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Unformatted text preview: Case 2 Costco Wholesale 1 Case 2 Costco Wholesale Case 2 Costco Wholesale 1. What is Costco’s business model? Is the company’s business model appealing? Why or why not? Case 2 Costco Wholesale 2 According to Thompson, Strickland, and Gamble the company’s business model is to generate high sales volumes and rapid inventory turnover by offering members very low prices on limited selection of nationally branded and select private-label products in a wide range of merchandise categories. I would think that their model is very appealing to the consumer’s eye due to the way the economy has been over the past few years. Every customer loves price reductions and bargains on name brand items. If this is something done often their goals will be met. 2. What are the chief elements of Costco’s strategy? How good is the strategy? The chief elements of Costco’s strategy are to keep prices low to members and cap margins on brand name merchandise at 14%. This is great because their giving what they promise in their mission statement and model. Costco seems to also be 20% below other comparable prices in the market. Their brands are of equal or better quality than some national brands. 3. Do you think Jim Sinegal is an effective CEO? What grades would you give him in leading the process of crafting and executing Costco’s strategy? What support can you offer for these grades? Refer to Figure 2.1 in Chapter 2 in developing your answers. Jim Sinegal is doing an awesome job in being an effective leader and CEO especially since this company has been in business for 25 years according to the text, Costco is the fourth largest in the United States and the eighth largest in the world. In order to last this long they must be doing something along the lines that the consumer’s approve. I would give Jim an A because his strategy is followed down to the core otherwise the business would not achieve the goals as intended. The support that can be offered for this grade is the fact that the Wall Street...
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This note was uploaded on 08/30/2010 for the course MANAGEMENT 3467783 taught by Professor Langly during the Summer '10 term at University of Phoenix.
- Summer '10