Costco Wholesale Corp.: Mission, Business Model, and Strategy

1226 Words Oct 13th, 2011 5 Pages
Costco Wholesale Corp.: Mission, Business Model, and Strategy

What is Costco’s business model? Is the company’s business model appealing? Why or why not? Costco’s business model is focused on producing high sales volumes and rapid inventory turnover by offering members low prices on a limited selection of national name brands and select private-label products in a wide range variety. Costco is focused in low-cost strategy is concentrated on a narrow buy segment and out competing rivals by having lower costs, therefore being able serve a niche consumers at a lower price. (Gamble, John and Thompson, Arthur (2009) Costco’s business model is appealing because they are able to continually sell to a niche market. This niche market has
…show more content…
These products are the treasure-hunt products they may not be offered the next time a member visits Costco. Therefore, customers are allured to buy these items at an irresistible price.

Do you think Jim Sinegal is an effective CEO? What grades would you give him in leading the process of crafting and executing Costco’s strategy? What support can you offer for these grades? Refer to Figure 2.1 in Chapter 2 in developing your answers. In my understanding of the case study one the CEO Jim Sinegal has proven to be an effective CEO. I would give Mr. Sinegal a “B+” in overall strategic Management Process. In developing a strategic vision he has visualized who, what, and how he is going to sell Costco products. The managements vision is to have rapid inventory turn-over, with operating efficiencies by volume purchasing, efficient distribution, reduce handling of merchandise in no-frill, self-service warehouse facilities. This will enable the company to operate at lower price then their rivals and continually offer members lost cost merchandise. In terms of “Setting objectives” the objective is growth however there are no specifics on how or when. The company is continually growing with no specific objective of when to expand or how to get there. However, they have been open store globally in a systematic nature. “Crafting a strategy” has been very effective in Costco, there business strategy is to have high
Open Document