...SWOT ANALYSIS Group 4: Wholesale Clubs Due Date: April 13th Participants: Chelsea Jensen (Sam’s Club) Caitlin Kavanaugh (BJ’s) Julie Lehrman (Costco, formatted and submitted the document) A SWOT analysis is an analyzation on a situation which is broken up into 4 parts: Strengths, Weaknesses, Opportunities, and Threats. Strengths and weaknesses of a situation are internal factors that can include the development of a company or program, pricing, distribution, brand awareness, promotion market sharing, and management experience. Opportunities and threats of a situation are external factors that can include market trends, competitive activity, regulatory issues, economic pressure, and social issues. By evaluating a situation and categorizing those evaluations into the SWOT chart, you can more clearly see the past, present, and future of a situation/company. Identifying trends, analyzing the organizations competitors, accessing the organization itself, and researching the present and prospective customers are some points to look out for. As a result of a SWOT analysis, you can more clearly see how a company can: build on strengths, correct a weakness, exploit an opportunity, and avoid a threat. On the following page there is a chart that organizes a SWOT analysis on 3 different wholesale clubs: Costco, BJ’s, and Sam’s Club. Sources of information can be found on the page 3. S W ...
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...American Warehouse Clubs Date: 7-08-2012 | 1. Competition like in the North American wholesale club industry: - In North America discount warehouse and whole club segment has $125 billion market shares captured by Costco, Sam’s and BJ’s. There is high competition in the whole club sector, because every firm wants to enter a more profitable market by offering low prices with top quality products to grab customer attention. To attain this they have low operating cost and low labor cost to operate their facilities. They dictate the suppliers for price, deliveries and payment terms. As it indicates the suppliers have to wait for 30 to 60 days for their payments after the delivery is done. Other than general customers these clubs are attracted small business owners, churches and non-profit organizations. To increase the profit margins they introduced annual membership fee collected from customers to purchase products in whole sale clubs. Among the three whole sale clubs Costco and Sam’s club are in various states and have also established themselves internationally. But BJ‘s has limited their store to eastern seaboard of the US only and its market share is not affected by other two clubs at their positions. BJ’s accepts coupons which add value to its customers. This is an advantage to BJ’s and a disadvantage to the other two firms. BJ’s does have same competition levels of the other two clubs to participate in rivalry. When compared to Costco and Sam’s club the major market share...
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...Sam’s Clubs GLOBAL INDUSTRY ANALYSIS - CASE STUDY Wal*Mart Stores, Inc. a presentation p 1 Sam Walton Founder of Wal*Mart Stores, , Inc. Performance of Wal*Mart 20-year average return on equity of 33% Compound average sales growth of 35% Market value = $57.5 billion $ Wal*Mart Sales per square foot $300 Industry average $210 WAL MART Background 2 Year 1988 CEO: David Glass COO: Don Soderquist How to sustain the company’s phenomenal performance? 1987 Net sales Net Income Number Of Stores Number Of Stores Discount Stores Sam’s Wholesale Clubs Supercenters 1,114 84 N.A. 1,953 419 68 15,959 628 1993 67,345 2,333 WAL MART Background 3 Number of Stores (1994) 0 500 1000 1500 2000 Hypermarkets Warehouse Clubs Warehouse Outlets Wal*Mart Stores WAL MART Background 4 Where Emerged in the U.S. g When Mid-1950s Top 10 discounters in 1962 Wal*Mart remained only The industry became more concentrated Discount store companies p operated 50 or more stores accounted for 82% CR5 (1986) 38% 62% CR5 (1993) 29% 71% WAL MART 5 Discount Retailing Discount Retailing Industry Sa ales Grow wth 30 20 10 0 25% 9% 11.2% 7% WAL MART 6 Discount Retailing Comparative Pricing Study, 1993 WAL MART 7 Discount Retailing Overall Performance of Discounters WAL MART 8 Discount Retailing Year 1945 Ben Franklin franchise store In 1950s 15 stores Year 1962 Wal*Mart Discount City store Year 1969 18...
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...1.What is competition like in the North American wholesale club industry? Which of the five competitive forces is strongest and why? Use the information in Figures 3.4, 3.5, 3.6, 3.7, and 3.8 (and the related chapter discussions on pp. 57-70) to do a complete Five-Forces analysis of competition in the North American wholesale club industry. In North American wholesale club industry, there are three principal competitors: Costco Wholesale, Sam’s Club and BJ’s Wholesale Club. Costco has approximately 56% share of warehouse club sales in North America; Sam’s Club has about 36% share and the rest 8% goes to BJ’s Club and other small warehouse clubs. A five forces analysis Rival Sellers: This is a strong competitive force in this case. All these three principal competitors: Costco Wholesale, Sam’s Club and BJ’s Wholesale Club, charge membership fees and offer low prices to attract members. The competition among them is vigorous: the products they offer are similar and they all have price advantage. Customers may easily switch membership from one to another. Potential New Entrants: This is a weak competitive force in this case. The three principal competitors: Costco Wholesale, Sam’s Club and BJ’s Wholesale Club have advantage because it is difficult for new companies to enter this industry. To be a new entrant, a company must have large amount of capital to acquire big enough building and land to satisfy large scale buying and selling; also it has to have an established distribution...
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...Costco Inc. 2012: A Wholesale Membership Industry Analysis Using the Porter’s Five Forces Model Costco’s Company Background Costco is the third largest retailer in the U.S. as well as the seventh largest retailer in the world. It is leading the discount warehouse and wholesale club segment of the North American retailing industry. As of 2012, Costco had a total of 598 warehouses internationally. Costco’s fiscal 2011 total revenue was $88.9 billion and net income was $1.46 billion. Additionally Costco had $1.9 billion of membership fees revenue acquired from 25 million households and 6.4 million businesses making it the leader in the wholesale, membership industry. The annual sales for one of Costco’s competitors, Sam’s Club, averaged $146 million with a $78 million average per store. Costco’s business model aims to generate high sales volumes and rapid inventory turnover by offering fee-paying members attractively low prices on a limited selection of nationally branded and selected private-label products in a wide range of merchandise category. Rapid inventory turnover, low operating costs through purchasing high volumes, efficient distribution, and reduced merchandise handling costs are the major factors that make Costco profitable with relatively lower gross margins than other wholesale competitors. Also, the membership fee required from customers is a major revenue source thataccounts for approximately 70 percent of its total revenue annually. Additionally, Costco...
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...Jennifer Wepking-Doeden BADM 482 Case 1 – Costco 7/14/14 Costco Case Analysis INTRODUCTION Costco’s mission statement reads: “The company will continue to pursue its mission of bringing the highest quality goods and services to market at the lowest possible prices while providing excellent customer service and adhering to a strict code of ethics that includes taking care of our employees and members, respecting our suppliers, rewarding our shareholders, and seeking to be responsible corporate citizens and environmental stewards in our operations around the world.” (CITE) After evaluating Costco’s this mission, I believe their business model and strategy is extremely appealing to all parties involved. To a customer having the highest quality goods that come with low price tags, while providing excellent customer service is what they look for in this competitive market. If a customer purchased a poor quality good or experienced horrible customer service while at Costco, they most likely won’t return. Another appealing aspect Costco gives to customer is that the CEO will answer phone calls about the complaints. This will make the customer feel like something will be done about their complaint. Employees should admire the involvement the CEO Jim Sinegal presents and how the company’s business model appeals to them. The strict code of ethics they company projects is a major appealing aspect. Projecting correct ethics will help the company again worthy employees...
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...SCHOOL OF BUSINESS CASE: A-186A DATE: 06/19/03 CosTco WHOLESALE CORPORATION FINANCIAL STATEMENT ANALYSIS (A) INTRODUCTION Margarita Torres first purchased shares in Costco Wholesale Corporation in 1997 as part of her personal investment portfolio. Between 1997 and 2002, she added slightly to her holdings from time to time when the company sold stock for what she felt was a reasonable valuation, and up to that time she did not sell any of her shares. Having watched Costco grow from 265 warehouses to 365 worldwide, and from sales revenue of $21.8 billion to $34.1 billion, she wondered what factors led to such successful growth. She also wanted to determine whether those factors would hold consistent going forward. At this point, Costco was one of a special breed of retailers called wholesale clubs. Unlike other retailers, wholesale clubs required that customers purchase annual memberships in order to shop at their stores. Costco operated a chain of warehouses that sold food and general merchandise at large discounts to member customers. The company was able to maintain low margins by selling items in bulk, keeping operating expenses to a minimum, and turning inventory over rapidly. Costco’s closest competitors were SAM’S Club (a division of Wal-Mart) and BJ’s Wholesale, which both operated as wholesale clubs. Other competitors included general discounters (such as Wal-Mart), general retailers (such as Sears), grocery store chains (such...
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...American Warehouse Clubs As of 2010 the nearly $215 billion discount warehouse and wholesale club segment within the North American retailing industry consisted of three major competitors (Thompson, C55-73). These competitors included Costco Wholesale, Sam’s Club which is also a Wal-Mart subsidiary, and BJ’s Wholesale Club. All three of these warehouse clubs also competed with a wide range of other types of retailers such as retailer discounters like Wal-Mart and Dollar General, general merchandise chains like Target and Kohl’s, specialty chains like Office Depot and Staples in office supplies and Best Buy in electronics and DVDs, supermarkets, gas stations, and even internet retailers (Thompson, C55-73). The competitive forces which influence these wholesale businesses are the suppliers, substitute products, buyer, new entrants, and rival firms. The strongest force out of these five competitive forces is rival firms. Costco, Sam’s Club, and BJ Wholesales are all competing for equivalent buyers within the North American wholesale club industry and market. BJ while on the smaller scale, does still have competition from both Costco and Sam’s Club, however they have not been as affected by their competition on the East Coast. Unlike BJ Wholesale Costco and Sam’s Club are both international. Even though Costco has a considerable market share they still have pretty stiff competition when it comes to Sam’s Club. The reason being is because both Costco and Sam’s Club are domestic...
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...delineates what other businesses are doing. Falling into unethical traps will cause business chaos. This is why long existing businesses last; by clearing possible liabilities better outcomes will be evident. Eventually, legacies become built and the company’s prominence exerts dominance and confidence. During environmental scanning of a company, there is a thorough assessment into a complete global analysis. This involves companies, markets, clients, industries, and businesses in the same market. For this study will consider the trends, technological events, successes, and expectations in business. Let us commence by a comparison of Costco’s values versus Sam’s Club values. Costco has developed a brand named Kirkland. The Kirkland brand has the Costco expectation to be equivalent or better than national brands. A continual product improvement is the exact objective for the maximum competing goal. Product quality and price comparison is continuously revisited by the internal Costco research team. Sam’s club is a division from the Wal-Mart Corporation. Although Sam’s and Costco have a close race,...
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...Overview Margarita Torres Costco member and shareholder Evaluating Costco’s financial performance Evaluation methods Common-size statements Sustainable growth model Benchmarking ratios Retail Industry $1.6 trillion in retail and wholesale trade (2001) 15% of GDP (1960) 16% of GDP (2001) Department stores Customer service premium Many SKUs Discount stores Low prices No frills Retail Industry Wholesale clubs Membership only Volume discounts Limited SKUs Online stores Convenience Low overhead Sears, Roebuck, & Company Founded 1893 First retail store opened in 1925 $41 billion in sales (2001) 2,185 stores Wal-Mart / SAM’S Club Founded 1962 First SAM’S Club opened in 1983 $218 billion in sales (2001) 4, 189 stores 528 SAM’S Clubs 39 million members (SAM’S Club) Concentrated in the South BJ’s Wholesale Founded 1984 $5 billion in sales (2001) 130 stores 6.7 million members Concentrated in the Northeast Costco Wholesale Corporation Founded in 1983 Merged with Price Club in 1993 $34 billion in sales (2001) 365 stores 17.1 million members Concentrated in the West Costco Wholesale Corporation Target markets Middle class customers Small businesses Mark up limited to 14% Kirkland Signature store brand Brand name quality at discount prices Efficient operations Common-size Statements Absolute amounts vs. relative ratios / percentages Trends Where are funds allocated? How efficient is the business? Benchmarking Comparisons between businesses Sustainable Growth Model Step 1: Profitability and...
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...Professor Macaulay MGMT 425 2/16/16 Costco Executive Summary This paper conducted an external analysis of Costco which is in the retail industry, more specifically, variety stores. The five forces of this industry include Threat of New Entrants, Bargaining Power of Buyers, Bargaining Power of Suppliers, Threat of Substitutes, and Intensity of Rivalry. After having conducted research, the intensity of each of the forces are as follows: Threat of New Entrants – moderate; Bargaining Power of Buyers – weak; Bargaining Power of Suppliers – weak; Threat of Substitutes – strong; and Intensity of Rivalry – weak. Furthermore, the greatest concern involves threats from online purchases, due to the convenience and ease of the transaction. Although, suppliers that have large economies of scale are working with Costco in securing preferential prices. Threat of New Entrants The first of Porter’s Five Forces is the threat of new entrants, which refers to the likelihood of new competitors entering the industry. The strength of this force depends on the levels of barriers to entry. When barriers to entry are high, the threat of new entrants are low, and vice versa. We determined the threat of new entrants to be moderate for the Variety Stores industry. The first two barriers to entry are large economies of scale and high capital requirements. When consumers shop at wholesale clubs, products are usually sold in bulk and are bought in larger quantities than usual. This type of...
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...Costco Case Analysis Assignment # 1 Mark Frenkel MGMT 670 9046 02/21/11 Jim Sinegal initially took a job at Fed -Mart as a means to pay his bills while attending San Diego Community College never imaging that this decision would forever change the direction of his life. It was there that he met Sol Price, who ran the company and who mentored his further inclusion in the business. Sol had a vision that he acted on when he founded his Price Club with the goal of establishing a member warehouse retailing niche business. Having embarked on this path, he took Jim with him and they shared a vision for shaping how they would do business going forward. Initially, Price was content in becoming a leader in member warehouse retailing until he correctly recognized an opportunity to gain more sales volume and greater negotiating leverage with suppliers by granting membership to individuals which arguably created the market for deep-discount warehouse clubs. Sinegal excelled at understanding the driving elements in this type of marketing and became particularly adept at understanding what was working and what wasn’t at stores, which was something that Price was also very good at. Noticing these burgeoning skills, Price made him the manager of the original store. It was here that Sinegal learned the craft at the hands of his mentor, a task he did so with such skill that he decided to leave the proverbial nest and team up with Seattle-based...
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...three major segments: Walmart US, Walmart International, and Sams Club. These retail stores include discount stores, hypermarkets, supercenters and others. Industry Analysis The major business revenue of WMT is from supercenters and Sam’s Clubs. So we focus on the industry of supercenters and warehouse clubs in the US. 1. Define the industry----Supercenter and Warehouse club industry Supercenters are some large department stores that retail various goods and service to customers such as groceries, apparel and accessories. Supercenters and warehouse clubs are different. Warehouse clubs provide membership programs to customers, which charge the membership fees and then offer many goods in bulk with discount price. The market size of the industry is estimated as $453.8 billion, and the profit is $21.3 billion in 2016. The annual growth rate from 2011 to 2016 is 1.8%. The customers in this industry are householders. Based on the market research, 55% consumption of customers is food and beverages, 23.1% consumption of customers is food and appliances. The technology development in the industry is steady. For example, point-of-sale (POS) systems and radio-frequency identification (RFID) technology are used to improve the efficiency of operation. Revenue in 2016 | $453.8bn | Profit in 2016 | $21.3bn | Annual Growth 2011-2016 | 1.80% | Industry life cycle: Supercenter and Warehouse club industry is classified as mature phase. The development of this...
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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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...week, we focused on four main topics – benchmark analysis, managerial versus financial accounting, the effects of technology on business, and the effects of globalization on business. All team members felt they gained a lot from the readings and teaching this week, despite having some areas that caused us to struggle. There were many lessons that we will be able to apply to our places of employment in the future. Benchmarking Analyses Last week we focused on benchmarking. "Benchmarking compares and organizations practices, processes, and products against the world's best," (Nickels, McHugh, & McHugh, 2010). Benchmarking can be used to gain a competitive advantage by allowing an organization to compare existing performance against their competitors to identify areas for improvement. If your competitor out performs you in an area, you evaluate that process and see how you can improve to become better than your competitor. For example, "Target may compare itself to Wal-Mart to see what, if anything, Wal-Mart does better. Target will then try to improve its practices or processes to become even better than Wal-Mart" (Nickels & McHugh, 2012). So if Wal-Mart were to be better at shipping items than Target, Target would evaluate that process to see how they could be better at shipping than Wal-Mart. In conducting a benchmark analysis this week between Sam’s Club and Costco, it is observed that Sam’s Club has a very evolved supply chain management system...
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