Sam's Club and Costco

1255 Words Jan 23rd, 2011 6 Pages
Costco 1

Tiffin University

MBA Graduate Program

MGT-622 Section 90

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

Professor Lillian Schumacher

Darrick Beckwith

January 30, 2011

Costco 2

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

What struck you as positive and/ or negatives? Were there certain strategic elements that were particularly insightful? Were there any glaring weaknesses that could jeopardize their success? There are many positives that can be drawn from the way that Costco runs and controls its business. Costco’s motto is “To continuously provide our members with quality goods and services at the lowest possible prices” (Thompson, Strickland,
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For Costco, the competitor and their targeted customers were two constituencies. How was their strategy influenced by these parties? Did their strategy reflect adequate consideration of the needs of these two groups? Costco’s strategy was definitely influenced by its customers and its competitor. From a competitor’s standpoint Costco wanted to a provide services, prices, and products that rivaled its competitor Sam’s Club. Costco’s combining of high quality and low prices id the driving for behind Costco’s success. It is evident that Sam Walton, with Wal-Mart and Sam’s club played an integral part in the way the Costco has devised its strategy. Costco’s average pay, for example, is $17 an hour and is 42% higher than its fiercest rival Sam’s Club. Costco’s health plan also makes other retailers look Scroogish, Costco’s workers were only paying just 4 percent toward their health costs and raised it to only 8 percent when Sam’s Club and the retail average is at 25 percent (Bowmer, 2007). “Costco isn’t simply looking to be better that the competition they want
Costco 4 to be demonstrably better,” said John Matthews, Costco’s senior vice president for human resources (Bowmer, 2007). From the customer’s standpoint Costco looks to keep increasing its consumer base by providing low prices that aren’t coming at the workers’ expense, they believe this is the key to providing a good service and good business
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