Costco External Industry Analysis
Introduction
Costco has grown from a single location in Seattle, Washington and is now the largest membership based retailer and currently the 6th largest overall retailer in the United States. In 2011, Costco saw a 10% increase in sales and in 2012, Costco is planning on opening 14 new store locations, three of which will be outside of the US. Costco is no longer a small local retailer but now an international company with different threats and opportunities. As the company continues to grow, it is important for Costco to understand the external threats and opportunities that will impact the company in either a positive or negative way. In order understand these forces a SLEPT analysis is used to analyze the social, legal, economical, political and technological impacts on Costco.
SLEPT Analysis
Social
Recently, manufactures have been under attack for exploiting overseas workers for cheap labor. Companies like Apple and Victoria’s Secret are recent examples of companies that have been criticized for the companies labor activities. According to a story by the New York Times, “Employees work excessive overtime, in some cases seven days a week, and live in crowded dorms. Some say they stand so long that their legs swell until they can hardly walk (par. 8).” Many of the workers are children forced to work in these conditions. In the same article by the New York Times, a former Apple executive said: “most people would still be really disturbed if they saw where their iPhone comes from (par. 26).” As stories like these start to come to light, Costco could begin to face pushback from consumers of these products, many of which Costco sells. Costco can see this as an opportunity to push manufacturers to implement changes in the manufacturing process. Costco may also be threatened because, if manufacturers are forced to change the manufacturing process, it will result in higher prices and sales will plummet. Also consumers may choose not to purchase these products.
Costco has grown from a single location in Seattle, Washington and is now the largest membership based retailer and currently the 6th largest overall retailer in the United States. In 2011, Costco saw a 10% increase in sales and in 2012, Costco is planning on opening 14 new store locations, three of which will be outside of the US. Costco is no longer a small local retailer but now an international company with different threats and opportunities. As the company continues to grow, it is important for Costco to understand the external threats and opportunities that will impact the company in either a positive or negative way. In order understand these forces a SLEPT analysis is used to analyze the social, legal, economical, political and technological impacts on Costco.
SLEPT Analysis
Social
Recently, manufactures have been under attack for exploiting overseas workers for cheap labor. Companies like Apple and Victoria’s Secret are recent examples of companies that have been criticized for the companies labor activities. According to a story by the New York Times, “Employees work excessive overtime, in some cases seven days a week, and live in crowded dorms. Some say they stand so long that their legs swell until they can hardly walk (par. 8).” Many of the workers are children forced to work in these conditions. In the same article by the New York Times, a former Apple executive said: “most people would still be really disturbed if they saw where their iPhone comes from (par. 26).” As stories like these start to come to light, Costco could begin to face pushback from consumers of these products, many of which Costco sells. Costco can see this as an opportunity to push manufacturers to implement changes in the manufacturing process. Costco may also be threatened because, if manufacturers are forced to change the manufacturing process, it will result in higher prices and sales will plummet. Also consumers may choose not to purchase these products.
References: Duhigg, C., & Barboza, D. (2012, January 25). In China, human costs are built into an iPad. The New York Times Gorondi, P. (2012, February 20) Oil jumps to 9-month high after Iran cuts supply, MSNBC. Retrieved from http://www.msnbc.msn.com/id/46453240#.T0LFqkrcjRw Li, S. (2012, Feb 2). Retail sales climb healthy 4.2% in January. LA Times. Retreived from http://www.latimes.com/business/money/la-fi-mo-retail-sales-20120202,0,5173912.story Pagliery, J. (2012, February 24). Health care reform isn 't a job killer – yet. CNN Money. Retrieved from http://money.cnn.com/galleries/2012/smallbusiness/1202/gallery.health-care-reform