COSTCO (3) - COSTCO WHOLESALE By: Ruth Riley Jeff Wilkins...

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C OSTCO WHOLESALE By: Ruth Riley Jeff Wilkins Anne Eshelman Kevin Kocher
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CASE ANALYSIS Company History While researching the COSTCO Wholesale Warehouse Corporation I kept hearing a repeating refrain playing through my head. It went something like “Anything you can do, I can do better. I can do anything better than you”. Costco the brain child of Jim Sinegal came about as he worked for another corporation called Sol Price which started the first Price Club back in the 70’s. Jim then a young man got his start at the company by loading mattresses for the store while he attended College. These were quite meager beginnings for a man who now controls a multi-billion dollar business. But Jim Sinegal was wise; while moving through the ranks of the Sol-Price store employees he was observing everything, learning the intricacies of the behind the scene business and also planning in his head ideas he would change, ideas he would keep and those that simply were no good he’d throw out once he started his own company. When Mr. Sinegal felt he’d learned as much as he could with Sol Price he joined up with Jim Brotman and founded Costco. Their first store opened in Seattle in 1983. The concept behind Costco then and now was simple as their CEO Jim Sinegal once stated “Costco is able to offer lower prices and better values by eliminating virtually all the frills and costs historically associated with conventional wholesalers and retailers, including salespeople, fancy buildings, delivery, billing and accounts receivable.” ( http://phx.corporate-ir.net/phoenix ). In today’s economy who wouldn’t want to shop in a store where they knew they would get good quality for fair prices?
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Mission Costco’s mission is to provide ‘quality goods and services at the lowest possible prices’. Objective Their objective is to generate high sales, and fast inventory turnover by offering members a limited selection of national brands and select private-label products in a wide range of merchandise categories at very low prices. Strategy Costco’s strategy deals with keeping prices low, limiting product lines and limiting selections, and providing a ‘treasure hunt’ shopping experience. The fact that the CEO shows concern for his workers earning a mere $350,000 per year (not including his stock options and benefits package) while paying his average worker $17.00 an hour speaks volumes towards his belief that you don’t have to earn a lot to spend a lot to do big business. Industry Attractiveness The attractiveness of COSTCO is rests in several factors. The first being the offer of membership; everyone wants to belong to something and they want to believe that by belonging there is a long term benefit. COSTCO offers three levels of membership and each level offers something special the three levels are Business, Gold Star and Executive. The second attractive
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This note was uploaded on 08/21/2010 for the course BUS 421 taught by Professor Holt during the Spring '10 term at Southern Oregon.

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COSTCO (3) - COSTCO WHOLESALE By: Ruth Riley Jeff Wilkins...

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