Case 4 Warehouse Clubs

1279 Words Mar 11th, 2012 6 Pages
Case 4: Competition among the North American Warehouse Clubs: Costco Wholesale vs. Sam’s Clubs vs. BJ’s Wholesale 1. Competition in the North American wholesale club industry is mildly intense. The players in the wholesale club industry try to achieve lower prices by reducing throughout the store by using pallets or inexpensive shelving to display items. They also incur very low costs for store decoration and light fixtures and a relatively low labor cost because of the use of fewer works and employees to operate the facility. The importance of the five competitive forces among the industry is high. Consequently, rivalry among competing sellers, buyers, and suppliers are the most important. The case discusses major wholesale clubs, so …show more content…
5. Five years from now, Costco’s standing as the industry’s leader is likely to be stronger. Because of their functioning strategy and the management’s understand of the company’s overall vision will be vital in Costco’s success. Costco’s most important clients are not their shareholders, but their members and customers. Even in the midst of the shareholders opinions and the Wall Street criticisms, Costco stays true to the commitment to their members. Costco’s strategy of offering the lowest possible prices to not only small businesses and such, but to individual households, will help them excel in this industry. Sam’s Club is the rival that is gaining strength, but still has not met the standards of Costco. The issue with Sam’s Club is they operate much like the supercenter, Wal-Mart, which owns Sam’s Club. Their operation cost is high, as compared to Costco. Costco only keeps in stock a certain amount of items and constantly change their items to keep customers coming back time after time to gain the best possible bargain. 6. The recommendations I would make to Jim Sinegal regarding the actions that Costco management needs to take to sustain the company’s growth and improve its financial performance would be to focus more on advertisement and marketing. Marketing and advertising through media instead of depending on word of mouth, could result in a dramatic increase in sales and knowledge of this wholesale club. Because of the low cost of running a
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