...Introduction Costco Wholesale Corporation "Costco" operates in the discount warehouse and wholesale club industry segment. Costco has had a long history of successful management and recently has come under new leadership. The warehouse and wholesale club industry has three main competitors in the North American region however it is facing increasing pressures from low-cost retailers, nationally and Internationally. Although still profitable, the company experienced some erosion of their growth rates during the most recent fiscal year (2015). Costco's new management team will need to focus on the company's core competencies of low-cost leadership and providing superior customer value to maintain its market position within this market segment. Mission & Growth Strategy Costco's mission is "to provide the highest quality goods and services at the lowest possible prices while providing excellent customer service...." (Thompson, 2012). They strive to provide their members with un-matched value, a treasure hunt shopping experience and high quality service. Their philosophy entails taking care of their staff, the staff provides quality care to the members, and member retention will provide financial gains to the shareholders. Their growth strategy is achieved through opening new warehouses throughout the world and increasing club memberships. Club membership fees are a critical component of Costco's financial success. Membership fees accounted for approximately 70%...
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...Case Study Analysis 1: Costco Wholesale Corp: Mission, Business Model and Strategy MGMT 670: Strategic Management Capstone June 26, 2011 Business Case Study: Costco Wholesale Corporation Introduction As a student in MGMT 670: Strategic Management, the capstone course for the Management track at the University of Maryland University College, I was asked to prepare a case study analysis of Costco Wholesale Corporation. Costco is one of the world’s leading wholesale retailers with annual sales of $76.3 Billion for fiscal year (FY) 2010, which is an increase of 9% from the previous year ($69.9 billion). In addition, its earnings per share increased to $2.92, an annual increase of 18% from the previous year. (Costco Financial Report, 2011) This increase is an all time high for the company thereby solidifying its place as a leader in the wholesale industry. Costco and its Business Strategy From inception, Costco’s business strategy has been to offer limited products (4000) at lower prices coupled with great values while keeping overhead costs low. In its main product line Costco has about 3,000 products that are present in the stores at all times and 1000 products that are ever-changing. These 1000 lines allow Costco buyers/merchandisers to hunt for items that will keep customers coming back to see what is new or fresh in the stores. These items help Costco create the “treasure hunt” environment that will keep customers coming back to the store more frequently. The motivation...
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...Nova Southeastern University Wayne Huizenga Graduate School of Business & Entrepreneurship Assignment for Course: MGT 5090 Entrepreneurial and Strategic Thinking Submitted to: Ron Steffel Submitted by: Georgette McIntosh N01 Xie Luxuan Dorquidia Alemany Date of Submission: May 3, 2015 Title of Assignment: Costco Case Study CERTIFICATION OF AUTHORSHIP: I certify that I am the author of this paper and that any assistance I received in its preparation is fully acknowledge and disclosed in the paper. I have also cited any sources from which I used data, ideas of words, whether quoted directly or paraphrased. I also certify that this paper was prepared by me specifically for this course. Student Signature: Georgette McIntosh ******************************************* Instructor’s Grade on Assignment: Instructor’s Comments: EXECUTIVE SUMMARY he purpose of this report was to examine the implications on employees motivations used at Costco Wholesale Corporation. Research for this report included a review of he purpose of this report was to examine the implications on employees motivations A. Problem Statement: State the main problem facing the firm (or industry) in one, succinct sentence. B. Analysis: Summarize the main findings of your analysis. You may use bullet points, bold, italics – any means to convey and highlight the key factors you have determined based on your analysis. C. Alternatives:...
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...ASSIGNMENT QUESTIONS: Costco Wholesale Corp.: 1. What is Costco’s business model? Is the company’s business model appealing? Why or why not? Costco business model is meant to maximize efficiency by depending on a high sales tied with quick inventory earnings. Costco’s concept is base on offering members the lowest price on a limited selection of national brands, the warehouse format maintain a low cost rate as they buy and sell items in bulk. Costco memberships keep customers loyal, because it accumulate most of its profit from membership fees, they’re able to sale their goods at a very low markup price. Overall Costco’s business model is very appealing, while being positioned to grow its business for the foreseeable future, it has many benefits. Example, efficiency inventory combine with quicker inventory turnover will reduce Costco cots of selling goods. High sales volumes combine with quick inventory allows Costco to sell and receive cash for goods before it has to pay for any of its merchandise, which allows Costco to finance a large percentage of its inventory through the payment terms provided by its vendor rather than having to maintain a sizable working capital to pay for its merchandise. It’s high end target product result in bringing in high-end consumer into its stores which is another reason it’s appealing. 2. What are the chief elements of Costco’s strategy? How good is the strategy...
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...Costco Business Model And Elements Of Costcos Strategy, Management1. What is Costco’s business model? Is the company’s business model appealing? Why or why not?2. What are the chief elements of Costco’s strategy? How good is the strategy?Posted by Alena | Posted Date: 8/7/2011 12:03:45 PM | 1. What is Costco’s business model? Is the company’s business model appealing? Why or why not?Business Model is used to exemplify the methods and ways which we used to generate planned revenue. The Costco’s business model is to generate high sales volume and rapid inventory turnover by offering low prices on limited selection of national branded and select private-label products in wide range of merchandise categories. Costco’s offers these products to their members who are of two types’ business members and gold star members.This business model is tempting because it gives a test to Costco’s management to continue to devise strategies and methods through which they can keep hold of existing members and catch the attention of new members. Otherwise they will suffer failure because there will be a risk that discontented members will not renew their membership. This business model takes company towards total quality management.2. What are the chief elements of Costco’s strategy? How good is the strategy?Strategy is the organization’s pre selected means or approach to gaining its goals or objectives, while keeping in view current and future external conditions. Costco’s strategy’s elements...
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...Costco case study and strategic analysis Costco Wholesale Corporation (Costco), one among the few largest wholesaler giant differentiates itself applying unique strategies relating to production and operations, and marketing which make it stand out from the rest of the retailers who are also said to be competitive in the retailing and wholesaling business globally. 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” (Costco Annual Report 2006). Some of the fundamental principle of the Costco is that they obey the law, they take care of their members, they take care of their employees, they respect their suppliers, and finally they reward their shareholders. Some of the reasons how Costco can serve those highest quality goods of national brands for the lowest possible prices is that they eliminate different cost associated with delivery expenditures, account receivable, inventory, sales people, and fancy buildings. And they successfully operate themselves in the competitive environment serving not only an individual customers but also a legal customers (a company), and small business customers. Costco believe that society and the community is one of the key factors of their success. Therefore, they are willing to give back to their community and the society in terms of quality goods in...
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...seconds) Search Results The New Era of Management - Google Books Result https://books.google.com/books?isbn=0324537778 Richard L. Daft - 2008 - Industrial management workforce has a reputation for being the most productive and loyal in all of retail. A winning retail strategy, flexible ... Which of the three management-skill categories do you think Costco CEO James Sinegal draws upon most during his year-round visits to local Costco warehouses? Explain. 2. What aspects of Costco's ... Management - Google Books Result https://books.google.com/books?isbn=0324537700 Richard Daft - 2007 - Business & Economics workforce has a reputation for being the most productive and loyal in all of retail. A winning retail strategy, flexible ... Which of the three management-skill categories do you think Costco CEO James Sinegal draws upon most during his year-round visits to local Costco warehouses? Explain. 2. What aspects of Costco's ... Costco Wholesale Corporation - Essays - Mastan www.termpaperwarehouse.com › Business and Management * Sep 7, 2013 - Read this essay on Costco Wholesale Corporation . Come browse our large digital ... Which of the three management-skill categories do you think Costco CEO James Sinegal draws upon most during his year-round visits to local Costco warehouses? Explain. Team building; Managing warehouses like ... What Costco CEO James Sinegal Can Teach You About ... www.openforum.com/.../what-costco-ceo-james-sinegal-ca... * ...
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...directing the research and efforts in a manner consistent with and specific to those particular segments characteristics. Segmentation divides the consumers into groups with similar desires by examining demographic, psychographic, geographic, and behavioral individualities (Kotler & Keller, 2012). Branding and strategy is equally important and will be discussed later in the positioning statement. Target marketing and segmentation for Costco Wholesale is unique to other retail business as it operates as a member-only warehouse club. Costco initially opened the doors as Price Club in 1976 and operates domestically and internationally in 663 locations worldwide, and is headquartered in Issaquah, Washington (Costco Wholesale, 2014). The original target focus for the warehouses were designed and targeted to accommodate small-to-medium-sized business for the purpose of purchasing for affordable resale, and has since become popular to the individual personal needs and desires as well with their Kirkland Signature private label brand products. Costco claims that each warehouse offers products that are of top quality, the most exclusive, at the lowest price, and offers the largest...
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...merchandise that include a mix of across the country branded and illicit private-label products in an exceedingly wide selection of merchandise classes. This is an awfully appealing business model because it provides the power to control fruitfully at a lot of lower profit margin by securing marketer volume getting agreements, economical distribution, no-frill self-service warehouse facilities and supplemental membership fee revenue. Another magnet is because of the high sales volume and fast inventory turnover style of this business model, the accelerated money conversion cycle permissible Costco to gather the funds for inventory before marketer liabilities changing into due. This provided for marketer finance and also the ability to require advantage of early payment discounts that additional reduced operational prices. As a testament to the success of this business model, from 2008 through 2011, Costco was able to increase the amount of warehouses by 15.6%, revenues by 22.6%, and earnings by 14.0%. 2. What are the chief elements of Costco’s current strategy and is it effective? Costco’s...
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...position in our industry where our company can best defend itself against these forces or can influence them in our favor (Porter, 137). There are five important forces that determine competitive power (Pearce & Robinson, p. 99): * Supplier Power * Buyer Power * Competitive Rivalry * Threat of New Entrants * Threat of Substitution The attached Exhibit A, Costco’s Five Forces Analysis, provides a visual representation of our competitive strengths and weaknesses. I will provide an explanation of each of the five forces moving forward. Supplier Power – Weak Bargaining Power Costco has is known for its ability to leverage its buyer power making their supplier’s power weak. At the same time we recognize the need to develop strong relationships with some suppliers to maintain inventory of what customers are looking for. By taking care of our suppliers, Costco remains top of mind with them when new deals become available (Retail Merchandiser). With big volume buying we are able to exert pressure on suppliers by moving on to the next one should they not like our terms. No single supplier...
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...Executive Summary Costco is one of the most profitable retail stores in the United States at the moment. This is in spite of the prevailing tough global economic times and stiff competition from stores such as Wal-Mart and Target. Costco, a members’ wholesale retail store, was founded in 1983 in Washington by Jeffrey Brotman, who serves as the current Chairman of the board of directors and James Sinegal, the current company president. Costco has not been spared by the current global economic conditions. They have affected it in a number of ways that have made the company’s management respond in a manner that is meant to ensure that the business not only survives but grows even stronger. First, Costco has taken strong measures to keep enough employee numbers. Customers are better served by employees who are in good health. Employees are not going to be in good health if they work long hours and cannot visit a doctor when sick. Costco employees work normal hours since there are enough employees to serve the company’s customers. While other stores such as Wal-Mart have seen it fit to downsize their workforces, Costco has moved to ensure that employees are of the right numbers all over its stores within and without the United States. Secondly, the current tough global economic conditions have driven Costco into extending good salaries to its employees. The good compensation has ensured that employees are well motivated and ready to serve customers in a better manner. As counter...
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...selection of nationally branded and select private-label products in a wide range of merchandise categories (p.C-35). The business model is appealing because of its unique set of practices and its great management. One of reason for its business success is its high sales volume and rapid inventory turnover, which helped the company to receive cash for inventory before it had to make a payment to its vendors (p. C-35). The company generated $71 billion at 544 warehouses in 40 states, Puerto Rico, Canada, the UK, Taiwan, Japan, Korea and Mexico. Its annual sales per store averaged $130 million whereas it’s closest competition; Sam’s club averaged $75 million per store. (p. C32-C33) 2. What are the chief elements of Costco’s strategy? How good is the strategy? The chief elements of Costco’s strategy are low prices, a limited product line and limited selection, and a “treasure hunt” shopping environment (p. C-35). The company’s strategy is appealing because they entice with low prices to attract more customers. Similarly the company is also based on the limited product or product selection as more products mean more confusion for the customer. This technique helps to create a good relationship with its suppliers. The strategy contains all of the criteria to make Costco one of the successful companies today. 3. Do you think Jim Sinegal is an effective CEO? What grades would you give him in leading the process of crafting and executing Costco’s strategy? What support...
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...Executive Summary Under the Management of Jeffrey H. Brotman, Costco Wholesale Corporation remains as one of the largest wholesaler retail in the world. Tech-Shield should consider the option of making an investment to Costco Wholesale Corporation due to the company’s effective business strategy, financial success, and reputable corporate policies. Costco's 5 year financial history has shown the increasing growth of the company. Costco has significant profit margin of 1.5% to 2%, showing that they are still growing and will become even more successful in the years to come. Costco continues to gain more loyal customers by attracting them on low priced goods and excellent customer service. Costco plays a very important role in the economy by creating jobs and opening up 30 new warehouses in 8 different countries from the year of 2012 to 2013. With more than 70 million members and employees, Costco prides their company to provide their customers quality products for the best price, ability to take care of their employers and customers, and to reward shareholders. Introduction Costco currently remains as the nation’s largest wholesale operator with 462 warehouses in the United States. In the year off 2013, Costco has over 71.2 million cardholders and 185,207 workers while profiting over 105.2 billion dollars in revenue. Wal-mart offers 100,000 items as divergent to 40,000 items at most grocery stores. However, Costco offers 10,000 items because they are able to order larger...
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...and Evaluation Costco Wholesale Corporation (Costco) operates a membership-only warehouse that sells quality products and services at an affordable price. Costco remains an organization known for providing quality goods and services at the lowest possible prices (Costco, 2013). This paper evaluates Costco’s strategic choices and evaluates considerations for growth. The paper identifies the best value discipline, generic strategy, and grand strategy for Costco. Finally, the paper includes a recommended strategy for Costco to implement. Best value discipline According to Pearson and Robinson (2013), consultants Michael Treachy and Fred Wiersema described the Value-Discipline Model as a strategy took to help organizations recognize what the organization wants their customers to value them for. The Value-Discipline Model focuses on three areas for an organization to focus on, operating excellence, product leadership, and customer intimacy. Of the three areas of the Value-Discipline Model, customer intimacy best describes Costco’s business model. According to Pearson and Robinson (2013), “a strategy of customer intimacy continually tailor and shape products and services to fit an increasingly refined definition of the customer” (p. 198). Customer intimacy differentiates Costco from competitors with low prices and hassle free service. Costco’s mission statement states the importance of providing “quality goods and services at the lowest possible prices” (Costco, para 1). ...
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...Costco: Weakness of Three Aspects, a Company, Diversity, and Globalization INTRODUCTION The history of Costco “We are a membership warehouse club, dedicated to bringing our members the best possible prices on quality brand-name merchandise.” Costco Wholesale Corporation is one of biggest wholesale corporations in the United States and several other countries. The story of Costco’s rise from a single Seattle store in 1983 to a multinational chain of enormously profitable warehouses is a tale of perfect leadership in a rapidly-changing retail world. The company’s first location was in 1976 under the name Price Club which was established by Sol Price. Jim Sinegal launched a competing company with an idea of a wholesale business, Costco. The two businesses eventually merged in 1993, and Sinegal went on to educate Sol Price on the art of getting the right product in the right place for the right price. When Costco and Price Club merged in 1993, the operation under the name “PriceCostco” had 206 locations generating $16 billion in annual sales. Since resuming the Costco name in 1997, the company has grown to more than 500 locations worldwide. After opening the first Costco warehouse located in Seattle, WA, U.S.A. Costco became the first company ever to grow from zero to $3 billion in sales in less than six years. Costco’s strategy There are several factors for Costco to increase its growth under the strategy of the right products in the right place for the right price....
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