Whole Foods vs. Whole
Amazon acquired grocery giant Whole Foods in 2017 in a blockbuster deal, but one consequence of this
acquisition is that Amazonâ€™s highly centralized and data-driven approach to business decisions has
clashed with that of Whole Foods. This has frustrated both employees and Whole Foods customers. This
activity is important because mergers and acquisitions are not guaranteed to have universally positive
results, particularly if the two companies involved have significantly different strategies or cultures.
The goal of this exercise is for you to consider the nature of the culture clash between Whole Foods and
Amazon, as well as how both companies can overcome these issues.
Read about Amazonâ€™s acquisition of Whole Foods and its organizational behavior-related implications.
Then, using the three-step problem-solving approach, answer the questions that follow.
Investigative journalist Michael Blanding put it best, â€œAmazonâ€™s acquisition of Whole Foodsâ€¦ was the
corporate equivalent of mixing tap water with organic extra virgin olive oil. Youâ€™d be hard-pressed to find
two companies with more different value propositions.1 Stories quickly emerged about Whole Foods
customers unhappy about the changes at their favorite organic retailer, and they werenâ€™t the only ones
complaining. Similar negative stories emerged from employees regarding the new performance driven
expectations imposed by Amazon.
After the acquisition, Amazonâ€™s presence was immediately felt. In addition to plastering its logo
everywhere in Whole Foods stores, it also used its strengths in data and data analysis to determine
appropriate product mixes and bring efficiencies to many processes. After all, Amazon is known for its
efficiencies, low costs, and low prices.
This is a stark contrast to Whole Foodsâ€™ highly empowered approach to doing business, wherein
individual stores and their employees had autonomy regarding decisions about product selection,
inventory, and how best to serve customers. This employee-centric focus is what earned the company a
spot-on Fortuneâ€™s Best Places to Work list for 20 consecutive years, and the reason its customers
enjoyed personalized intensive, hands-on service. Although this decentralized, high-touch approach had
real benefits, it also had considerable inefficiencies that Amazon was keen to address.
Amazon and its employees utilized data, rigorous analysis and controls, and demanding performance
management practices. In the eyes of Amazon, customers were faceless digital profiles of purchasing
history and preferences. This environment was a good fit for some employees but incredibly stressful
and negative for others. Evidence for this was Whole Foods dropping from Fortuneâ€™s list in 2018 (it didnâ€™t
make the list in 2019 either).
1. Award: 0.00 points Â
These differences have the potential to undermine the hopes and goals of the merger, which were to
bring Amazonâ€™s efficiencies and operating prowess to Whole Foodsâ€™ unique approach and loyal
customers, enabling it to scale up and make an even larger impact in the market. Leaders at Amazon,
and to a lesser extent at Whole Foods, now have decisions to make. Problems exist, and the success of
the marriage depends on solving them.
Assume youâ€™re a consultant, what would you recommend to Amazonâ€™s leadership?
Apply the 3-Step Problem-Solving Approach
Step 1: Define the problem as described in the case.
Step 2: Identify the causes of the problem. Which inputs and processes from the Organizing Framework
Step 3: Make recommendations to Amazonâ€™s leadership regarding how to realize the potential of the
Michael Blanding, â€œAmazon vs. Whole Foods: When Cultures Collide,â€ Harvard Business School Working
Knowledge, May 14, 2018, https://hbswk.hbs.edu/item/amazon-vs-whole-foodswhen-cultures-collide.
I have read and reviewed the above case study.