Comparative Analysis- Whole Foods Market V/S Sainsbury Case Study Example
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In this paper, we will compare the organizational structure of two leading organic food retailers in United States and United Kingdom. As for US, we have chosen Whole Foods Market that is the biggest organic retailer in the country with store count sprawling to 399 locations. The company also operates in Canada and UK, but at very small scale as 96.7% of the total revenue is sourced from native market only. On the other hand, as for United Kingdom, Sainsbury is the largest organic retailer in the country with 29% market share.
With growing demand of organic foods and other supplies by the consumer worldwide, both these companies are heading high and aggressively towards large sales volume. However, with market analyst expecting a major boom in the demand for organic food by the consumers, both these companies are fighting for their market share as more and more companies, both, corporates and independent retailers are entering the business of organic retailing.
-Whole Foods Market
Operating in world’s largest capitalistic political system, the company although enjoys numerous benefits of wide-scale American market but it has to adhere to strict regulations imposed by United States Department of Agriculture(USDA) as all the matters relating to organic sale and production are covered under USDA. Moreover, the company is taxable under a high corporation tax rate as the country thrives to recovers back from huge fiscal deficits, thus cutting down the after-tax profit margins for the company.
On the other hand, the political system in United Kingdom is little more favorable as the Government have decided to lower the corporation tax rates in order to assist large corporation such as Sainsbury. In addition, opportunities are expanding for the corporates with more eastern European countries joining the European Union.
-Whole Foods Market
The existing social environment in the country is very much favorable for the company. The country is now witnessing high consumer spending and that too with a healthy pattern. As the nation witness highest obesity in the world, the consumers are turning their consumption towards organic foods. In addition, the younger generation also understands the need of a healthy lifestyle. Hence, the company is foreseeing some favorable social factors which are most likely beneficial for the company.
The UK market is also expecting a significant change in the consumption patter of the society. Most noteworthy, as per a report, four out of five shoppers below the age of 34 are willing to spend on organic foods and products. In addition, the UK organic market is now valued worth £1.79billion in sales with rate of growth above annual inflation rate of 2%. Thus, the company is most likely to benefit from changing consumption outlook of the consumers in the country that now prefers organic foods on their kitchen shelves.
-Whole Foods Market
In terms of ethical trade, the company follows some strict guidelines and also selects the suppliers on those same parameters. Since the core business activity of the company is providing healthy and safe organic products only, the company makes sure that the supply from its suppliers also meets high standards of food safety and hygiene, animal welfare and environmental protection. In addition, the company has also launched Whole Trade Guarantee Program under which supply is sourced from suppliers from developing countries while the company offers them better wages.
The company is also dedicated towards ensuring ethical practices in animal welfare on farms and ranches. As part of its parameters, the company ensures that the suppliers carry out innovative animal production practices that improve the lives of animals raised for meat and poultry in our stores. It is this reason that the company is ranked as one of the Most Ethical Companies in the Food Industry by Ethisphere Institute.
In order to ensure Ethical Trading, the company makes sure that its code of conduct ‘’ Code of Conduct for Ethical Trade’’ is strictly followed by the suppliers and only the best product reaches their customers. For this purpose, instruments such as third party audits of suppliers and sites, self-assessment questionnaires and confidential mechanisms for suppliers to highlight issues are followed.
In addition, the company also aims to be transparent with all of its stakeholders on ethical trade performance and also encourage the suppliers to do likewise.
-Whole Foods Market
Just like any other organization, the company is also required to adhere to various legal regulations. Since the core activity of the company is organic retailing, it is required to adhere to legal rules framed by US Department of Agriculture along with other related consumer and food safety laws., pg 13
Retailing food items exposes the company to many consumer laws and health and safety laws. In addition, the organic product being sold in the stores has to be appropriately certified as per set legal regulations.
Impact of differences on management decision making
Noted from the above difference in Political, Ethical, Social and Legal factors of the companies operating under same industry, we can witness that each of them are cashing on favorable social factors as the forecast for growth in organic food consumptions shows a promising future in the industry. However, while the political system of Sainsbury is more favorable where reduction in tax rates will allow the company to compete with upcoming or existing competitors by focusing on more product range and store count, Whole Foods Market, that is operating in United States is not only facing tough political situation in the form ever increasing regulations and high tax rates, will have to counter the increasing competition by reducing its selling price or offering low cost products so as to retain the customer loyalty.
Ethical trading. (n.d.). Retrieved February 7, 2015, from Sainsbury: http://j-sainsbury.co.uk/media/1586898/sainsbury_s_code_of_conduct_for_ethical_trade.pdf
Organic Market Report reveals growth in organic sales for the first time in four years. (n.d.). Retrieved February 7, 2015, from http://www.soilassociation.org/news/newsstory/articleid/6650/soil-association-2014-organic-market-report-reveals-growth-in-organic-sales-for-the-first-time-in-fo
SEC 10K Filing- Whole Foods Market. (n.d.). Retrieved January 31, 2015, from Whole Food Market: http://www.sec.gov/Archives/edgar/data/865436/000086543614000161/wfm10k2014.htm#s56db89faadd441089a400d7114f983e5
World’s Most Ethical Companies’. (n.d.). Retrieved February 7, 2015, from http://media.wholefoodsmarket.com/news/whole-foods-market-named-one-of-worlds-most-ethical-companies
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