Chapter 3 Resolving International Commercial Disputes
I. General Issues Re: Resolution of Disputes
A. Method: Settle, Litigate, Arbitrate, Mediate? B. Forum: Where should the dispute be resolved? C. Law: What law applies? D. Enforcement: How can will you
number of Gold Star individual members is up from 12.7 million to 20.2 million, a solid CAGR of
6.85% (as per information in case Exhibit 1).
company sees opportunities to open about 25 stores per year.
The companys stores attract upscale consum
7. Do you approve of the decision to acquire Wild Oats Market? What pros and cons do you see?
8. Were John Mackeys Internet postings unethical or in any way inappropriate? What actions, if any, do you
disapprove of? What actions, if any, should the compan
General and admin expenses seem under control but are creeping up slightly.
Direct store expenses as a % of sales have also been creeping up, but more so in scal 2007.
Store contribution as a % of sales revenues, while a bit inconsistent over the ve-year
1. What is Costcos business model? Is the companys business model appealing? Why or why not?
2. What are the chief elements of Costcos strategy? How good is the strategy?
3. Do you think Jim Sinegal is an effective CEO? What grades wo
5, then you can expect students to probe a bit deeper in evaluating Costcos competitive strengths/weaknesses,
its potential for continued growth, and how well it is positioned to compete against Sams Club, BJs Wholesale,
and other big-box discounters like
Jim Sinegal, the companys CEO and driving force behind Costcos 23-year march to become the 4th
largest retailer in the U.S. and the 8th largest in the world, was far from a stereotypical CEO. Sinegal
was regarded as an exceptionally savvy merchandiser, wi
Costcos mission in the membership warehouse business was To continually provide our members with quality
goods and services at the lowest possible prices. The companys business model was to generate high sales
volumes and rapid inventory turnover by offer
Costco Wholesale Corp.: Mission,
Business Model, and Strategy
In 2008, Costcos sales totaled almost $71 billion at 544 warehouses in 40 states, Puerto Rico, Canada, the
United Kingdom, Taiwan, Japan, Korea, and Mexico. More than 50 of Costcos w
In January 2008, Whole Foods was named to Fortunes 2008 list of the 100 Best Companies to Work For for
the 11th year in a rowit was ranked 16th on the 2008 list, down from 5th on the 2007 list and 15th on the 2006
list but up from 30th on the 200
Cut capital expenditures to the boneuse most of the companys cash ows from operations to pay
down debt and accumulate cash reserves.
Maintain the suspension of dividend payments for the foreseeable futurecertainly until debt levels are
reduced to under $1
8. Were John Mackeys Internet postings unethical or in any way inappropriate?
What actions, if any, do you disapprove of? What actions, if any, should the
companys board of directors take with regard to his Internet postings and
blogs? Should the board be
Store appeal and shopping environment
Another question you can pose is whether Whole Foods Market has a winning strategy based on the three
criteria discussed in Chapter 1. We think students ought to be able to make a strong case tha
The data on store operations (see the bottom of case Exhibit 4) look ne for the most part. Pretty clearly,
the stores the company is adding are performing well in terms of pulling up the average weekly sales
numbers and realizing acceptable gains in compa
What evidence is there that company personnel embrace and practice the core values?
Several pieces of evidence can be cited:
Many Whole Foods team members felt good about their jobs because they saw themselves
as contributing to the welfare of society and
Another core value was We appreciate and celebrate the difference natural and organic products can
make in the quality of ones life. Commitment to this core value seems evident in the companys
product line, in the companys educational programs, and in th
150 million croissants (2007), 100 million pounds of ground beef (2007), 1 million pumpkin pies during
Thanksgiving week (2007), annual gasoline sales of $4.6 billion (2007), and 1.5 million $1.50 hot dog/
soda pop combinations per week; Costco was also t
not obtain its luxury offerings directly from high-end manufacturers like Calvin Klein or Waterford
(who were unlikely to want their merchandise marketed at deep discounts at places like Costco); rather
Costco buyers searched for opportunities to source s
TEACHING OUTLINE AND ANALYSIS
1. What was David Neelemans original strategic vision for JetBlue? Should
JetBlues strategic vision be revised now that the company has new executive
Students should have little trouble identifying the key element
This case is suitable for both written and oral presentations. Our recommended questions for written assignments
are as follows:
1. David Barger, CEO of JetBlue Airways, has employed you to develop a plan to restore the companys
growth in revenues and hea
JetBlues new management team faced many challenges ahead. JetBlues shares were in a downward spiral-dropping from $12.99 per share on February 13, 2007 to $3.97 per share on May 30, 2008. The new management
team had quickly put new operating procedures, c
JetBlue Airways: A Cadre of New
Managers Take Control
JetBlue Airways was founded in 2000 by David Neeleman, whose vision was to bring humanity back to air
travel. Neeleman believed that airlines should be able to provide a high level of custom
Raise prices fractionally. This is probably the quickest and surest route to better protability. But the
culture at Costco and Jim Sinegals strong conviction about charging the lowest possible prices will
make this option a tough sell.
Continue to open ne
have the right to good wages and good careers?.It absolutely makes good business sense. Most people
agree that were the lowest-cost producer. Yet we pay the highest wages. So it must mean we get better
productivity. Its axiomatic in our businessyou get wh
Fiscal years ending on Sunday closest to August 31
Income Statement Data
Amount of income before income taxes
that was contributed by me
Moreover, Costco employees enjoyed a benet package that included the following:
Health and dental care plans.
Convenient prescription pick-up at Costcos pharmacies, with co-payments as low as $5 for generic
drugs and generally no more than 15% co-pay fo
8. Are Costcos prices too low? Why or why not?
This is an important question to pose to the class. In the case, students will read that Costcos markups and
prices were so low that Wall Street analysts had criticized Costco management for going all out to
6. Based on the data in case Exhibits 1 and 4, is Costcos nancial performance
superior to that at Sams Club and BJs Wholesale?
Students can use the data in case Exhibits 1 and 4 to develop the following comparisons:
Merchandise costs as a % of net sales
Selling, general, and administrative
expenses as a % of total revenues
Operating income as a % of total
revenues (operating prot margin)
Moreover, Sinegal is doing a nice job in leading the strategy execution process at Costco. He spends a lot of
time in the stores, checking out store layouts and merchandising, speaking with employees, and in general
staying in close touch with how well th