When evaluating the question of whether to locate a store in Detroit, the managers at Whole Foods definitely faced a formal decision situation, a situation requiring a choice among a number of alternatives. Whole Foods’ management scrutinized this decision carefully because of its significance to the organization as a whole and to the careers of the Whole Foods managers actually making the decision. To a degree, store location decisions are programmed; retailers typically have a set of criteria they use for measuring potential demand, and they select sites that meet the standards of all the criteria. However, as the case illustrates, creative thinking also plays a role in decisions as complex as site selection.

High-level managers at Whole Foods were involved in making the costly and difficult-to-reverse decision of the selection of the location for a new store. These managers most likely sought input from employees lower in the hierarchy who had insights from marketing research and knowledge of consumers and organizations in Detroit. Managers at headquarters were interested in the insights not only from data and marketing experts but also from employees who had experience with store operations in Michigan. Probably the decision required a consensus of several decision makers.

As management at Whole Foods evaluated the decision about locating in Detroit, they were most likely aware of all the elements of the decision situation. Both the internal and external environments of Whole Foods were likely a focus of the analysis. For example, internally, did Whole Foods have the financial resources to open another store, and did it have the expertise to make the right buying decisions for Detroit shoppers? Externally, how would businesspeople in Detroit react to the opening of a Texas-based retailer? Reason and sound judgment were needed to establish management’s orientation in making this decision. Also, management had to keep the retail chain’s organizational objectives in mind. The new store would have to contribute to overall profits, not just be a nice gesture toward a struggling city. In arriving at the decision, management probably listed alternatives such as locating stores in other cities and other Detroit neighborhoods and compared the potential of the Midtown Detroit market with those other markets.

After eliminating alternatives that were expected to be less profitable, Whole Foods’ management had to evaluate all remaining locations, select one (or none), and implement the decision. Implementation involved finding a developer for the site, working with the developer on the new store’s design and construction, and then negotiating a lease for the new site. Additionally, it needed to hire staff to run the new store and order the merchandise to sell.

This decision-making process involved a great deal of uncertainty. Management had no guarantees that other retailers would not enter the area while it built and staffed the new store—or perhaps after Whole Foods had begun to show the way to operate profitably in Detroit. Management also did not know whether the Detroiters who said they would like to shop at Whole Foods would actually do so. Nor could it control the direction Detroit’s economy and population would take in the years between decision making and store opening. Management did know, however, what has worked in the past to stop competitors and what kinds of decisions have resulted in successful store operations elsewhere in Michigan and through the United States. Therefore, Whole Foods could estimate the probable outcome for each proposed alternative and base its decision on the alternative with the most favorable probable outcome.

Decision makers at Whole Foods could have used some tools for making better decisions. One is probability theory, which generates an expected value for various decision alternatives. Management could then have implemented the alternative with the highest expected value. Also, because the location decision involved a series of steps related to each of several alternatives, Whole Foods could have used a decision tree to assist in picturing and evaluating each alternative. For example, if a competitor had opened a Midtown Detroit store before Whole Foods finished its construction process, Whole Foods might have changed some of its decisions about staffing and stocking its store based on the competitor’s actions and outcomes.

Whole Foods’ management must remember, however, that business judgment is an adjunct to the effective use of any decision-making tool. The purpose of such a tool is to improve the quality of the judgment, not to replace the judgment. In other words, Whole Foods’ management must not only choose alternatives based on the probability theory and decision tress but must also use good judgment in deciding what is best for the company.

In the current situation, Whole Foods’ management also had to decide which individuals would be involved in making the decision to locate a store in Detroit. First, a decision of this magnitude should probably be made by a group of top leaders drawn from many different organizational areas. A group decision would almost certainly have been better than an individual decision in this case because a group would have had a broader perspective of Whole Foods and the market than any one person in the company would. Therefore, the group would have been more likely to make an appropriate decision.

Perhaps the group decision-making process used to select the location should have included methods discussed in the text. Brainstorming sessions would have ensured that all ideas for locations surfaced, whereas the nominal group technique would have compelled group members to focus on the urgency of making the decision by requiring them to vote on whether to invest in the new site. The Delphi technique could have been used to obtain important input on the decision from experts in Michigan and at the Texas headquarters by asking them to provide their written views through a specially designed questionnaire. However, using a group to make this decision would have been time-consuming and expensive. Once the decision had been made, however, group members would have been committed to it, regarded it as their own, and done everything in their power to ensure that the company is successful.