What Is Costco's Business Model?
Contents
1. What is Costco 's business model? Is the company 's business model appealing? 3
2. What are the chief elements of Costco 's strategy? How good is the strategy? 4
3. What two core values or business principles has Jim Sinegal stressed at Costco? 6
4. How well is Costco performing from a financial perspective? 7
5. What recommendations would you make to Costco top executives regarding how best to sustain the company 's growth and improve its financial performance? 8
6. Evaluate the recommendations you made in Q5 and select one or two optimal ones. 8
Recommendation 1 8
Recommendation 2 8
Recommendation 3 9
7. Generate an implementation plan for the one or two optimal recommendations. 9
8. Summarize this case by developing a brief SWOT analysis for Costco. 11
References 12
1. What is Costco 's business model? Is the company 's business model appealing?
In defining Costco’s business model we should first go over their value proposition. A company’s value proposition is the cluster of tangible and intangible items or services that are believed to offer marketable utility to prospective customers (Kotler & Keller, 2009, p. 123). Costco is an international chain of discount …show more content…
The profitability ratios associated with Costco from 2008-2011, show a lot of stability, but not as much growth as shareholders would like to see. Gross profit margin, operating profit margin, and the return on assets all appear to grow very slight from 2009 on, but there is a noticeable drop off that can be seen from the previous years before the macroeconomic challenges hit North America. The most noticeable upward trend can be seen with the operating profit margin. This margin increased from 2.49% in 2009 to 2.66% in 2010. It then increased to 2.74% in 2011. Return on equity dropped from 13.96% in 2008 to 10.84% in 2009. This rate has fluctuated slightly but has not been as low as it was after the macroeconomic
1. What is Costco 's business model? Is the company 's business model appealing? 3
2. What are the chief elements of Costco 's strategy? How good is the strategy? 4
3. What two core values or business principles has Jim Sinegal stressed at Costco? 6
4. How well is Costco performing from a financial perspective? 7
5. What recommendations would you make to Costco top executives regarding how best to sustain the company 's growth and improve its financial performance? 8
6. Evaluate the recommendations you made in Q5 and select one or two optimal ones. 8
Recommendation 1 8
Recommendation 2 8
Recommendation 3 9
7. Generate an implementation plan for the one or two optimal recommendations. 9
8. Summarize this case by developing a brief SWOT analysis for Costco. 11
References 12
1. What is Costco 's business model? Is the company 's business model appealing?
In defining Costco’s business model we should first go over their value proposition. A company’s value proposition is the cluster of tangible and intangible items or services that are believed to offer marketable utility to prospective customers (Kotler & Keller, 2009, p. 123). Costco is an international chain of discount …show more content…
The profitability ratios associated with Costco from 2008-2011, show a lot of stability, but not as much growth as shareholders would like to see. Gross profit margin, operating profit margin, and the return on assets all appear to grow very slight from 2009 on, but there is a noticeable drop off that can be seen from the previous years before the macroeconomic challenges hit North America. The most noticeable upward trend can be seen with the operating profit margin. This margin increased from 2.49% in 2009 to 2.66% in 2010. It then increased to 2.74% in 2011. Return on equity dropped from 13.96% in 2008 to 10.84% in 2009. This rate has fluctuated slightly but has not been as low as it was after the macroeconomic