COSTCO WHOLESALE IN 2012: MISSION, BUSINESS MODEL, AND STRATEGY
Jim Senegal was a very effective CEO. He was able to take capitalize on the membership warehouse concept that he learned from Sol Price when he worked for Price club in the late 1970. In 1983, he developed a strategic mission and values “to continually provide our members with quality goods and services at the lowest prices possible”. This resulted in the first Costco being opened in 1983. The crafted strategy objectives centered around “ultra-low prices, limited product selection, a “treasure hunt” shopping experience, low operating costs, and geographic expansion. The rapid inventory turnover, vendor financing, low operating costs, and self service facilities enabled Costco to operate at a significantly lower gross margin and to pass on those savings to members through lower prices and higher quality goods. By charging members a prepaid fee, which supplemented overall profitability, it provided shareholders with an acceptable return. Those strategies could make Costco Wholesale as the third largest retailer in the United States and the seventh largest retailer in the world, also being the clear leader of the discount warehouse and wholesale club segment of the North American retailing industry. Began its operation in 1983 until January 2012, Costco had a total of 598 warehouses in 40 states and Puerto Rico, 9 Canadian provinces, United Kingdom, Korea, Taiwan, Japan, Australia, and Mexico. In 2011 Costco reached a record high total revenues of $88.9 billion and net income was $1.46 billion.
Costco’s Mission, Business Model, and Strategy
According to Thompson, et all (2014), the managerial process of crafting and executing a company’s strategy consists of five interrelated and integrated phases. Those are: * Developing a strategic vision and mission of where the company needs to head. Costco’s