Costco Wholesale in 2008: Mission, Business, Model, and Strategy

2477 WordsFeb 11, 201110 Pages
Costco Wholesale in 2008: Mission Business, Model, and Strategy  Question 1: What is Costco’s business model? Is the company’s business model appealing? Why or why not? The official Costco’ mission statement is “To continually provide our member with quality goods and service at the lowest possible prices”. This statement shows us what drives Costco and their long-term goal is. They want to sell high quality goods and services to their customers, along with the lowest price of the market. Thus it is easy to understand what why the company strategy is how it is: to generate high sales volumes and rapid inventory turnover by offering member very low prices on limited selection of national brand and select private-label product in wide…show more content…
The opportunity to find brandname products at lower price appeals a lot to customers. It develops the loyalty of the client, may explain why the membership number is so high (53.2 million memberships). The strategy seems to be a great success. The strategy gives a strong foundation for longterm survival. “Those people are in business of making money between now and next Tuesday. We’re trying to build an organization that’s going to be here 50 years from now”, said CEO Sinegal. This quote resumes pretty well the overall strategy. By offering low prices and capping markups, the wholesale company does not give much chance to competitor to gain market share. Costco was able to build competitive advantages and successfully to differentiate themselves from others competitors.  Question 3: Based on the data in case Exhibits 1 and 4, is Costco’s financial performance superior to that at Sam’s Club and BJ’s Wholesale? First, a deep financial analysis would be necessary to fairly judge each company. Exhibit 1 and 4 gives only the balance sheet and income statement, while we would rather need some financial ration instead. This is just to say. Costco has done a very good job so far. The strategy has performed very well. Net sales and net income has increased years after years. While the net sales were $70,977 billion of dollar in 2008, it was $44,357 billion for Sam’s Club and only $8,815 billion for BJ Wholesale. The diluted net income per share has also

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