3 pages/≈825 words
Business & Marketing
Organizational Learning (Case Study Sample)
The task required an analysis of Whole Foods in line with the various tools used. It required an analysis of the balancing and reinforcing loops and how these could help Whole Foods increase profitability.source..
Whole Foods Company has in the recent past embarked on an ambitious plan aimed at strengthening its market performance and the company’s profitability. Among the notable activities include the company’s acquisition of Wild Oats which is the company’s major competitor. Secondly, the company intends to include children’s products in its product portfolio. In order to understand the influence these have on the company’s ultimate profitability and market stability, the management is obliged to consider the various loops that these two major changes belong. Notably, they are balancing and reinforcing loops given the company’s intended outcomes. The outcomes of these initiatives are ideal in Whole Foods’ organizational learning.
Organizational learning has been employed for decades in management of development in organizations. In order to understand and implement strategic plans for development purposes, an organization needs to exemplify the feedback loops taking into consideration the causal effects of each activity. Most importantly, it is the role of management to explore the strengths and weaknesses of its strategic plans over a period. Organizational learning theory espouses that there are three approaches to learning. These include single loop where a single feedback loop is considered. In this approach, the organization modifies its strategies in reaction to result in error correction. It should be noted that management is obliged to make inquiries into the possible causes of a situation and consequently design corrective mechanisms against the inherent risks associated with the identified causes. The second level of organizational learning is the double loop approach. Bellinger (2004) posits that an organization reconsiders its strategies, values and assumptions that direct production. After this evaluation, the leaders can create an environment that favors affectivity and efficiency. For instance, Whole Foods Company can adequately craft new strategies based on this model. According to Larsen, McInerney, Nyquist, Santos & Silsbee (1996), embracing systems thinking within organizational set ups results in whole systems with complete departments that are coordinating in lieu of the general company objectives. Notably, the two main feedback loops employed in this aspect are balancing loops and reinforcing loops. In order to understand how the feedbacks are applicable to Whole Foods Company analysis, it is paramount to explore the two.
The negative feedback loops, often referred to as balancing loops are a series of cause and effect mechanisms that an organization implements to counter a change that impacts on the productivity of an organization. It is imperative to note that the effects of balancing loops result in the stability of the internal and external organization environment. In Whole Foods scenario, the company has reported a decline in profits. In this regard, it is important for the management to ascertain the causes of the decline and craft remedial mechanisms. The systems could either fix the internal environment or create an unintended effect on the company’s fortunes.
Balancing loops can offer valuable insights into the strengths and weaknesses of organizational features. It is common knowledge that each strategic plan is designed to reflect the aspirations and the probable paths to realizing the organization’s objectives. As a matter of fact, Whole Foods Company has the possibility of strengthening their market presence through the analysis of their competitive advantage, marketing strategies and the human resource capability. This enables the management to learn the desired changes that will result in profitability. As noted earlier, the company has reported a decline in sales and profits. Taking this into consideration, it is necessary that the management institutes changes that will result in the company maximizing its customer base and production levels. According to data obtained from the company’s database, the main threats that the company faces include competition from local producers and low awareness on organic foods. Whereas the threats exist, it is admissible that there are opportunities presented by the same (Whole Foods, n.d). For instance the company acquired Wild Oats and it is apparent that Wild Oats is the major competitor. Apart from the acquisition of Wild Oats, the other notable balancing loop the company has implemented is the increased brand awareness campaign aimed at strengthening the market presence. Different approaches to brand awareness exist. However, the method that each company adopts depends on the nature and the size of the company’s product portfolio. In Whole Foods scenario, the leaders have opted for community service. The company’s intention to create a loyal customer base is based on the fact that with increasing competition, it is paramount to improve promotional activities and offer loyalty services to their clients. The ultimate result is that Whole Foods can strengthen its market share and equally improve profitability.
Figure 1: Whole Foods balancing loop
Reinforcing loops or positive feedbacks are cause effects that result in growth or decline. On the other hand, the decline may be felt at the present moment but ultimately, the company is apt to register growth in its total equity, market share and profits. As noted in Bellinger’s systems thinking (2004), the reinforcing loops produce an exponential growth or decline curve. Considerably, the effects of the mechanisms result in a growth that is only noticeable after the threshold is reached. The reinforcing loop drops after the company has realized the intended results associated with an activity. It should be observed that a balancing loop is implemented after the reinforcing loop has reached the exponential phase. In short, a systems diagnosis follows immediately the company realizes there is a possible decline. The reinforcing loops enable the organization to register a growth or a decline. The growth or decline will depend on the affectivity of the reinforcing strategy.
In Whole Foods scenario, the company needs to reinforce its profitability and most importantly, the market share stability. The company’s vision and mission are to provide organic food products to a large customer base and to stamp their authority as the most complete organic food provider in the industry. In line with this, the major challenge is to curve a niche using progressive strategies that result in increased customer base. As noted in their plans, the company intends to target children as additional consumers. Bellinger (2004) notes that there is no growth that comes without a cost. In this observation, it is worth noting that the reinforcing loop is to increase customer base by adding children products in their portfolio. This loop brings to the fore a number of issues relevant to organizational development. To begin with, the company has to identify products that will appeal to the targeted consumers. Additionally, the management has to carry out a feasibility study on the product and the present market trends. Secondly, the organization’s product portfolio should be designed following a critical analysis of the needs, the market demographics and cost of production.
It is important to note that balancing and reinforcing loops interact to form a structure where the intended results in a balancing loop are offset by delays in enforcing reinforcing loops. In this structure, there are actions that are critical to realize the objectives of a strategic plan. For instance, Whole Foods balancing lo...
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