Nadler-Tushman Congruence Model Applied to Whole Foods Market Case Study

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Business

Outputs at Whole Foods Market

Organizational Level Outputs

Group Level Outputs

Individual Level Outputs

Is There Congruence?

Whole Foods Market is one of the preeminent organic food retailers in the U.S. The Nadler-Tushman Congruence Model provides an effective framework for The Excellence Consulting Group (XCG) to analyze the organization, and assess the outputs to determine how the performance of the firm stacks up against the goals. The Nadler-Tushman Congruence Model examines outputs by looking at three levels; the organizational, group, and individual level. Examining these outputs will also allow an examination of the overall congruence that is archived by the firm.

2.

Organizational Level Outputs

At an organizational level there are a number of outputs. As Whole Foods Market is a retailer of organic healthy food, the first and most apparent output is the sale of the firms' products to its customers. This is an output that is the primary purpose of the organization, achieved with the firm acting as an intermediary between the food producers, such as famers and food manufacturers, and the customer. Whole Foods Market actively manages its supply chain, carefully looking upstream for suppliers of high quality organic and healthy products, including potential suppliers to provide own brand products for the firm. There shops sell in excess of 2,400 product lines, out of its' 403 worldwide stores, of which 384 are in the U.S. (Wu, 2014).

The way that the products are sold also creates a different type of output, the perception of an experience the firm provides for the shoppers. The strong ethic of the firm allows shoppers to feel good about their purchases, which supports the psychosocial aspects of buyer decision making and the creation of brand loyalty and associations (Kotler et al., 2013). The experience has been enhanced by the firm with the provision of additional services, such as wine bars, and in some of the newer building there is even a putting green (Wu, 2014). Older stores are also being revitalized to enhance the experience felt by the shoppers.

Another major output for firms quoted on the stock market will be the financial outputs. In the financial year ending in 2014 the firm had sales of $14,194 million, up from $12,917 million in the preceding year, and a net income before tax of $579 million, up from $551 million in 2013. While this was an increase in the amount, it was a slight decrease in terms of the profit margin, falling to 6.66% in 2014 from 6.92% in 2013. However, even with this decrease the firm is still providing an impressive profit output, with an industry average being 2.33% (MSN Money, 2014). For the shareholders there has been an increase in the way profits may be assessed by looking at the earnings per share; the diluted earnings per share increased from 1.28 in 2012, to 1.48 in 2013 and 1.57 in 2014, supported with a reduction in the number of shares outstanding as well as increased sales. In 2014 the firm paid out dividends of $0.48 per share, equating to an annual projected yield of 1.07%, the output that is paid directly to the stockholders. The majority of earnings are generated by the firm reinvested as the company has an agressive growth strategy, growing by an average of 40 stores a year, with the creation of these new stores and the service they offer also another kind of output, with a stated target 1,000 stores across the United States (Wu, 2014; Whole Foods Market, 2014).

2014 was a record year for Whole Foods Market, and the outputs have been increasing consistently over the last five years; with sales growth averaging 12.6% per annum over the last five years, compared to 9.15% for the industry average, and net income increasing by 31.6% per annum, compared to 6.97% for the industry average (MSN Money, 2014). Overall, is the firm has shown significant growth over the last five years, providing very satisfactory outcomes for most investors, with the share price in 2009 being $13.61, and the current share price for the opening on 22 December 2014 being $48.80 (MSN Money, 2014). The outputs of the firm in 2003 to suffer from decline, especially as the organization entered into some price cutting in order to become more competitive (Wu, 2014), but the increase in overall sales has seen the share price rebound and the organization is now recovering.

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While the sale of groceries, and the financial outputs may be defined as the primary outputs, there are also other types of output which should be considered. One type of output which supports sales is the communication output, primarily for its marketing and public relations exercises. The organization seeks to support healthy food decisions by both customers and employees with the provision of information; this is seen in the organizations' mission and value statements, as well as the marketing messages. As seen in the next section, it is also seen at a group level. The marketing messages have successfully differentiated a firm, creating an image associated with healthy, high-quality, organic groceries, which is noted as facilitating a high level of loyalty within its consumer base (Whole Foods Market, 2014).

The outputs of the organization may also be seen in the context of the local communities, where specific strategies are seen, partnering with local suppliers, as well as the large national supply. The company undertakes a number of contracts with smaller supplies, such as local farms or smaller producers, to supply a limited number of stores, supporting local businesses as part of the organizational strategy. Local communities are also supported through the approach to corporate social responsibility, including approximately 5% of the after-tax profits being donated to charitable causes, the provision of loans to fair trade and local producers, and the development of foundations such as the Whole Planet Foundation, The Whole Cities Foundation (Whole Foods Market, 2014).

3.

Group Level Outputs

At a group level, the outputs are similar to those at an organisational level. When examining the group level outputs the firm needs to be considered at a smaller level, looking at different departments or individual stores within the organisation. It maybe argued that the group level outputs are extremely important to the firms' success, especially when looking at the success of the firm in areas such as marketing. The firm has a renowned the low corporate marketing budget, which averages less than 1% of the organisation's revenues (Whole Foods Market, 2014). The success of the firm with such a low budget reflects the efforts which are made as individual store level, including public relations exercises supporting local communities, social marketing of different stores on medium such as Facebook, and the efforts of the employees in the stores to provide a high level of service, and knowledge, to the customers (Whole Foods Market, 2014). For example, the whole foods market store in Charlotte, Utah, has its own presence on Facebook, and in excess of 14,000 fans, and whole foods market in Brooklyn has in excess of 37,000 fans. The pages provide an efficient way of the organization interacting with local shoppers, providing efficient sources and marketing. In addition, the employees will undertake actions in the community, supporting charitable causes, and it is frequent for tastings and additional events to take place in the stores. An example of the was provision of support at a local level, such as the 564 grants that were provided under the Whole Kids Foundation in 2012 to provide salad bars in schools to promote healthy living (Whole Foods Market, 2014).

In group level output terms, there are also important organisational departments that have an impact on the efficiency and effectiveness of the firm. The marketing department itself also supports the use of social media marketing, with more than 1.6 million fans for the corporate Facebook page, as well as being active on other social networks, such as Twitter. The outputs from the human resources department are also an important output, helping to gain the support and loyalty of the employees, as well as places them in a position where it is frequently on listings of the best companies to work for, including being on the list of the 100 best companies from Fortune 500 since 1998 (Wu, 2014). The programs for employees include a total health immersion program, as well as a program to provide discounts on item to support good health, to encourage high levels of health in the employees, with in excess of 16,000 workers taking part in these programs (Whole Foods Market, 2014). The outputs of these programs include healthy employees, and lower levels of absenteeism within the work staff, in addition to significant reductions in the medical care.....

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