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The process of combining or acquiring a company can significantly affect the business of an organization. Moreover, such changes also affect the market in which companies operate. Hence, one example of the acquisition of one company by another is the case of Amazon and Whole Foods. This merger gave several advantages to the global giant at once. However, it is worth noting that this process caused some legal challenges that required solutions. Thus, this work aims to study the contribution that the acquisition of Whole Foods Amazon has made and what barriers the organization had to face in this process.
Therefore, it is worth paying attention to the causes and possible effects that can be isolated from the acquisition process or the merger of companies. First of all, this affects the growth and future of the company; however, it can be both a positive and a negative result (Kumar, 2019). One of the main problems that a company may encounter is the legal side of the whole procedure. To avoid this issue, it is necessary to attract highly qualified specialists and ensure compliance with all necessary conditions and requirements.
One of the primary motivations for an organization to merge or acquire another is the prospect of growth and further development. With a successful merger of companies, not only profits can grow, but also the number of consumers and sales. At the same time, if problems arise, a reverse process may occur in which one of the parties or both may incur significant losses. The second reason is the struggle for primacy in the market segment in which organizations operate. Many manufacturers unite to gain competitiveness and take a leading position in comparison with their rivals. This circumstance is closely related to the reason for the desire to dominate. However, such a desire may affect the emergence of a monopolistic nature of the market, which may entail unnecessary attention from legal authorities.
As already mentioned, when merging one company into another, problems may arise with the legal side of the issue, which is seen in the example of Amazon and Whole Foods. Consequently, the giant decided to acquire a grocery organization at a very high price, which was $ 13 billion (Wingfield & de la Merced, 2017). even before the merger of the two organizations, Amazon faced several lawsuits at once, one of which was filed directly by Whole Foods itself. Thus, sources note that the basis of this action was the fact that the company bars others from making successful bids for the natural foods and organic grocer (Long, 2017, para. 1). This raised several doubts about the need for a merger of companies. One of the reasons for this doubt was the fear that the resulting dominance could become an obstacle to further innovations in the market. Moreover, it could significantly affect the transactions that occur in this segment of the market.
At the first mention that Amazon was going to purchase Whole Foods, many experts considered this action ineffective and unnecessary. For example, Lamm (2017) claims that Amazons reach will ultimately reduce the number of grocery competitors that consumers can choose from (para. 4). One cannot disagree with this statement since the global company, in addition to its usual activities, has introduced online retailing, which can reduce the productivity and profitability of other grocery retailers.
Despite the problems that arose, Amazon managed to acquire a grocery giant and start its activities. The company managed to defend against accusations of unfair competition methods and methods of fighting opponents (Shepardson & Dastin, 2017). Despite this, the positive side of the companys activities was not visible to everyone. Hence, Sainato (2017) spoke about the harmful influence of the crossing of companies and stressed the need to mitigate any abuse of power from the dominant platform (para. 12). Furthermore, the decision to merge the two companies caused quite controversial opinions of the public.
Therefore, next, it is necessary to move on to how successful and effective the acquisition of Amazon the Whole Foods company was. It is noted that after the influence, Prime members began to occupy a unique position. To a certain extent, the motivation of other retailers was affected, who had to react quickly to such changes in the market. Thus, this was reflected in the fact that more and more attention was paid to e-commerce services, which significantly reduced Amazons position among other rivals. One of the main threats in the merger of the two companies was the possible future dominance that organizations could gain by merging. However, this only had a positive impact on the development of competitiveness of other representatives of the grocery industry. Moreover, this applies not only to online but also to offline sales and services.
Despite not achieving the expected result, the circumstances obtained helped the company to avoid possible legal problems. In addition, Amazon benefited from the deal in many other aspects, for example, by increasing the indicators and statistics of online orders. Therefore, the company has expanded its list of products offered, as well as significantly shortened the delivery time when making an online purchase. Regarding the members of the loyalty program, the number of discounts that were provided for its participants increased (Berthene, 2019). Thus, this affected the growth of customers who decided to become part of this program to get a good offer. Many sources note an increase in media attention on the company ( Amazon to acquire Whole Foods Market, 2017). This is due not only to the surprise but also to the global nature of this transaction.
The connection between Amazon and Whole Foods has caused the writing of many different articles that express entirely different opinions about this process. Henceforth, Stevenson (2021), in his article, says that the acquisition of Whole Foods was the alarm bell that started all these multibillion-dollar investments in digital grocery capabilities (para. 1). On the other hand, another article focuses on the fact that the reasons were the desire to take over data and products (Petro, 2017). This fact cannot be considered incorrect since, after the acquisition of Whole Foods, it acquired information about an extensive customer database.
In conclusion, this study consisted in analyzing how the merger of companies can affect the market in which companies operate. Moreover, it was also considered what legal issues organizations might face before, during, and after the acquisition process. Hence, in the case of Amazon and Whole Foods, the leading legal risks existed at the beginning of the entire merger procedure and were resolved through litigation. Moreover, the work concluded that the merger of the companies was effective in contributing to the development of the market situation, especially in the field of online commerce.
References
Amazon to acquire Whole Foods market. (2017). Whole Foods Market.
Berthene, A. (2019). How Amazons Whole Foods acquisition changed the grocery industry. Digital Commerce.
Kumar, B. R. (2019). Wealth creation in the worlds largest mergers and acquisitions. Springer.
Lamm, G. (2017). Legal, regulatory challenges mount to Amazons takeover of Whole Foods. Puget Sound Business Journal.
Long, J. (2017). 2nd lawsuit filed over whole foods, Amazon merger. Food & Beverage Insider.
Petro, G. (2017). Amazons acquisition of Whole Foods is about two things: Data and product. Forbes.
Sainato, M. (2017). Whole Foods acquisition worsens Amazons anti-trust issues. Observer.
Shepardson, D. & Dastin, J. (2017). Amazon deal for Whole Foods wins U.S. regulatory, shareholder approvals. Reuters.
Stevenson, S. (2021). Its finally clear why Amazon bought Whole Foods. Slate.
Wingfield, N. & de la Merced, M. J. (2017). Amazon to buy Whole Foods for $13.4 billion. The New York Times.
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