Whole Foods

  • Uncategorized

WholeFoods

Inthe recent years, an increasing number of theorists have developedmodels that seek to help organizations diagnosis existing problems,anticipate future changes, and implement designed solutions in aharmonized manner. Among the various organizational developmentframeworks, Nadler-Tushman model of organizational development isarguably one of the most powerful tools developed. Popularly known asthe Nadler-Tushman Congruence model, the theory is credited for itsability to account for both the internal and external characteristicsof the organization playing a critical role in understanding therelationship between the company strategy and its external andinternal factors. To delve deep in understanding the application ofthis theory, this paper analyzes the existing strategy at the WholeFoods Market to determine the current Porter’s strategy applied bythe organization, identify the critical inputs, and assess thecongruence between the strategy and the resources.

Nadler-TushmanCongruence Model

Nadler-TushmanCongruence model is arguably one of the most investigated theories inorganizational development. The theory emerged after Nadler andTushman noticed that the system theory popularly applied in the earlyyears of industrial development was too abstract to be used forday-to-day organizational problem analysis. Nadler and Tushmanoffered and expanded versions of system theory that containedadditional concepts intended to be more useful to practitioners. Themodel puts significant emphasis on the transformational process andin particular as a made up of components or parts, which interactwith each other. The components exist in states of relative balance,consistency or fit with each other. Nadler and Tushman (1986) referto this as the congruence hypothesis or the idea that the better thecongruence between components, the more effective the organization.When an organization has a market demand to produce a new product(new input and new output), that demand requires a specific task toproduct the output. If the task’s demands require skills andknowledge that individuals do not posses, then there will be acongruence gap (or low “fit”) between tasks and individuals.Organizational effectiveness can only be achieved if the fit isincreased. The model points to areas that affect one another so thatchanges in other parts of the system can be noted and controlled.Nadler (1981) explains that when parts of a system are changed, theymay increase or decrease the fit or congruence with other parts ofthe system. When changes happen, other components of the organizationmay resist the change and encourage regression to the prior state.Thus, Nadler points to the need to motivate change (the individualcomponent), manage transitions, and pay attention to politicaldynamics of changes as well.

Atthe core of the model is the assumption that organization functioneffectively in an open environment. Under this context, Nadler andTushman observe that organizations are influenced by their inputsprimarily organizational resources, history, existing environment,and designed strategy. These factors affect the environment byproducing outputs at the organizational, group, and individual level.For successful implementation of any strategy, Nadler and Tushmanargue that the organization should focus on achieving congruencebetween the inputs of the organization, internal processes, andfactors and the outputs generated by the organization. Nadler-Tushmancongruence model present organizational inputs to includeenvironmental factors (all factors external to the business),resources, (internal factors in the business), the history of thebusiness (past behaviors and activities that influence the currentfunctioning of the business), and strategy (the current approach toachieving organizational goals within the business context).

Strategyin the Whole Food Market

TheWhole Food Market’s strategy since its inception has focused ondifferentiation. The company has focused to maintain its foodproducts as natural as possible, thus it has focused on delivery andpackaging of food products that are unadulterated by artificialadditives, colorings, sweeteners, and preservatives. In addition, thecompany has focused on offering the best customer experience throughextraordinary customer service. The company is known to chooseemployees who are passionate about food, working with the company topush the organizational agenda. In particular, the company aims toeducate its customers and gain their loyalty based on their knowledgeabout natural and organic foods, and the health and nutritionalbenefits that the foods brings to its clientele. While the focus ofthe company has been the United States, the United Kingdom and asmall fraction of western countries, the company has its eyes focusedon the east particularly Japan and China. The company’s focus onnatural products requires that it charge premium prices.

Thecurrent goals of the company are to expand its markets, increasingthe store footage, reduction of expenses, and achieving sales growth.To achieve these goals, the company has launched affordable brandsthat target the middle-income earners, opened new stores in lessaffluent areas, improved local sourcing, tailoring products to meetlocal community needs, reducing the size of existing superstores inorder to lower cost, and optimizing the company supply chain.Consequently, the company has reshaped its market approach.Currently, the company engages in marketing activities such as flashsales, health advertising, and price matching activities to match itscompetitors. An important factor to note is the fact that whole foodexist in a time when customers equate going green and beingenvironmentally friendly with enthusiasm and respect to theenvironment. In the recent years, people began to learn about foodand the processes completed by many to produce it. Most of what theyhave discovered is disturbing (Johnston &amp Szabo 2011). WholeFoods launched a national wide effort to trigger awareness and actionto remedy the problems facing the food system (Johnston, 2008). WholeFood Company is trying to show their customers that it is dedicatedto not only all natural foods, but to a green world and healthypeople. However, beyond the green movement, has been ableto tap into a demographic that appreciates the “trendy” them oforganic foods and all natural products. Since the store is associatedwith a type of affluence, many customers shop there to show they fitinto this category of upscale, educated, new age people.

Thereare three generic Porter’s generic strategies: cost leadership,differentiation, and focus. The cost leadership and differentiationstrategies focus on the industry wide strategies where the formerfocuses on offering low prices, and the differentiation strategyfocuses on offering a wide range of product choices with uniquequalities such as offering green products. The focus strategy focuseson cost and product qualities with particular emphasis on particularmarket segments.

Inputsof Whole Food Market

Whenthe company emerged in the 1980s, there was not competition and thecompany a relative period of monopoly in the early years of the1980s. The company strategy at its inception was opening new storesand by the end of 2000, the company expanded its business throughacquisition. Whole Food Market established its own quality standards,and ethical practices within the business. John (2015) observes thatthe standards adopted by the company were stricter than thoseemployed in the industry in general.

Whenlooking at the historical aspect as discussed by Nadler-Tushmanmodel, the importance of high quality standards in working on theperception of the consumers is very critical. Furthermore, byhistorically being associated with quality products, the company hassurvived a competitive industry despite targeting the affluent.

Thecompany has strong market influence because of its large network ofstores, superstores, and organic food supplies. The company hasexpanded its operations in the UK and Canada where it has been verysuccessful. Some of the key resources that have been critical to theorganization’s success has been brand reputation. isassociated with superior ethical practices, high quality foods, andrecently green consciousness. The company large network of stores hasbeen another important resource in its current success.

Forthe external environment, some of the factors that affect the marketposition of the company are increasing supply of organic foods(offered by competitors such as small local stores, private labels,and large retailers) and intensive competition. The competition istaken a notch higher by the recent concerns for green products. Thesetwo phenomena can be categorized as increasing competition and thusbecome the main factor affecting the operations of .Competition will force to reconsider its existingadvertising approach, and the existing organizational strategy.

TheCongruence between Inputs and Strategy

Thecongruence between the inputs and strategy at Whole Food is largelyindefinite. For instance, there is a major mismatch between thehistorical inputs and current company strategy. At the inception ofthe company, focused on serving the affluent by offeringhigh quality natural food products. Using this strategy, the companysought to achieve high profitability and high stock prices.Furthermore, the quality of the products was associated with the highprices offered. The recent company strategy is to reduce the pricesoffered by the company. This shift in strategy can work against thecompany it will be claimed that the company has sacrificed quality bylowering its prices. Thus, there lacks congruence between thehistorical input (high quality products and high prices) the resourceinputs (brand reputation) and the current cost leadership strategy.Further, the current cost leadership strategy is unaligned with thewide network of large stores (input) in Nadler and Tuchman’s model.For this strategy to work, must change its internalstructure to implement its current strategy.

However,the currently adopted strategy is congruent with the externalenvironmental factors within the industry. The competition at theindustry level demands that the company refocuses on delivery ofaffordable products to its client base. is thereforepositioning itself at the organic food market for it to effectivelycompete with other larger market players.

Conclusion

Theextent to which an organization’s environment is relatively stableor dynamic affects internal operations, structures, and policy. Thisis practically true for , which is currently attempting toadapt to its operational environment. The company is trying tochanges its business strategy to fit to the industrial reality. Thatexplains the lack of congruence between the historical, currentinputs, and the company strategy.

References

John,C. (2015). Organization Contemporary Principles and Practice`.Chicago: Blackwell Publishing

Johnston,J. (2008). The citizen-consumer hybrid: ideological tensions and thecase of Market. Theoryand Society,37(3), 229-270.

Johnston,J., &amp Szabo, M. (2011). Reflexivity and the Marketconsumer: the lived experience of shopping for change.&nbspAgricultureand Human Values,&nbsp28(3),303-319.

Nadler,D. A. &amp Tushman, M. L. (1980). A Model for DiagnosingOrganizational Behavior. Organizational Dynamics, 9 (2), 35-51.

Close Menu