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Krisan SilabanFebruary 21, 2017ISDS 3100 Phase 2 ReportIt is no surprise to hear Whole Foods Market Inc. continually grows to increase its brick and mortar count. Although electronic commerce (e-commerce) is on the rise, Whole Foods still has the competitive advantage of selling readily available fresh produce, meat, poultry and seafood. Whole Foods still carries cost advantage over e-commerce providers of such fresh products mostly in the cost of shipping that it is able to avoid. Sure, people can go online to purchase dry goods like almond flour, but with fresh items, they’ll likely see a better deal going to a Whole Foods store directly. However, although Whole Foods operates on cost advantage in the organically healthy food industry, it lacks differentiation advantage that e-commerce offers. In an effort to compete, Whole Foods receives positive feedback through mergers and acquisitions. A positive feedback is a “process that occurs in a feedback loop in which the effects of a small disturbance on a system include an increase in the magnitude of the perturbation.” A positive feedback translates into causal loop where product of A feeds into B to produce more of it and the same goes with B. Through merger and acquisitions, Whole Foods is able to decrease competition while sustaining its subsidiaries and keeping them in business in a sense. Network effect also plays a role in Whole Foods’ growth. Network effect is simply “the effect that one user of a good or service has on the value of that product to other people.” Whole Foods is interested in partnering with dieticians and health gurus with social media presence. The success of such people in spreading health conscious efforts, the more customers Whole Foods will get. Positive feedbacks and network effects mean very little if a tippy market doesn’t exist in favor of Whole Foods. A tippy market is one “that is subject to strong positive feedback, such that the market will ‘tip’ in favor of the firm that is able to reach critical mass and dominate the market.” Whole Foods is not quite the “winner-take-all” yet; Trader Joe’s is its main competitor in the organic store industry. Whole Foods is quick to respond to market change, though. When Trader Joe’s offers cheap wine, Whole Foods immediately got on board knowing that the customer demand exists. In fact, through blind taste test, people prefer Whole Foods’ line of cheap wine over Trader Joe’s. Whole Foods is implementing its own online services to compete in this increasingly popular e-commerce time. Powered by instacart, Whole Foods offers delivery. By signing up and choosing a local store branch, customers can pick their grocery and have it ready for pickup or delivered at an extra cost. In addition, Whole Foods also provide online meals and catering services as well as gift cards sale for pickup or delivery. Meals and catering services tend to be more personalized so Whole Foods offer consultation as well through the phone. Whole Foods leverages an established network in accessibility of organic food to provide competitive advantage of network effects and create a tippy market. Trader Joe’s, being a competitor, has not reached e-commerce yet which leads differentiation competitive advantage for Whole Foods.The integration of IT is not new to Whole Foods, but it is changing fast. Jeanne Ross and Peter Weill of MIT’s Center for Information Systems Research (CISR) suggest that senior managers be involved in six information systems management decisions. Decision 1 is to determine how much should be spent on IT. Whole Foods operates on a cloud-based platform to share information all across the board. Having cloud-stored information helps Whole Foods in merchandising and supply chain logistics. Its number one concern is of course cyber security. Whole Foods goes to one of the bests in the business for its IT needs. Number three behind Oracle and SAP, Whole Foods partners with Infor to build its enterprise software. Whole Foods retains a differentiator in technology as competition is growing. Decision 2 is then to decide which business processes are the most important. Because Whole Foods grows rapidly through mergers and acquisition, Whole Foods focuses hard on fitting each one to few information channels. Some fragments include in-house production, merchandising and sponsorship. After that, decision 3 is to conclude which IT capabilities need to be companywide. Whole Foods and Infor recognize the multi-channel structure needed for the company and they work together in investing all IT resources into creating a single system to accommodate all channels. It is safer and low-cost driven for Whole Foods to carry out close to one system. After the IT needs are identified, Ross and Weill follow up with three more decisions that need to be made. Decision 4 is to answer the question of how good the IT services really need to be. As mentioned above, Whole Foods share one system all across the board for all its stores, corporate and subsidiaries. IT services will have to be intact 24/7. Co-CEO Walter Robb relies on technology to “expand the scope of how we look at retail.” After agreeing on quality needed, decision 5 is what security and privacy risks Whole Foods is willing to accept. With its decentralized structure, Whole Foods desperately needs security. From remote access, to GUIs, to software and hardware, Whole Foods IT guard system is under constant surveillance. While the company agrees to take risks in cloud computing, at the same time it is agreeing to invest greatly in maintaining sustainability. The last decision suggested by Ross and Weill is who should be responsible for IT initiatives. As the Chief Information Officer, Jason Buechel is accountable for delivering solid IT infrastructure for Whole Foods. Some of Buechel’s platforms include One POS, Affinity shoppers reward program and Instacart. By teaming up Whole Foods background in retail with leaders in technology, Buechel hopes to create a leading IT operations practice for the company. Whole Foods is highly IT-dependent. Besides for internal management uses, Whole Foods also administers technology for customer uses. It is important to note that even internal information like inventory count will eventually feedback to customers. Additionally, some technology that is directly available for customers include Instacart shoppers, coupon printing stations, self-serve Teabot, wine bar code readers, iPad order stations and many more. Instead of creating information barriers to only human interactions, Whole Foods is pushing to have knowledge readily available without wait time on sales representative. Take the wine bar code reader for example. Whole Foods came up with a device that stores information on each wine on the shelf which is recognized by the bar code. A customer can scan the bar code of a wine and the device will tell him/her how old the wine is, where it comes from and what meals pair best with it. By offering information lookup device like so, Whole Foods serves speedier interaction, concise data system, and hospitality. Works CitedKowitt, Beth. "Whole Foods Makes Big Bet on Tech." Fortune. Time Inc., 14 Oct. 2015. Web. 20 Feb. 2017.Management. "Whole Foods Market Reports First Quarter Results." Whole Foods Market, Inc. Whole Foods Market, 8 Feb. 2017. Web. 20 Feb. 2017.Newsroom. "Newsroom." Whole Foods Market Promotes Jason Buechel to Executive Vice President and Chief Information Officer - Whole Foods Market Newsroom. Whole Foods, 31 July 2015. Web. 20 Feb. 2017. ................
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