder to forsake it with the creating number of preferences incorporated into it. One positive about Whole Foods is it was seen as expensive by various shoppers, so it gives Amazon some space to cut down prices and still hold some great edges. The potential fortune Whole Foods can advance toward getting for Amazon can be from the perspective that it can drive higher Prime subscription members. Also, to the degree Prime members can create will empower Amazon to keep Whole Foods’ prices lower, thusly keeping up its leadership position in foods (Saintvilus, 2017).
Strategic Leadership and Culture
Amazon has a transformative long-term plan set up for the food business with different basic parts, which will pass on strong money related issues by methods for another multichannel model, and engage extraordinary price levels around there too. Amazon focuses on the long term not the without further ado, and a perfect instance of the long-term focus is Amazon Web Services (AWS) and how it started with startups and developers and has now stretched out to an extensive number of customers (Taylor, 2017). As opposed to focusing on challenges, Jeff Bezos the originator of Amazon sees openings and courses of action. This is evident in how Bezos talks about frustration and new choices. Bezos made dangerous moves from the get-go in the establishment of Amazon that supported as time goes on. It is seen that Bezos place assets into warehouses, which influenced the stock prices to drop basically at in the first place, yet this added to their journey to wind up observably the leader in online retailing. The estimations of Amazon have influenced their leadership and achievement in Online Retailing. Bezos grasped an approach to manage help never lose the importance of purchaser devotion and Amazon restrains in on wiping out the risk of unsatisfied customers. Amazon tries brightness in purchaser reliability; perhaps one could express trying for perfection. Jeff Bezos ensures managers and all staff appreciate the experience of the customer. He plans them to take training to empower them to grasp what the customer encounters and to ensure quietude. Bezos not simply asks his managers to be sensitive to the customer experience, yet he in like manner has role modeled this in his relationship with the buyers. Amazon keeps up their leadership by settling on a varying product decision. Amazon strategizes by expanding their business and service commandingly, to the point that they will get a handle on minor net incomes or experience setbacks for the swift improvement (Turner, 2017).
Amazon’s mission is to fabricate a place where people can find anything they should need to buy online. In the Whole Foods mission statement, regardless, it certifications to not offer just anything but rather to pass on the most lifted quality that conceals more significant advantage. For a significant time span, Amazon has been denounced for its business sharpens. A burnout-inciting work culture, confined focus on recycling and a nonattendance of straightforwardness on sustainability reporting have all accomplished brutal feedback. Balance that with Whole Foods’ regard-based culture of taking care of master gatherings, allotment of reliable recycling and its strike into solar energy – feels like an unusual marriage (Stern, 2017). Amazon has responded to responses to its sustainability affirmations and hailed a positive move by basically developing its sustainability team. It has moreover announced a movement of goals toward this way, running from solar-energy-filled fulfillment centers to advancement of its greatest wind farm. Amazon is more than 20 years old and remains a moderate jab in the sustainability advancement. Its meander into renewables was not a matter of business reasonability but instead was driven by market and contender weights. Then again, Whole Foods has taken a watchful approach to managing sustainability, winning its first Green Power award from the US Environment Protection Agency (EPA) more than 13 years back. The Whole Foods approach is to make long-term an impetus for its proprietors, shoppers, workers, suppliers and close-by tenants. What stamps out an asserted think business is its ability to stay steady with that mission, rather than gliding steadily towards life as an engine of improvement for investors through consistent augmentation (Jain, 2017).
Conclusion
This report looked at the strategic position of the organization currently by carrying out analyses of their strategies, ethical position, and leadership. In terms of that, the organization’s internal and external environment, corporate strategy, culture, leadership and CSR issues were discussed. To carry out the environmental analyses PESTLE and Value Chain models were used. The acquisition by Amazon of Whole Foods is a huge turning point for the retail industry. At one stroke, Amazon has managed to get hold of a countrywide cold chain, a worldwide sourcing network, deep fresh sourcing proficiency, and absolute integrity in private label food. Amazon Fresh has become the biggest strategic threat to traditional grocers. Whole Foods has brought a lot of valuable capabilities to Amazon. The organization as a future strategy can completely take on the corporate strategies followed by Amazon, mixing them with the core ones of Whole Foods. They can attempt at operating like a traditional market.
References
He, Z., (2015). August. External Environment Analysis of Commercial-use drones. In 2015-1st International Symposium on Social Science. Atlantis Press.
Hollensen, S., (2015). Marketing management: A relationship approach. Pearson Education.
Jain, T., (2017). Will Amazon’s Whole Foods deal go the same way as L’Oréal and Body Shop?. [online] The Conversation. Available at: <https://theconversation.com/will-amazons-whole-foods-deal-go-the-same-way-as-loreal-and-body-shop-79776> [Accessed 14 Dec. 2017].
Kumar, S., Tiffany, M. and Vaidya, S., (2016). Supply chain analysis of e-tailing versus retailing operation–a case study.Enterprise Information Systems, 10(6), pp.639-665.
Laudon, K.C. and Traver, C.G., (2013). E-commerce. Pearson.
Saintvilus, R., (2017). Digesting Amazon’s (AMZN) Competitive Strategy For Whole Foods. [online] NASDAQ.com. Available at: <https://www.nasdaq.com/article/digesting-amazons-amzn-competitive-strategy-for-whole-foods-cm837720> [Accessed 14 Dec. 2017].
Sarbah, A. and Otu-Nyarko, D., (2014). An Overview of the Design School of Strategic Management (Strategy Formulation as a Process of Conception). Open Journal of Business and Management, 2(03), p.231.
Savino, M.M., Manzini, R. and Mazza, A., (2015). Environmental and economic assessment of fresh fruit supply chain through value chain analysis. A case study in chestnuts industry. Production Planning & Control, 26(1), pp.1-18.
Stern, N., (2017). The Impact Of The Amazon-Whole Foods Deal Will Go Far Beyond Food. [online] Forbes.com. Available at: <https://www.forbes.com/sites/neilstern/2017/06/20/the-amazon-whole-foods-aftermath-five-things-to-think-about/#24b224527da0> [Accessed 14 Dec. 2017].
Taylor, B., (2017). Amazon, Whole Foods, and the Future of the (Old) New Economy. [online] Harvard Business Review. Available at: <https://hbr.org/2017/06/amazon-whole-foods-and-the-future-of-the-old-new-economy> [Accessed 14 Dec. 2017].
Thomas, L., (2017). Amazon officially owns Whole Foods; here are the products that are getting marked down. [online] CNBC. Available at: <https://www.cnbc.com/2017/08/28/amazon-officially-owns-whole-foods-here-are-the-products-that-are-getting-marked-down.html> [Accessed 14 Dec. 2017].
Turner, M., (2017). ‘It’s gonna change our culture’: Whole Foods CEO preps his staff for life under Amazon. [online] Business Insider. Available at: <https://www.businessinsider.com/Its-gonna-change-our-culture-Whole-Foods-CEO-preps-his-staff-for-life-under-Amazon/articleshow/59226312.cms> [Accessed 14 Dec. 2017].
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