Costco Wholesale Club Strategic Plan

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Evan Wabrick
Strategic Plan
Dr. Watts
4/18/2012
Strategic Plan for Costco Wholesale Corporation
Executive Summary
The retail industry is an extremely competitive environment that poses many challenges for Costco Wholesale Corporation and its competitors. Since many of the stores offer the same products, it may sometimes be very hard for customers to differentiate between retail stores. Even though the economy is recovering from a recession, the retail business is still a mature industry and is improving very steadily.

Costco and its competitors are affected by the same political, economic, social, and technological factors, such as taxes, presidential elections, SEC regulations, the economic state of the country, exchange rates, various social characteristics, such as customer age, income and family size, and the growth of e-commerce. All of these external factors have a great influence on how Costco conducts their operations.

Costco is a premier leader in the retail industry thanks to their strategic pricing strategy, low cost operating system, and financial stability. Costco is still vulnerable to numerous threats, such as competition, exchange rates fluctuations, increasing labor and healthcare costs, and high exposure to low growth markets. If Costco is to maintain the market share in the retail industry, they should consider the options of offering more customer service in their warehouses, increase online retail sales, and acquire other retail stores for expansion and growth. Finally, if Costco wants to become more competitive and profitable over time, management should implement the recommendation of lowering membership costs and expanding their operations.

Firm Profile
Costco Wholesale Corporation is based in Issaquah, Washington and is one of the leading forces in the General Merchandise Stores/Retail Industry. Costco operates an international chain of 600 warehouses where only their membership holders have the privilege to shop. Costco offers high-quality, brand name merchandise at substantially lower prices than other retail locations across the globe. Their warehouses were originally designed to help small to medium-sized business reduce costs in purchasing for resale and for daily business use, but has turned into a primary location to help all individuals with their personal needs.

Costco Wholesale Corporation offers one of the largest varieties of products that can be found in one location. Their products range from groceries, electronics, automotive supplies, jewelry, sporting goods, household appliances, and office equipment. What distinguishes Costco from other retailers is that they only allow members to shop at any of their locations. There are three different membership levels: Business, Gold Star (individual), and Executive membership. Each specific level entitles customers to various privileges.

The mission of Costco Wholesale Corporation is “To continually provide our members with quality goods and services and the lowest possible prices.” Costco is able to fulfill its mission by their strategic pricing strategies, while offering products in bulk that saves their customers money. There is no vision statement for Costco; however, through abiding by their mission, Costco hopes to remain a leader in the competitive retail industry and become more profitable in the near future.

External Analysis
According to Mergentonline.com, Costco Wholesale Corporation is ranked the second largest retail store in the world, with five-hundred ninety-eight stores worldwide and annual revenues close to $89 billion dollars. Since about two-thirds of the United States gross domestic product comes from retail stores, many consumers are reliant on the products of retail stores for their everyday needs. In order to have a competitive advantage over other retail stores, Costco needs to differentiate themselves in terms of products and price. When determining what products to sell...
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