Costco mini case study

1276 WordsJun 21, 20146 Pages
Case 2 questions-Costco 1. What is Costco’s business model? Is the company’s business model appealing? Why or why not? Generating high sales volume and rapid inventory turnover by offering fee-paying members low prices on nationally branded and private-label products. Yes, it is appealing because the fees paid by members allowed for sufficient supplemental revenues while the turnover rates allowed Costco to receive cash for inventory before it had to pay many of its merchandise vendors. 2. What are the chief elements of Costco’s strategy? How good is the strategy? Pricing, product selection, treasure hunt merchandising, low cost emphasis, and growth are the chief elements of Costco’s strategy. It is a very good strategy because…show more content…
6. How well is Costco performing from a financial perspective? They are doing very well from a financial perspective. Some of the numbers do not look good to the traditional investor, but that is because Costco is not a traditional company. The current ratio shows that Costco can meet all current liabilities, while liquidity is also high (which means the company can quickly convert assets into cash). Profit is also constantly increased by not having to store inventory. 7. Based on the data in case Exhibits 1, 5, and 6, is Costco’s financial performance superior to that at Sam’s Club and BJ’s Wholesale? Costco is turning in much higher numbers for total revenue than BJ’s and higher sales than Sam’s. Costco holds 57 percent of the market share while BJ’s has 8 and Sam’s has 35 percent. 8. How well is Costco performing from a strategic perspective? Does Costco enjoy a competitive advantage over Sam’s Club? Over BJ’s Wholesale? If so, what is the nature of its competitive advantage? Does Costco have a winning strategy? Why or why not? They are performing very well from a strategic perspective. No, Costco does not enjoy a clear competitive advantage over Sam’s. It does however enjoy a competitive advantage over BJ’s. the nature of this competitive advantage includes the fact that BJ’s has too many products, which makes rapid turnover harder to achieve. I think that Costco has a winning strategy because they are selective with the
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