Whole Food’s chief elements of the strategy are to position the company as a market leader in the natural and organic foods, expand the brand internationally, provide the highest quality, and be the best food retailer in every community in which Whole Foods stores are located. Is Whole Foods’ strategy well matched to market conditions in the food retailing industry (one of the criteria for a winning strategy discussed in Chapter 1)? Whole Foods’ strategy is definitely well matched to market conditions. Currently, there is a huge demand for healthy food. People are more health conscious, expect taste and quality, and look for convenience in shopping. Whole Foods is able to address all the current trends through its strategic vision. The CEO John Mackey’s vision was for Whole Foods to become an international brand, carry the highest quality natural and organic foods, and be the best food retailer in every community. The products are free of pesticides, hormones, and other genetically engineered products that could affect health, community, and agriculture.
In addition, Whole Foods is recognized by the USDA as being a Certified Organic grocer by Quality Assurance International. This means that all their products are grown organically; the products are grown without the usage of pesticides, fertilizers, bioengineered organisms, growth hormones, or antibiotics. Whole Foods had successfully addressed the economic conditions of 2008; as sales dropped due to the recession, Whole Foods executives changed the company’s strategy to better match the economic downturn. For instance, they reduced prices of certain foods, offered family sized meals, offered coupons, and managed to cut certain products’ costs. Based on the financial statement data in case Exhibits 9, 10, and 11, how well is Whole Foods Market performing? Use the financial ratio information in Table 4.1 of Chapter 4 (pages 98-99) to assist you in calculating a revealing set of` financial ratios and interpreting them.
According to Exhibits 9, 10, and 11,—– there is an increase of their net income from $136,351in 2005 to $203,828 in 2006. In 2007 and 2008 Whole Foods net income decreased gradually, in 2009 net income increased to $146,804 due to the change in the company’s strategy. According to Yahoo finance net income has been increasing since 2009; in 2011 the company’s net income was $342,612. Whole foods’ balance sheet shows total assets of $3,783,388 and total liabilities of $2,155,512 in 2009. In 2011 total assets were $4,292,075 and total liabilities were $ 1,300,770. Ash The cash flow data shows a net cash provided by operating activities of $587,721 in 2009. Also, the company has invested $386,283 in 2009 as part of the growth strategy. Based on these recent information Whole Foods has recorded a strong financial performance.
Gross Profit Margin= Revenues-Cost of goods sold= $8,031,620-$5,277,310=34.3%
34.3% is the percentage of revenues available to cover operating expenses. Current Ratio= Current assets =$1,055,380= 1.54
Current liabilities $684,024
Since the current ratio is greater than 1, Whole Foods is able to pay current liabilities using assets that can be converted to cash in the near term.
Debt to assets ratio=Total debt = $2,155,512= 0.057
Total assets $3,783,388
This ratio is very low, in other words the company’s operations are not financed through the use of debt.