Question

Perform a thought experiment whereby two popular specialty food stores, Trader Joe’s and Whole Foods, join forces in a strategic alliance in the near future. Conduct some research on the market niches that these food stores operate in to determine whether there might be an opportunity for some kind of fruitful partnership.

Explain the nature of the proposed partnership, along with its potential advantages and disadvantages and what hurdles the two companies might need to overcome in order to benefit from the strategic alliance.

Answer 1

Trader Joe’s and Whole Foods are both specialty grocery store in USA having competing neck to neck with one another. Trader Joe’s is privately held company where as Whole food is a listed company. In terms of scale and operation Whole Food is much larger than Trader Joe. I think these two biggest specialty grocery chain stores can make a strategic alliance to add value to them and to the society too. They should make contract farming with local community where they serve and procure directly from the farmers on those private labels organic product. Farmers need specialty knowledge, resources both technical, financial and guarantee procurement as minimum supported price. It will be difficult for either whole food or Trader Joe to initiate this step.

By doing this they will get guaranteed quantity of organic product and sell it in the market. They can tell their customer about the genuineness of the product and market it properly. This can reduce the procurement cost, steady supply of materials to them. For these products they should sale in a common venture. A limited liability partnership should be formed to sale specially produced organic product. It should be 50-50 partnership which can use the technical knowledge of Trader Joe and scale of operation of Whole Food. By doing this they can give more money to the customer through elimination of middle men and provide the products to customer at lower cost.

These two companies must pass the hurdles and bottleneck which they can encounter. The first and foremost is they must set aside their ego and talk for strategic partnership for attaining long term growth, there will be issue in ways of doing work as both companies have different philosophy of working and conducting business. USP of both these companies are different and they may not wish to reveal their core competencies also.