System feedback loops constitute an essential part of the systems thinking theory which allows viewing organization as a system. They are also connected to the theory of organizational learning, which may occur within a loop. There are different feedback loops at Whole Foods Market, two of which will be described in the paper. Recognizing and having control of the reinforcing and balancing loops provides a company with an advanced understanding of its internal processes and creates multiple learning opportunities that will allow it to become more successful in the future.
Feedback Loops at Whole Foods Market
The Reinforcing Loop
The performance and success of Whole Foods Market depend on many factors. Some of these factors form the critical feedback loops, understanding of which is important to controlling and enhancing processes that will positively impact performance of the company. The first of such loops is the reinforcing loop which consists of the following elements. The first element is the demand for organic foods. The second element is the profit earned by Whole Foods Market as the result of the above-mentioned demand. The third element is the number of stores that operate within the grocery chain. The final element is the customer awareness of healthy eating habits. The revenue and profit of the company depend directly on the volume of demand for organic foods. If it is low, then the profit is low; if it is high, then the company enjoys higher revenues. These resources are essential to increasing the number of the Whole Foods Market stores, as the management prefers to rely upon the internal resources for support of the growth strategy. A greater number of stores opened implies being able to raise brand awareness among a greater number of customers. While Bellinger (2004) explains that “a reinforcing loop is one in which the interactions are such that each action adds to the other,” this particular loop can be reinforcing in a positive manner (greater demand – greater profit – greater number of stores – greater customer awareness – greater demand) or work in a negative way (poor demand – poor profit – no new stores – the potential of increasing customer awareness not realized – decreasing demand).
This loop has been selected to be described in detail, as it highlights some of the most important factors that the company’s performance depends upon, namely, the demand for organic foods, customer awareness of the benefit of these foods, and to how many customers can Whole Foods Market reach out through the enhanced geographic coverage. Moreover, this loop is similar for all of the markets where the grocery chain is represented. The warrant for this case consists in the linear correlation between demand and profit and the consistent nature of growth strategy.
The Balancing Loop
The second of the assessed feedback loops is the balancing loop. It also comprises four important elements. The first element is the corporate practice of profit-sharing among teams of employees (“Business as an agent,” 2005).In …