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Costco's Value Chain Analysis

2581 Words11 Pages

Costco is an international retailer with 474 locations in 10 countries. Costco warehouses present one of the biggest and most high-class product category selections to be found under single roof. Costco takes advantage of online and mobile commerce and it is identified best practices in global e-commerce management. This report indicates Costco’s mission and vision, organizational structure, and their strength and weaknesses of competitive position, and performance evaluation, which is identified financial analysis. Moreover it includes identification of environmental analysis which PEST analysis, SWOT analysis and Porter’s five forces analysis. Lastly, report shows evaluation of opportunity and implementation plan, which I recommend on organization …show more content…

• Though profitable, slower growth in sales
• Strong brand awareness
• Share market with recognized competitors
Value chain analysis is one of the fundamental elements of chain analysis.
In order to analyze the environmental aspects of Costco, PEST analysis will be used. The PEST analysis covers the analysis of Political, Economic, Social, Technological environments of a country with reference to a specific object. The Costco Warehouse Corporation’s PEST analysis as follows:

Political

Costco Wholesale Corporation’s business practices get influenced by the political environments of the host and the home countries where it carry outs its business. The company is providing high wage rate to its workers as a result of its agreement with the union bars and it has set different standards for its workers in its stores in spite of the political policies of a country. Due to its wage rate and policies concerning to it, the performance of the workers is far better than typical and the general performance of the company is very …show more content…

It has a large network of business through the US and many other regions. These procedures are large scale procedures which occasionally delays the implementations of changes to bottom levels. It has huge stores for already aged markets in the US. Secondly, Costco does little or no proper advertising that means that the corporation is not receiving customers that it should have receive. Costco has very limited emphasis on its stores and the areas it covers. The meticulous decision making influence in its ability to more speedily respond to market conditions. Also maintaining high wage is weakness for Costco for example Costco’s average pay is $18 an hour, 43 percent higher than its competitor, Sam’s club.

Opportunities

Costco can expand its market in the many regions of the world specially the developing markets of China, Japan, and India. These markets display huge potential for growth of the firm. Also for it customers across the world it can start online business opportunities. The company is continually working on distribution channels to make it stronger and enter new prospective markets. Economic recession has allowed Costco opportunity for luxury-item deals, including the chance to retail prime-grade meat that used to go almost solely to restaurants.

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