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Costco Executive Summary

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Executive Summary Key Problems Costco has built its business strategy around its membership subscriptions. While the approach has proven successful in terms of revenue generation and customer loyalty, it is not without flaws. One of the main drawbacks of Costco's reliance on membership subscriptions is its limited customer base. By requiring customers to pay an annual fee for access to its stores, Costco automatically excludes a sizable portion of the population who may not be willing or able to commit to a membership. This exclusivity prevents Costco from tapping into a larger market potential and potentially limits its growth opportunities. Moreover, the membership model creates a dependency on retaining existing members. Costco must …show more content…

Strong Distribution Network: In 2020 Costco operated about 750 warehouses across the U.S. and Puerto Rico, Japan, Mexico, Spain, China, Taiwan, France, Iceland and South Korea. Weaknesses: Limited Product Selection: While Costco offers a wide range in products, they offer a limited selection of individual products. Slow eCommerce: Even with their website and partnership with insta cart they are slightly behind than the average retail store. With them being behind, it has become difficult for them to attract millennials who prefer a quicker shopping experience. External Analysis Opportunities: Global Expansion: Costco has a great opportunity to continue to expand globally, especially adding more stores in Europe and Asia (specifically China). Expand: Costco can expand into related areas like delivery services by acquiring smaller established companies in that sector. In 2020, they acquired Innovel Solutions for $1 billion, they serve third-party retailers (Reuters …show more content…

The company engaged in unrelated diversification by expanding into Costco Travel, exclusively for members to book vacation packages, including international and domestic vacations, cruises, rental cars, and flights at a discounted price. Regarding their geographical diversification, the company operates in multiple countries, with a total of 852 warehouses worldwide, and an international strategy of offering top-quality travel services at the lowest price possible. Costco is considered to have a matrix structure as it combines two different types (functional and multidivisional). Through the functional organization structure, Costco groups employees into different departments based on skill and knowledge; through the multidivisional organizational structure, Costco employees are divided into departments based on geographic regions and product/service

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288 Words | 2 Pages

Exclusivity to members: As we all know, Costco are the membership system. This system allows exclusivity to members, and exclude other shoppers. It restricts the shoppers shop easily. Even there are more than 81.3 million cardholders, not everyone has the cards. For example, there are many tour groups come to California, especially Chinese tour groups.

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624 Words | 3 Pages

The short answer to this common question is yes. Costco sells food and drinks, health and beauty products, clothing and accessories, jewelry, toys, furniture and home goods, and even electronics and appliances. Because many of these products come in bulk sizes, Costco offers great savings in addition to high quality. This warehouse club offers deals on many national and regional name brands online and in its warehouses. Additionally, this retailer sells its Kirkland Signature products.

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189 Words | 1 Pages

Currently Costco holds 81.3 million cardholders and they buy in relatively small quantities, with no specific customer/member accounting for a meaningful fraction of a Costco’s total sales. Subsequently, individual members of wholesale clubs have little power or leverage to deal with a wholesale club over

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475 Words | 2 Pages

Costco is a membership warehouse club. Costco is dedicated to bring members the best quality items in bulk with the best possible price. It started as Price Club in 1976. When it opened up in 1976 the only purpose the business had was serving only small businesses. But later found out that they would be better off selling to non-business members.

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The balance sheet provides financial data at a specific date regarding a company’s assets, liabilities, and stockholder’s equity which is used to help predict future cash flows and assess a company’s flexibility. (Kieso et al., 2022) Costco’s consolidated balance sheet reported total assets of $64,166(million) for FYE 2022 which are categorized as current assets and other assets. Costco’s short-term investments are debt security notes. Receivables consist of vendors discounts and rebates which are settled against any payable due the vendor, credit card incentives, reinsurance, third-party pharmacy due from members, and other governmental tax-related entities. Merchandise consists of inventory from United States, Canada, and internationally.

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748 Words | 3 Pages

They do not have as many stores meaning that the average store approximately receives 100 million dollars a year in sales. Costco focuses on selling in bulks with larger sized quantities and focuses less on everyday goods. Doing this means they are able to increase the volume of particular items and keep prices low. In addition, Costco has perfected a purchasing strategy known as the “treasure hunt” which refers to new incoming items and deals that spontaneously come and

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581 Words | 3 Pages

As of 2023, Costco has 850 total warehouses with 158 of them being outside of the United States and Canada (Costco, 2023). Costco is able to scale partially because of their hiring and product selection, but also because they slowly build up their store counts in the same countries over the years by capitalizing and adjusting to each countries cultures and catering to it. For instance, Costco entered Japan in the 1990’s and they currently have 31 stores their which is the most outside of North America (Costco, 2023). This is due to their growth strategy (Parnell, 2014).

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675 Words | 3 Pages

Although, Costco has been widely successful compared to their competitors. There are certain aspects where they need to improve to stay ahead of their competitors. Their customer and employment engagement is vital for future success. It could be beneficial for Costco to look into markets in America where they are not present, and even outside the United States.

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696 Words | 3 Pages

Today, online shopping is more popular than ever, we have seen companies like Amazon start out from nothing, to becoming one of the largest in the world. As this shift starts to occur, we start to see normal brick-and-mortar stores decline in sales. Costco being one of them, despite their having a modern website. Their business model is constructed on having customers come into the physical store and purchasing the products from there. If Costco starts to sell more of their products online, then it will cost the consumer more to purchase.

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208 Words | 1 Pages

Costco needs to try enter new markets, such as markets in developing Asian countries. Costco also needs to expand the coverage of its e-commerce websites because currently it offers online services to the United States, Canada, United Kingdom, Australia, Mexico, Taiwan, South Korea, Japan, and Spain, (Gregory, 2017). Costco also needs to increase the variety of its goods and services to improve the attractiveness stores to a more diverse population of consumers, (NerdyRoo, 2021) Costco should conduct continuous market research which should also consider the consumers and competitors. Costco needs to do more online marketing and selling because by expanding its reach, by doing so this would make the barriers of entry harder to overcome and eliminate

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414 Words | 2 Pages

Introduction This article is based on the corporation called Whole Foods; which is trying its best to hang in within the economy encounters with rival supermarket chains and with their consumers. Whole Foods is trying its best way to satisfy their consumer with low prices that meet their standards and prices that will keep them in business, but finding that balance seems like a challenge. There was a survey done on more than one thousands Whole Foods customers that shows that this company needs to find a way to satisfy their customers pretty soon or else they won’t be around for the long run. About twenty-four percent of the consumer's stated that the organic products at Whole Foods were definitely higher quality than organic food

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49 Words | 1 Pages

A bigger problem is that Costco’s primary market of upper middle-class suburbanites is aging out, and their kids are moving into smaller city dwellings, often without cars. The same efficient marketplace that led to its success is killing the sales and middle management jobs it needs to keep selling.

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776 Words | 4 Pages

Key Trends – Globalisation One of the main opportunities Costco has is more global expansion to specific targeted countries. Although operating in many countries, Costco is heavily dependent on the U.S. and Canadian markets. It still has the opportunity to expand into the Asian and Australian markets where it has a limited presence. Costco has the capability to operate about 100 stores in Taiwan, Korea and Japan combined and about 20 stores in Australia. It currently has 41 stores in Taiwan, Korea and Japan combined and 6 stores in Australia.

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1315 Words | 6 Pages

Expanding to Asian markets would be a fantastic chance as these consoles have yet to launch in some of these regions(X-box One doesn't launch in China until September 29th). It could grow in number of stores so as to cater more demands of Customers. More gamers are inevitable as the gaming market grows and opening more stores in places will indeed help cater the increasing demands for gaming products with the recent release the PS4/ Xbox-One

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907 Words | 4 Pages

Executive Summary In this week of the Stock Exchange Challenge, I determined that Chipotle was the best stock to sell. Its E.coli breakthrough, pork shortages resulting in profit loss, as well as animal welfare difficulties concerned me to the point of trading it. Chipotle has under preformed in profit gains and dividends since it launched and its increased competitors will only further hurt this business.

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