Business, Management

Whole Foods Market PESTEL/PESTLE Analysis & Recommendations

Updated on Updated on by Pauline Meyer
Whole Foods Market PESTEL or PESTLE analysis and case study on external factors in remote macro-environment
Whole Foods Market at West University Place, Texas. Whole Foods Market’s PESTEL/PESTLE analysis shows that the external factors in the company’s remote or macro-environment present mostly opportunities for the business. (Photo: Public Domain)

Whole Foods Market addresses the main issues identified in its PESTEL/PESTLE analysis. As the leading health food store chain in the United States, Whole Foods Market has comprehensive policies and strategies that account for the opportunities and threats identifiable in the PESTEL/PESTLE analysis model. Whole Foods Market now has more than 70,000 employees in more than 400 locations in the U.S., Canada, and the U.K. This level of international success is indicative of the company’s capabilities in exploiting such opportunities and overcoming the threats in its remote or macro-environment. This PESTEL/PESTLE analysis gives insights on the external factors that Whole Foods Market must include based on current industry and market conditions.

Whole Foods Market’s PESTEL/PESTLE analysis shows that the company is in a strong position to address the external factors in its remote or macro-environment. However, strategic improvements may be needed to boost Whole Foods Market’s market position.

Political Factors Affecting Whole Foods Market’s Business

This dimension of the PESTEL/PESTLE analysis model reflects governmental influence on business and industry. In Whole Foods Market’s case, the following are the most significant political external factors in the remote/macro-environment:

  1. Regulations on organic and GMO food (opportunity)
  2. Free trade agreements (opportunity)
  3. Low labor standards in developing countries (opportunity)

Whole Foods Market has the opportunity to further improve its standards to ensure proper labeling of organic and GMO-free products. The firm also has the opportunity to expand its business based on advantages of free trade agreements, such as through new locations overseas. In addition, Whole Foods Market can capitalize on its Whole Trade Guarantee to build its brand and attract more customers. The Whole Trade Guarantee certifies suppliers based on criteria like fair labor and employment practices. Thus, Whole Foods Market has already taken steps to address the opportunities based on the political dimension in the PESTEL/PESTLE analysis model.

Economic Factors

In this dimension of the PESTEL/PESTLE analysis model, the impacts of economic conditions are determined. Whole Foods Market must address the following economic external factors in its remote/macro-environment:

  1. Economic stability (opportunity)
  2. Higher employment rate in the U.S. (opportunity)
  3. Rising labor costs in developing countries (threat)

Whole Foods Market has the opportunity to grow based on the economic stability and gradually rising employment rate in the U.S. However, the rising labor costs in developing countries is a threat because the company’s supply chain significantly depends on producers in developing countries. The rising labor costs lead to higher supply costs and higher selling prices at Whole Foods Market stores. Thus, Whole Foods Market must develop strategies to minimize such issue in this dimension of the PESTEL/PESTLE analysis model.

Social/Sociocultural Factors Influencing Whole Foods Market

This dimension of the PESTEL/PESTLE analysis model identifies the social conditions that influence consumers, employees and investors. In Whole Foods Market’s case, the following are the social/sociocultural external factors in the remote/macro-environment:

  1. Increasing emphasis on healthy lifestyles (opportunity)
  2. Increasing cultural diversity (opportunity)
  3. Increasing wealth gap (threat)

Whole Foods Market has the opportunity to grow based on high quality organic products that satisfy the healthy lifestyles trend. The company also has the opportunity to offer a more diverse product mix to match the rising cultural diversity of its target consumers. However, the rising wealth gap is a threat because it weakens the middle class, which is Whole Foods Market’s main source of revenues. In this dimension of the PESTEL/PESTLE analysis model, Whole Foods Market must consider strategies to maintain growth despite a rising wealth gap.

Technological Factors in Whole Foods Market’s Business

In this dimension of the PESTEL/PESTLE analysis model, the effects of technology or technological changes are presented. Whole Foods Market must account for the following technological external factors in its remote/macro-environment:

  1. Increasing automation in business (opportunity)
  2. Increasing mobile technology usage (opportunity)
  3. Patenting of GMOs (threat & opportunity)

Whole Foods Market has the opportunity to implement more automation technologies to increase business efficiency. Also, the firm has the opportunity to provide improved online services through consumers’ mobile devices. However, the patenting of genetically modified organisms (GMOs) threatens Whole Foods Market’s access to adequate supply. Nonetheless, this factor also presents an opportunity to reduce or eliminate GMO-containing products in Whole Foods Market stores. In this dimension of the PESTEL/PESTLE analysis model, Whole Foods Market must apply strategies to further reduce its dependence on GMO-containing products.

Ecological/Environmental Factors

This dimension of the PESTEL/PESTLE analysis model emphasizes the conditions of the natural environment. In Whole Foods Market’s case, the following are the most notable ecological/environmental external factors in the remote/macro-environment:

  1. Global warming/climate change (threat)
  2. More complex standards on business waste disposal (opportunity)
  3. Higher emphasis on business sustainability (opportunity)

Global warming threatens the productivity of farmers in Whole Foods Market’s supply chain. On the other hand, the firm has opportunities to further improve its performance in waste disposal and sustainability. This dimension of the PESTEL/PESTLE analysis model highlights Whole Foods Market’s need to ensure the adequacy of its supply chain.

Legal Factors

In this dimension of the PESTEL/PESTLE analysis model, the effects of laws on business are identified. Whole Foods Market must consider the following legal external factors in its remote/macro-environment:

  1. Environmental protection laws (opportunity)
  2. Inadequate labor laws in developing countries (opportunity)
  3. Antitrust law (threat)

Whole Foods Market already has environmentally sound policies, but more of these policies can improve the firm’s standing and brand image. Whole Foods Market also has the opportunity to capitalize on its Whole Trade Guarantee to build the company’s reputation. The Whole Trade Guarantee evaluates suppliers based on fair labor practices. On the other hand, antitrust law is a threat because it reduces Whole Foods Market’s ability to maximize its growth via acquisitions and mergers in the U.S. The firm has used acquisitions as a major expansion strategy. In this dimension of the PESTEL/PESTLE analysis model, Whole Foods Market must emphasize growth strategies other than acquisitions in the U.S.

Whole Foods Market’s PESTEL/PESTLE Analysis – Recommendations

In the six dimensions of the PESTEL/PESTLE analysis model, Whole Foods Market has mostly opportunities. However, there are some notable threats, such as global warming and rising labor costs in developing countries. Whole Foods Market can further expand and diversify its supply chain to address the threat of rising labor costs in developing countries, the threat of global warming, and the threat of the patenting of GMOs. Also, Whole Foods Market can adjust its pricing strategy to address the threat of the rising wealth gap. Moreover, the firm can build new stores and expand overseas to address the threat of antitrust law in the U.S. This PESTEL/PESTLE analysis shows that Whole Foods Market has strong potential to continue growing.

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