Costco - strategy which is to cap the margins on branded...

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How well is Costco performing from a strategic perspective? Does Costco enjoy a competitive advantage over Sam’s Club? Over BJ’s Wholesale? If so, what is the nature of its competitive advantage? Does Costco have a winning strategy? Why or why not? Costco has been very successful in the wholesaling industry as it can be seen from its business strategies. Costco’s members are given a limited selection of nationally branded and select private label products in a wide range of merchandise categories. Costco combine its rapid inventory turnover with the operating efficiencies to run the business profitably at significant lower gross margins. As a result, Costco takes advantages of its high sales volume and rapid inventory turnover to obtain the benefits of early payment discounts from merchandise vendors due to the high sales volume and rapid inventory turnover allow Costco to generate enough cash in account. The pricing strategy of Costco is key factors to support the low price business
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Unformatted text preview: strategy which is to cap the margins on branded name merchandise at 14 percent so that its members can buy with low price. Costcos main competitors are BJs Wholesale Club and Sams Club. All three are similar companies with the same class of customers and very similar sort of products provided. Costco has the leading position among customers as the number one supplier of variable products and low prices. Costco's competitive advantage is centered upon its ability to buy in enormous bulk, consolidate, and sell in its stores. Sam's Club and BJ's Wholesale Club stores duplicate Costcos approach, with one significant difference the companys approach towards its work force. Costco's larger membership base also provides some advantage. Costcos maintains only marginal advantage over these two companies in terms of concept and pricing, but among the three they have conquered the U.S. market....
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This document was uploaded on 12/05/2010.

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