Case Study: The Club War

When it comes to warehouse-style club stores, there are really only four names out there: Costco, Sam’s Club, Wal-Mart and BJ’s. This paper will discuss the Costco and BJ’s. The different type of strategies being utilized by each company, the purpose of the financial statements, their Vertical & Horizontal analysis, how each financial rations ties into the two company’s strategies, Solvency & Performance for each company, a SWOT analysis of each company and finally if the expectations of the stakeholders of each company are being met.

Answer 1- The first question which shows the two new options how impact transfer and customer might freight cost and the answer for this question is given in first alternative and second alternative which is elaborated above.

The industry we have chosen is the department store-retail industry. Within this industry, we have chosen the department stores of JCPenney and Macy’s. We find this industry, as well as these two companies, interesting from a strategic perspective. JCPenney has recently undergone a massive strategic restructuring in regards to its pricing, brand offerings, and store layout, pushing it away from the typical department store strategy of discounts and coupons. Its new strategy has become much closer to Wal-Mart’s strategy of every day low prices. Macy’s, on the other hand, has restructured with a push from the economic

The US warehouse club and superstore industry includes about 20 companies; however the major competitors that Costco faces are Sam 's Club (owned by Wal-Mart), BJ’s Wholesale Club, and Meijer. The club superstore industry is so competitive that these four companies alone hold over 90 percent of sales. These superstores are able to offer competitive pricing because as large companies they can offer a wide selection of products and have purchasing, distribution, marketing, and financing advantages. Due to low margins, the profitability of these individual superstore companies depends on high volume sales and efficient operations. This is where Costco has been able to succeed and set itself aside from the competitors.

The Key Issues to be observed in this case include a look at why Costco has grown to be the discount retail warehousing sales leader and the strategic actions they have taken to achieve this market Position. First, the study will involve an analysis of the industry’s driving forces and the key success factors in the industry in order to obtain an understanding of the discount retail warehousing industry. The study will then perform a SWOT analysis of Costco and its environment with the objective of identifying the opportunities and threats faced by Costco and the strengths it has to help them seize and overcome them. This will allow for an analysis of the company’s strategy for continued growth in the future.

“We are a membership warehouse club, dedicated to bringing our members the best possible prices on quality brand-name merchandise.” Costco Wholesale Corporation is one of biggest wholesale corporations in the United States and several other countries. The story of Costco’s rise from a single Seattle store in 1983 to a multinational chain of enormously profitable warehouses is a tale of perfect leadership in a rapidly-changing retail world. The company’s first location was in 1976 under the name Price Club which was established by Sol Price. Jim Sinegal launched a competing company with an idea of a wholesale business,

Consumers and small business owners do not have to purchase from warehouse clubs. Multiple options and places are available for consumers to buy the products, including ecommerce organizations. There are notable replacements when Costco’s goods are not under buyer’s purchase radar.

Costco Wholesale is a retail warehouse club with 698 stores in eight countries (Costco Wholesale, n.d.). The modern day Costco began in 1993 when Price Club, founded by Sol Price in 1976, merged with Costco, founded by Jim Sinegal and Jeff Brotman in 1983. When the two companies initially merged they utilized the name PriceCostco, but later reverted back to the name Costco (Costco Wholesale, n.d.). At the time of the merger, Costco had 206 locations and has quickly grown, now servicing over 170 million club members worldwide (Costco Wholesale, n.d.). The following analysis identifies the organization’s strengths, weaknesses, opportunities and threats by examining Costco’s organizational environment, leadership strategies and human

Costco is a wholesale organization that is the second largest retailer in the world. Their mission statement is “To continually provide our members with quality goods and services at the lowest possible prices”, which is strongly understood throughout their organization. Costco’s mission statement shows that their businesses use quality as one of their selling points. Providing quality goods and services allow their members to shop with confidence knowing their purchasing experiences would be worthwhile. The other part of the company’s mission statement involves low prices. This aspect is important because there are many other firms that compete against Costco on the basis of low prices. Because of its high quality goods and services at everyday low prices, this concept becomes attractive to many consumers allowing the business to flourish. The company has taken some blows for having low prices, but in the end, it has benefitted with high inventory turnover leading to a profitable business.

Warehouse membership clubs compete with the mainstream retailers on the basis of price. They offer members merchandises that sell in bulk and at highly competitive rates compared to regular retail stores. However, customers must pay a membership fee to become a member in order to enjoy the privilege. The primary contributor to these clubs' profits is the membership fee as opposed to gains on merchandise sales. This allows the clubs to reward their loyal members with products at remarkably low prices. Therefore, it is essential and crucial to retain and increase loyal customers for a long-term growth. This is an interesting finding that warehouse clubs utilising such novel strategy; but the original intention of their strategic leadership convey

Costco has many competitors with the primary two being Sam’s Club, a warehouse wholesale business being managed by Walmart, and BJ’s warehouse. Sam’s Club is offering the same services as Costco. They offer their customers lower prices than traditional stores and like Costco they sell their products in bulk to keep members interested. What makes them a threat to Costco is the cost of becoming a member to shop at their stores. For Costco’s basic membership, known as a Business membership, a price

Wal-Mart's stance on not allowing unions can also be accredited to their cost leadership approach. When I outline Wal-Mart's business policy at the start of this essay, I suggest that they were a central-control based organisation that tried to ensure it controlled all aspects of the firm. This is linked to cost leadership, by having tight control they know exactly where money is going and where it is coming from which allows for better development of efficiency.

Chris Fraser, President, Supply Chain International, VF Brands is faced with a challenge to create a competitive advantage for the company by making its supply chain more efficient and robust in terms of speed to market, material utilisation, lower inventories, less work in process and lower cost to quality. VF’s coalitions were pleased with the quality and reliability of service they received from sourcing. VF had driven down cost by continually expanding their supplier base to ever lower cost locations enabling VF to hit corporate margin targets of 10-15%. At his juncture, Fraser and Green began exploring the next possible actions to take for making the supply chain more efficient.

The successive study reveals that the senior management believes that the vast accounts affect the increment of commitment to enhanced supply chain efficiency. The administration has indicated significant customer improvements through maintenance and increase in the sales volume the company generates from the critical accounts. The company research suggests that formulation of a supply chain that involves collaboration with its large customers is now a competitive necessity. In many situations, strong retailers demand the latter and at times can dictate relationship arrangement. The company, therefore, has to ensure significant consideration to create unique supply chain, several powerful customers. It would be wise for Westminster to establish leadership positions within