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Final final Paper - FINAL COPYt

Final final Paper - FINAL COPYt - ate University Dr Trance...

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ate University Dr. Trance co v. Wal-Mart Dollar Investment Analysis
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Table of Contents ........................................................................................................................................... Introduction ............................................................................................................................................................. 3 ..................................................................................................... Costco vs. Wal-Mart: Who are they? ............................................................................................................................................................. 3 .................................................................................................................................. Costco’s Strategy ............................................................................................................................................................. 4 ............................................................................................................................... Wal-Mart’s Strategy ............................................................................................................................................................. 7 Mergers and Acquisitions 9 .................................................................................................................................... The 5 th P: People ........................................................................................................................................................... 11 .................................................................................................................................. Financial Analysis ........................................................................................................................................................... 13 Conclusion 16 2
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Introduction When analyzing Wal-Mart and Costco, it is important to look at more than just financials to decide where to invest our $1 million. Although at the end of the day it is the financials that will ultimately decide whether or not we make a return on our investment, there is a lot that goes into those financials. We will focus on strategies implemented by each company respectively, the focus of the class – Strategic Management. The three specific strategies we will focus on are functional-level, business- level, and corporate-level. Each a precursor of the latter, require a proper and successful implementation of their predecessor. First you must have a successful functional-level strategy, enabling you to implement business-level strategies and if you are lucky enough, corporate-level strategies will follow. Although the corporate-level strategy is the least common, in large companies like Wal-Mart and Costco these strategies do play a role in the ultimate financial outcome of the company. The variables included in these different strategies are discussed in detail in the following essay. The goal of this analysis is to decide which company we would invest $1 million into. Our decision is to invest $1 million in Wal-Mart. We chose Wal-Mart on the basis that their functional- level strategy is stronger where it matters most, regardless of the fact that they do not treat their customers both internally and externally well, they are financially stronger than Costco, have a better business-level strategy, and have a corporate-level strategy that is related to their distinctive competencies whereas Costco lacks a corporate-level strategy. Costco v. Wal-Mart: Who are they? Costco Wholesale Corporation operates an international chain of membership warehouses that carry quality, brand name merchandise at substantially lower prices than typically found at conventional wholesale or retail sources. Costco's warehouses present one of the largest and most exclusive product categories such as groceries, candy, appliances, television and media, automotive 3
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supplies, tires, toys, hardware, sporting goods, jewelry, watches, cameras, books, house wares, apparel, health and beauty aids, tobacco, furniture, office supplies and office equipment. Costco offers three types of membership: Business, Gold Star (individual) and the Executive membership. Business members qualify by owning or operating a business, and pay an annual to shop for resale, business and personal use. Gold Star members are available to those individuals that do not own a business. Executive Membership offers all of the usual benefits and also allows members to purchase a variety of discounted consumer services at substantially reduced rates.
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