Rough Draft Final paper

Rough Draft Final - Costco vs Wal-Mart I ntroduction When analyzing Wal-Mart and Costco it is important to look at more than just financials to

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Unformatted text preview: Costco vs. Wal-Mart I ntroduction 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. A new industry called behavioral finance is emerging and we are quickly realizing more and more how the emotions and reactions of society as a whole affect the returns on the stock market. The greatest example of this is the recent stock crash where it was people’s fears that lead to a hysteria in the market. Once the market started to crash everyone and their uncle exited causing a lack of capital investment, in turn leading to a larger recession. As financials froze up it was impossible for the market to rebound as there was no money being lent, hence no money being spent, hence no profits being made. I t is not only this new study of behavioral finance, but a company’s image, their strategy, their carbon footprint, and of course their revenue streams that ultimately decide the return on investment. These variables are discussed throughout the following report and will lead to the decision to go not with the company that makes larger margins, but with the socially responsible and the ethical company who believes in enriching the lives of employees and customers is of greater importance than returns on equity. Costco vs. 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 are 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 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. In contrast, Wal-Mart is the number one retailer in the United States; it is the wealthiest and most powerful corporation in the world. The company operates large discount retail store selling a broad range of products such as clothing, consumer electronics, drugs, outdoor equipment, guns, toys, hardware, CDs and books. Wal-Mart also operates "Supercenters" which include grocery supermarkets. Included in the above are “warehouse clubs," Sam Club’s stores in particular which are similar to Costco’s strategy of...
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This note was uploaded on 09/08/2010 for the course BUS 189 at San Jose State University .

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Rough Draft Final - Costco vs Wal-Mart I ntroduction When analyzing Wal-Mart and Costco it is important to look at more than just financials to

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