Costco manages its risk through diversity. This is the place you can purchase groceries and a diamond ring all in one place. I understand how one would purchase a diamond in Costco versus Tiffany’s due to the substantial savings and the companies relaxed return policy. But saving thousands of dollars by making such a purchase in Costco can prove to be a poor decision in the long run. Costco does not offer any type of customization.
Costco Wholesale Corporation strives to grow and expand through their competitive retail and pricing strategies in their market. As a retail firm, Costco depends on cusumer purchasing capacities (Gregory 2015). Costco offers a limited number of items that are afforadable quality services and goods to their consumers and believes it aids to their continued growing and expanding success. Costco is driven by cost leadership for their retailer store because they would rather maintain the lowest prices possible which enable customers to return. Costco largely relies on their pricing and retail strategy to continue sales and organization success.
Costco opened the first club in 1976 in San Diego. After several years, it opened the first Costco warehouse in Seattle. From $0 to $3 billion sales, it just spent less than six years (Costco, 2016). This shows the basic framework has been created. Now Costco is a bright star in the field of retail industry.
PRICE CLUB and COSTCO more than the current market for the merger of the two stores. PRICE CLUB for the world's first member of the wholesale and retail stores, was founded in 1976 in San Diego, California, initially to serve small businesses, and later to serve the wider consumer masses, they are open for a group of each purchase , And the first COSTCO stores in 1983, was established in Seattle, Washington, in its business just six years, the annual turnover from 0 to grow to 3 billion US dollars. The two companies merged in 1993 to become PRICECOSTCO and in 1998 they changed their name from Pleasant to Costco Company
The main reason as to why Costco has been top of its game in the retailing business is their method of cutting costs by eradicating steps in the traditional supply chain. In a traditional supply chain, the goods will transferred from the manufacturer to the distributor and then to the warehouse and then to the store for selling. At each of these places, several workers are involved in stocking, loading and unloading and transportation of goods, which are all extra costs to Costco. Costco’s system eradicates all these needless steps and costs by evading the need for intermediates. They transport the goods directly to their stores and with the help of forklifts they arrange the goods in the shelves.
Hunter Avenarius MBA 705 M4: Case Analysis 2 4/3/23 Question 1 Costco’s business model differs from other traditional discount retailers in various ways. The first way goes all the way back to the roots of the business as they were founded on a principle that they would provide the lowest prices possible for their customers by keeping their costs low. They do this by utilizing a low-price and high-volume philosophy (Neubauer, 2022). Meaning, they are not marking up their items as other stores would, rather, they are keeping their margins slim and hoping to outsell other stores drastically.
3.0 Concepts 3.1 Resources and Capabilities In order to achieve and sustain competitive advantage, a business needs both resources and capabilities. Resources are assets that are owned or employed by an organization. The organization utilizes and uses these assets to carry out their business operations. Resources can be grouped either tangible assets or intangible assets.
Costo understands that in order to have a successful business model, a barely sufficient or adequate offer of products is necessary. In fact, Costco carries around 3,700 items in its store,
Costco’s business model is centered around offering a smaller range of products at incredibly low prices which attracts the consumer. In order to supplement this lowered profit margin, they require their shoppers, both businesses and individuals, to purchase annual memberships. The membership fee accounts for a majority of the company’s profit. Furthermore, Costco operates its under a wholesale warehouse style which eliminates the need for excess handling and workers in the store. The stores are stocked to carry certain big ticket, ‘limited time offer’ goods so that customers feel the need to take advantage of the deal because it may not be there when they next return.
Although they are unable to meet all the needs, they will all it takes to meet as many needs as possible. They only work with 501(c) (3) nonprofit organizations, which meet their giving guidelines and focus areas. Grants are focused on programs that support children, education and health and human services. The United Way, Children's Miracle Network Hospitals and the Red Cross are examples in Costco’s charitable giving.
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.
SAM CLUBS they offer consumers to buy good at the cheaper cost but in bulk and that helped the smaller business to buy good from them at cheaper cost and make good margins. • Wall Mart International, this business models are custom business models, which helps Wall mart to determine their business strategy based on county and their regional location on the country’s location. As of today Wall Marts operates in over 11,000 retail locations under 65 banners and in 28 countries, such as Argentina, Canada, United Kingdom, Germany, South Korea, Puerto Rico and join ventures in China and India. Wall Mart has employed over 2.2 million employee across the
Gold Star membership targets the individual or typical household and is offered at $55.00 for an annual membership. Business membership also cost $55.00 for an annual fee and includes household membership and focuses on business owners and managers. This type of membership is used for the purchase of products for business use, personal use, and resale use. The membership owner may add up to an additional six members for an annual of $55.00 each. The Business membership is Costco core target of offering small businesses products with reduced costs intended for resale.
What are the two types of core competencies that drive a firm’s competitive advantage? Which firms demonstrate a clear competitive advantage because of (a) major value-creating skills/core capabilities and/or (b) superior assets or resources? Which firms have demonstrated sustainable sources of competitive advantage? The two core competencies that drive a firm’s competitive advantage are cost leadership and differentiation.
