Joe Picurro11/16/16MKTG300, INFO300MGMT300, FINC300

Marketing Assignment

1. The 365 store needs to have a much different product offering to consumers than the

typical Wholefoods store. While much is discussed about the demographics more needs

to be talked about the actual 365 stores. A clear a precise strategy, objective, and target

market is needed. To make these stores profitable but to also eliminate competition with

the original Wholefoods stores which would create conflicts within the company. They

have the Wholefoods name but must be branded as something different. Targeting the

missing segments of consumers Wholefoods does not already attract.

These 365 stores create a new strategy and opening for Wholefoods that will target those

with the national medium income or close to it. The Silver Lake area near Los Angeles provides

such a market. There is too much stressed on what seems to be implying a hipster market, it

seems foolish to apply this as a grand Wholefoods strategy for the 365 stores. Instead the

income, health habits, and age of the Silver Lake area should be closely observed. Not the

hipster classification because most of the country is not like that, nor will it provide a strategy for

those in Silver Lake. The overall demographics of this city should be viewed at as positive for a

365 store and can be closely modeled for other possible areas, to build new stores. One big

consideration is that there always will be the unknown consumer, which are those who may shop

at a store such as Wholefoods every so often.

The 365 stores may be more appealing to those kind of consumers and therefore, must reflect

a welcoming image for them as well. This is because Wholefoods is looked at as a high class

grocery store, that image stays in consumer’s minds. Making them not even think about

considering to shop there, the 365 stores need to break away from that image. Appealing to all

consumers but primarily focusing on those moderate grocery shoppers discussed. This is another

strategy the VP of marketing needs to take into consideration. This is not just building a new

store these 365 stores must be used to attract a whole other segment of the market. This needs to

be solidified and practiced in order to attract new customers and keep the original Wholefoods

stores as what they are with no conflict of sales.

2. Management will focus on how to better serve the market for the 365 stores, services

such as the restaurant setting should be cut to reduce unneeded staff and spending. This

will help management focus primarily on the products Wholefoods will provide at these

stores creating a more normal shopping setting for customers. Many of the restaurant

services are not needed for these stores. Financing these new stores is a major capital

expenditure. Many resources and budgeting will have to be looked at closely to ensure

these stores are successful. Product costs will cheaper and more will be spent on

advertising and bringing in customers. 365 stores will become more of a cost focus over

building new Wholefoods stores.

The operations will change since new products and services will be used and implemented,

along with cuts in operations for the 365 stores. Such as many of the high end amenities

offered by the typical Wholefoods stores. This may require a revised structure for the

management and services provided. Since this is a major investment that needs to be

coordinated throughout all of Wholefoods. Marketing and advertising will now have to

develop a strategy to attract customers, to this new form of the Wholefoods experience.

Reducing the high end services will help with this new market. This completely changes the

objective and focus in a positive way by focusing on providing customers with a product

oriented experience. Operations of these stores will focus on providing cheaper but good

quality products. Instead of having all the extra services provided by a typical Wholefoods

store, this may sound bad but actually is a good thing, and will not reduce the Wholefoods

image. It allows the 365 stores to operate as more of a typical grocery store. Consumers will

get the Wholefoods experience without the extra amenities that they can’t afford or even

don’t care for.

3. Everyone deserves healthy and good quality food at an affordable price. This is why

Wholefoods has developed the 365 line for the health conscious hardworking individual.

The 365 store offers a large array of the best high quality health foods and products not

offered in any other grocery store.

Wholefoods is the premier of certified organic grocery stores. The convenience of all top

quality health and food related products is provided at one place. Wholefoods provides a

passion in every product for healthy lifestyles for all individuals of all needs. A healthy

start, starts at Wholefoods.

Finance Assignment #26

1. Looking at Whole Food’s balance sheet for 2015 they have a tremendous amount of cash

and short term investments of $519milliom. They also have a lot of finished goods that

account for all of their inventory $500million. On the income statement sales and

revenues rose in 2015 at $15.39billillion as well as the costs of goods sold at $9.97billion.

Income taxes domestically are also astronomically more than foreign taxes. Referring to

the two items on the balance sheet, inventory and cash make up a huge portion of assets.

Building all of these new 365 stores will most likely knock down cash, and reduce

inventory. Since those resources will be needed to help fund the 365 stores, they will be

impacted greatly for this undertaking.

The income statement is very telling of the costs that go into Whole Foods and its stores.

While the company did make a lot in sales, in just a 4year period from 2011 to 2015, cost of

goods sold has gone up $3.4billion. During the same time sales went up $5.28billion if you

subtract the two the sales really only went up $1.88billion. This is important because it

shows Whole Foods’s gains are only growing slightly costs are going up as fast as they gain.

If this is not mistaken there will be higher costs and less profit in the future. Whole Foods

seems to be a company struggling to maintain their costs more than anything. Building these

new stores will raise all of those costs since it is so expensive for current stores to operate. If

Whole Foods is not bringing in enough profit to balance out the costs and rake in more

revenues. Budgeting for these stores can break this company very fast. This particular

balance sheet from marketwatch.com provided the best information since. It was easy to

read by providing summarized balance sheet and income statement information.

2. The financial decisions help keep a company going and effects every aspect of the

company, no money no business. Management needs to take the best course of actions to

provide the company with the best strategy going forward. They help make the decisions

that need to be financed which affects every department and function of Whole Foods.

Even though opening these 365 stores seems to be a risk, management feels taking the

risk. Is the best way to help the company turn around with a new outlook that comes

with the 365 store line. Marketing for these stores will change since Whole Foods is

already planning. On them having a new cheaper product line, that will be focused on

those of the middle class bracket.

This also changes who Whole Foods will market to in order to get these products they wish

to obtain. As well as how the store will actually appeal to this new market, even though they

are trying to attract the middle class market. This does not make marketing and advertising

any cheaper. All the costs are still there and this poses not just a challenge for marketing but

all of operations. Whole Foods must make more drastic financial evaluation of all

operations, marketing, and management decisions before opening all of the planned 365

stores. It is understandable that Whole Foods wishes to attract a new and missing market

since the current market is not doing so well. However, smaller steps should be taken for

opening up all of these 365 stores.

Whole Foods should first experiment with maybe one or a few stores before opening, a

bunch at once in a small time frame. However, the absolute first thing they must do is

manage their costs, of the current stores before opening up more stores. The company cannot

afford to skate on by because this will potentially lead to a great loss or financial disaster, in

the future.

3. The following are the formulas for Whole Foods in 9/27/2015. The debt to equity ratio

in millions for 2015 is (3+62)/3769total equity = 0.0017 or 0.02%. Total Current Assets

1544/ Total Current Liabilities1252= 1.23%. The quick ratio is total current assets1544 –

inventory500/ total current liabilities = 0.83%. ROA (Net Income 2015)/ (Total Assets

2014) Total Assets 2015/2= 536/ (5744+5741)/2= 536/5742= 0.0933 = 9.33%. ROE

(Net Income 2015)/ (Total Equity 2014) + Total Equity 2015= 536/ (3813+3769)/2=

536/3791= 14.14%. In 2014 the Whole Foods current ratio was 1.473%, quick ratio

0.75%, ROA 10.26%, ROE 15.06%, debt to equity 0.02%.

The two I determine that will change the debt to equity because the total and long term debt

will definitely change and increase. Due to such a large capital expenditure and the quick

ratio since there will be so much more inventory. This calculation may possibly be negative

and it is already low. Inventory costs are going to sky rocket as well as the current liabilities.

These are extremely important to look at because they seriously take into consideration. The

current and long term effects of budgeting, that need to be monitored very closely.

Managements decisions will deeply impact these ratio and financial decisions, while there

may be some negatives with the 365 store which is not surprising with such a big expense. If

management does not monitor its expenses and these ratios carefully. If the negatives will

continue in the long run and Whole Foods can be in some serious trouble with these 365

stores. If they monitor things well with inventory and costs of goods sold instead of all profit

this situation can be improved. Stop & Shop is competitive but Shoprite is more attractive

than both Whole Foods and Stop & Shop. Their ratios especially ROE is very attractive

more than 8% over Whole Foods is a big difference.

4. For the 3year period there was a 540% increase from 2006 to 2009. For the 5year period

from 2006 to 2011 there was 709% increase. For the 10year period from 2006 to 2016

there was a 310% increase. Whole Foods is at a low point over its competitors they went

up slightly but have being dragged down. To date the price for Whole Foods stock is

down. Shoprite is way up; Stop & Shop is hard to find but are showing steady gains

within their subsidiaries. That hold shares in the company.

This company desperately needs a new strategy to bring in new revenue but to also. Gain

control of the costs, looking at Stop & Shop and Shoprite, Stop & Shop being the smaller

grocery store. Both are showing positive or steady gain while Whole Foods keeps dropping.

Having much less of an impact than major grocery stores like Shoprite. Whole Foods does

not have to go to that extent but need to be positive in their own reinforced market.

Management needs to look at this information before fully building the 365 line it may sound

attractive but it’s not clear. These financials show it could be a success or the biggest

blowback for the company. The 365 store needs more analysis than given to succeed.

Management Assignment

1. Whole Foods has the strength of having a very positive image. So even though they are

trying to attract a new market segment. Customers who already shop at the original

Whole Foods stores may shop at a 365 store without, thinking twice about it. These also

opens up many new marketing techniques that may allow these 365 stores. To help

Whole Foods as a company offer so much more than their competitors. The threats of

stiff competition such as Shoprite and Stop & Shop. Offering organic produce as well

can be overcome by Whole Foods because they are known as the organic grocer.

Stronger branding and positioning can deeply offset the threats of competition.

The opportunities that come with these stores is to offer more from Whole Foods that was not

possible before. It can be a brand new unique take on grocery stores and cheaper healthy

food shopping habits. The weaknesses of Whole Foods are the cost of these 365 stores.

Gaining control of the costs can really help these stores stay up and running, profitable, and

rebrand the company. This shows a good SWOT analysis will really benefit this new 365

store line but it must be done 110% correctly.

2. a) The financial impact will be impacted greatly this will lower costs of employees

because 1,500 is a large number. This in turn will change operations just as well to make

up for laying off the employees. Systems, technology, research will have to be put in

place which will. Perform those tasks at a lower cost, Whole Foods may then lay off

more employees since these. New implementations can actually perform more efficiently

at a cheaper cost.

b) This can be a challenge because the new stores are going to be managed and operated

differently than the original stores. Since these stores seem to apply they are actually

different and will be managed be fest fit their operation needs. This may pose a threat in

the sense that Whole Foods now needs to implement. A new operational strategy for

these stores and will cut back on employees like they did with the original stores. This

may hurt their image by cutting so quickly with the new store line. Even though it may

be needed to cut costs and quite frankly those tasks can easily be replaced. The staff

needed may be helped greatly from this instead of hurt. Costs may go down and Whole

Foods can build on a much cheaper, efficient, and all around better staffing and operating

strategy.

3. Alderfer’s ERG Theory is needed for the success of the 365 chain because even though it

is simple. It covers the mage aspects of human need and motivation and similar to Whole

Foods as of now growth seems to be isolated and that needs to change. The ERG theory

delves into that social desire, interpersonal development. Even though Whole Foods does

this through its products and services. It must first be done through its people, keeping

employees active and happy and avoiding negative feedback. From layoffs may

discourage that motivation. Whole Foods needs to keep those employees engaged in the

product. Without that motivation their brand name goes down with it, especially their

own line of health products.

The ERG Theory expands on Maslow’s Hierarchy in terms of relatedness needs,

existence needs, and growth needs. This can be used as a motivation analysis for the 365

stores as well. Do are employee’s feel they relate to our moto and products; do they feel

they exist instead of being in fear of being the next to be cut? If these are met or not how

will this affect the growth of Whole Foods and the spillover effect, for the 365 line.

Interpersonal love, esteem needs are, the lower order are put into the existence needs.

The growth needs however contains both self-actualization and self-esteem needs.

Aldelfer had said that when needs in a higher category are not met then individuals

redouble the efforts invested in a lower category needs. Top management does show

they care about their employees especially with being rated on Forbes 100 as being one

of the best places to work at. This shows employees are motivated and happy however,

top management fails at the growth part. Needs in the higher category are not met in the

company and this is because there doesn’t seem to be any clear. Strategy as of how much

the 365 stores will actually cost, what is their marketing strategy, and what exactly will it

offer. This is why there isn’t a positive growth in Whole Foods and the company is

struggling. Top management needs to use 3 out of 3 of Alderfer’s ERG Theory not 2 out

of 3. They can have all the positivity they want but the company needs growth.

Operations Assignment

1. Whole Foods has based its entire process based on all of its products and services not

just a particular item. This unique in its approach because the distribute these

products and provide the services. It wishes to be branded with, this process creates a

brand image of positivity from the process. The design is to develop and meld this

into the company as a whole. This is important especially with the opening of the

365 stores because it seems like Whole Foods. May have to change processes and

designs for these stores that consumers are unfamiliar with.

Whole Foods then took the inputs the sought and put into their own line of health

products. The company’s process is now sustaining this and that is part of their design.

The design for the 365 stores is unclear Whole Foods should not throw away the design

of its original stores. Instead they should take those processes and meld them into the

design of the new stores. Building upon the already positive image of Whole Foods.

2. Managing quality is a huge deal because the expenses for the cost of goods sold for

Whole Foods is problem. The company provides itself on being a certified organic

grocer, taking safer initiatives with their foods. Such an instance was with the price

of salmon, one of the top executives at Whole Foods said. Yea we can sell it for less

but it is safer for the environment if we do it this way. While this is a very general

statement this shows yes anyone wants good quality, and Whole Foods tries to be the

absolute best they can be. Managing quality is a lot harder to accomplish than one

may think.

What was discussed before was on the quality of products for Whole Foods.

Stepping away from this Whole Foods promotes a lot of its managing quality through

their services. Such as those discussed on their core values is by providing healthy

eating education. As well as winning partnerships with suppliers to ensure they help

deliver exceptional quality as well. Quality is the biggest cornerstone in marketing

for Whole Foods.

3. The Whole Foods location strategy is to place these new 365 stores in new markets

and around metropolitan areas. These areas are also wealthy and those with middle

class incomes. Stores are still relatively close by and complement instead of drive

business from existing stores. Whole Foods is doing so to increase market share in

that area. Pushing the stores to far apart may isolate those stores providing low

profits. By putting the new stores in wealthy metropolitan areas and suburbs they

attract the entire market area.

This location strategy is about increasing market share, outperforming competitors

instead of other Whole Foods stores. This strategy makes sense because everyone shops

for groceries and there are more than enough people to fill these stores thousands of times

over, even though close by. This will help the community, provide effective marketing,

and bring in profits. Which is a must with these new stores being such a large capital

expenditure.

4. Whole Foods has laid out a strategy that makes them the number one organic grocer

of all grocery stores. They have built this around the company the company making

their stores unique. Whereas Shoprite and Stop & Shop are very similar with some

quality differences. Whole Foods then laid out further strategies of how their store

operates. There’s acts like a restaurant on top of a grocery store. Customers have the

opportunity to shop or dine.

This is a great layout design because people may want to shop and dine or one influences

the other to such a behavior. Whole Foods offer a kitchen sit down experience where

customers can order food and buy groceries with that meal as well. It gives people the

Whole store with a small kitchen experience. This strategy may not fit into the 365 store

since their strategy will be different. However, a new bold layout seems to be a big

promise to consumers for those stores.

5. Whole Foods has a massive supply chain and prides themselves on relationship their

suppliers. Being a global grocery store this task is immense, Whole Foods gets

supplied from suppliers, manufactures, supplements, and in store food making. The

supply chain is one of the most important operations for this company. They are

completely dependent on their products obviously and costs of warehousing. These

products is immense because the company wants to ensure. Quality and products and

inventory are managed correctly. The company has done a great job with this but

needs to lower costs.

Appendix

http://performance.morningstar.com/stock/performancereturn.action?

p=price_history_page&t=WFM

http://financials.morningstar.com/ratios/r.html?t=WFM

http://www.marketwatch.com/investing/stock/wfm/profile