Case Study Assignment 2

Case Study Assignment 2 - Case Study Assignment 2 Costco...

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Case Study Assignment 2: Costco Wholesale 1 Case Study Assignment 2: Costco Wholesale Dustin Taylor Thomas Edison State College BUS-421 Business Policy
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Abstract Costco was founded in Seattle, Washington in 1983. That was also the year in which Wal-Mart launched their first warehouse format store, in the form of Sam’s Club. Since then, both have become among the largest retailers in the world. Costco now has 583 stores and over 60 million members througout the world (Costco Wholesale Corporation, 2011). This case study examines Costco’s business model, strategy, and their recent financial performance. By using a SWOT analysis, this case study will determine whether the business decisions that Costco management is making are the decisions needed to sustain the growth that the company is currently enjoying. Case Study Assignment 2: Costco Wholesale
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Case Study Assignment 2: Costco Wholesale 3 Introduction Costco, Sam’s, and B.J.’s: are you familiar with these stores? Chances are you probably have at least one of these chains in your area. All three of the chains offer bulk and/or discounted items to members who pay a yearly membership fee. By eliminating the frills from the shopping experience, they are able to offer products to their shoppers at a price consistently lower than that of most retail stores. This case study concentrates on the elements of Costco’s business model, strategy, and offers an insight as to what makes their company unique. Business Model The business model used by Costco is a business model similar to the one used by most of the warehouse type stores. Costco strives “To continually provide our members with quality 2010). By having high sales volume, offering a very limited selection of merchandise, and having a high inventory turnover, they are able to offer their products at low prices. Most of the inventory in a Costco is paid off before the account comes due, allowing Costco to take advantage of discounts provided by their vendors. Costco’s Strategy Costco varies from most supermarkets or departments stores because of their firm rules involving price markups. At Costco, no branded item can be marked up by more than 14 percent and no private-label item by more than 15 percent (Greenhouse, 2005). When compared to normal industry markups of between 25 and 50 percent, it’s easy to see that Costco enjoys a
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This note was uploaded on 07/13/2011 for the course BUS 421 taught by Professor Ness during the Spring '11 term at Edison State College.

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Case Study Assignment 2 - Case Study Assignment 2 Costco...

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