Imagine a store that never advertises, has no signs in its aisles, doesn’t bag what you purchase, and charges you a fee just to walk in the door; Costco Wholesale is that shop. The purpose of this report is to illustrate how Costco as a multinational corporation strategically manages its marketing operation across global markets. For research purpose, this report will be focused on Costco wholesale in Japan and USA. According to Blacktown City Council (2014), Costco Wholesale Corporation operates an international chain of membership warehouses which carry quality brand name merchandise at substantially reduced prices compared to other conventional wholesale or retail outlets. It began its operations in 1983 in Seattle, Washington and later merged with The Price Company in October 1993 operating under the name PriceCostco, had 206 locations generating $16 billion in annual sales (Costco Wholesale, 2015). As of December 2014, the Company operated a chain of 671 warehouses in 43 states, Washington, D.C., and Puerto Rico (474 locations), nine Canadian provinces (88 locations), Mexico (34 locations), the United Kingdom (26 locations), Japan (20 locations), Korea (11 locations), Taiwan (10 locations, through a 55%-owned subsidiary), Australia (seven locations) and Spain (one location). The Company’s online business also operates websites in the U.S., Canada, U.K., and Mexico (Costco Annual Report, 2014). Since this world has become increasingly interdependent as barriers of
The strategic objective of Costco is based on the concept of offering members very low prices on a limited selection of nationally branded and selected private label products in a wide range of merchandise categories while producing high sales volumes and rapid inventory turnover. This rapid inventory turnover, when combined with the operating efficiencies achieved by volume purchasing, efficient distribution and reduced handling of merchandise in no-frills, self service warehouse facilities, enables Costco to operate profitably at significantly lower gross margins than traditional wholesalers, discount retailers and supermarkets. (1)
turnover, which is made possible by low prices and limited product selection. This business model is appealing for them and has many benefits. Firstly, by setting up the business approach to rapidly
Wal-Mart failed to grasp the consumer and retail environment in Japan. With a population of 127 million, the highest per capita income and the second largest economy in the world, Japan is a very smart market for retailers. The opportunity exists, but there is much more research and planning that needed to be done before expansion began. Instead of adapting business operations to the Japanese culture, the company essentially assumed the Japanese would readily adjust to Wal-Mart’s. For example, in Japan there is a much larger need for local store customization. Consumer buyer behavior is much different than in the United States, with purchasing patterns and product selection varying greatly between regions. They have a trend to buy smaller quantities in regular intervals rather than the more American idea of “stocking up.” Similarly, the concept of large retail stores is foreign. Retailers with the highest growth rate are small specialty stores; quite the opposite of Wal-Mart. The culture tends to buy more fresh produce than pre-packaged goods as well. Lastly, the Japanese view high price as equaling high quality. This mentality causes them to purchase forty percent of the world’s luxury goods annually. Packaging and appearance of goods play a huge role in their purchasing decisions. When looking at Wal-Mart’s product selection, it is obvious they do not usually cater to luxury-brand customers. All of these cultural misunderstandings lead Wal-Mart
Costco Wholesale Corporation’s organizational structure is based on the company’s current operation and locations as well as the market. The organization structure is the shape to connect different organizational components to address the business needs. Costco’s organizational structure active enables the management of operations in different markets. Even though Costco is the biggest membership warehouse club in America, and designed it structure for success in the management of it business in the U.S. and overseas. Costco would have to change its organizational structure within time to suit the expanding global operations.
Costco Wholesale Corporation operates an international chain of membership warehouses, which carries quality, brand name
Costco’s former CEO Jim Sinegal designed the Wholesale Club Notion in 1983. Stores were quickly spread throughout the United States, Canada, and Mexico. According to Michaud (2012), “By the end of 2008, there were 550 stores in 40 states and 7 countries, with 54 million members” (Para. 3). The company creates a global chain of warehouses that carry value products as per their slogan. Michaud further discussed that “Costco is also one of the largest corporation in the world with 663 stores
The company’s first location was opened in 1976 under the name of Price Club. Originally it served only small businesses, but later on it found that it could increase its sales by extending its services to non-business members. The first warehouse operating under the name, Costco, began functioning in 1983 in Seattle, Washington. In 1993 Costco and Price Club merged. Today, the company operates under Costco Wholesale name and has its warehouses all across the world. As of the end of 2015 it has close to 700 warehouses in total located in United States, Canada, United Kingdom, Mexico, Japan, Australia, Spain, Taiwan and Korea. Costco’s common stock trades on the NASDAQ Global Select Market under the symbol
What is Costco’s business model? Is the company’s business model appealing? Why or why not?
In order for Costco to stay competitive in the market and ahead of its competitors, it is essential to venture into different products and services. Costco’s main products vary, which include: groceries and frozen products, fresh meats and produce, bakery goods, beverages and liquors, health and beauty products, seasonal goods, office products, appliances and electronics. To increase Costco’s product differentiation over its competitors and increase sales, Costco began to introduce other products; such as pharmacy, gasoline, auto insurance, and a food court. In addition, extends more services to executive card members that include check printing, payroll services, identity protection, free roadside assistance with Costco’s auto insurance, and traveling benefits.
Costco is a recognized and successful retail chain including several locations, glowing feedback, and a wonderful overall reputation. Known by several audiences to be considered a “big-box” store, Costco offers various products in its stores at low, discounted prices, accompanying a membership card. Before and after researching this company, the author of this paper has heard exceptional feedback regarding the company for its initiative to keep prices low, employee morale high, and customer satisfaction to be one of its top priorities. Within this body of work, the author will dissect and discuss some of Costco’s stakeholder perspectives and how some of the perceived initiatives may help aid the company within its
Costco is one of the most profitable retail stores in the United States at the moment. This is in spite of the prevailing tough global economic times and stiff competition from stores such as Wal-Mart and Target. Costco, a members’ wholesale retail store, was founded in 1983 in Washington by Jeffrey Brotman, who serves as the current Chairman of the board of directors and James Sinegal, the current company president. Costco has not been spared by the current global economic conditions. They have affected it in a number of ways that have made the company’s management respond in a manner that is meant to ensure that the business not only survives but grows even stronger. First, Costco has taken strong measures to keep
With 360 warehouses, located in the United States, Canada, Mexico, Japan, Taiwan, Korea, and the United Kingdom, Costco Wholesale Corporation is the largest and most profitable chain of its kind.
Costco Wholesale is a multi-billon dollar global warehouse retailer with more than 540 stores, and 53 million cardholders in eight countries. Also, Costco is a membership warehouse club in which the industry is dedicated to bringing members the best possible prices on quality, brand-name merchandise. With hundreds of stores located world wide, Costco provides the convenience of specialty departments and exclusive to member services. The corporation uses many different techniques to manage its vast business’ systems. Some different approaches the company uses to gain success include their business information system PaxPro, their Business Intelligence and very strong business model.
In 1983, Costco Wholesale Corporation, the fourth-largest retailer in the United States, was founded by former Price Club executive, Jim Sinegal, and lawyer Jeffrey Brotman. Costco focuses on selling products at low prices in bulk packaging and focuses mostly to large families and small businesses. They sell products like flat-screen TVs, gallon jugs of mayonnaise, and coffins. Costco operates 556 stores worldwide: 405 in the United States, 77 in Canada, 31 in Mexico, 21 in the United Kingdom, 9 in Japan, 7 in South Korea, 6 in Taiwan, and 1 in Australia. Costco employs 140,000 employees and accumulates $70 billion in annual sales. It became the first company to rise from zero to $3 billion in sales in less than six years, and reached
The MUJI has established a unique positioning in the retail industry in Japan and has successfully expanded to overseas markets.(Fujikawa,Y 2017)