Inventory and Costco S Strategy

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Assignment 1 - Last date for submission November 7th 2010
Any two should be completed and submitted individually.
MGM 713
C A S E 2
1. What is Costco’s business model? Is the company’s business model appealing? Why or why not? 2. What are the chief elements of Costco’s strategy? How good is the strategy? 3. Do you think Jim Sinegal is an effective CEO? What grades would you give him in leading the process of crafting and executing Costco’s strategy? What support can you offer for these grades? Refer to Figure 2.1 in Chapter 2 in developing your answers.

4. How well is Costco performing from a fi nancial perspective? Do some number-crunching using the data in case Exhibit 1 to support your answer. Use the fi nancial ratios presented in Table 4.1 of Chapter 4 (pages 104-105) to help you diagnose Costco’s fi nancial performance. 5. Based on the data in case Exhibits 1 and 4, is Costco’s fi nancial performance superior to that at Sam’s Club and BJ’s Wholesale?

6. Does the data in case Exhibit 2 indicate that Costco’s expansion outside the U.S. is fi nancially successful? Why or why not?
7. 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?

8. Are Costco’s prices too low? Why or why not?
9. Does Costco pay its employees too much? Does it make sense for Costco to compensate its employees so much better than the employees at Wal-Mart/Sam’s Club? Why or why not? 10. What recommendations would you make to Jim Sinegal regarding the actions that Costco management needs to take to sustain the company’s growth and improve its fi nancial performance?

Costco Case Study
1. What is Costco’s business model? Is the company’s business model appealing? Why or why not? • Costco’s business model was to generate high sales volumes and rapid inventory...
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