Recent Post

Searching...
July 13, 2013

Essay Paper on Firm Analysis



Firm Analysis
As per instructions, I have chosen The Whole Foods Market to carry out my assignment on firm analysis.
The Whole Foods Market:
The market is registered in NADAQ and trades as a WFMI. It is the chain of supermarket initiated by the college dropouts in 1978---John Mackey and Rene Lawson Hardy, the two young boys who borrowed $45,000 from family and friends to open the doors of a small natural foods store called SaferWay in Austin, Texas. Two years later, John and Rene partnered with Craig Weller and Mark Skiles to merge SaferWay with their Clarksville Natural Grocery, resulting in the opening of the original Whole Foods Market on September 20, 1980. (Whole foods market, 2010)
Nature of Business:
“Whole Foods Market, Inc. (Whole Foods Market) owns and operates a chain of natural and organic foods supermarkets. As of September 27, 2009, it operated 284 stores: 273 stores in 38 the United States, states and the District of Columbia; six stores in Canada, and five stores in the United Kingdom. Its product selection includes, but is not limited to produce, seafood, grocery, meat and poultry, bakery, prepared foods and catering, coffee and tea, nutritional supplements, vitamins, body care and educational products such as books, floral, pet products and household products”. (Corporate information, 2010)
Organization Values (mission, vision and overall strategy)
             The Whole Foods Market, Inc’s core values are following that are portrayed it mission, vision and strategy as well:
“These are not values that change from time to time, situation to situation or person to person, but rather they are the underpinning of our company culture. Many people feel Whole Foods Market is an exciting company of which to be a part and a very special place to work. These core values are the primary reasons for this feeling, and they transcend our size and our growth rate. By maintaining these core values, regardless of how large a company Whole Foods Market becomes, we can preserve what has always been special about our company. These core values are the soul of our company.
·         Selling the Highest Quality Natural and Organic Products Available
·         Satisfying and Delighting Our Customers
·         Supporting Team Member Happiness and Excellence
·         Creating Wealth Through Profits & Growth
·         Caring about our Communities & Our Environment
·         Creating ongoing win-win partnerships with our suppliers
·         Promoting the health of our stakeholders through healthy eating education.  (Whole foods market, 2010)
            To access the information, different resources will be used that may include both electronic and no-electronics channels like independent consultants including financial and non financial, financial statements, financial positions, different officials of the market and observations etc.
Financial Analysis (in Stocks):
(corporate information, 2010)
Financial Analysis (in Statements):
http://chart.apis.google.com/chart?cht=bvg&chs=323x200&chbh=18&chdlp=t&chls&chg=0%2C25&chm=D%2C926BDA%2C2%2C-1%2C3%7Cs%2C6000A7%2C2%2C-1%2C5&chdl=Revenue%7COperating%20income%7COperating%20margin%20(%25)&chco=4D89F9%2CC6D9FD%2C926BDA&chds=0%2C3000%2C0%2C3000%2C0%2C100&chxt=x%2Cx%2Cy%2Cr&chxl=0%3A%7C2009%7C2009%7C2010%7C2010%7C2010%7C1%3A%7CQ3%7CQ3%7CQ1%7CQ2%7CQ3%7C2%3A%7C0%7C750%7C1500%7C2250%7C3000%7C3%3A%7C0%25%7C25%25%7C50%25%7C75%25%7C100%25&chd=t2%3A1878.338%2C1829.229%2C2639.158%2C2106.061%2C2163.1809%7C78.915001%2C68.778%2C102.253%2C119.236%2C115.57%7C4.2013206%2C3.7599447%2C3.8744555%2C5.6615644%2C5.3425951
Above mentioned both charts are depicting the overall declining trend both in Stock market and financial statements. Overall revenue and operating income are portraying the downward trend (quarterly). Despite the following recent developments:
  • “Apr 20, 2010: Whole Foods to initiate process for reduction in energy consumption
  • Apr 16, 2010: Bean & Body Launches New Canned Lattes At Whole Foods Market
  • Apr 12, 2010: Whole Foods Market Installs Coulomb Technologies ChargePoint Networked Charging Stations For EVs
  • Apr 06, 2010: Whole Foods partners with Cork ReHarvest to recycle wine corks
  • Mar 26, 2010: Nature's Peak Expands To Mid-Atlantic Region” (Companies and Markets, 2010).
Objectives for improving the performance of organization's financial position
Objective
Measure
Target
Action
Stock improvement
 By doing proper market research that what is available and what is the customer demand.
 Increased the varieties of different collection as per demands e.g. varieties of French cheese and salad etc.
 For improving the collection and satisfy the customer, the coordination with Farmer markets will be introduced.
Customer service improvement
 By taking feedback from the customers
 Provide the happy service to all customers.
 Proper and continuous training program will be scheduled.
Quality improvements
 By taking feedback from the customers with proper vigilance on item that is being sold.
 Achieved and maintain the world class quality by securing series of ISO quality certifications.
 Proper and continuous vigilance plan will be introduced and implemented. The higher management will also be involved in it.

Objectives for improving the organization's customer service perspective.
Objective
Measure
Target
Action

 Provide Happy Service

Measuring this parameter by doing on the spot feedbacks, and surveys.  
To satisfy the whole clientele.

Hiring after Highlighting the independent consultant services. 

Establishing the Win-Win Situation. 
By keep monitoring the customer response properly and periodically. 
To maintain the existing clientele, to invite back the lost ones by expanding the customer circle.
Offer the promotion and schemes periodically. 





Cost of Capital


2007
2006

Net operating profit after tax (NOPAT)


$
201,934
$
215,281
Capital charge

166,480
150,871

EVA

35,454
64,410

Increase in EVA
              $
(28,956)
$
38,624



2007
2006

Total assets


$
2,208,124
$
2,040,422
Total liabilities

759,354
663,006

Net assets

1,448,770
1,377,416
Long-term debt and capital lease obligations

58,307
12,214
Implied goodwill (from pooling-of-interest transactions)

162,803
162,803
Other*

179,897
123,911

EVA capital


$
1,849,778
$
1,676,344

Store returns(divisions) for the first quarter of 2010:
Average Size
Average Comps
NOPAT ROIC
# of Comp Stores

Stores over eight years old
27,100
13.1%
55%
58
Stores between five and eight years old
30,500
11.2%
49%
29
Stores between two and five years old
36,000
17.3%
23%
37
Stores less than two years old (including relocations)
36,400
23.5%
9%
15

All stores in comparable store base
31,200
14.7%
33%
139
All stores open at the end of the first quarter
31,300

28%
146
Direct Competitor Comparison


PVT1
Market Cap:
8.47B
13.23B
7.78B
N/A
5.09B
Employees:
45,300
334,000
186,000
N/A
63.98K
Qtrly Rev Growth (yoy):
14.70%
5.80%
-0.60%
N/A
11.40%
Revenue (ttm):
9.01B
80.81B
40.94B
N/A
8.44B
Gross Margin (ttm):
34.82%
23.07%
29.68%
N/A
24.27%
EBITDA (ttm):
726.04M
3.76B
2.43B
N/A
606.80M
Operating Margin (ttm):
5.00%
2.70%
3.07%
N/A
4.70%
Net Income (ttm):
240.35M
1.09B
-1.25B
N/A
N/A
EPS (ttm):
1.43
1.69
-3.25
N/A
1.44
P/E (ttm):
34.20
12.37
N/A
N/A
17.64
PEG (5 yr expected):
1.75
1.31
1.16
N/A
1.31
P/S (ttm):
0.94
0.17
0.19
N/A
0.41



KR = The Kroger Co.
SWY = Safeway Inc.
Pvt1 = Trader Joe's Company (privately held)
Industry = Grocery Stores


Strategic Goals:
Strategic planning of an organization is setting the path for future direction. In strategic planning, organizations decide their goals and targets, strategy to achieve these targets and how to improve their position (Burkhart and Reuss, 1993). The company has financial, customer related, internal and learning related strategic goals. However the primary goals for the company to achieve are:
  • Enhance profit by giving good and quality services to the customers
  • Invest in the development of the employees which ultimately lead towards the development and growth of the organization
The objectives mentioned above are all in the pursuit of these two main goals. There are no such goals which do not support the attainment of our primary goals. All the above mentioned goals are important for the ultimate attainment of the final goals hence, no objective or goal can be eliminated from the company’s objective.
            Quality services can also be ensured by hiring the services of independent consultant which can give tips to guide and train our employees so that they will be able to provide extra ordinary quality to the customers.  Quality of the service can also be ensured by providing feedback opportunities to the customers so that they can express their concerns openly. These all efforts will pave the way for attaining our ultimate goal, i.e. to enhance profit by giving good and quality services to the customers.
Our company is using Outside consultants may be retained to assist in developing internal programs. The principal value of a consultant is not to do the teaching, but to aid in the development of policies, programs, and plans, and to measure results. Smaller companies not having large personnel or training departments can benefit from consultants, for the cost is less than that of operating a training department. However, some sacrifices of scope in the over-all program may result. This will help us to attain our second primary goal, i.e.  Invest in the development of the employees which will ultimately lead towards the development and growth of the organization.













References
Burkhart, Patrick, L.  and Reuss, Suzanne  (1993). Successful Strategic Planning: A Guide for
Nonprofit Agencies and Organizations. Newbury Park: Sage Publications
Companies and Markets (2010). Whole Foods Market, Inc. (WFMI) - Financial and Strategic
Analysis Review. Retrieved on 25th October 2010 from:
Corporate Information (2010). Whole Foods Market, Inc. Retrieved on 25th October 2010 from:
Whole foods market (2010). Retrieved on 25th October 2010 from:



0 comments:

Post a Comment