Strategic Plan of Trader Joes Chain of Grocery Stores - Paper Example

Paper Type:  Research paper
Pages:  7
Wordcount:  1900 Words
Date:  2021-07-02

The creation and implementation of an effective strategic plan are what has enabled most businesses to be successful in their respective industries both locally and internationally. Strategic planning involves the determination of the most suitable way of utilizing the resources of an organization (Haines 2016). Businesses that employ strategic planning usually have to conduct various analyses such as the SWOT analysis. The knowledge of the external and internal factors that may influence the operation of the business often enables the organization to set and implement strategies that ensure the company accomplishes it set goals.

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Trader Joe's is a privately owned chain of grocery stores which has its main headquarters located in Monrovia, California. The company has over 464 stores located in 41 different states in the country. Joseph Coulombe founded the business in the year 1958, and its first store was located in Los Angeles. According to Gray (2015) Coulombe came up with the idea of setting up the firm while he was on vacation in the Caribbean islands. He had noticed that most of the supermarkets at that time failed to satisfy the needs of many of the Americans who used to travel a lot and thus came back with an enormous appetite for local food and wine they had previously not tasted for a while. The first store under the brand name Trader Joe's was opened in the year 1967 in Pasadena, California.

During its first years of operation, the firm had butchers that sold fresh meat to its customers. The stores also sold sandwiches, fresh orange juice, and fresh cheese. In the year 1979, the business was bought by the owner of Theo Albrecht of Germany as a family investment. Albrecht was also the owner of Aldi Nord chain of supermarkets that was founded in the year 1913. In the year 1987, John Shields became the company's CEO after Coulombe. Under the leadership of Shields, the firm opened new outlets in locations outside California. The places where the business opened their first new branches at were in areas such as Arizona and Northwestern area of the Pacific. The company later opened various outlets in the East Cost in locations such as Cambridge and Brookline near Boston. John Shield later retired in the year 2001 and was succeeded by Dan Bane. At that time the firm had around 156 outlets in 15 different states.

Trader Joe's is currently stocked with about 4000 different items. The company identifies its stores as your neighborhood grocery store.' Some of the products sold in the stores are organic foods, gourmet foods, vegetarian foods, and different brands of wine and beer. The company majorly focuses on the selling of environmentally friendly products. The outlets of the company are located in various locations that cover 10000 to 15000 sq. ft. The firm's various outlets are uniquely designed in ways that reflect the artistry and culture of the particular area in which they are located (Gray 2015). The retail grocery industry which is the industry that the firm falls under is very competitive. The company faces stiff competition from other numerous local grocery stores and large chain stores such as Publix, Wegmans, Hy-Vee food stores, Walmart, Safe way, Costco and Stop and Shop. The firm also faces competition from their brother store Aldi.

Trader Joe's is currently one of the most successful firms selling groceries under the retail industry. The company makes sales of almost $ 1734 per square foot which is nearly twice as much as the $930 sales of Whole Food Market which was a market leader in organic food sales (Zentes et al. 2017). The business has received various positive reviews from reports presented on different business articles. For instance, the Consumer Reports ranked the firm's stores as the second-best supermarket after Wegmans in its May 2009 issue, and one of the most customers preferred supermarket in its 2014 issue. MSN Money in its third annual release of June in the year 2009 rated Trader Joe's in its Customer Service Hall of Fame as the second-best company in the deliverance of customer service. The business was listed as one of the most ethical business entity by the Ethisphere magazine for three years from 2008 to 2010. The Supermarket News in the year 2015 estimated that the company had made sales of $13 billion which made it be ranked at position 21 in the Top 75 Retailers list of 2016. The Fortune magazine rated it as one of the retail stores that most consumers prefer to shop at crediting to their low prices and customer friendly personnel team.

SWOT analysis is a method of evaluation that most organization utilize to help them determine their strengths and weakness. The abbreviation SWOT stands for Strength, Weakness, Opportunities, and Threats. Strength usually symbolizes the advantageous internal factors that organizations possess. These factors often promote the growth of the entity. The weaknesses of a firm account for the internal negative factors that may affect the company's progress. The opportunities are the advantageous external factors that may promote the growth of the business. The threats, on the other hand, are the negative factors that would limit the progress of the firm. In SWOT analysis the strengths and weaknesses of the organization can be easily influenced by the enterprise's activities and choices. The opportunities and threats, on the other hand, can only be affected by external factors such as a county's governance, inflation, and the forces of demand and supply in the market. These factors often determine the trends of an industry's market. According to Slack (2015) the conducting of SWOT analysis is paramount to firms since it aids them in strategic planning.

In consideration of a company like Trader Joe's through the conducting of a SWOT analysis, we would note that the organization possesses strengths such as the firm's strong brand image, the presence of friendly employees, the low prices of the products offered by the enterprise and the welcoming environment of the organization. The company's little social media involvement, limited selection, and over concentration of the firm on a few geographical locations are some of the weaknesses of they face. The opportunities presented to the entity are such as the growing demand for organic foods, the introduction of new products and services that are acceptable in the market, and the expansion of the market for private labels. The threats that the firm faces, on the other hand, are, for instance, the increase in human resources cost, the presence of more substitutes of their products in the market, and the growth in the intensity of competition.

SWOT analysis of Trader Joe's has enabled us to note that for the organization to maintain its competitiveness in the market the firm has to ensure it retains its strengths and capitalize on the opportunities that are presented to them. They should maintain the strong brand image that the business has since many of its customers buy from the organization's different stores since the believe Trader Joe's products are quality products. The low pricing and unique packaging of its products such as the wines they sell have encouraged consumers to regularly buy from the organization because they are economical as compared to those offered by other stores. The may also maintain the criteria they utilize in selecting and training of their employees since this has enabled them to create a competent team of employees who value the company's customers. The maintenance of the strengths that the organization possesses would allow them to retain their current customers and also attract new once.

The firm should capitalize on the opportunities presented to them since it would enable them to grow their market base and thus make the organization more competitive and prosperous. The growth in demand for organic foods has increased the consumption level of such foods and thus firm's like Trader Joe's get to sell more of its products to the growing number of customers. According to Hildenbrand (2014), the laws of demand and supply state that an increase in demand usually leads to an increase in the price of a commodity in the short run period since the availability of the product in the market is low, yet the demand is high. In the short run period Trader Joe's may increase its profit margin by slightly increasing some of the prices of its products. The public embracement of the new products offered by the firm and the expansion of private market labels are also opportunities that would boost the company if it capitalizes on them.

Trade Joe's can become more competitive by improving on its weaknesses and insulating itself from the possible negative consequences it may face from the threats it faces. The firm's identification and understanding of its numerous weaknesses and threats offer them various opportunities for change. The changes presented ensures the company is more prepared for the future and competitive. The weaknesses of a business are internal which can be rectified by the organization. Thus while trying to protect an entity from the adverse effects of its weaknesses, it is important for organizations to implement corrective strategies (Hill et al. 2014). The identification of weaknesses of Trader Joe's facilitated by SWOT analysis would enable the organization to embrace social media through forming interactive social accounts that promote their interaction with customers. The interactive platform offered by social media would allow the firm to advertise its products and understand their customers' interests better through their interactions.

The business would note that it needs to improve on its stocking by incorporating more products in their stores. This change would enable the organization to attract more customers to their stores since like their competitors they would also be a one-stop shop that offers most of the requirements needed by its clients. The firm may also change the location growth and set up plan it employees since their stores are concentrated in specific areas. The spreading out of its stores would enable the firm to reach more customers since they would cover larger areas.

Threats' being external factors that a business faces it is important for the firm to set preventive measures (Hill et al. 2014). These measures usually ensure that the organization operations are not negatively affected by the various changes of the trends in the market in relation to the industry the business is operating under. The identification of the threats that the organization faces would enable them to know how to fight the increase in competition caused by entry of more companies in the market and the growth in the number of substitute products. The firm through employing evaluation strategies such as benchmarking that would enable them to understand their competitors and know how to stay competitive in the market. The identification of the threats would also allow them to set effective human resource strategies that would enable them to cushion the increasing cost of human resources. The setting of wages and salaries saving account is an example of a strategy that the firm may employee to cater for the possible further increase in labor costs.

The success of the strategic plan employed in relation to the analysis presented from the conduction of SWOT analysis is paramount to Trader Joe's. We can measure the success of the strategic plan that the organization would utilize by one, analyzing the strategic plan's relation to the business goals, mission, and vision. The goals, mission, and vision of a company are the main factors that determine the future of an organization (Zentes et al. 2017). Thus the analyzing of how the strategic plan implemented has enabled the f...

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