Amazon And Whole Foods Case Study

1. Based on your research, how would you describe the merger or acquisition of Amazon and Whole Foods? Provide data from your research to support your conclusion.

The acquisition of Whole Foods and Amazon closed on August 28, 2017 with Amazon purchasing Whole Foods at $13.7 billion. There were employee fears about Amazon’s automation strategy replacing the workforce on the Whole Foods side, however, an Amazon spokesperson quelled those fears during a press release where they stated, “that it has no plans for layoffs or to use automation to replace Whole Foods' cashiers” (Thomas, 2017). In general, Amazon’s acquisition of Whole Foods was a beneficial move for each organization. Each organization has features that could potentially contribute

to the success of the other. However, there seems to be more advantages for Whole Foods than there is for Amazon.
Since late 2016, Whole Foods leadership had been actively discussing strategies to improve Whole Foods' declining stock price. In April 2017, activist hedge fund Jana Partners announced it had acquired a nearly 9% stake in the company and was planning to have a changing-of-the- guard in the top ranks of Whole Foods. Jana Partners concerned Whole Foods CEO, John Mackey. With more than a decade of activists and hostile investor, Mackey was very excited for Whole Foods to be acquired by Amazon and declared the meeting with Amazon as “love at first sight” (Business Insider, 2017).
Benefits of Whole Foods being acquired by Amazon include Amazon Lockers being available in select locations. Using the Amazon lockers, shoppers can either have products shipped from Amazon.com to their local Whole Foods. Additionally, Whole Foods' private-label products will also now be available through Amazon.com, AmazonFresh, Prime Pantry and Prime Now. This move will put more pressure on competitors from a low-price perspective, competitor such as Wal-Mart, Aldi, Lidl and Sprouts. Competitors will need to think about what that means for them and respond accordingly. The acquisition is a beneficial capture for Amazon as well because it will provide Amazon a much more extensive real estate footprint (479 stores) and could potentially provide market disruptor strategies for the grocery industry.
2. Conduct a Human Due Diligence on the two organizations. How compatible are the firms?
Overall, Amazon’s acquisition of Whole Foods was a mutually beneficial for each entity and was a good match after reviewing each company’s leadership principals and workforce culture.

Leadership alignment is crucial to the future success and smooth transition for both organizations. If the leaders in both organizations are aligned in leadership principles and practices, there would be less resistance to adapting to the leadership style of the acquiring organization. Implementing and harmonizing the new strategy of the new organization since the acquisition of Whole Foods, should be smooth since the leadership practices are aligned between both companies. Leadership principal similarities include customer obsession, hiring and developing the best talent, having courage to commit and disagree, and “being right, a lot” (Amazon Leadership Principals and Whole Foods Leadership Principals).

Culturally and from a human resource perspective, Whole Foods makes up for what lacks in Amazon. Amazon has been known for being ruthless in setting performance measures in past. Amazon is known to be a white male dominated organization having a high turnover rate. Whole Foods on the other hand has a fantastic reputation for employee satisfaction, a strong emphasis teamwork and human resource management. Amazon and Whole Foods are complimentary organization and has the potential to be even more successful if they leverage each other’s

strengths.
3. What would you recommend the leadership of the companies do to help ensure that the company’s merger/acquisition is successful in the long term?
For short term success, Amazon should take the successes from Whole Foods and not touch those programs or even implement those into the current Amazon culture. The strong team culture in Whole Foods, for example, is a great factor in Whole Foods’ success that could work for Amazon. Amazon already did a great job in getting ahead of the messaging that they would not be laying off cashiers for automation. Continued transparency in their communication and follow through from the messaging will go a long way in building trust with the Whole Foods workforce.
To secure long term acquisition success for Amazon and Whole Foods, I would recommend some organizational health survey once every two years where the company creates key performance indicators to gage success of the new programs and processes implemented. The organization health surveys will include financial, operational, employee engagement metrics. Every other year I would implement a shorter pulse survey in case any major activity is brewing.