CASE STUDY

Case Study: Costco Wholesale 2008

[Name of the Institute]

Case Study: Costco Wholesale 2008

Introduction

Costco Wholesale is the fourth largest retailer in United States, and it has maintained this position for last 27years. It is the eight largest retailers in the world, having 413 retail stores in United States by the end of 2009. Costco has global presence and has its retail stores present in Canada, United Kingdom, Japan and Korea too. Costco operates in 40 states and 9 countries, and its revenues are noted to be 741 billion. Per day transactions of Costco Wholesale have been estimated to be 1.4 million. James Sinegal and Jeferry Brotman are the founders of Costco Wholesale. The purpose of this report is to analyze and evaluate the business structure and strategies of Costco Wholesale. Costco differentiates itself from other retailers by applying unique strategies related to operations, production and marketing. These strategies help Costco in standing out from all the other retail stores and maintaining its position in the market. The mission of Costco is to provide customers with best quality products at the lowest rates and costs possible (Thompson, 2008, pp. 1).

SWOT ANALYSIS

(Albert S Humphrey originated SWOT Analysis in 1960's)

PORTER5

Forces

(Michael Porter presented Porter's 5 force model)

PRODUCT LIFE CYCLE

(Theodore Levittpresented the economic theory of product life cycle in 1965)

VALUE CHAIN

ANSOFF

(First published in Harvard Business Review in 1957)

PEST ANALYSIS

(Francis Aguilar presented PESTEL Analysis in 1967)

7S

(McKinsey presented the 7S Model)

Strength of Costco Company

Costco has diversified products and services, which has helped it in maintaining a good position in the global market.

Costco Company has a strong market position, which helps in dealing with the competitors.

They have to spend less on advertisement, as their market position and awareness is already strong. This also helps in spending less cost on promotion and advertisement.

The management of Costco is strong, and is efficiently handling all their activities by implementing effective strategies.

 Suppliers

The suppliers of Costco Company are exerting pressure on Costco. There are so many retailers present in the market, and the suppliers can sell their products through any retailer. This provides the suppliers like P&G have bargaining power. Costco has to fulfill the needs and requirements of its suppliers.

 Costco is in the maturity stage of product life cycle. Though the company is profitable, its sales are not increasing remarkably. Costco Company has strong brand awareness, and globally people are aware of the brand.

 Costco company has broad distribution channel. It runs continuous production lines, is well-known as a powerful purchaser. They create value by continuously improving the operational performance and efficiency. Costco Company has also reduced its business risk by enhancing the business opportunity.

 Product Development

In the existing market, they are providing the buyers with a variety of already existing products.

Diversification

Costco Company is providing its customers with diversified range of products.

 Political

The political environment influences the business practices of Costco company. Costco has global existence, and the political forces of different countries influence Costco in different ways. It follows the rules and regulations of United States political ...