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Whole Foods Market and its Social Purpose

Introduction

Whole Foods Market (WFM) is one of the most productive food retail companies in the United States. Its successful development was conditional upon the inclusion of social responsibility principles in business operations. However, the situation in the food market is changing rapidly, and WFM’s future progress now depends on the creation of a social purpose. To move from social responsibility to a social purpose, it is vital to analyze the current company’s strategies and their compliance with the needs of its principal stakeholders. Environment, Social, and Governance (ESG) criteria will help to reveal the existing issues in the corresponding areas and design a plan to eliminate them. Hence, the consideration of the stakeholders’ interests will allow WFM to increase profitability while remaining competitive on the market of natural and organic foods.

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From Social Responsibility to Social Purpose

To perform a shift from social responsibility to a social purpose, it is essential to distinguish the difference between these notions and analyze the company’s compliance with each of them. These concepts seem to be similar, but the difference in their impact on society is tremendous. The substitution of a social purpose with social responsibility tends to result in the absence of the latter (Pontefract, 2017). The focus of social responsibility is primarily related to attempts to increase stakeholder satisfaction and thereby ensure the company’s sustainable development (Pontefract, 2017). This definition implies the ultimate benefit for WFM rather than its stakeholders, and here comes the concept of a social purpose, which fills the gap.

The paradox is in the impossibility of sustainable development without addressing all stakeholders’ needs in the long run. A corporate social purpose is aimed at the inclusion of all affected persons in the list of target beneficiaries (Silverstein et al., 2018). The purpose not only states that the company’s policies are orientated on the protection of the environment as in the case of social responsibility but also demonstrates how exactly it delivers the impact and what measures it takes (Silverstein et al., 2018). Hence, the shift from a social responsibility company to a social purpose company for WFM would indicate the change in the company managers’ attitude and the elaboration of actions corresponding to its values and principles.

Perception of Social Responsibility by WFM’s CEO

The problem that hindered the adoption of the latest practices, such as a social purpose and its implementation in WFM, is conditional upon the attitude of its Board of Directors. As John Mackey, the co-founder and co-CEO of the company stated in the interview, they perceived their potential contribution to society as a by-product of WFM’s operations (Barro, 2016). According to him, WFM is “inherently socially responsible,” which implies the substitution of a social purpose with social responsibility (Barro, 2016). Such a controversial opinion caused deterioration in the company’s image and revealed its incapability to keep up with the competition in the future.

Mackey believed that WFM, by the very fact of its existence, contributes to the development of society. He stated that it allows for a range of benefits, including the creation of jobs and numerous opportunities for people and other businesses, and these consequences are enough for making the difference (Ferguson, 2017). Hence, in his view, prosperity is not conditional upon the company’s actions but the fact of its existence. This erroneous understanding led to the managers’ inability to realize the problem and readjust the company’s business operations to emerging societal needs. Hence, perception is the first aspect that should be changed on the way to a new image of WFM.

The Purpose and Values of WFM

The principal values and the stated purpose of WFM define their future social purpose, and it is vital to consider them for further alignment and readjustment of business activities accordingly. As can be seen from the company’s website, the values of WFM include the increase in satisfaction of the emerging needs of modern customers through the realization of natural and organic foods (Our core values, 2018). They are complemented by the creation of profits and prosperity about the needs of communities and the environment (Our core values, 2018). WFM also pays particular attention to maintaining a high quality of provided services and goods and the establishment of positive partnerships with other businesses (Our core values, 2018). Hence, the statement of values seems to cover all of the possible concerns of stakeholders.

In this way, WFM intends to achieve profitability and prosperity for all of the affected persons. These values are combined under the purpose, which is “to nourish people and the planet” (Our core values, 2018). In the global context, WFM’s ultimate objective is to make the world healthier, which implies coordination with the world’s largest organizations such as Whole Food Planet or Whole Cities Foundation (Barro, 2016). However, this is only a theory as the company does not provide any information on specific areas of cooperation with other businesses and organizations. Therefore, its policies can be defined as following the principles of social responsibility rather than creating a social purpose.

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In practice, WFM fulfills only one value, which relates to the company’s sustainable development. It creates wealth “through profits and growth,” thereby promoting financial stability (Barro, 2016). This fact also contributes to the definition of its activities as operations reflecting the social responsibility of WFM without a purpose. Hence, the company’s policies, despite the assurance of John Mackey, do not adequately serve its stakeholders as they do not imply the inevitable benefit for them relating to the mentioned aspects. It allows concluding that the company admitted social responsibility but did not take the required actions to turn it into practice. This position might result in a decline in the quality of products and financial problems resulting from it in the future and require a social purpose.

Current Strategy of Whole Foods Market

The strategy of WFM derives from its purpose and the values stated on the website. Hence, the company intends to ensure its global expansion, become a leader in the food industry, and maintain a high quality of its products and services (SG, 2020). Nevertheless, such a complex task requires more specific actions rather than following the principles of social responsibility. These actions can be combined under a unified social purpose. To ensure the correspondence of the company’s purpose to its current strategies, it is crucial to consider them and find a way to match the needs of the business and environment.

The challenge for WFM is to comply with the requirements of society while remaining competitive in the market. Its principal competitors are health food stores and grocery firms, and they are also focused on customer satisfaction through the provision of healthier alternatives (Thompson, 2017). This fact hinders the company’s expansion as it cannot afford the decline in quality in such a competitive environment and should consider the policies of other “healthy” businesses. Hence, further implementation of WFM’s intense growth strategy is impossible without a well-defined social purpose. However, its definition should correlate with the strategy and demonstrate WFM’s capability to fulfill environmental needs while being a fast-growing business, allowing for profits for its key stakeholders.

The principal strategy of WFM is the diversification of its products and services while considering environmental needs. It is orientated on all the customers regardless of age and gender and is intended to condition the future growth of the company through the provision of eco-friendly products and services (Thompson, 2017). The successful implementation of such a strategy would be managed more efficiently with the inclusion of concrete measures for the protection of the environment as this process is directly connected to the increase in the negative impact (Ferguson, 2017). It is critical to demonstrate to the customers that the expansion of business does not imply a more significant threat. Therefore, the future social purpose of WFM should be focused on ensuring sustainable growth while taking actions to protect the environment and communities.

Environment, Social and Governance (ESG) Criteria

To define other standards, which should be included in the social purpose, it is vital to assess all the areas of the company’s activities and their impact on society. An instrument is known as Environment, Social, and Governance (ESG) Criteria would be useful in this case (Chen, 2020). According to it, the three aspects are assessed on their compliance with the needs of stakeholders. The strategy identified above mostly relates to the environmental aspect, which includes pollution, waste, and conservation of natural resources (Chen, 2020). However, it does not indicate the specific measures that should comprise the social purpose of the company. The strategy only defines a general direction for future efforts and implies the central place of environmental concerns in the business.

The second category of criteria relates to the social aspect of WFM activities, which is also included in the strategy. They imply the existing business relationships of the company and the inclusion of the interests of all the principal stakeholders (Chen, 2020). For WFM, the stakeholders are its customers, employees, investors, suppliers, producers, and communities (Ferguson, 2017). As can be seen from the strategy above, the company addresses only the needs of communities developing environmental programs other organizations (Thompson, 2017). As for different stakeholders, WFM does not specify what measures are being taken and how it intends to increase their satisfaction. Hence, the consideration of all the affected persons while creating a social purpose would be beneficial in terms of increasing the company’s attractiveness among them.

The third category is governance criteria, which implies the measures taken for the benefit of WFM employees and managers. The importance of governance criteria is defined by the necessity to avoid the conflict of interest regarding the company’s choices, ensure the just treatment of all the workers, and provide opportunities for future personal growth (Chan, 2020). For this, WFM motivates its employees through compensation and the provision of other benefits. The company also creates various team growth programs promoting their career development (Ferguson, 2017). However, its policy does not include available transparent information in terms of conflicts of interest (Ferguson, 2017). This circumstance might become a barrier for future investors, who, in turn, significantly contribute to the company’s prosperity (Chan, 2020). Therefore, WFM should specifically address such issues and include them in the social purpose.

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Social Purpose for WFM

The creation of a social purpose for WFM should be based on the stated purpose, values, strategy, and the essential criteria identified above. The principal challenge is to ensure the inclusion of all stakeholders. WFM admits that it depends on them and natural resources, and its managers emphasize the necessity to advance their interests while performing core business operations (SG, 2020). Hence, the environment, social, and governance criteria will be the ground for the company’s social purpose.

The environmental needs related to the business operations of WFM represent the most critical aspect that should be addressed by the social purpose. It is essential to balance between the needs of WFM to increase profitability and the needs of the world to protect the planet (Thompson, 2017). For this, WFM focuses on long-term goals, including the development of environmental programs. Thus, for example, the company successfully uses Whole Trade Guarantee for its supply chain but does not specify how exactly it deals with environmental impact (Silverstein et al., 2018). Detailed information about such actions as the refusal to use artificial ingredients would allow turning WFM into a social purpose company.

Moreover, it should address the environmental risks of accompanying services such as delivery. The consideration of the packaging and its harm as well as measures allowing to substitute them with eco-friendly materials would be the basis for the company’s social purpose. Such measures can be complemented by the demonstration of the lack of a negative impact on the environment resulting from the expansion of its supply chain. Hence, WFM could include a monitoring system tracking its activities and their impact to increase the satisfaction of customers concerned about environmental issues (Thompson, 2017). In this case, specificity could be gained through the provision of information on the work of every single element of the company’s supply chain.

The inclusion of social aspects in WFM’s purpose would complement the environmental measures and increase the trust among the company’s managers and employees. They relate to the support of diversity in hiring and training, as well as the proper treatment of workers reflected in the creation of a safe environment for them (Silverstein et al., 2018). The actions of WFM intended to maintain positive business relationships would enhance corporate image and the popularity of its services. As for the last aspect that should be included, it combines the current measures towards the promotion of career development as well as the creation of new initiatives (Thompson, 2017). The company governance is essential for proper management of all of its areas of activity, and it would allow coordinating WFM’s overall performance.

Conclusion

WFM is an excellent example of a company that intends to conduct a shift from social responsibility to a social purpose. Such a change corresponds to the new market conditions resulting from the emerging environmental requirements of customers. The analysis showed that the company’s strategy fully corresponds to the stated purpose and values. However, it does not provide any concrete details, which are distinctive attributes of the social purpose. Hence, its strategy and policies correspond to the practice of social responsibility, which is incapable of addressing emerging issues. The implementation of the specified actions related to environmental, social, and governance criteria would allow WFM to satisfy all the stakeholders and remain competitive in the food market. Thus, WFM will successfully transform into a social purpose company by the requirements of the present-day business world.

References

Barro, J. (2016). Whole Foods co-CEO says business is ‘inherently socially responsible’ – here’s why that’s wrong. Business Insider.

Chen, J. (2020). Environmental, Social, and Governance (ESG) criteria. Investopedia.

Ferguson, E. (2017). Whole Foods Market stakeholders: A CSR analysis. Panmore Institute.

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Our core values. (2018). Whole Foods Market. Web.

Pontefract, D. (2017). Stop confusing CSR with purpose. Forbes.

SG (2020). Whole Foods Market: Vision, mission, values, philosophy 2020. Business Strategy Hub.

Silverstein, A., McCormack, D., & Lamm, B. (2018). The Board’s role in corporate social purpose. Harvard Law School Forum on Corporate Governance.

Thompson, A. (2017). Whole Foods Market’s generic & intensive growth strategies. Panmore Institute.

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