...Costco Companies Inc. – Case Analysis * Karthik Sundar (668943916) EXECUTIVE SUMMARY Costco is a membership only club warehouse giant that operates globally. Most of its business is concentrated in the United States with its presence in a majority of the states. It is currently having good business figures of 115 Billion dollars in revenue and a net income of 15.3 Billion dollars. The following is a case study of the hurdles faced by the management at Costco during the period of 1998 when they had come up with a new venture of offering services to its customers. Costco’s sales driver is the fact that it sell a bulk of its products at very low margin to its customers. It is able to do so as it has a large inventory at each warehouse and operational costs aren’t very high. Despite having a large inventory, it has a high number of inventory turns at each of its inventories. Such operational efficiency helps them offer products at great prices to its customers. This value offered attracts a lot of small business and general public. Costco’s customers are a good mix of such business and general customers from the public. It operates on an exclusive membership with a member enrollment fee of 40$ during the period of this case (55$ currently). Major revenue generators are food and sundries amounting to about 60% of the sales at Costco. It has a good business model of operating at good efficiency, competitive pricing, commitment to the quality and great employee focus. A combination...
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...Xie Luxuan Dorquidia Alemany Date of Submission: May 3, 2015 Title of Assignment: Costco Case Study CERTIFICATION OF AUTHORSHIP: I certify that I am the author of this paper and that any assistance I received in its preparation is fully acknowledge and disclosed in the paper. I have also cited any sources from which I used data, ideas of words, whether quoted directly or paraphrased. I also certify that this paper was prepared by me specifically for this course. Student Signature: Georgette McIntosh ******************************************* Instructor’s Grade on Assignment: Instructor’s Comments: EXECUTIVE SUMMARY he purpose of this report was to examine the implications on employees motivations used at Costco Wholesale Corporation. Research for this report included a review of he purpose of this report was to examine the implications on employees motivations A. Problem Statement: State the main problem facing the firm (or industry) in one, succinct sentence. B. Analysis: Summarize the main findings of your analysis. You may use bullet points, bold, italics – any means to convey and highlight the key factors you have determined based on your analysis. C. Alternatives: State briefly (one sentence or a bullet point each) 2 or 3 alternative courses of action that could be implemented D. Recommendation: Choose one course of action and support your choice. E. Implementation: Briefly (2 or 3 sentences) present...
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...Question 1 What is Costco’s business model? Is the company’s business model appealing? Why or why not? Costco’s business model focuses on selling limited selection of products at low prices, often at very high volume and rapid inventory turnover. These goods are bulk-packaged and marketed primarily to large families and businesses. Costco does not carry multiple brands or varieties where the item is essentially the same. It provides members with a selection of only about 4000 items, this results in a high volume of sales from a single vendor, allowing further reductions in price, and reducing marketing costs. Costco also saves money by not stocking extra bags or packing materials; to carry out their goods, customers must bring their own bags or use the merchandise shipping boxes from the company's outside vendors. Costco’s business model is appealing because rapid inventory turnover, high sales volume per warehouse, low prices, reduced handling of merchandise, are all elements that create value to a Costco’s members, and make the company successful. Question 2 What are the chief elements of Costco’s strategy? How good is the strategy? The chief elements of Costco’s strategy are: Low prices: Costco’s pricing strategy is to cap the margins on brand-name merchandise at 14 percent (compared to 20-50 percent margins at other discounters and many supermarkets. The margins on Costco’s private-label Kirkland Signature items are a maximum of 15 percent. Costco’s strategy...
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...Management Strategies Case Study #2 Competition among the North American Warehouse Clubs As of 2010 the nearly $215 billion discount warehouse and wholesale club segment within the North American retailing industry consisted of three major competitors (Thompson, C55-73). These competitors included Costco Wholesale, Sam’s Club which is also a Wal-Mart subsidiary, and BJ’s Wholesale Club. All three of these warehouse clubs also competed with a wide range of other types of retailers such as retailer discounters like Wal-Mart and Dollar General, general merchandise chains like Target and Kohl’s, specialty chains like Office Depot and Staples in office supplies and Best Buy in electronics and DVDs, supermarkets, gas stations, and even internet retailers (Thompson, C55-73). The competitive forces which influence these wholesale businesses are the suppliers, substitute products, buyer, new entrants, and rival firms. The strongest force out of these five competitive forces is rival firms. Costco, Sam’s Club, and BJ Wholesales are all competing for equivalent buyers within the North American wholesale club industry and market. BJ while on the smaller scale, does still have competition from both Costco and Sam’s Club, however they have not been as affected by their competition on the East Coast. Unlike BJ Wholesale Costco and Sam’s Club are both international. Even though Costco has a considerable market share they still have pretty stiff competition when it comes to Sam’s...
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...Costco Pharmacy POM Audit Team 7 Executive Summary Design of Goods and Services- Costco can be seen to be in their maturity stages of their life. Therefore, it is recommended for Costco to expand its Pharmacy department by at least 50%. Process Design-Costco processes prescriptions and provides the prescribed drugs to customers. For each prescription, pharmacists carefully review the dosage along with other drugs you may be taking in order to prevent any chance of medications interacting with each other. They also ensure you do not receive any medication which could result in an allergic reaction. It is recommended to introduce E-prescribing in the near future as it would reduce the duration for each prescription process. Layout-The Costco Pharmacy Layout can be defined as a Retail Layout. The main objective of a retail layout is to maximize profitability per square foot of floor space. However further research will need to be conducted to make a recommendation Capacity- Even though the pharmacy department is not operating at 100% efficiency, it is still using and managing their facilities effectively, operating at 72% efficiency on a daily basis. However, future capacity planning is required as the efficiency capacity is increasing as population grows. Productivity- The labor productivity is currently5 units per labor hours while the multifactor productivity is 0.040 units per dollar. After auditing Costco’s productivity it was found that Costco should aim to increase...
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...challenges of a dynamic global environment while upholding ethical values and encouraging civic and social responsibility. The faculty promotes an environment supportive of applications-oriented learning by engaging in a balance of discipline-based, business pedagogy, and practice-based intellectual contributions. I. Catalog Description: The capstone course for the MBA. The course assumes that the company success depends upon formulation of an astute “game” plan and the ability to implement and execute that game plan proficiently. The purpose of the class is to enable students to “think strategically,” consider the total enterprise, and to make long-term decisions in a global market environment. A prerequisite for the Integrative Case Study. II. Prerequisites: - Student must be in last semester of course work and have approval of advisor. - Justification: This is a capstone course that draws upon all of the MBA core courses and stresses complex and interdisciplinary applications of the combined theories and experiences of these core courses. III. Course Learning Outcomes: This course has been developed to help you adapt to the rapidly changing markets, globalization, shifting government policies, new technologies and increasingly fickle consumer tastes, all which make the task of strategic management more difficult and critical over time. After taking this course, you should be able to: A. Recognize the most...
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...Target Corporation, Home Depot, Costco, Barnes and Noble, and Best Buy, only lagging behind that of Walmart among the US brick and mortar retailers. Our study would focus on analyzing how Amazon revolutionized the concept of digital enterprise and succeeded in becoming the numero uno online retail company. Amazon vision was to offer “Earth’s biggest selection” and to be “Earth’s most customer-centric company” and succeed to a greater extent in realizing this vision. Facing fierce competition from a variety of traditional and digitial competitors such as Walmart, Target, Bestbuy, Ebay, Barnes and Noble, Buy.com etc., Amazon was able to grow successful over the years through strategically reinventing and adopting itself. Amazon’s relentless costumer focus, ability to offer shopping convenience, consumer decision-enabling information, a wide selection, discounted pricing, and logistical competencies forms a very interesting case study for understanding present world’s competitive strategies of the firms. The growth of Amazon since its inception in 1995 and its evolution into its present business model help us learn some of the very important strategy lessons in staying competitive in the real world business and hence the motivation to pursue this study. Research Methodology: - What kind of data you think you might need to collect to study the issues that you selected? Here are a few areas that the team would like to focus in their case study of Amazon. Understand: • How...
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...Project Feasibility GEANINA POPESCU CASE STUDY PREMIERE MOISSON BAKERY ELEMENTS OF THE SOLUTION Introduction Dear Madams, Sirs The attached report contains PM Consulting Inc’s study concerning the opportunities of implementation and distribution of the Premiere Moisson Bakery products. As required the options of a product market expansion were considered and they were analyzed for their present and future economic feasibility. Based on the information that you provided to us, we concluded that there is a market for your products and that the project will be financially feasible. We will recommend as a go to seek and negotiate partnership in the cities of Ottawa and Quebec however we recommend that the United States should be approached in an ulterior phase at a future date. SITUATION We, PM Consulting Inc were able to identify three specific phases of Ms Lilian Colpron business evolution. These are: 1. Liliane Colpron started her own business at the age of 30 years while having three children and being divorced. She started by negotiating a partnership with a French baker and she opened a little bread shop. She learned how to make and bake bread as well as how to package and deliver bread. Liliane Colpron owned this little bakery for twelve years and then she sold it when she was making sales of $1,000,000 per year. 2. Once the frozen raw bread dough was starting to be the new “it” on the market, Liliane Colpron decided to exploit this new...
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...Pillsbury Cookie Challenge 1. What did the team learn from the study and what are the implications of this knowledge? There are two studies occurring in this case. The first one is “Usage and attitude study”. The insights is gained from the case: * 56% Canadian prefers to bake from scratch and 33% bake scratch every month. * Convenience and taste is the top two most important elements considered by Canadian when they choose cookies. Then they followed by quality of cookies. The kids’ favor is also put into considered when their parents decide to purchase. * Customers regard cookie dough as convenient. And acting on the impulse, increasing number of customers purchase cookie dough. Implications obtained from the study: First of all, it’s the preference of cooking method. We could regard this point as one of customer behavior features, to be detailed, or as how to use our product. Guillen should base on this behavior preference to improve the product. Second, it’s the purchase drivers considered by customer. Based on the study, when customers choose cookies, the product features should be listed as convenience, taste, quality and kids’ preference. This is critical information for Guillen to redesign or reposition his product. What’s more, it’s the motives of purchase. According to the study, customers always choose product impulsively without too much recognition or preference about certain products. There are two sides of this matter. One is positive....
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...Introduction The focus of this case study is on the Vizio company and market for flat-panel TVs. However, most importantly Vizio’s unique use of globalization of production which gave them a competitive advantage in the market just as it was peaking. I found it important to do some research on the Vizio company to get a solid understanding of their background and history. The unique blend of origin, ethnicity and country of residence through much of his youth may have played a strong role in CEO, William Wang’s success with globalization. What started as a consultant business in 2002, later helped Gateway launch the first flat-panel TV under $3K and then Vizio found a niche in the flat-panel TV market which set them apart from their competitors. Globalization makes them successful today which is highlighted in the case. Their products are manufactured in Mexico with parts from across the world. Even their core mission and business model states, “VIZIO® lowers cost and increases efficiency by creating and orchestrating mutually desirable global partnerships.” This is definitely a company with a goal of producing affordable producing and passing on efficient manufacturing costs is exactly how they do it. Question #1: Why is the manufacturing of flat-panel TVs migrating to different locations around the world? Flat-panel TV technology is much like other products being manufactured around the globe in that the companies that are manufacturing the products are trying to...
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...same objective of making highest profit. So, increasingly companies are not merely asking themselves the management question of ‘Are we doing the right?’ but are having to regularly ask ‘Are we still doing it right?’ They have been seeking a more holistic means of doing this than traditional means of delivering products and services to the customers. In a volatile world, decision makers need options on the future and the ability to change direction as strategic opportunities. Although, business as usual (BAU) performance change is providing a short term success but they are typically faced with a less than perfect processes to make investments. In this case analysis, we are trying to summarise the current situation facing the firm by analysing the general environment, industry, competitor, swot analysis with the recommendation and conclusion. 2.0 External Environmental Analysis Wal-Mart is a household name in the retailing industry. It is one of the few companies that have managed to...
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...COMPANY BACKGROUND Costco was founded by Jim Sinegal and Seattle entrepreneur Jeff Brotman. Operation of the first store of Costco began in 1983. There were nine Costco stores in five states by end of 1984. Costco became a public company for raising additional fund for business expansion in December 1985.Costco successful to reach one billion dollar in sales in less than six years which make the company the first ever United States (U.S) that reach that huge amount of sales. Costco merge with Price Club in year 1993 and came out with name of PriceCostco. Later, the name was changed to Costco Wholesale Corporation in August 1999.This warehouse club chain have 57 million members. It sales volumes only based on its members as it only open to their members and guests. Costco is the fourth largest retailer in the US and is the seventh largest in the world. Currently, Costco holding market share or in other words industry standing of US and Canada is about 55% . Whereas its close competitor Sam's Club market share is about 36% and 9% by BJ’s Wholesale Club. Costco offer tremendously lower price products with good quality and branded name. The price which are offer by Costco much lower compare to other conventional wholesale or retail that sell similar items and products. Profit generated by the company from its membership fees is about one billion with E- commerce sales contributing about five hundred and thirty four million. It was estimated that the renewal rate of the card...
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...Change and Culture Case Study I Lydia Wooten Managing in Today’s Health Care Organizations HCS/513 September 17, 2012 Darlene Cantu Change and Culture Case Study I There are many reasons why mergers take place. The main reason why corporation exists with merging with companies is to enhance their level of competition in the market. It is however important to note that conjuring departments into a single organizational unit is a different form of merging. This is due to the fact that the cultural transformation may not be as great as merging two companies. The major challenge involved with merging is getting two different groups or staff to work collaboratively to realize real benefits. In this scenario, am a middle manager in a healthcare organization that has merged with a previous competitor, Competition has been viewed to result to delivery of poor quality of care. One unique aspect about the new organization is the fact that it has in place numerous outpatient and inpatient services that our organization does not. This paper will be described what affects the organization will have on the culture on terms of systems and shapes. In detail provide quality care from the middle manager to ensure the staff will ensure quality care without a competitive point of view. Impact Sale on the Culture of the New Combined Organization T-Mobile and AT&T are similar organization but they provide different services. The same scenario for health care organization they...
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...Student: Thong Nguyen ID : 863621 Case study. WAL-MART Store, Inc. I. Summary. The company was founded by Sam Walton in 1962, incorporated on October 31, 1969, and publicly traded on the New York Stock Exchange in 1972. It is headquartered in Bentonville, Arkansas. Wal-Mart is also the largest grocery retailer in the United States. In 2009, it generated 51% of its US$258 billion sales in the U.S. from grocery business.[4] It also owns and operates the Sam's Club retail warehouses in North America. Walmart has 8,500 stores in 15 countries, under 55 different names. The company operates under its own name in the United States, including the 50 states and Puerto Rico. It operates in Mexico as Walmex, in the United Kingdom as Asda, in Japan as Seiyu, and in India as Best Price. It has wholly owned operations in Argentina, Brazil, and Canada. Walmart's investments outside North America have had mixed results: its operations in the United Kingdom, South America and China are highly successful, whereas ventures in Germany and South Korea were unsuccessful. Wal-Mart is one of the world’s leading retailers, but there are many competitions with other retailers such as: Target, Kmart and convenience stores. But the strategy of Walmart is lower prices, better variety and good quality, it’s one of the factors to satisfy customer needs. Customer is the most important factor for success of the company. II. Question. 1. Should Walmart sell more food...
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...MKTG 208 Case Study: IKEA invades America By: Juan Galang SID: 43055745 1. Situation Analysis Strengths (Internal) * Strong worldwide brand image * Value furniture (clever designs with a cheap price) * Consisted of strong core policies (electricity& product efficiency) * Hard to imitate their Scandinavian design * Managers able to determine what consumers wanted through their Price/Product Matrix * Engaged with customers (self service, had everything they needed from pencils to measuring tapes) * Provides amenities to customers (childcare, restaurants and big carparks) * Cost effective (use higher grade of wood in the outside but lower on the inside) * Form, function and affordability * Had good relationships with 1800 suppliers worldwide * Innovative designs (using a mixture of designers for products) * Niche furniture retailer * Strong market research applied (From $600 M - $1.2 B) * Flat packaging (more space for inventory) Weaknesses (Internal) * Furniture not built for longevity * When first entered the market had bad design * America was a different market that they needed to adapt too * Neither high nor low end furniture * Inconvenience for customer to build product * Different aspect compared to American standards (had different measurements and sizes to what the market was used too upon entry) * Ranked 14th in leading U.S. furniture retailers sales Opportunities (External) ...
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