Costco case study and strategic analysis

References Cascio, W.

Costco supply chain case study

Signaling strategic intent. Costco is one of the innovative wholesalers teamed by very dynamic management team and dedicated, motivated and satisfied workforce with the mission to continually provide its members the best quality products at the lowest possible prices. Most importantly they have very incredible return policies in hand to attract and retain customers. There is the tough competition especially in between Costco and Sams Club. Costco deliberately limits each product category to fast-selling models, sizes, and colors, which means they usually offer only one or two brands or sizes per item which essentially makes the decision for the member as to what they will by. At the same time, Target Corporation is the second highest company in the industry based on market capitalization. Costcos offers these products to their members who are of two types business members and gold star members. In essence, the more products the company sells, the bigger the scale and cost advantages.

The market capitalization of Costco Wholesale Corporation is Because those customers who are said to be well off last year may not be same this year and they may need help in terms of saving money whenever they go for shopping.

Largely dependent on vendors for timely supply of quality merchandise at reasonable price High market expectation in terms of price, quality and financial performance Internal environm ental analysis CVS Adidas corporate strategy and case studies The Paradoxic al Twins: Acme and Omega Electronic s Competition in video game console industry Nora Sakari case analysis Western Union Restructurin g decision Hewlett Packard merger case studies Costco case study and strategic analysis Apr 06 1 In the core of their strategy, Costco sells limited numbers of products in fewer varieties to keep the cost down and they rely on high volume sales.

Costco bcg matrix

This makes the power of aggregate consumers very high. Customers might go to other retailers like Walmart, which has a wider array of goods and services. The firm could use its website and its network of suppliers to compete against new membership warehouse club retail companies. This works as an incentive and members try to take maximum advantage and therefore Costcos sales volume increases. However, international operating margin is upward sloping. Costco has made it a strategic goal to increase sales at existing stores by 5 percent annually and open additional warehouses. Strategic Vision Give customers the best value, at the best price Treat people right, and with respect Objectives Employment Objectives: Hire great people Treat them well Give them good jobs Do right by them Management Objectives: Always promote from within Training happens constantly Grow our own talent Model what you want from your employees Business Objectives: Dont try to be too much to too many Know on what level you compete Know your customers Stay focused on your core business Growth Objectives: Run the business for long-term sustainability Open new stores new locations per year Keep Internet sales growing Ethics Objectives: Obey the law Treat customers right Treat employees right Treat suppliers right Business Model: Business Model is used to exemplify the methods and ways which we used to generate planned revenue. In conclusion, Costco is applying different cost related strategy such as penetration pricing, and below the line promotion and they have also employed diversion buying strategy which they themselves termed as treasure hunt shopping experience. Highly dependent on U.

Most of them have wider presence of their business with better brand image. Exhibit 2 merely segregates the total sales into five categories. A and Japan with low inflation rate in the countries governmental stability Rapid growth in membership Possibility of international expansion Advantage of economic downturn Increasing brand awareness Positive image in terms of employees pay and social responsibility Serves the democratic countries with political and High inventory turnover comparing to its competitors Unique ability to keep overhead cost low resulting in Weakness Comparatively less attractive store layout for luxury items Weak advertisement base leading to the inability of reaching full range of membership base.

Costco global strategy

One of the key uniqueness and strength is that they sell membership to their customers that not FOLLOWERS only generate the fixed revenue every year but also increase the brand loyalty and awareness of the customers towards Costco. They have dineshperspective. In , Costco was pegged as the world's largest retailer of choice and prime beef, organic foods, rotisserie chicken, and wine. Furthermore, among those merchandise that Costco keeps in its location, it has distinctive segment which they called treasure-hunt merchandise where they keep products which keeps changing quickly. Most importantly they have very incredible return policies in hand to attract and retain customers. Suppliers do not have significant access to the end consumers and therefore the bargaining power primarily favors the wholesaler who does have direct and ample access to the end consumer via their warehouses. Costco has managed to offer a wide range of products that creates a one-stop shopping experience for their members. One of the key uniqueness and strength is that they sell membership to their customers that not only generate the fixed revenue every year but also increase the brand loyalty and awareness of the customers towards Costco. One of the crucial factors of Costco is their pricing strategy. Due to the nominal growth rate of U. Furthermore, they try to find the best value pack for almost every product they sell in their location store.

Shifting the rules of competition. The likelihood of new threatening entrants is minimal.

costco case study pdf

In conclusion, Costco is applying different cost related strategy such as penetration pricing, and below the line promotion and they have also employed diversion buying strategy which they themselves termed as treasure hunt shopping experience.

Inthe first Costco warehouse location was opened in Seattle U.

Costco case study and strategic analysis

Largely dependent on vendors for timely supply of quality merchandise at reasonable price. This process brings in freight volume and handling efficiencies, decimating redundant costs associated with conventional multiple-step distribution channels. Innovation and flexibility creates the style of the organization. These may have likely been incurred from heavy investment in new warehouse construction, and from purchasing large volumes of inventory to fill the new warehouses. Costco is one of the innovative wholesalers teamed by very dynamic management team and dedicated, motivated and satisfied workforce with the mission to continually provide its members the best quality products at the lowest possible prices. This ploy has become a pattern within their business strategy. Written by Miles Media on May 30, Costco, apart from offering slightly lower price points on certain key products, is trying to improve its customer experience by implementing consumer friendly return policies, accepting several payment methods, and adding gift prizes. This leads to efficiency in management because there are fewer products to inventory, and it also leads to increased sales because customers are more likely to go ahead and buy a product even if it is not the brand they were wanting or the product is being sold in a larger quantity than what they were wanting. Its Kirkland brand of private label 1. It may affect Costcos future performance and competitors such as Sams Club may take away its market share due to the lack of promotional activities. Costcos mission statement is to focus on bringing high quality goods and services to the market at the lowest possible prices every day, but to do it with integrity at every level of the company while valuing the interests of the stakeholders Annual Report No self-checkout One could infer that unit expansion is a result of increased revenues. Weak advertisement base leading to the inability of reaching full range of membership base.

This process brings in freight volume and handling efficiencies, decimating redundant costs associated with conventional multiple-step distribution channels.

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Costco Case Study and Strategic Analysis