Environmental & Industrial Analysis: Whole Foods Market

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Environment Analysis

Examination of environmental factors is central to situational analysis development; as such, key factors influencing the environment, including technology, demographics, economics, sociocultural norms and global implications, are examined. Beginning first with the technological approach, advancements in this area have shaped the retail food industry into its current form. Prior to the advent of the supermarket, consumers relied on specialized retail stores and street vendors to supply their nutritional needs; however, the transition to chain stores, beginning in the 1920s, is largely attributed to major societal changes, including population shifts from rural to urban areas and increased disposable income (Haraston, 2005).

With the shift in population, demographics of urban areas are studied to ensure market potential and profitability of proposed Whole Foods Market sites; as such, the company varies their products according to geographic regions and local farm specialties. From an economic standpoint, the company integrates money-saving coupons, printable from “The Whole Deal” section of their website and offer tips to help consumers stay within their budget while enjoying organic and natural food to benefit overall health. While health and wellness are a current trend, low prices and convenience are dominant factors leading consumers to shop supermarkets; however, the rise in aging baby boomers and urban singles, both groups having high percentages of disposable income, have caused a demographic shift expanding the market for gourmet and specialty stores like Whole Foods Market (Haraston, 2005).

Sociocultural norms have shifted along with demographics as an increasing number of women work outside the home. The demand for the convenience of prepared food has increased, paving the way for Whole Kitchen®, Whole Foods Market’s line of ready-to-eat meals. Catering to the changing demographic and sociocultural norms cultivates a level of flexibility which allows the company to cater to changing tastes and preferences of the consumer market.

A final piece of environmental analysis probes into the global context. Driven by their “Whole Planet” focus, the company is selective in product offerings through global application of high quality standards. Additionally, the company actively supports organic farming and sustainable agriculture. For example, in 2011 the company stopped selling all red-rated swordfish and tuna as part of a larger initiative toward a fully-sustainable seafood department in cooperation with the Marine Stewardship Council (Whole Foods Market, 2011).

Industry Analysis

A U.S.D.A. food inflation forecast predicts costs to rise between 2.5 and 3.5 percent for 2012, pressuring margins in the organic food industry as consumers struggle to conform to budgetary restrictions during this low economic period (Agnese, 2012).  Retailers in the food industry fear price increases as demand rises for organic and natural food products resulting from a shortage of product availability, which has the potential to interfere with overall profitability.  Traditional retailers offering organic products may delay passing along price increases, using profits from other products to bridge the gap, in an effort to gain market share, leading to high risk of food cost inflation for retailers specializing in natural foods. 

While the reduction is low, this causes great concern for the organic retail industry when examined through Porter’s Five Forces Analysis, especially in regard to threat of substitute products.  The rivalry is growing stronger resulting from off-brand introduction of substitutes into the market at much lower costs to the consumer discount and drug stores offering organic and natural selections at a reduced price; likewise, 54 percent of organic purchases are made outside of specialty organic food stores (Organic Trade Association, 2011).   Furthermore, according to a Nielsen report that surveyed 27,000 consumers from around the globe, 76 percent of respondents cited their perception that “[organic foods] are healthier” as the main justification for their purchase (The Nielsen Company, 2010).  Healthier perception, rather than factual data, leads consumers away from brand-name purchases and toward economically priced substitutes, which could hurt the company’s bottom line. 


Business 101

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Perhaps considered elementary in the study of business are the Deming cycle of Plan-Do-Check-Act and the Toyota Production System of continuous improvment.  However, due to the high prevelence of Deming and Toyota in my business studies at Ferris State University, as well as in my previous studies at Muskegon Community College, I determined this blog outlining my career preparations would not be complete without at least mentioning them.  As such, here is a brief paraphraph summarizing the two.

Dedicated to meeting or exceeding customer requirements through quality and engineering excellence, many companies are committed to continuous improvement in meeting or exceeding customer requirements while contemporaneously saving costs and reducing lead-time.  Utilizing the Plan-Do-Check-Act cycle introduced by W. Edwards Deming leads to higher quality, increased productivity, and a more competitive market position. In addition to the four stages (Plan-Do-Check-Act), a fifth stage consisting of consolidation of the previous four prevents the circle from rolling back down the hill, which is key in using the Deming Cycle in a steady, ongoing improvement cycle.  Additionally, engaging in the Toyota Production System (TPS), focusing on kaizen (continuous improvement), jidoka (automation with a human touch), and just-in-time practices is beneficial for the external and internal business environment.  It provides customers with high quality at a low cost, allows for employee satisfaction with work, job security and fair treatment, and also gives a level of flexibility to respond to changing market conditions.

Again, I realize these are elementary business practices – but they are essential, nonetheless.

Exclusionary Rule Exceptions

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In researching the Exclusionary Rule in response to the Fourth Amendment’s contemplation of searches and seizures, I briefly summarized the case establishing said Rule, the case expanding it to the States, and the main exceptions.  I have included a few excerpts below to convey the subject matter of my studies.

Weeks  v US
232 US 383 (1914)
Exclusionary rule:  Police, without a warrant, seized evidence of illegal gambling via the US Mail from the home of Weeks.   On challenge, the court in Weeks unanimously held that the Fourth Amendment provides protection against “unreasonable searches and seizures” in federal courts and that evidence obtained in violation of the Fourth Amendment would ordinarily be inadmissible in a Federal criminal trial.

Mapp v Ohio
367 US 643 (1961)
Extension to States:  Purported to be in possession and under control of books and other materials in violation of Ohio state law, police followed a lead to Miss Mapp’s home.  After being repeatedly denied entrance, police forcibly opened and gained admittance to the home.  Production of a false warrant preceded a struggle resulting in Mapp’s handcuffing.  The officers continued their “widespread search” of the home and did, in fact, discover the obscene materials for which she was later convicted.  Prior, the Due Process Clause and its right to privacy was enforceable against the states; as such, the court deemed exclusion of evidence for violation is applicable to the states, as well, as a matter of federal constitutional law.

Hester v US
265 US 57 (1924)
Open fields exception:  In prosecution for concealing “spirits,” moonshine whiskey was found near the house where the defendant resided.  The court ruled that the protection afforded by the Fourth Amendment does not extend to open fields; thus, the exclusionary rule is inapplicable.

Walder v US
347 US 62 (1954)
Impeachment exception:  Evidence of heroin obtained through unlawful search and seizure was suppressed and his indictment dismissed.  In a subsequent trial, Walder testified he had never purchased, possessed or sold any narcotics and, because he had “opened the door,” that evidence could be used during trial to attack credibility.

Warden v Hayden
387 US 294 (1967)
Hot pursuit exception:  Following a tip in pursuit of a suspected armed robber, police entered the home of Hayden and found him in an upstairs bedroom.  During the search for the man in the home, a pistol, shotgun, ammunition, and clothing matching the description given by witnesses of that worn by the robber were found.  Contemplated in this case is whether the police had violated the protection against unlawful search and seizure by entering and searching the home without a warrant and absent permission, consequences of which would exclude the evidence found by officers used against Hayden at trial.  The court created a “hot pursuit” exception in saying “[t]he Fourth Amendment does not require police officers to delay” if it would result in endangering themselves or others.  In this instance, speed was essential to deter endangerment, and no violation was found to have occurred.

US v Calandra
414 US 338 (1974)
Grand jury exception:  A warrant authorizing the search and seizure of bookmaking records and wagering paraphernalia  in connection with a gambling investigation.  One agent went beyond that scope and seized a loansharking record, knowing it could be used in a separate pending investigation.  A grand jury subpoenaed the agent to question him on the loansharking records and he refused to testify due to 5th amendment rights against self-incrimination.  The Supreme Court ultimately held that grand juries may use allegedly illegally obtaind evidence in questioning witnesses because “the damage… outweighs the benefit of any possible incremental deterrent effect.”

US v Ross
456 US 798 (1982)
Automobile exception:  After receiving a tip about a man selling illegal narcotics stored in the trunk of his car, police located it, stopped the car and ordered the driver out.  Police arrested the driver after noticing a bullet on the front seat and discovering a pistol in the glove compartment.  Police then searched the trunk, without a warrant, finding heroin and, later, finding $3,200 in cash in a zippered pouch.  The Supreme Court ruled a warrantless search of containers found during the search of a car are constitutional, as it falls within the “automobile exception” precedent set in 1925 by Carroll v US 267 US 132 (1925).  This case claimed the mobility allowed it to leave the jurisdiction, making it impractical to take the time to obtain a warrant, and a lower expectation of privacy due to clear visibility through the windows into their contents.  The exception was later expanded to include RVs in California v Carney 471 US 386 (1985), based on mobility similar to that of an automobile.

 Nix v Williams
467 US 431 (1984)
Inevitable discovery exception:  Williams was arrested in conjunction with the disappearance and likely murder of a 10 year old girl.  The police promised his attorney that Williams would not be questioned during transit back to Des Moines.  During the trip to Des Moines, one of the policemen started talking to Williams making statements to elicit a guilty feeling (Christian burial for her family before Christmas, etc).  Williams broke down and directed the police to where he had buried the body of the girl.  At that time, the search party was only 2 miles from the body and would have eventually been covered by the search team.  Williams argued on appeal that the body should be excluded as evidence.   The Supreme Court disagreed and came up with the “inevitable discovery” exception to the exclusionary rule, saying that if the illegally obtained evidence would have been found eventually, by lawful means (such as in this case), it would be admissible.

NY v Quarles
467 US 649 (1984)
Public safety exception:  A man was identified by a woman as her rapist to police.  The police frisked the man and found an empty shoulder holster.  The man answered when police asked where the gun was and the man was subsequently read his Miranda rights.  The court ruled that the safety of the public is paramount to adherence to the Miranda warnings; thus, the evidence is not subject to exclusion.

US v Leon
468 US 897 (1984)
Good faith exception:  Drug evidence was seized pursuant to a warrant obtained with stale information (the staleness overlooked by the magistrate).   The majority in Leon said that the exclusionary rule was not designed to be a personal right but is rather designed “to deter police misconduct rather than to punish the errors of judges and magistrates” and that they could find little benefit in applying the exclusionary rule where there has been good-faith reliance on an invalid warrant.   Thus evidence obtained in violation of a person’s Fourth Amendment rights would not be excluded from trial if the law enforcement officer, though mistaken, acted reasonably.

Cupp v Murphy
412 US 291 (2000)
Loss of evidence exception:  During his wife’s murder investigation, Daniel Murphy voluntarily came into the station for questioning where police asked to take sample scrapings from his fingernails.  Upon his refusal, and without a warrant, police took the samples and found incriminating evidence which was admitted at trial; thus convicting Murphy.  The court affirmed that where officers reasonably believe “highly destructible” evidence is on a person, a limited search to obtain incriminating evidence prior to destruction does not violate the Fourth Amendment .

Hudson v Michigan
547 US 1096 (2006)
Knock-and-announce exception:   Police obtained a warrant authorizing search for drugs and firearms at the home of Booker Hudson; however, suppression of the evidence on grounds of Fourth Amendment violation as a result of premature entry is argued.  Hudson claims police “waited only a short time” before entering through the unlocked front door of his home.  Unlike other requirements, such as the warrant or Miranda where compliance is easily determined, what comprises a “reasonable wait time” is difficult to determine.  Additionally, the case noted several instances in which it is not necessary to knock and announce (e.g. reasonable suspicion of threat of physical violence or destruction of evidence).  It was thus decided the social costs of applying the exclusionary rule to such intrusions are excessive in comparison to the incentive to violate, and suppressing the evidence is unjustified.

Herring v US
555 US 135 (2009)
Police record-keeping errors exception: Defendant was charged with a convicted felon in possession of a firearm and knowingly possessing methamphetamines. The US District Court for the Middle District of Alabama denied the motion to suppress resulting in conviction.  He appealed. The US Court of Appeals for the Eleventh Circuit affirmed and certiorari was granted by the US Supreme Court.  A warrant, said to be outstanding by a clerk of neighboring county, was subsequently found to have been recalled.  The Exclusionary Rule did not apply as a result of police negligence in failing to update a computer database to reflect recall of arrest warrant.  The error was not the result of systematic error or reckless disregard of constitutional requirements, and any minimal deterrence that might result from applying exclusionary rule would not outweigh heavy cost of excluding otherwise admissible and highly probative evidence.

VRIO Framework

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Value, the “V” in the VRIO framework, is a moving target.  This is especially true in regard to the ever-changing forum of technological advances; whereas, what was once considered value-added has moved into the realm of the expected and no longer provides the competitive edge for companies like it once did.

Reading the New York Times this week I came across an article about Barnes and Noble. http://www.nytimes.com/2012/01/29/business/barnes-noble-taking-on-amazon-in-the-fight-of-its-life.html?_r=1&ref=business

Once a prominent seller that put smaller, local booksellers out of business mostly due to their capital and resources being able to sustain a wider selection of books, their business strategy is now becoming obsolete as consumers transition to e-readers.  Though they introduced the Nook as an attempt to compete with Amazon.com and their highly successful Kindle, their efforts are proving futile.

This gives new insight to the trendy phrase “too big to fail.” Perhaps big chain stores, such as Barnes and Noble, are “too big to evolve.”

Finding Balance

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During the busyness of the school year, in pursuit of academic excellence, I am confident in my abilities to handle the heavy dose of responsibilities I undertake.  I have honed and refined my prioritization skills; in fact, juggling daily demands has become an intrinsic trait.  Never have I missed a deadline, whether self-imposed or set by a superior, and, even under pressure, I add a certain level of flair and exuberance to tasks and activities.

In all that life demands, in the midst of personal and professional responsibilities, there are times when I feel it is too much.  Being the type to go “all in,” I’ve discovered the importance of finding balance.  The key to success, for me, is incorporating renewal into the stressful, demanding life that I live.  When I begin to feel myself coming apart at the seams, I put the brakes on.  I step out of myself, out of the situation, and take time to breathe.  Turning inward, I gain the strength to continue.

This morning I am taking time to renew my inner self.  With the semester coming to a close at Ferris State University, having managed the stress of college life as a non-traditional student, I am confident that I went “all in” over the past fifteen weeks.  I gained valuable experience, knowledge, and have expanded my comprehensive capacity.

In taking time to reflect on my inner strength and slowing down to restore my sense of balance, I will gain the strength and stability to continue my high spirited, enthusiastic pursuit of all that life has to offer.

Customer Loyalty Program

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As part of a recent team project for my Organizational Behavior class, I oversaw the conceptual design of a customer loyalty program as an alternative solution to increase awareness of a local resort restaurant.  I learned many operational conundrums and gained valuable insight into the decision making process of this company, including situational, circumstantial, and functional concerns.  I am including in this post a portion of the proposal to demonstrate both my writing skills and thought process behind such a program.  (The name of the restaurant has been changed to protect the business.)

In considering factors to increase profit, it is well documented that the majority of a firm’s sales come from a small proportion of repeat customers.  With the cost estimated between two- to ten-times more to win a new customer than to retain an existing one, targeting loyal customers will boost sales much more efficiently.  However, before loyal customers are targeted, they must first be identified.  Creating a customer incentive, or loyalty, program is a first step toward drawing in new customers and transitioning them into returning, loyal customers (Donnelly, 2010).  Thus, “Bernie’s Bucks,” a customer loyalty program, is suggested as an alternative solution to develop and reward long-term relationships with customers to increase the profit margin of Bernie’s Bar and Grill.

There are three key factors to ensure success in implementing a customer loyalty program: (1) keep the program easy to understand and execute; (2) get enough customer information when they enroll to ensure the benefits offered match their interests; and (3) track the usage of deals and redemption statistics to analyze what offers are working for future promotional campaigns.  The potential for this type of program, as discussed in the previous paragraph, leads to increased profits as a result of a better understanding of the targeted customer profile; however, disadvantages of the plan must be considered.  While a customer loyalty program is not excessive in cost to implement, if the plan is not seen through to fruition the reputation of the restaurant will suffer detrimental consequences.  It is essential  for long-term success that staff-members receive training and become well-versed in the execution, and that a person is assigned to evaluate the redemption statistics, of Bernie’s Bucks.

The first criterion, keeping the program easy to understand and execute for both the employees and the customers, is essential for a successful customer loyalty program.  The employee needs to familiarize themselves with the program and explain, sell and promote it in a way that identifies with the customer; likewise, the customers need to understand what they are supposed to do, how to get information, and what benefits they receive.  With that in mind, it is proposed that Bernie’s customers receive a loyalty punch card, the size of a business card, to carry in their wallet to track loyalty; moreover, upon reaching a preset amount, the customer will receive a half-priced entrée.

The second point of focus for Bernie’s customer loyalty program is to gather information about the customer; thus, ensuring the benefits match their interests, and to gather data for future marketing and promotion opportunities.  This is accomplished through having the customer complete a short questionnaire when signing up for the Bernie’s Bucks rewards program to gather basic contact preferences, restaurant habits, birthdate, and estimated frequency of visiting the ski resort.

The last area of emphasis in establishing a successful customer loyalty program is through the tracking of promotional materials to differentiate between what offers are generating revenue and those that are not.  Tracking redemption will provide data for Bernie’s to target specifically what drives the majority of customers to its location, which allows a repeat of successful promotions, further increasing the return on investment of the customer loyalty program, Bernie’s Bucks.

Conflict Resolution Seminar

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Last week, I took advantage of a certificate program covering conflict resolution presented by Warren Hills, Ph.D and Associate Vice President of Human Resources at Ferris State University.  Lasting three days, I learned many valuable tools to handle disputes and had ample time to practice mediation.  Day 1 was a discussion-based lecture that began with different conflict management options ranging from negotiation, mediation and arbitration through court/legal services.  The differences between “position” statements and statements expressing needs and interests were explained, and a thorough presentation of the BADGER mediation process of the Facilitative Mediation Model was given.  Day 2 involved the BADGER process in greater detail and provided opportunities to practice mediating different scenarios within a group.  I was able to mediate several situations and practice active listening while negotiating common ground to begin the process of resolving the conflict.  The third and final day consisted of on-the-spot presentations of what I learned by applying it to a specific scenario.  Through peer evaluation, I scored an average of 10 out of 10.

In reflection, I am pleased that I was able to attend this seminar.  I learned many skills that add value to my current college career; furthermore, I will carry these skills into future organizations as I advance in the business field.

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