Amazon Buys Whole Foods

José B. Alvarez; David  Lane; Joni  Coughlin

Case | HBS Case Collection | December 2017 (Revised May 2018)

Amazon Buys Whole Foods

by José B. Alvarez, David Lane and Joni Coughlin

Abstract

The June 2017 news that e-commerce giant Amazon was paying $13.7 billion for organic supermarket chain Whole Foods precipitated a broad sell-off in the shares of grocery retailers and suppliers. Behind the precipitous declines lay recognition that Amazon’s bold move into brick and mortar assets offered transformational opportunities. Amazon could gain expertise in perishable product sales and procurement, plus access to 30 million well-off shoppers and 463 grocery stores in key U.S. markets. Whole Foods could absorb Amazon’s technology and process expertise to modernize and reduce its operating costs, which were among the highest in the industry. For grocery retailers and suppliers, the deal portended increased competitive pressures in a saturated market. As 2018 dawned, all parties were assessing the deal’s implications. Had the stock market overreacted to news of the deal? Why was Amazon buying Whole Foods? What were the long-term implications of the deal for the food value chain?

Keywords: Amazon; Whole Foods; grocery; grocery delivery; Mergers ＆ Acquisitions; e-commerce; business models; Agribusiness; food value chain; Agribusiness; Mergers and Acquisitions; Operations; Competitive Strategy; Agriculture and Agribusiness Industry; Retail Industry; Web Services Industry; Food and Beverage Industry; United States;

Language: English

Format: Print

26 pages

Educators Purchase

Citation:

Alvarez, José B., David Lane, and Joni Coughlin. "Amazon Buys Whole Foods." Harvard Business School Case 518-056, December 2017. (Revised May 2018.)

In summer 2016, four of Australia’s top five banks petitioned regulators for permission to bargain collectively with Apple over the terms under which they would support its digital wallet, Apple Pay. They argued that doing so would force concessions from Apple that would improve market competitiveness, consumer choice, price transparency, and transaction security for all mobile payments in Australia. The banks stood to benefit as well. If they succeeded in their primary aim of opening the contactless payment functionality of Apple’s devices to their own digital wallets—something Apple had thus far refused in any market it had entered—the banks could retain customer relationships that Apple Pay threatened to usurp and limit Apple’s free-riding on the contactless payment infrastructure the banks had just spent several years building.

Case | HBS Case Collection | June 2017 (Revised August 2018)

Goodbye IMF Conditions, Hello Chinese Capital: Zambia's Copper Industry and Africa's Break with Its Colonial Past

Rafael Di Tella, Vincent Pons, Sarah Mehta and David Lane

Over the past several decades, rapid growth in Chinese investment and trade has created for Africa a new development partner. China represents an alternative to U.S. and European nations whose past imperialism, resource avarice, and economic dictates—through the conditionality of IMF and World Bank lending—remain a negative legacy. This case uses the story of Zambia's Chambishi copper mine, which was purchased in 1998 by the state-owned China Non-Ferrous Metals Mining Corporation, to illustrate China’s growing interest and involvement in the African continent. While many in Africa welcome the substantial Chinese investment, resentment over labor abuses, low pay, and substandard working conditions at some Chinese-owned enterprises fuels anti-China sentiment. At Chambishi copper mine, a 2005 explosion, caused by management's shoddy adherence to safety standards, killed nearly 50 miners and sparked outrage among Zambians. The explosion marked the first in a long series of protests and safety violations that would unfold at Chambishi over the next ten years.

Keywords: China; Africa; Zambia; copper; imperialism; Development economics; IMF; World Bank; ODA; debt relief; geopolitics; Growth and Development; Business and Stakeholder Relations; Labor and Management Relations; History; Development Economics; China; Zambia; Africa;