Costco mini case study Essay

1. What is Costcos melody dumbfound? Is the phoners business model appealing? Why or why non? Generating high sales volume and rapid record overturn by quite a little uping fee-paying members low prices on nationally mark and private-label products. Yes, it is appealing because the fees paid by members allowed for sufficient supplemental revenues date the turnover rates allowed Costco to receive cash for inventory before it had to pay numerous of its merchandise vendors.2. What atomic number 18 the chief elements of Costcos scheme? How good is the dodge? Pricing, product selection, treasure hunt merchandising, low cost emphasis, and growth are the chief elements of Costcos dodge. It is a genuinely good strategy because they offer the lowest prices no matter what.3. Do you ideate Jim Sinegal has been an effective chief operating officer? What grades would you give him in leading the process of crafting and executing Costcos strategy? What support can you offer for th ese grades?Refer to Figure 2.1 in Chapter 2 in developing your answers. Yes, I do think Jim Sinegal has been an effective CEO. I would give him an A in crafting and executing Costcos strategy because he has been excellent in developing a strategic vision of a no-frills and low-cost store, mission, and core values, a commodious with setting objectives of fast inventory turnover and offering the lowest prices at Costco. He has also through a good job of crafting the strategy by finding forth what works best while in charge of his first store, monetary value federation. He executes and monitors the strategy to achieve the objectives and vision by visiting his birth stores and making sure that operations are running in the most(prenominal) smooth and cost efficient way possible for both businesses and private members.4. What core values or business principles has Jim Sinegal stressed at Costco? Sinegals five core values include Obey the law, take oversee of our members, take care of our employees, respect our suppliers, and reward our shareholders.5. What is competition like in the North American in large quantities club indus return? Which of the five hawkish forces is strongest and why? Use the information in Figures 3.4, 3.5, 3.6, 3.7, and 3.8 (and the related discussions in Chapter 3) to do a complete five-forces analysis of competition in the North American wholesale club industry. Competition in the North American wholesale club industry is growing 15-20 percent faster than retailing as a whole. The three main competitors are Costco, surface-to-air missiles, and BJs sweeping. Firms in early(a) industriesoffering substitute products is the strongest of the five competitive forces because companies like Wal-Mart or net profit retailers are not in the retail wholesale industry scarcely put increased pressure on Costco by covering many an(prenominal) of the same types of merchandise at actually low prices as well. in all wholesale clubs (Costco, Sa ms Club, and BJs Wholesale) offer low prices to draw in members and provide them with considerable cost savings enough cover or exceed membership fees. It is easy for a consumer to switch their membership from interlocutor to wholesaler, thus increasing rivalry, which is a strong force in this industry. The windowpane to enter the warehouse club industry is relatively small, unless an outsider firm to acquire BJs Wholesale Club, intending to expand into places where there are no BJs stores. The barriers for a newcomer are high therefor the threat of new entrants is weak. While a big percentage of manu accompanimenturers for these retailers or discounters are large, they arent always in a strong bargaining put that could allow them to dictate the terms or conditions by which they would supply their products to their individual warehouse clubs, thus making bargaining post of the suppliers weak.The bargaining power of the emptor is also weak because of the small influence that a n individual buyer has in relation to the wholesalers total sales. The threat of substitutes is very high in this industry. There are many places that one could go to purchase the same item. The buyer is also often times more(prenominal) familiar with a substitute retailer.6. How well is Costco execute from a fiscal perspective? They are doing very well from a financial perspective. whatever of the numbers do not look good to the traditional investor, only if that is because Costco is not a traditional company. The current ratio shows that Costco can touch on all current liabilities, while liquidity is also high (which essence the company can quickly convert assets into cash). Profit is also always increased by not having to store inventory.7. Based on the selective information in case Exhibits 1, 5, and 6, is Costcos financial performance superior to that at Sams Club and BJs Wholesale? Costco is turning in much high numbers for total revenue than BJs and higher sales than Sams. Costco holds 57 percent of the grocery share while BJs has 8 and Sams has 35 percent.8. How well is Costco performing from a strategic perspective? Does Costco enjoy a competitive reward over Sams Club? Over BJs Wholesale? If so, what is the nature of its competitive advantage? Does Costco have a winningstrategy? Why or why not? They are performing very well from a strategic perspective. No, Costco does not enjoy a correct competitive advantage over Sams. It does however enjoy a competitive advantage over BJs. the nature of this competitive advantage includes the fact that BJs has too many products, which returns rapid turnover harder to achieve. I think that Costco has a winning strategy because they are selective with the products they choose to sell, they encompass their workers well (which in turn creates higher productivity), and they are able to sell a big volume of products, keeping prices down, along with expenses and overhead costs.9. are Costcos prices too low? Why or why not?Many would argue that their prices are too low, with only 14% markup. I do not believe that they are. If the prices werent so drastically low, the company would not attract so many interested buyers. These prices are what set the company apart from many other competitors, and are therefor undeniable for the companys success. 10. What do you think of Costcos compensation practices? Does it move you that Costco employees apparently are rather well-compensated? Better compensated than employees at Sams Club or BJs? I think that Costcos compensation practices are once again, smart.When employees are happy, they are productive. When they are productive, they evolve more done. When they get more done, it eliminates the need for excess employees to do what could be done by productive employees in the workplace. It would slightly surprise me that they are so well compensated (better compensated than Sams Club of BJs) before reading the entirety of this case because of the no-frills policy that Costco has patently adopted, but it also makes sense after reading this case ingest that the employees are so well cared for. It saves and earns Costco excess money in the long run through rising productivity and encouraging positive word-of-mouth. 11. What recommendations would you make to Costco top executives regarding how best to sustain the companys growth and purify its financial performance?I would tell Costcos top executives to try and acquire BJs wholesale, thus acquiring their 8 percent market share. I would also encourage the implementation of self-checkout in stores for ease and public toilet of theindividual consumer. Other than that, I think that Costco has a strong business strategy and is implementing strategies currently to sustain the companys growth and reform financial performance.