Costco Case Analysis
Costco Case Analysis
Costco Case Analysis
Costco was established in 1983 by Jim Sinegal and Jeff Brotman. Together they established Costco as the leading wholesale company in the United States and have moved its operations into the international market. Just like many successful companies they established a strategy that has allowed them to obtain an advantage over their competitors and gained a market share which includes but does not limit them to a more affluent clientele. In this review, Costco’s strategy, mission, objectives and external environment will be reviewed. A financial analysis of the companies financial statements will be presented and compared to its biggest competitor, Sam’s Club to illustrate that Costco has captured a large market share and gained a competitive advantage over its competitor through the company’s unique strategy which includes “low prices, a limited product line and limited selection and a “treasure hunt” shopping environment” (Thompson, pg C-35).
Mission and Business Model According to (Thompson, pg C-35) Costco’s mission is “To continually provide our members with quality goods and services at the lowest possible prices.” Thompson further points out that the “company’s business model was to generate high sales volumes and rapid inventory turnover by offering members very low prices on a limited selection of nationally branded and select private-label products.” Costco stores provide fewer choices, 4000 compared to Wal-Mart or Target that have as many as 150,000 items. Costco will also offer high priced items at a significant price reduction for what they refer to as Treasure-Hunt Merchandising with price tags of $50,000 to $250,000. They obtain the higher priced merchandise from “wholesalers or distressed retailers” that want to move their product or get rid of it, so they are willing to sell it to Costco at a huge discount which Costco then turns around and sells it to their customers at a huge discount
Costco Case Analysis
Costco was established in 1983 by Jim Sinegal and Jeff Brotman. Together they established Costco as the leading wholesale company in the United States and have moved its operations into the international market. Just like many successful companies they established a strategy that has allowed them to obtain an advantage over their competitors and gained a market share which includes but does not limit them to a more affluent clientele. In this review, Costco’s strategy, mission, objectives and external environment will be reviewed. A financial analysis of the companies financial statements will be presented and compared to its biggest competitor, Sam’s Club to illustrate that Costco has captured a large market share and gained a competitive advantage over its competitor through the company’s unique strategy which includes “low prices, a limited product line and limited selection and a “treasure hunt” shopping environment” (Thompson, pg C-35).
Mission and Business Model According to (Thompson, pg C-35) Costco’s mission is “To continually provide our members with quality goods and services at the lowest possible prices.” Thompson further points out that the “company’s business model was to generate high sales volumes and rapid inventory turnover by offering members very low prices on a limited selection of nationally branded and select private-label products.” Costco stores provide fewer choices, 4000 compared to Wal-Mart or Target that have as many as 150,000 items. Costco will also offer high priced items at a significant price reduction for what they refer to as Treasure-Hunt Merchandising with price tags of $50,000 to $250,000. They obtain the higher priced merchandise from “wholesalers or distressed retailers” that want to move their product or get rid of it, so they are willing to sell it to Costco at a huge discount which Costco then turns around and sells it to their customers at a huge discount
References: Thompson, A. (2010). Costco Wholesale in 2008: Mission, Business Model, and Strategy. Business Strategy Game. Money Central. Costco. http://moneycentral.msn.com/investor/invsub/results/compare.asp?Page=FinancialCondition&Symbol=COST. Retrieved February 19, 2011.