I'm doing a project for cost /benefits /risk analysis for information system. My case analysis is tesla motors and i could not find a resources of how much their website application cost, maintain and run the operation just involved the using the website.

1 Group Name TABLE OF CONTENTS Executive Summary................................................................................................................................................ 1 Companies............................................................................................................................................................... 1 Comparison............................................................................................................................................................. 2 Advantages and Disadvantages........................................................................................................................... 7 Cost/Benefit and Risk Analysis............................................................................................................................. 9 Competitive Strategy.............................................................................................................................................11 Operating Agreement ...........................................................................................................................................13 Web Credibility.......................................................................................................................................................15 Collaboration..........................................................................................................................................................17 Social Networking..................................................................................................................................................18 Conclusion...............................................................................................................................................................19 Works Cited.............................................................................................................................................................20 Appendix .................................................................................................................................................................21 EXECUTIVE SUMMARY 2 Our goal is to present a comparison of Whole Foods and Trader Joe's websites, the impact its implementation has had on their business model and competitive advantage in the grocery store market place. The structure of our report focuses on this technology and how each company has used its website to their advantage, as well as discussing the disadvantages that were brought about by utilizing the Internet and social networking as well. We will highlight areas of success where their websites and social networking efforts have added value to the company's overall image and growth, but will also take into consideration areas where each company can improve upon. Whole Foods is an international grocery store that provides the highest quality organic products to their customers. Trader Joe's is a national grocery store with a localized focus on bringing specialty and seasonal items to customers at the lowest price they can bargain for. Throughout our analysis we discovered both companies' websites were a good model of how organizations can use technology to their competitive advantage. Often businesses find it extremely costly to maintain a website, therefore a cost benefit analysis has been calculated for both companies to determine if they are profiting from using a website and social media. Potentially, anyone is able to create a website, so we also have evaluated each website for the credibility of its content. COMPANIES Whole Foods is a grocery store started in Austin, Texas in 1980. They are a privately held company who focus on bringing natural and organic foods to customers. Their motto \"Whole Foods, Whole People, Whole Planet emphasizes that our vision reaches far beyond just being a food retailer.\" Within the United Kingdom and North America there are over 300 Whole Foods locations. This company is a for profit organization who places high standards on the products they sell in order to sell the highest quality food. With self-managed teams throughout the organization, Whole Foods directs a big portion of their attention to satisfy their employees. Although Whole Foods is a publicly held company, they focus on the community. They are aware that their customers create the company's profit. Every year Whole Foods donates at least 5% of their profit to various community programs or non-profit organizations as a way to give back to the community.Whole Foods website was established on December 11, 1997. Trader Joe's, a for profit company, was first introduced into the market of convenience stores under the name of Pronto Markets in 1958 in Monrovia, California. The name was changed to \"Trader Joe's\" in 1967 by the original founder. Following the name change to Trader Joe's, the stores become larger and they reinvented the look of the store adding wood to the walls and Hawaiian shirts for uniforms. Trader Joe's became a specialty grocery store when it changed its name in 1967. With the name change came a larger selection of hard to find food products. Trader Joe's focuses on the value of the product in terms of price, their mission \"to bring our customers the best food and beverage values and the information to make informed buying decisions.\" They keep their prices at an affordable point with no clubs, cards, or sales to follow. Whenever possible, Trader Joe's buys directly from suppliers and they bargain to keep the prices as low as possible for the customers. Currently there are 361 brick and mortar locations with about half of them located in California. This is a privately held company.Trader Joe's first created a 3 website December 19, 1996. COMPARISON FIVE FORCES MODEL FORCE TRADER JOE'S WHOLE FOODS FORCE STRENGTH FORCE STRENGTH Bargaining power of customers VERYLOW MEDIUM Threat of substitutions HIGH HIGH Bargaining power of suppliers VERY LOW LOW Threat of new entrants HIGH HIGH Rivalry MEDIUM HIGH Bargaining power of customers The goal of the customer in any industry is to obtain the highest quality or service possible for the lowest possible price. There are several factors that tend to provide customers with greater bargaining power. The fewer and larger the customer is, the greater their bargaining power. This is not the case in the organic grocery industry where there are many individual customers. The more information the customer can obtain about the market, the more bargaining power they will have. When customers are armed with the knowledge of things such as market demand, selling prices, and seller's cost, they have a strong negotiating position. Consider the new car market. If a customer goes into the car dealer with no information, they will not know how much room they have to negotiate on the price of the car they want and the dealer will end up getting a higher price for the car. However, when the customer is armed with the price that the dealer paid to obtain the car, they can negotiate for the lowest possible price. It is not very likely that customers can obtain that information in the grocery industry; therefore their bargain power is low. Buyers also have more bargaining power when the product or service that they are purchasing is a large expense for them. Again, an example of this would be the purchase of a new car. The larger the expense of the product they are purchasing, the more comparison pricing that the customer will perform. While grocery shopping is nowhere near the single large purchase of a car, it does represent an extremely large 4 portion of a household's monthly expenditures. Because of the large size and variety of options offered at Whole Foods, customers can make their entire weekly or monthly grocery purchases at one time making it a large expense. As a result, Whole Foods customers may do more price comparison, giving them a higher bargaining power. Trader Joe's, on the other hand, has smaller stores, less variety, and no plastic bags, lending itself to more frequent, smaller purchases representing a smaller expense and therefore less bargaining power to the customer. If the product or service that the company is selling is the same as its competitor's products or services, buyers tend to choose where they make their purchase based strictly on price. When customers are basing their buying decisions on lowest prices, their high bargaining power comes in the form of either requiring the company to price match to gain the sale or to lose the sale altogether to the competing company. A final bargaining power of customers comes in the form of coupons or other types of additional savings such as markdowns. When a company decides to honor coupons, they are agreeing to allow the customer to pay less for the products that they purchase. While couponing provides a small amount of bargaining power to the customer, it is extremely easy for customers to find and use coupons; therefore, it is a widely used bargaining power. Because Trader Joe's works hard to have the lowest prices possible, they do not offer or accept coupons, have sales, or offer markdowns of any kind. Whole Foods, on the other hand, offer markdowns and allow their customers the use of coupons. A wide range of coupons are available to print out on their website. There key factor in reducing the bargaining power of the customer is for a company to find ways to increase the customer loyalty. This can be extremely hard in the grocery business. The two most popular methods that grocery stores use to increase customer loyalty are loyalty cards and added value through features or branding. Loyalty cards are exploding in the grocery business. In a majority of companies, the advertised sales that they offer are only available through the use of a loyalty card. Loyalty cards not only benefit the company by increasing customer loyalty, they can also provide the company valuable information regarding customer preferences. However, these benefits come at a cost to the company. According to Evan Carmichael, loyalty reward programs cost 1-1.5% of revenue and take at least 18 months to be profitable(1). Neither Trader Joe's nor Whole Foods have implemented a customer loyalty program. When a company can add a perceived value through certain features or branding of products specific to their company, it works to lock in customers. Both Trader Joe's and Whole Foods work to achieve this through the use of store brands. Trader Joe's is ultimately more successful in this area because their store brands are labeled with their company name instead of a generic nameand the Trader Joe's store brand items are known for their high quality. Threat of Substitutions The threat of substitutions can be considered high for several reasons: If the company's product is not in line with customer wants or needs. 5 If it is easy for a customer to switch from one grocer to another. When there is no added value (either real or perceived) to choosing one company's product over a competitor. When there is nothing unique about one company's product versus a competitor. If a company wants to be successful, they need to stay in touch with want their customers really want. This can be difficult because customers' wants continuously change over time. A product that may once have met all their needs may not continue to do so down the road. Though their product may work to fill market demand, when a company does not work to stay on top of changing desires, their customers may find that a similar product meets more of their needs instead. Companies face a high threat of substitution when it is easy for a customer to switch from one company to another. Because customer loyalty is hard to come by, the easier it is for a customer to switch the more likely they are to do so. Some industries have worked to combat the threat of substitutions by finding ways of locking in their customer. Examples of this include the cell phone service and cable providers. Most of these providers require their customers to sign contracts that lock them in for a long period of time. Grocery stores have no way to truly lock customers into buying from their particular company. Some work to achieve a semblance of this by offering customer loyalty programs. When there is no added value to purchasing one particular product over a similar product, there is a high threat of substitution. To reduce this threat companies must work to provide added value, whether that added value is real or merely perceived. A product that offers more features or higher quality can be considered as offering added value. Along the same lines, if a company offers a unique product, the threat of substitution is significantly reduced. In this way, differentiation works to both add value, and to make a product unique. Differentiation is important because the more alike two products are the easier it is for a customer to simply substitute a different product in its place without even noticing a difference. Threat of substitution is inherent in the grocery business. When a person gets hungry, basically any food would work to meet their demand. Trader Joe's and Whole Foods both have an extremely high threat of substitutions. Not only are there plenty of organic foods widely available, but there is also the threat of substitution with non-organic grocery items as well. Also, because it is difficult to truly differentiate grocery items, the best way for Trader Joe's and Whole Foods to combat the threat of substitution is through differentiation of their companies overall rather than of specific grocery items. Bargaining power of suppliers A suppliers' bargaining power is inherently high because they have a product that a company needs. But, there are ways in which a company can work to significantly reduce the suppliers' bargaining power. A few key questions to ask when determining the bargaining power of suppliers are: Do the company's purchases from the supplier represent a large portion of the supplier's business? 6 Could the company use substitute products from other suppliers? Could a partnership be formed with a specific supplier to ensure consistently lower pricing? When a company's purchases represent a large portion of the supplier's business, the supplier's bargaining power decreases. The supplier becomes reliant on the purchasing company's business. This gives the company more power to negotiate lower prices. This means that the higher the inventory turnover rate of a company, the more purchases they will make to replenish that inventory giving the purchasing company more power over the supplier. Trader Joe's demonstrates an advantage in this area. They have smaller stores which carry fewer products at a high quality and low price. Because of this, they have an extremely high sales volume. This high inventory turnover rate gives them the power to negotiate lower prices with their suppliers. Whole Foods have larger store with more products. They also do a good number of sales; however, their inventory turnover rate is lower than that of Trader Joe's. Their lower inventory turnover rate means that they have less room for negotiating with their suppliers than Trader Joe's does. If a company can easily substitute products from other suppliers, the supplier loses its bargaining power. This allows the purchasing company to demand better pricing. If their expectations are not met, then they can easily drop the supplier altogether and replace them with a different supplier. Trader Joe's has an advantage over their suppliers here as well. They change the products that they stock often, and if they cannot get a product at a reasonable price they simply replace it with a different product that they can get for a reasonable price. Whole Foods, meanwhile, have set stocking products. If a certain product goes up in price, they must either purchase it anyway or be out of stock on it. While forming a partnership with a supplier can benefit both the purchasing company and the supplier, it also works to lock in the supplier thereby weakening the supplier's bargaining power. Whole Foods doesn't seem to have any special partnering relationships. They do have a supplier that provides them with store brand products even though those products are under a generic name. Trader Joe's on the other hand relies on a partnering relationship with its primary supplier and definitely works that relationship to their advantage. Their supplier provides them with store brand products. These store brand products make up a large percentage of Trader Joe's stock. These products feature the Trader Joe's name and Trader Joe's insist that these store brand products be of an extremely high quality at a low price in order to create a deep association of quality to their name. Trader Joe's places a great value on their supplier partnership in a way that is reminiscent of Coca-Colaand their Coke recipe. Trader Joe's emphasizesthat the identity of their partnering supplier be kept a secret. This allows them to negotiate for extreme discounts and protects their supplier from having to give huge price cuts to all of their other customers, creating a win-win situation. Threat of new entrants Several questions can be asked to help determine the treat of new entrants into a certain market. These include: 7 Is there a process that is critical to this particular business? If so, is that process hard to learn? Are there certain assets needed to run this business? If so, is this asset(s) hard to acquire or hard to divest? Is it hard to gain customers in this specific business? Is customer loyalty common within this business? Answers to these questions represent potential barriers to entry into a particular industry. The more barriers to entry that an industry has, the lower the threat is of new entrants. If there is a process that is critical to the business, it could serve as a barrier to entry because a potential entrant would have to learn that process before they could successfully enter the market. When a specific process is extremely time consuming or hard to learn, it serves to further deter a new entrant. It could even prevent a potential entrant altogether; another company may decide that learning the required process is not worth the time or effort it will need to expend in order to enter the market. In the grocery industry, there is no particular process necessary to learn before a new competitor could potentially enter the market. When there are certain assets that are needed to run a business in a particular industry, it could pose as a barrier to entry for new businesses. This would apply if the asset needed was hard to find or of such a high cost that it would be difficult for a start-up company to obtain. Also, if the asset required could not be easily converted either into cash for its sale or by way of other uses such as in another business endeavor, the new entrant would be more reluctant to acquire the asset. Difficulty obtaining customers creates a significant barrier to entry. Without the ability to acquire customers, it would be impossible for the new entrant to stay in the market. Small markets, oversaturated markets, and markets not conducive to easy distribution make it difficult for a new business to gain market share. When customer loyalty is high within an industry, new entrants face an extremely difficult challenge to get competitor's existing customers to switch over to their company. In this case, the new company would have to rely strictly on a high level of differentiation in order to gain any of those customers. While customer loyalty is not common in the grocery business, customer loyalty programs are becoming increasingly common. As discussed earlier under the bargaining power of customers, both Whole Foods and Trader Joe's work to gain customer loyalty by adding value through their store brand products. Because Trader Joe's is more successful in creating loyalty to their products, they have a small advantage over Whole Foods in the threat they face of new entrants customers to existing competitors. Overall, both Trader Joe's and Whole Foods bear a high threat of new entrants. In their industry, there is no critical process that must be learned before a new competitor wishes to enter the market. There are no particular assets that must be acquired to start up a grocery business. Finally, new customers are readily available for the market and are not hindered by a high level of customer loyalty. 8 Rivalry In the grocery store industry, rivalry is extensive. There are many companies in the business to sell grocery items that have little differentiation among them. Customers can easily switch between competitors. This causes a high level of rivalry between companies as they fight to maintain their market share. Also, the market itself can determine the amount of rivalry companies face. The few top companies within an industry market tend to experience a higher level of rivalry amongst themselves as they compete to be the leader in the market. In a growing market, there is less of a need for strong rivalry. This is because as the market is growing there is enough demand for every business to gain a piece of it. As market growth dwindles, there is not enough demand for every business to sustain their customer base. Rivalry will then increase as companies fight each other for more business. One way to reduce rivalry is to focus on a distinctive segment within a larger market. This is where Trader Joe's resides while Whole Foods tends to walk the line in-between a specialty/organic store and a full-fledged grocery store. Trader Joe's therefore experiences a slightly lower level of rivalry because they are competing in a smaller segment with other organic/specialty stores while Whole Foods faces a higher level of rivalry because they have to compete in the entire industry with large chain grocery stores as well as the organic/specialty stores. ADVANTAGES/DISADVANTAGES Whole Food's Advantages: They offer coupons on their website. The website contains various recipes and healthy eating tips. The color contrasts of the off-white background with the dark green characters makes it easy to read and they offer many options to navigate through their site as well as gain access to their social networking sites Offering on-line contests encourage shoppers to visit the site more often to participate Option to shop on-line for Catering events They provide a wealth of information regarding healthy products and make this information readily accessible through an link on their homepage Facebook page has twice as many followers as Trader Joe's \"unofficial one \"and each individual store has its own page. Their posts are focused on local community events, issues and involvement. Each store has its own page and it's apparent they have a dedicated employee who makes daily posts, often more than one. Well managed. Whole Food's Disadvantages: 9 There is far too much text on every page which may bore some people The major links on the home page changed during the website analysis, which can be confusing or frustrating to regular visitors. Too many links are offered, at the top, on the left and at the bottom which can make navigating more tedious On-line shopping is limited to catering only, you cannot order groceries ahead of time for pick up the same day, even from Hurry's Farmers Market in Cobb Social Networking has made them vulnerable to negative publicity. A \"Boycott Whole Foods\" Facebook page was created to bring attention to their CEO's political comments and attitudes Some of the links' font size is too small for some viewers Not many of their customers \"interact\" with them through Twitter. Trader Joe's Advantages: As websites go, their rustic, nostalgic, almost tropical website is very fun, creative and \"moves\"; keeping the visitor entertained. Visually attractive! Trader Joe's has a cartoon section meant to bring humor to the customers visiting the website The homepage has a balance of pictures and text so the visitors are not overwhelmed by too much text. They offer icon options under the heading \"products & guides\" which provide extensive information regarding the ingredients in their products. Icons are offered for determining how their products are categorized by heading, such as gluten free, fat free, kosher, non-dairy, vegetarian, vegan, quick meal and sodium content. Very informative and helpful! They have a Twitter \"fan group\" and have much more personal interaction with their followers on twitter than Whole Foods 38% of the Trader Joe's conversations occurring on blogs while only 28% of Whole Foods conversations happen on them Trader Joe's Disadvantages: They do not have an \"official\" Facebook or Twitter page. \"MyTraderJoesList\" twitter page was created by a fan and an unofficial \"Trader Joe's Guide\" Facebook page was started to capitalize off of their recipes. There are also several unaffiliated blogs, so from a social network standpoint they are not \"in control\" of the information being discussed or distributed on the internet. Since their business model is to negotiate the lowest price they do not offer coupons They do not offer on-line shopping 10 Products are seasonal, so the product selection always varies therefore you cannot be guaranteed to find a favorite or staple item during each visit. Since their products are constantly changing, not all the products they sell are featured on the website Compared to Whole Foods who has 53% conversations happen on Twitter, only 29% of Trader Joe's conversations occur on the popular micro-blog. COST/BENEFIT/RISK ANALYSIS As with any other aspect of a business, there are costs associated with creating and maintaining a company website, but there are potentially unlimited benefits which can outweigh the costs. In today's world, it is extremely important for a company to have a website and possibly have social media pages such as Facebook and Twitter. To determine how involved a company should be in forming virtual places, the benefits, risks, and costs must be considered. Most companies first look at the positive potentials of having a website and social media pages. Some of the benefits a company receives from having a website are: it is cheaper and easier than print advertising to start and also to update it provides customer access to information 24-7 lends credibility to the company allows the company ability to do market research allows for market expansion because the Internet can be accessed globally Some of the benefits from a company's use of social media such as Facebook and Twitter are: it increases awareness of the company it helps to increase traffic to the company's website gives the company the ability to monitor conversations about their products provides a better understanding of the customers' wants provides knowledge of potential product issues In some cases, the benefits do not always outweigh the costs of maintaining a website. To have an effective website, a company has to allocate monetary resources to not only develop the web site, but also to maintain it. The costs would include, obtaining a domain name, hiring a web site designer, contracting with the developer to maintain and update the site, and possibly hiring an employee(s) to monitor the website. The least expensive, but an important first step, is the purchasing of a domain name for the website. A domain name has a cost of around $20 per year. In order for potential customers to find the company's web page with the least amount of effort possible, it is /essential to 11 have a domain name that is easily identified with the company, such as the company's name. One of the largest expenses of having a website comes from hiring a web developer. The web developer has the ability to create the website, update the content on it, and resolve any problems that may arise. On average a web developer costs about $40,000 per year. This may seem like too great of an expense; however, a good web developer can go a long way to providing credibility to the company's website which is a key to its effectiveness. Currently, Whole Foods uses their website to advertise, educate, offer coupons, and generate sales for their catering department. Whole Foods generated approximately $9 billion in total revenue in 2010. iIn that year, we can assume that Whole Foods spent $20 for their domain name, $40,000 for their web developer, and $120,000 for a team of three employees ($40,000 each per year) to monitor and update their website information. There is no information on how much of Whole Foods' revenue can be attributed directly to their website, but we can conservatively assume that a minimal .5% of revenue came from advertising on the website. This means that Whole Foods spent $160,020 dollars to have a website but gained $45 million dollars as a result of it. While it is evident that Whole Foods website is working effectively, room can be found for improvement. To increase their revenue potential, Whole Foods should consider customizing their website to allow customers the ability to place an order online and have it ready for pick up at the store. In the grocery industry, it is not feasible to use company websites as a traditional Web storefront where customers can order groceries and have them shipped to them without ever leaving their couch. But, an argument can be made that the Web storefront concept can be twisted and reworked to try to develop a new concept that may work to generate increased revenue. Because customization of web site processes can be quite costly, the first thing that a company should do when considering any customization is to reexamine their mission statement. Any changes or processes that a company makes should work to better achieve their mission; if not, it's likely that it would not be worth implementing. After that, they develop an idea that works towards their mission; they should examine the costs versus the benefits. Even if it is a groundbreaking idea, it is possible that the costs may far exceed the benefits that the company will get from it; the idea may have to be shelved until a later date when it may become more feasible, or may have to be scrapped altogether. Whole Foods' mission statement focuses on standards of excellence, high quality products, and high quality customer service; accordingly, focusing their competitive strategy on differentiation. As such, providing the unique combination of online ordering and personal shopping would accentuate their differentiation. Now that Whole Foods has determined that this new web service is in line with their mission, they must consider the cost of implementing the concept and compare them to the potential benefit it would bring. Whole Foods determines that the web programmer that they would want will cost them $90,000. They would then have to hire two employees per store to monitor and to pull the orders that are received. These employees would be paid an annual sum of $50,000 per store ($25,000 per employee). This means a cost of around $14 million company-wide for labor. In addition, Whole Foods decides that it would be best if they set up a separate area inside the stores to accommodate this 12 new service. They estimate this cost to run them approximately $3.4 million dollars to implement in every store. Total estimated costs add up be in the neighborhood of $17.5 million dollars to put the program into operation. Whole Foods should do some research, possibly through customer surveys in the stores and on their web site, to estimate the amount of revenue this program could generate. The surveys suggest that a 1% sales increase can be expected through the web site sales. Considering the expected sales increase of $90 million versus the costs of $17.5 million, Whole Foods would benefit from this type of web customization. COMPETITIVE ADVANTAGE Porter's Four Competitive Strategies Comparison Because the five forces model outlines the competitive forces that have an effect on a company's profitability, it should be examined to determine what actions need to be taken in response to them. After studying a company's strengths and weaknesses, a company then chooses a competitive strategy that they feel will offer them the chance of greatest profitability. According to Porter, there are four competitive strategies. In this table, industry wide would be considered the entire grocery industry while focus refers to a focus on the organic/specialty food segment of the grocery industry. Whole Foods competitive strategy is based on differentiation with a focus on the organic/specialty food segment. Their mission statement, which they refer to as their declaration of interdependence, outlines this clearly, \"Whole Foods Market is a dynamic leader in the quality food business. We are a missiondriven company that aims to set the standards of excellence for food retailers. We are building a business in which high standards permeate all aspects of our company. Quality is a state of mind at Whole Foods Market.Our motto Whole Foods, Whole People, Whole Planet emphasizes that our vision reaches far beyond just being a food retailer. Our success in fulfilling our vision is measured by customer satisfaction, Team Member excellence and happiness, return on capital investment, improvement in the state of the environment, and local and larger community support.\" ii Whole Foods website ties into their competitive strategy. They use their website to provide information that their customers will find valuable. Their website is geared toward those interested in living a healthy lifestyle and includes product information, healthy recipes, health and food related articles, and 13 healthy menu plans. Having this available on their website increases traffic to their website, and in turn, increases traffic to their stores. Whole Foods use of social media ties into their competitive strategy as well. They use Twitter and Facebook to announce their community involvement projects. This not only reinforces to their customers their mission of providing community support, thereby gaining customer loyalty, but it also works to create a buzz about the project so as to get more involvement as well. A common complaint among some customers of companies that use social networking to advertise is that they are bombarded by useless information way too often. Whole Foods avoids this by allowing each store to have their own website and twitter accounts. Each is maintained to relay information about local happenings only greatly increasing the relevance and, in turn, the quality of the social networking. Trader Joe's competitive strategy is based mainly on being the cost leader within the organic/specialty segment of the grocery industry. But like everything else about them, Trader Joe's competitive strategy is a bit outside the box because while they not only strive to be a low-cost leader, they also actively work to differentiate themselves from their competitors. While most other companies achieve differentiation on aspects such as products or quality, Trader Joe's achieves experience differentiation. Experience differentiation involves drawing the customer in so that they become fully immersed into the shopping experience. While Trader Joe's does not have a formal mission statement, per say, they do have two very informal missions. The first one is based on Trader Joe's original founder Joe Coulombe who founded the company in the 1960s and was quoted as saying his vision was to "offer shoppers a little adventure by stocking items they couldn't find elsewhere at prices that wouldn't empty their wallets." He had hoped that \"everyone from underpaid musicians to out-of-work PhDs could come to Trader Joe's and find elements of the lifestyle they aspired to for not too much money.\" iiiAfter Joe Coulombe retired, the company wrote a second mission statement in 1991 in chalk on a sign. This second mission statement said, \"At Trader Joe's, our mission is to bring our customers the best food and beverage values and the information to make informed buying decisions. There are more than 2000 unique grocery items in our label, all at honest everyday low prices.\" iv Trader Joe's website ties to their competitive strategy also. Their website is more scaled down than a lot of company websites; similar to the way that their stores are purposely scaled down. It has no long, drawn out articles; instead it offers short, humorous insights on everything from product info and company history. While their less involved website undoubtedly works within their cost leader strategy, the experience differentiation aspect is evident as well. Everything from their background animation to their wide variety of recipes screams adventure. The Trader Joe's website is as laid back and fun-loving as their stores are. Also tying into their cost leader competitive strategy is Trader Joe's use, or rather lack of use, of social networking tools such as Facebook and Twitter. While it may be free to start these sites, the cost of maintaining and updating them can mount up quickly; because Trader Joe's doesn't sell any products on their website, it would be a cost that may not provide a greater benefit. Also, because Trader Joe's stores are so spread out and individualized, each store would have to have their own accounts in order to post relevant information to their customers. As it turns out however, Trader Joe's may not need to develop these social networking sites because their cult-like followers have made up plenty of unofficial ones on their own. These Trader Joe's fans are posting nothing but wonderful things about the company 14 and their products creating a viral hook in which they share the positive Trader Joe's message with someone who then in turn shares it with someone else and so on and so on increasing Trader Joe's social capital without the company ever having to make a single posting. OPERATING AGREEMENT Mission: The Three Amigas intend to collaborate in order to gather research to present an informative, interesting and accurate comparison of our chosen company's websites, Whole Foods and Trader Joe's. Purpose: To present a fair comparison of our companies websites in an interesting fashion by analyzing their advantages and disadvantages and put forth creative ideas for improvements which would add value and use technology to increase their competitive advantage or potentially create a disadvantage. Decisions: All decisions will be made as a team, with the ultimate goal of producing a quality project. Decisions will be made in a collaborative fashion, as quickly and efficiently as possible to ensure the progression and success of the project in order to benefit everyone in the group. Meetings: Team meetings will be held in a synchronous manner weekly on either Tuesday or Thursday after class in the Burrus Building 4th floor computer lab lasting approximately one hour, never exceeding 1 hours unless all members come to a unanimous agreement to do so. Additional meetings will occur as needed. Meetings can also be virtual or asynchronous as we proceed through the preparation of our document using Google Docs. Every member will be given an opportunity to address the team regarding the status of their assignments and offer suggestions regarding outstanding issues. Meeting Attendance: Communication is critical to the success of the project; therefore any team member who cannot be in attendance, either in person or via phone, will provide 24 hour notice and a viable excuse. Failure to attend meetings, being consistently late with material, and failure to adhere to deadlines will result in a negative peer review by all team members. If this behavior persists Professor Rhea will be notified. Preparation and Performance: It is the responsibility of each team member to stay current on the project team activities, even when he or she has missed a meeting. 15 Team members should stay in contact and keep each other updated and informed of any issues which may arise that will affect meetings or deadlines. Quality: Quality is one of our highest priorities. Deliverables should be turned in on a timely basis, with minimal spelling and grammar errors. All documents will be formatted in Calibri, 11pt font, with 1.5 spacing. All citations and references must be from accurate and credible resources. Plagiarism will not be accepted. Each portion of the project will be reviewed and signed off on by all team members before the assignment is submitted. Peer Review: Prompt attendance to meetings and productive participation will be reflected positively in a team member's peer-review. Consequently, if a team member does not attend meetings, is consistently late with material, and does not adhere to deadlines after repeated verbal and written reminders from the Project Manager, it will result in a negative peer-review by all other team members. Plagiarism will not be accepted, and will result in permanent termination of voting privileges and a dock in peer review by all group members. Team Members and Roles: Amiga 1: A.C. SlaterAdvantages/Disadvantages, Social Networking Amiga 2: Kelly KapowskiCompanies, Web Site Credibility Amiga3: Screech PowersComparison, Cost/Benefit/Analysis, Competitive Strategy Collaboration Tool: Our team will utilize Google Docs to collaborate in the preparation of the document and we will create our presentation using Power Point. We will keep in touch via text messaging, email and the chat discussion board set up via GA View Vista, this will be our asynchronous style of communication. Social Networking Tool: All three of us are \"friends\" on Facebook to keep track of each other and have taken the initiative to create twitter accounts to explore this realm of social networking in order to follow our companies. WEB CREDIBILITY 16 Design to Look Professional The Whole Foods website is very professional looking. The color contrasts makes it easy to read and the colors most frequently used are the two colors associated with the Whole Foods logo. The same color scheme is used throughout the whole website. Also the same font and font sizes are consistent throughout. The links are well organized at the top and bottom of the home page. The content on the website is all related to food including recipes, healthy eating tips, and product information. Because of the consistent look of the website, people will find it is an easy to find each site link and will most likely visit the site frequently for new information. The Trader Joe's website has a less professional appearance than the Whole Foods website. The scenic background is geared to attract a younger target market. The drop down menu on the top of each page makes it easy to navigate to any page no matter which page one is on at the time. The balance of text and pictures allows a person to be able to read enough information without being overwhelmed with too much wording. This is ideal for professional grocery websites because people want a quick reference about the food they are consuming. Trader Joe's has recipes categorized by each meal as well as specific product information and pricing. Make Easy to Verify the Accuracy of the Information on the Site Whole Foods has a link at the bottom of their homepage called \"Company Info.\" Under that section one can see a link for press room where there are published articles about the company. The articles are about different community functions Whole Foods has been involved in. This verifies that their actions are aligned with the company's values. On a different tab one can read information about what locally grown food means. While back on the \"Company Info\" tab one can gain knowledge and local vendors and becoming a potential vendor for Whole Foods. Having this tab makes it easy for people to check the accuracy of the information on the website. On The Trader Joe's website it is harder to verify that the information on the website is accurate. Nowhere on the site are outside references cited for their information. For a couple of the answers to FAQs, Trader Joe's has referenced another website for more information about the product in question. Besides those two other websites being sited, it is hard to verify the accuracy of the content of the information displayed. Show That There is a Real Organization Behind Your Site Whole Foods provides a store location search as well the addresses for the company's national and regional headquarters. To farther prove that there is a real organization behind the website, they have included a page with published articles about their accomplishments in the community. This information is easily found under the \"Company Info\" section. 17 Trader Joe's also has an easy to find store locator's search. This company has a section where they showcase a couple of stories about their involvement in the community. Although it is clear from the website that there is a real organization behind the site, it is harder and there is less evidence to prove the legitimacy of the site. Show That Honesty and Trustworthy People Stand Behind Your Site Whole Foods has a section where biographies are posted of the people on the board of directors. Next to the biographies, a picture of the person is included. In addition, the website has different blogs including one from someone on the board of directors and another about their products and vendors. It is hard to prove that there are honest and trustworthy people behind the Trader Joe's website. There are no pictures of employees or people on the board of directors. No customer testimonials can be found on the website either, but they do have a large \"fan club\" on twitter and have inspired several \"unofficial\" social media sites. Make It Easy to Contact You To contact a local store, Whole Foods provides a list of all the store locations and once a location is clicked on the phone number for that store appears. Right below that option is an option for emailing the store. First one selects from various listed topics a topic of choice and then a comment box appears to write the email in. A link to the contact information can be found at the bottom of the homepage as well as other pages. One can get confused in looking for the contact information because it is under a link called \"customer service\" and not contact info like many people would search for. The address and phone number of Trader Joe's locations can be easily found on the website. They also provide a section to leave comments on, though they state it may take a while to review and respond to the comment sent. The website is made creditable by these factors found on the website. Make Your Site Easy to Use and Make It Useful The Whole Foods website is easy to use because it has all the links categorized at the top of each page. They are easy to read and have helpful names to know what is under each section. No matter what page the reader is on, there is always a link at the top of the page for the home page as well as for the rest of the categories. At the bottom of each page one can find other categories and links during each category. Some of the categories include stores, careers, products, and values. Although there appears to be too many links, each link as a descriptive title to let the reader know what is under that page. The graphics on each page are pictures of food, which relate to the text on that page. These pictures help captivate the attention of the reader. The Trader Joe's website also has links categorized at the top of each page. They use a drop down menu to choice which page to go to from the main category. This makes it easy to navigate though all the 18 different pages on their website. Trader Joe's uses \"link icons\" unlike the Whole Foods website, which makes it less overwhelming for the reader. The use of graphics on their site does not distract the reader from the text. They have pictures on the background of the website but for the text they have a plain offwhite background. Pictures on the website are of a medium size so they do not seem bigger than the text and they do not seem to take away from the reading material. Update Your Sites Content Often Whole Foods keeps their website up to date in various ways. Under the \"Press Room\" section, which they use for published articles about their community involvement, Whole Foods has recenter articles published within a month or less of the date the site is visited by a reader. In this section they also have recent videos one can watch. One can also find recipes added a couple of days before as well as one or two years ago. It is easy to identify if the information has been updated because they publish the dates of when information was added next to the article or recipe. They have also had a copyright of their website content for 2011. It is hard to verify when the Trader Joe's website has added something new because they do not have dates on their website. This means the recipes on the site could be from a few months ago or possibly from many years ago. Although they also have a copyright date of 2011 for their website, one is not sure how much the information changed from year to year, or month to month. The Trader Joe's website does not have any pop-up ads. They also do not have any promotional advertisements in their website due to the fact that they do not run sales on their items because they bargain with the vendors to get the lowest possible price for their merchandise. Avoid Errors of All Types, No Matter How Small They Seem On the Whole Foods website, there are no spelling errors or grammar errors. Each link works properly and no matter how much content is on the link, it only takes a few seconds to download the page. This creates an easy hassle-free website to use. The Trader Joe's website has no spelling or grammar errors. When a link is clicked on, the content for that page appears instantly. The rate that the content is processed is extremely fast. The speed of the site gives readers of the Trader Joe's website more motivation to come back to it. COLLABORATION TOOL Our team has prepared this report primarily by using Google Docs, which allows us asynchronous collaboration as we create and edit our project document. This is a free web-based service provided by Google where teams can work on a documents together on-line, including projects in progress, power point, or an excel worksheet. Individuals allowed to view the document can make modifications to the document at anytime. Changes are saved automatically by Google and one is able to leave comments regarding their changes to alert other group members of the revisions. Several people may work on the 19 document at the same time and are able to view one another's changes at the instant it is being revised so as to reduce duplication and potential mistakes. We are also using Power Point to prepare and present our project to the class. The person preparing the Power Point presentation can share it with other group members and either allow them to read it or edit the document if necessary by other team members. It allows for all group members to have a part in the preparation of the presentation. SOCIAL NETWORKING Our companies approach their social networking strategies for marketing their brands in very different ways. Although they both operate in more of a non-traditional grocery market, focusing more on organic and specialty type products, they separate themselves by their target audience and how they approach their customers. Whole Foods targets a more affluent, socially aware and often older customer, so they take a more traditional approach to social networking by having an icon on their home page for customers to follow them on Facebook, Twitter and Flicker, a photo sharing website. They also created their own \"Whole Story\" blog. Each of their individual stores maintain their own Facebook page and Twitter account, capitalizing on the popularity of social networking and taking advantage of this medium to market their store and products. We determined they must have a dedicated social media expert, because each store makes daily, if not twice a day, posts to their page focusing on community involvement and local events they are sponsoring. Interestingly, we discovered there can also be disadvantages to opening up ones company to social networking input. \"Boycott Whole Foods\" is an independent Facebook page created by customers who wanted to bring attention to comments in a speech made by the CEO regarding his political views on health care. Trader Joe's takes a much different approach; they do not sponsor an \"official\" Facebook page or Twitter account. Obviously, this is a cost benefit to their organization compared to competitors in their industry who do engage in this type of social networking. They rely on a \"grass roots\" approach from their customers who have created a Facebook page, \"Trader Joe's Fans\