Costco's Strengths
Costco’s strengths are linked to the company’s current operations and strategies. The strengths in the SWOT analysis model are the capabilities (internal strategic factors) that firms use for profitable business. In Costco’s case, the following are the most notable strengths: As the leading membership warehouse club chain in the United States, Costco is strong because of its market presence. The company’s name is popular among consumers. Also, Costco’s expansive supply chain is a strength that relates to the firm’s ability to achieve economies of scale. Another strength of Costco is its Kirkland Signature brand, which consumers view as a label of quality. Costco’s philosophy is to provide its members with quality goods at the most competitive
prices. It does not focus its efforts on maximizing prices in the short term, but instead focuses to maintain a perception among its members of “pricing authority”, or consistently providing the most competitive prices. These bring customers back to the warehouse, since they have the belief that they are in fact getting the best price on a wide array of products. The company also uses its gasoline business to draw members to warehouses. While this business is relatively lower margined than others, it again drives higher volumes of other higher-margined products. Also, costco’s relentless pursuit of offering high-quality products and offering great value has allowed it to attract a very loyal customer base. This has allowed the company to grow market share and increase its customer base over the years.These strengths in the SWOT analysis of Costco highlight the benefits of the company’s current position in the market. Costco’s weaknesses are based on the company’s strategic focus. The weaknesses in the SWOT analysis model are the internal strategic factors that act as limitations or barriers to business. Costco’s most important weaknesses are as follows: Costco has a limited product mix compared to the wider and more extensive selection available from competitors like Walmart. This weakness prevents maximization of revenues from consumers who might not find what they are looking for at Costco warehouses/stores. Also, Costco’s business model creates exclusivity to members and prevents other shoppers from easily purchasing at its warehouses. Moreover, because of Costco’s generic strategy, the company has the weakness of low profit margins, which leaves little room for price adjustments. This SWOT analysis of Costco shows that the company’s weaknesses are directly linked to its business model.
prices. It does not focus its efforts on maximizing prices in the short term, but instead focuses to maintain a perception among its members of “pricing authority”, or consistently providing the most competitive prices. These bring customers back to the warehouse, since they have the belief that they are in fact getting the best price on a wide array of products. The company also uses its gasoline business to draw members to warehouses. While this business is relatively lower margined than others, it again drives higher volumes of other higher-margined products. Also, costco’s relentless pursuit of offering high-quality products and offering great value has allowed it to attract a very loyal customer base. This has allowed the company to grow market share and increase its customer base over the years.These strengths in the SWOT analysis of Costco highlight the benefits of the company’s current position in the market. Costco’s weaknesses are based on the company’s strategic focus. The weaknesses in the SWOT analysis model are the internal strategic factors that act as limitations or barriers to business. Costco’s most important weaknesses are as follows: Costco has a limited product mix compared to the wider and more extensive selection available from competitors like Walmart. This weakness prevents maximization of revenues from consumers who might not find what they are looking for at Costco warehouses/stores. Also, Costco’s business model creates exclusivity to members and prevents other shoppers from easily purchasing at its warehouses. Moreover, because of Costco’s generic strategy, the company has the weakness of low profit margins, which leaves little room for price adjustments. This SWOT analysis of Costco shows that the company’s weaknesses are directly linked to its business model.