Costco External Analysis

Only available on StudyMode
  • Download(s) : 658
  • Published : April 11, 2011
Open Document
Text Preview
Strategic Case Analysis:
COSTCO
(Nasdaq: COST)
Strategic Management
MGT4340 Table of Contents

1.0.0. Executive Summary………………………………………………… 2.0.0. Company History……………………………………………………. 2.1.0. Background……………………………………………………. 2.2.0. Purpose of this study …………………………………………. 3.0.0. External Analysis …………………………………………………. 3.1.0. General Environmental Analysis …………………………. 3.1.1. Demographic Segment ………………………………. 3.1.2. Economic Segment ………………………………… 3.1.3. Political/Legal Segment …………………………… 3.1.4. Socio-Cultural Segment ………………………….. 3.1.5. Technological Segment……………………………… 3.1.6. Global Segment ……………………………………… 3.1.7. Summary of General Environment Analysis………….

3.1.8. Driving Forces ………………………………………. 3.2.0. Industry Analysis …………………………………………… 3.2.1. Description of the Industry…………………………… 3.2.2. Industry Dominant Economic Features……………….. 3.2.3. Market Size …………………………………………… 3.2.4. Market Growth Rate…………………………………. 3.2.5. Industry Trends……………………………………….. 3.2.6. Five Forces Analysis …………………………………. 3.2.6.1. Threat of New Entrants……………………..

3.2.6.2. Power of Suppliers ………………………….
3.2.6.3. Power of Buyers…..…………………………
3.2.6.4. Power of Substitutes…………………………. 3.2.6.5. Intensity of Rivalry …………………………. 3.2.7. Summary of Industry Analysis……………………… 3.3.0. Competition Analysis………………………………………… 3.3.1. Industry Competitors ………………………………… 3.3.2. Rivals Anticipated Strategic Moves…………………… 3.3.3. Summary of Competitive Analysis……………………. 3.3.4. Key Success Factors……………………………………

1. Executive Summary

Costco Wholesale is recognized as the largest wholesale club operator in the US. Over the three-year time period of 2005-2008, this company has expanded its membership base while increasing its number of warehouses both in the U.S. and internationally. In 2008, U.S. sales increased 10.4%, revenue from Canadian operations grew 20.7%, and Costco's other international sales increased by 21.9%. This growth was primarily driven by a 6% and 15% increase in domestic and international comparable store sales each respectively, contributing to an overall 8% increase in Costco's comparable store sales. The increases in comparable store sales were primarily due to slightly higher average amounts spent by consumers as well as higher gas prices. In 2008, Costco operated at a 10.53% gross margin, up slightly from 10.52% in 2007 due to 0.24% increase in sales higher margin categories, primarily food and sundries.

2.0 Company History

Founded by James Sinegal and Jeffrey Brotman, Costco opened its first warehouse in Seattle, Washington, on September 15, 1983. Sinegal had started in retailing by working for Sol Price at both FedMart and Price Club. Brotman, an attorney from an old Seattle retailing family, had also been involved in retailing from an early age.

In 1993, Costco merged with Price Club (called Club Price in the Canadian province of Quebec). Costco’s business model and size were similar to those of Price Club, which was founded by Sol and Robert Price in 1976 in San Diego, California.[6] Thus, the combined company, PriceCostco, was effectively double the size of each of its parents. Just after the merger, PriceCostco had 206 locations generating $16 billion in annual sales. PriceCostco was initially led by executives from both companies, but then Sol and his son Robert Price founded Price Enterprises and left in 1994. Prior to the 1993 Price merger, Wal-Mart founder Sam Walton wanted to merge Sam's Club with Price Club. The very first Price Club location was an old airplane hangar, previously owned by Howard Hughes, and is still in operation today (Warehouse #401 San Diego). In 1997, the company changed its name to Costco Wholesale. 2.1 Background

Costco Wholesale Corporation operates a chain of membership warehouses that sell a wide variety of name-brand products, as well as the company's own Kirkland Signature brand of products, at discount prices to businesses and individuals who are members of selected employee...
tracking img