Amazon
Amazon acquired grocery giant Whole Foods in 2017 in a blockbuster deal, but one consequence of this
acquisition is that Amazon’s highly centralized and data-driven approach to business decisions has
clashed with that of Whole Foods. This has frustrated both employees and Whole Foods customers. This
activity is important because mergers and acquisitions are not guaranteed to have universally positive
results, particularly if the two companies involved have significantly different strategies or cultures.
The goal of this exercise is for you to consider the nature of the culture clash between Whole Foods and
Amazon, as well as how both companies can overcome these issues.
Read about Amazon’s acquisition of Whole Foods and its organizational behavior-related implications.
Then, using the three-step problem-solving approach, answer the questions that follow.
Investigative journalist Michael Blanding put it best, “Amazon’s acquisition of Whole Foods… was the
corporate equivalent of mixing tap water with organic extra virgin olive oil. You’d be hard-pressed to find
two companies with more different value propositions.1
Stories quickly emerged about Whole Foods
customers unhappy about the changes at their favorite organic retailer, and they weren’t the only ones
complaining. Similar negative stories emerged from employees regarding the new performance driven
expectations imposed by Amazon.
Immediate Impact
After the acquisition, Amazon’s presence was immediately felt. In addition to plastering its logo
everywhere in Whole Foods stores, it also used its strengths in data and data analysis to determine
appropriate product mixes and bring efficiencies to many processes. After all, Amazon is known for its
efficiencies, low costs, and low prices.
Clash
This is a stark contrast to Whole Foods’ highly empowered approach to doing business, wherein
individual stores and their employees had autonomy regarding decisions about product selection,
inventory, and how best to serve customers. This employee-centric focus is what earned the company a
spot-on Fortune’s Best Places to Work list for 20 consecutive years, and the reason its customers
enjoyed personalized intensive, hands-on service. Although this decentralized, high-touch approach had
real benefits, it also had considerable inefficiencies that Amazon was keen to address.
Amazon and its employees utilized data, rigorous analysis and controls, and demanding performance
management practices. In the eyes of Amazon, customers were faceless digital profiles of purchasing
history and preferences. This environment was a good fit for some employees but incredibly stressful
and negative for others. Evidence for this was Whole Foods dropping from Fortune’s list in 2018 (it didn’t
make the list in 2019 either).
