Costco Study Case

975 Words4 Pages
Question 1
What is Costco’s business model? Is the company’s business model appealing? Why or why not?
Costco’s business model focuses on selling limited selection of products at low prices, often at very high volume and rapid inventory turnover. These goods are bulk-packaged and marketed primarily to large families and businesses. Costco does not carry multiple brands or varieties where the item is essentially the same. It provides members with a selection of only about 4000 items, this results in a high volume of sales from a single vendor, allowing further reductions in price, and reducing marketing costs. Costco also saves money by not stocking extra bags or packing materials; to carry out their goods, customers must bring their own
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This results in a high volume of sales from a single vendor, allowing further reductions in price, and reducing marketing costs. If Costco management feels the wholesale price of a product is too high, they will refuse to stock the product.
Costco also saves money by not stocking extra bags or packing materials; to carry out their goods, customers must bring their own bags or use the merchandise shipping boxes from the company's outside vendors.
Question 6
Does Costco pay its employees too much? Does it make sense for Costco to compensate its employees so much better than the employees at Wal-Mart/Sam’s Club? Why or why not?
Costco’s does not pay it’s employee too much. It does make sense for Costco to compensate its employee so much bettter than Wal-Mart/Sam Club. Good compensation for employee is another business strat gy that Costco has employed in order to be set apart from their rivals and also to be able to win a sustainable competitive advantage.
Question 7
What recommendations would you make to Jim Sinegal regarding the actions that Costco management needs to take to sustain the company’s growth and improve its financial performance?
My recommendations to Jim Sinegal are continue their competitive advantage. They also have good strategy to make customer stay with them. Sinegal was very much the

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