Costco Wholesale Corporation: Mission, Business Model, and Strategy
Case Analysis 1
Costco Wholesale Corporation:
Mission, Business Model, and Strategy
Renee Francia
Strategic Human Resources
BME 0939883
May 2013 Term
Company Background
Costco Wholesale Corporation (Costco) is a retail membership warehouse chain which was founded by Jim Sinegal and Jeff Brotman in 1983. Headquartered out of Issaquah, Washington, Costco has grown in to one of the largest wholesale giants in the industry. The company’s business model was to generate high sales volumes and rapid inventory turnover by offering members low prices on a limited selection of nationally branded and selected private-label products in a wide range of merchandise categories (Gamble & Thompson Jr., 2009, p. 217). This concept was created using the Price Club model, a member warehouse retailer that has stores primarily on the west coast and was a pioneer of the membership warehouse concept, as Sinegal was a former manager there.
The first Costco store opened in Seattle the same year that Wal-Mart launched its warehouse membership format, Sam’s Club (Gamble & Thompson Jr., 2009, p. 216). The mission Costco had in mind was, “To continually provide our members with quality foods and services at the lowest possible prices” (Gamble & Thompson Jr., 2009, p. 217). This business model proved to be effective and Costco was able to open new stores with funding from public shareholders. After this expansion, Costco became the first U.S. company to reach $1 billion in sales in less than six years (Gamble & Thompson Jr., 2009, p. 217). In 1993 Costco merged with Price Club and was renamed PriceCostco. In 1997 PriceCostco changed its name to Costco Companies Inc. and then again to Costco Wholesale Corporation after their relocation to Washington.
Strategy
Costco was planned using a strategic vision of providing affordable high-quality products with a quick turnover rate while participating in responsible and sincere business practices. The cornerstones of
Costco Wholesale Corporation:
Mission, Business Model, and Strategy
Renee Francia
Strategic Human Resources
BME 0939883
May 2013 Term
Company Background
Costco Wholesale Corporation (Costco) is a retail membership warehouse chain which was founded by Jim Sinegal and Jeff Brotman in 1983. Headquartered out of Issaquah, Washington, Costco has grown in to one of the largest wholesale giants in the industry. The company’s business model was to generate high sales volumes and rapid inventory turnover by offering members low prices on a limited selection of nationally branded and selected private-label products in a wide range of merchandise categories (Gamble & Thompson Jr., 2009, p. 217). This concept was created using the Price Club model, a member warehouse retailer that has stores primarily on the west coast and was a pioneer of the membership warehouse concept, as Sinegal was a former manager there.
The first Costco store opened in Seattle the same year that Wal-Mart launched its warehouse membership format, Sam’s Club (Gamble & Thompson Jr., 2009, p. 216). The mission Costco had in mind was, “To continually provide our members with quality foods and services at the lowest possible prices” (Gamble & Thompson Jr., 2009, p. 217). This business model proved to be effective and Costco was able to open new stores with funding from public shareholders. After this expansion, Costco became the first U.S. company to reach $1 billion in sales in less than six years (Gamble & Thompson Jr., 2009, p. 217). In 1993 Costco merged with Price Club and was renamed PriceCostco. In 1997 PriceCostco changed its name to Costco Companies Inc. and then again to Costco Wholesale Corporation after their relocation to Washington.
Strategy
Costco was planned using a strategic vision of providing affordable high-quality products with a quick turnover rate while participating in responsible and sincere business practices. The cornerstones of
References: Costco Wholesale. (2012) Annual Report 2012. Costco Wholesale Corporation. Gamble, J.E. & Thompson Jr., A.A. (2009). Essentials of Strategic Management: A Quest for the Competitive Advantage. New York: McGraw-Hill Irwin. Investor Relations. (2013). Costco Wholesale Corporation. Retrieved from http://phx.corporate-ir.net/phoenix.zhtml?c=83830&p=irol-reportsannual Yahoo Finance. (2013). Costco Wholesale Corporation – NasdaqGS. Retrieved from http://finance.yahoo.com/q/bc?s=COST&t=my&l=on&z=l&q=l&c=