Competitive Forces and SWOT Analysis SWOT

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The bargaining power of suppliers

Suppliers have a relatively high bargaining power. On a market like organic foods, suppliers are very important for companies' activity. In other words, they practically depend on their suppliers.

As a consequence, suppliers represent the most important environmental factor of influence for Whole Foods, and the same situation applies in the case of any organic foods company. This business consists mainly in the raw materials that the company uses to produce the goods it sells under this brand. The company's activity depends on the quality of the raw materials, and on any potential delays from suppliers. The prices negotiated with suppliers have a direct impact on the production costs, and on the end-user price.

SWOT Analysis

Strengths

The company's strong position on the market in ensured by the numerous strengths the company benefits from. First of all, the company is renowned by the quality of its products. This further creates competitive advantage in comparison with the company's competitors. The company benefits from a long tradition on the market, becoming one of the most prominent brands in the field, and granting the company the experience is required for managing a business in this industry. Another strong point is represented by the wide range of organic foods provided by Whole Foods. Also, the company is able to cover a large geographical area, which helps increase the number of customers, and increase their loyalty.

Weaknesses

The most important weakness of Whole Foods is represented by the high prices of its products. As mentioned above, the company sells premium products at premium prices. There are customer segments that find such prices unaffordable.

Also, the company's distribution system is not a flexible one, determining the company to lose ground in favor of certain competitors.

Opportunities

The organic foods market segment is in continuous development process, which means there is room for Whole Foods to grow and to expand its activity.

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The company's production capacity allows for the company to make rapid and significant developments in expanding its range of products, compared to smaller companies that cannot afford to modernize their production process.

Threats

The biggest threat for Whole Foods is represented by large chains of supermarkets and hypermarkets. This is because such retailers can afford to practice lower prices in comparison with Whole Foods, prices preferred by most consumers. Also, some customers prefer to do all their shopping in one place, like a supermarket or a hypermarket, instead of making the extra effort to shop for organic products at Whole Foods.

Recommendations

As mentioned above, Whole Foods benefits from a series of strong points that used properly in the opportunities provided by the market can generate significant competitive advantage for the company.

There are more and more people interested in organic foods, in their attempt to adopt a healthier lifestyle. In order to increase awareness amongst existing and potential customers, Whole Foods create a magazine that should focus on the benefits of organic products and organic foods. The magazine should be free of charge.

Also, the company should develop an aggressive advertising campaign, focusing on marketing products for each group age, presenting the advantages organic foods have for each age group and for each specific category of customers.

In order to increase its customer base, the company should expand its range of products, based on thorough research on customer segments.

Reference list:

1. Industry Statistics and Projected Growth (2008). Organic Trade Association. Retrieved February 8, 2010 from http://www.ota.com/organic/mt/business.html.

2. Hunt, N. & Dorfman, B. (2009). How green is my wallet? Organic food growth slows. Reuters. Retrieved February 8,….....

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