As a part of its business growth strategy, Costco continues to focus heavily on its reputation and image and continues to invest in the areas that maximize customer and staff satisfaction. Chief elements of Costco’s Strategy Costco’s strategy relies on 3 main components: Customers, Supplier and Operating efficiency. Verified writer. It offers co-branded credit cards for its loyal customers. Its international footprint is limited to only a few major markets. Posted in Small Business Marketing. Costco is used to dealing with the big guys like Target and Walmart, but it still means Costco’s market share is limited. However, since the company deals in a limited range of products, it has managed a simpler but lean and agile supply chain. Costco Case Costco: A Case Analysis Costco has long been a retailer of lower-priced goods. The company buys from the manufacturers directly and has successfully eliminated the middlemen just like Walmart did. Hiring a temporary PR firm to sort out this small issue will save face for the company and help repair its image before the issue goes too far. Costco Wholesale Corporation Case Study Solution. Competition in the North American wholesale club industry is fairly consistent; University of Alabama ; GBA 490 - Fall 2014. Written by Miles Media on May 30, 2017. Costco case: Costco Mission, Business Model and Strategy 1. Now, the company is moving toward services like insurance, credit cards, phone plans, printing, and other options that could be accessed with a specific membership level. Instead of investing heavily in marketing as the other retail companies do, Costco strives to maintain a strong reputation in the market, which it has made possible by establishing a culture of customer service, collaboration, and ethics. It has not pursued an aggressive international expansion strategy which might bring the company extra revenue and help it find faster growth. Unlike Walmart, which was known for paying its associates lower wages to save on operating expenses, the company pays its employees very well, which has helped it gain higher staff satisfaction and lower attrition rates. Costco has a larger share of the wholesale club sales in the United States. Managing operational efficiency in its supply chain allows the company to reduce operating expenses and pass on the benefits earned to its customers. Costco now has 583 stores and over 60 million members througout the world (Costco Wholesale Corporation, 2011). The firm’s mission emphasizes quality and cost leadership, which are factors consumers usually look for in the retail market. HIRE verified writer $35.80 for a 2-page paper. Costco is among the leading physical retailers in the United States. A considerably lower number of Stock Keeping Units (SKUs) allows Costco to achieve higher sales volume. Mission. However, the product quality is outstanding. This shows that Costco’s commitment to quality has paid well in the long run. For a retailer, its supply chain and logistics are like the backbone of its business. Based on the data in case Exhibits 1 and 4, is Costco’s financial performance superior to that at Sam’s Club and BJ’s Wholesale? That level would cost users $100 per year, but testing of the options has been very positive in the majority of cases. Millennials are now the largest segment of the US population and therefore the most important customer segment for US-based retail brands. Why or why not? Introduction: Margarita Torres had bought shares of Costco Wholesale Corporation in 1997 as a slice for her personal stock collection. Costco’s main source of revenue is the United States market followed by Canada. In recent years, the company has been investing in technology to grow e-commerce sales and strengthen its existing competitive advantage. Top writers. It has allowed the company to gain a price advantage that it can pass on to its customers. Work with the audit firm, KPMG LLP, to ensure that future audits put greater emphasis on internal controls regarding information technologies. This guide is found after case 32 in your textbook Thompson A, Peteraf, M, Gamble, J & Strickland, A (2020) Crafting and Executing Strategy: The Quest for … Higher focus on customer service also helps the brand differentiate itself from the other retail brands. Scribd is the world's largest social reading and publishing site. Purpose of this Case Study To examine Costco’s business structure and strategy and how those relate to industry success 5. Costco case study | BUSI 690 – Policy and Strategy in Global Competition | Liberty University. Costco’s Kirkland signature brand is also an important attraction for affluent customers. However, this advantage is limited only to the Costco members. This will expedite the opening and keep costs down, per Bob Ripley store manager of an Anchorage, Alaska Costco and facilitator of the Fairbanks locations opening (Friedman, 2018). Abhijeet has been blogging on educational topics and business research since 2016. Costco Wholesale: Case Study. Final thoughts about this SWOT analysis of Costco Wholesale. 5 pages. Its e-commerce sales were around 4% of its total sales in 2019. Costco … Costco: A Case Study 1Business Model Costco’s business model depends on high sales volume coupled with quick inventoryturnover, made possible by low prices and limited product selection among a widevariety of branded and private label products. The retail industry in the United States is marked by intense competition and apart from Walmart and other retailers like Target, Costco is also facing increased competitive pressure due to the rise of the e-commerce brand Amazon. Costco case study and strategic analysis. Another important segment of consumers that Costco targets are small businesses. Supply chain management, apart from being a critical source of competitive advantage for the brand, is also a core pillar of Costco’s business growth strategy. Now with these same guys focusing on ecommerce, it puts even more pressure on Costco. It is a critical source of efficiency. Its approach to marketing is a lot like Starbucks. To achieve higher sales volumes, the company needs to maintain higher membership retention rates. Absence of dividends could lead to some investor dissatisfaction in the short term. These are the main factors that the company has been enjoying higher membership retention rates. While Walmart follows an open for all … Low Prices: Costco’s low price strategy is a major strength of the retail giant. In fiscal 2019, the company had a total of 42,900 Gold Star members as well as 11,000 business members. In this way, despite having a much lower gross margin as compared to the other retailers, the company is able to operate profitably by achieving higher sales volume and rapid inventory turnover. It is difficult to imagine such an error going unnoticed, however, this is a weakness in internal controls. Post author By kean; Post date September 29, 2020 Complete a case study of ABC Corporation (your instructor will assign the specific company for the case study at the beginning of Module/Week 2) . CASE ANALYSIS - WEEK 3 .docx. You need to be a member to shop at Costco. Costco Wholesale’s Strengths (Internal Strategic Factors) Costco Wholesale’s strengths are linked to the company’s current operations and strategies. Search Search Author- Abhijeet Pratap | Posted-November 2, 2020 November 2, 2020 | Updated: November 2, 2020 | Costco is among the leading physical retailers in the United States. Like Walmart, Costco also strives to offer its customers the price advantage. If Costco has been able to maintain its popularity and leading position in the US market, it is mainly because it is able to attract customers by providing good quality products at lower prices. However, Costco’s approach to retail is very different from that of Walmart. Costco’s mission is “to continually provide members with quality goods and services at the lowest possible prices.” This mission statement is directly linked to its business model and strategy. The company has maintained a clean and strong brand image, which has continued to grow stronger with time due to a consistent focus on quality and customer service. In fact, they have over half. Question whether there is an important reason that Costco ’ s strategy on! Managed a simpler but lean and agile supply chain management strategy has for. Most important customer segment for US-based retail brands some investor dissatisfaction in the United and! 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