Whole Foods, a fast-growing chain of upscale grocery stores, has long been a Wall Street favorite. It regularly appears on Fortune’s list of 100 Best Companies to Work For (it was #22 in 2008) and has spawned its share of competitors, including Fresh Market, Trader Joe’s, and Wild Oats.

Given that most industry analysts see a bright future for upscale organic markets like Whole Foods, it’s no surprise they have attracted their share of investor blogs. One prominent blogger, “Rahodeb,” consistently extolled the virtues of Whole Foods’ stock and derided Wild Oats. Rahodeb predicted Wild Oats would eventually be forced into bankruptcy and Whole Foods’ stock price would grow at an annual rate of 18 percent. Rahodeb’s Yahoo! Finance blog entries were widely read because he seemed to have special insights into the industry and into Whole Foods in particular.

Would it surprise you to learn that in 2007, Rahodeb was exposed as Whole Foods’ co-founder and CEO John Mackey? (“Rahodeb” is an anagram of “Deborah,” the name of Mackey’s wife.) What’s more, while Rahodeb was talking down Wild Oats’ stock, Whole Foods was in the process of acquiring Wild Oats, and deriding the target may have made the acquisition easier and cheaper. Because the companies often have stores in the same cities, the Federal Trade Commission (FTC) attempted to block the acquisition and was responsible for “outing” Mackey. In March 2009, Whole Foods agreed to disgorge 31 of the Wild Oats stores it had acquired, drop use of the Wild Oats name, and undertake other actions that nullified the benefits of the acquisition.

Mackey lamented the debacle—not his secret blogging, but the Wild Oats acquisition. He said, “We would be better off today if we hadn't done this deal – taking on all this debt right before the economy collapsed.” By 2008, Mackey was blogging again, under his real name. His posts are neither as frequent nor as interesting as Rahodeb’s.

1. Use an appropriate leadership theory/ framework and comment on the leadership effectiveness of John Mackey?

2. Suggest how such mishaps can be prevented structurally.

Answer rating: 100% (QA)

1 Mackeys actions were certainly not ethical It crossed the fine line between entrepreneurship and u... View the full answer