Strategic Analysis Fnl

Topics: Warehouse club, Costco, Sam's Club Pages: 16 (3143 words) Published: November 11, 2014


Tabla de contenido
1.DESCRIPTION OF THE COMPANY: COSTCO WHOLESALE CORP.3
Short history3
Key facts and figures of today’s business3
2.PESTEL:6
2.1.1.Political and legal :6
2.1.2.Economical:6
2.1.3.Sociological:7
2.1.4.Technological:7
2.1.5.Ecological:7
3.Industry analysis8
3.1.1.Industry Rivalry—Strong Competition9
3.1.2.Threat of Entry- Weak competitive force9
3.1.3.Power of supplier—Weak competitive force.9
3.1.4.Buyer’s (Customers) Power—a weak competitive force9 3.1.5.Threats of Substitutes—a strong competitive force10 4.From Resources & Capabilities to the firm’s STRATEGy and competitive advantage10 Resources & capabilities analysis10

4.1.1.CostCo’s resource assessment10
4.1.2.CostCo’s capability assessment12
Nature of the firm’s strategy and competitive advantage12 Strategic coherence of the firm’s choices13

1. DESCRIPTION OF THE COMPANY: COSTCO WHOLESALE CORP.
Costco Wholesale Corporation evolves in the consumer goods distribution industry. Thanks to a membership system, Costco is more than just a hypermarket; it is a wholesaler supplying goods at a low price to its member only. Indeed, it defines itself as a “membership warehouse club dedicating to bringing our members the best prices on quality brand-name merchandise”1. Short history

The history of Costco began in 1976 with the launch of a warehouse in San Diego by The Price Company. At that time, it was only serving small businesses and was considered only as an intermediary between goods producers and shops. Quickly after the opening, it decided also to distribute its goods to selected non – business members to expand faster and greater. Pioneer in this concept, it was immediately successful.

In 1983, under the supervision of James Sinegal and Jeffrey H. Brotman, Costco opened its first warehouse club in Seattle and 10 years later both The Price Company and Costco merged to become Price/Costco Inc. and relocated in Delaware, United States. At that time and thanks to the recent merging, the company was able to generate more than $16 billion in sales. In 1997, the group changed name to Costco Companies Inc. and then two years later to the final Costco Wholesale Corporation reincorporated in Washington. Its current trade value on the NASDAQ Market is approximately $129.09. It is traded under the symbol “COST”.

Key facts and figures of today’s business
Nowadays, the business is run by W. Craig Jelinek as president and CEO and by Jeff Brotman (founder) as Chairman of the Board and generates $3.6 billion2 to its shareholders mainly in the form of dividends (2013). Costco is also an international brand with 648 stores situated in eight different countries: United States (including Puerto Rico), Canada, Australia, Mexico, Japan, United Kingdom, Taiwan, and South Korea. As a comparison, its biggest competitor, Sam’s club created in 1983 and owned by Wall – Mart has 642 stores worldwide (Sam’s Club only) and is located in 27 countries.

Figure 1.2.1 Number of warehouse stores per country

In 2013, Costco opened 26 new stores, including 12 only in the United States and the rest in six other countries. These 26 new warehouse stores had generated around $100 million of sales3. Costco has increased significantly its net sales over the past five years and has reached record sales of almost $103 billion4 in 2013. The figure 1.2.2 below shows the net sales over the five past years.

Figure 1.2.2 Net Sales in $Billions from 2009 until 2013

Currently, the company employs more than 184,000 people throughout the entire world (2013), a number which is increasing every year since, at least, 2010.

Figure 1.2.3 Number of employees from 2010 until 20135

2. PESTEL:
2.1.1. Political and legal :

As Costco is present in many countries, It has to cope with rules in each one of them in order to respect the law and not to be penalize. In France, there are special restrictions:...
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