Preview

Costco Case Strategic Recommendation

Satisfactory Essays
Open Document
Open Document
364 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
Costco Case Strategic Recommendation
Costco Case
Strategic Recommendation
Bringing New Products for Customer Loyalty

The Purpose: In order to counteract against the increase of taxes Costco now pays, we must raise revenues by attracting new customers, and give them a reason to remain loyal. To do this, Costco should introduce a slightly wider variety of products.

Initial Problem: Although the company has exceeded in revenue generation and debt management, we have to deal with the catch-22. We have drastically limited our interest paid by adopting methods to immediately pay off short-term debt, and paying vendors quickly to take advantage of purchase discounts. By doing so, the company now has less debt to write-off to taxes, increasing those costs significantly.

Innovative Solutions: Costco should take on liability increases by purchasing more goods to sell in store. By offering more options, we can address yet another potential arising issue. Even though we stress customer service and strive to meet their demands, the company frequently ignores customer requests for products that the store does not carry. On top of this, Costco offers 4000 products - only half of that of BJ’s Warehouse. As for our 4000, only 25% change on a regular basis. With so many additional products offered at BJ’s Warehouse, potential customers could easily go there instead.

We need to take advantage of an untapped source of loyal customers. Costco has already proven that it keeps its customers through strong service policies and offering products in heavy demand. The company does not need to adopt an entirely new product policy. However, by offering an additional 500-1000 products in the stores, Costco will offer more variety than Sam’s Club, but still have the ability to pander to its customers desires.

Changes to Consider: Offering potentially up to 1000 more products means re-evaluating our floor space and inventory management. We will most likely have to purchase additional space to accommodate. In the

You May Also Find These Documents Helpful

  • Powerful Essays

    Costco Case Study

    • 1590 Words
    • 7 Pages

    In this paper you will read about how Costco uses effective leaders within its company to empower their employees and create a working environment that is enjoyable. This paper will aim to answer three questions: 1.) How does the flexible leadership theory apply to Costco’s operations? 2.) What is the CEO’s role in all of this? 3.) Can this work in your organization? If not, why?…

    • 1590 Words
    • 7 Pages
    Powerful Essays
  • Good Essays

    By following these business values and adhering to its overall mission, Costco has been able to differentiate itself from other large-scale retailers and maintain increasingly profitable returns while also providing rewarding job opportunities for its employees and high quality products and an overall exceptional shopping experience for its…

    • 361 Words
    • 2 Pages
    Good Essays
  • Better Essays

    The problem facing Costco these days is complaints by customers that they want some items sold individually because some customers don’t want to buy four bottles of ketchup at once. The research questions for Costco are will it provide items individually to customers, Is it profitable for Costco to sell some items individually, and how much business will not providing items individually to customers affect Costco’s revenues. This research is critical to Costco’s future and how it will change in the future to increase profits and maintain its current customers and also gain more customers that don’t shop at Costco because they are seeking a store that meets their needs of buying items individually.…

    • 2316 Words
    • 10 Pages
    Better Essays
  • Best Essays

    Financial Ratios and Ratio

    • 4182 Words
    • 17 Pages

    * Costco’s business strategy is fascinating compared to other wholesale companies in the industry in how their stores are presented to the public. Costco supermarkets are made of cement floors, merchandises are laid on pallets, groceries are not handled in bags, aisles are not labeled, and lastly, they do not advertise. This business strategy save millions of dollars in operating cost every year.…

    • 4182 Words
    • 17 Pages
    Best Essays
  • Better Essays

    Palmers Limited Case Study

    • 1312 Words
    • 4 Pages

    When you ask an average American about a wholesale dealer, one name stands out, Costco Wholessale Corp. They are one of the biggest wholesale corporation in US. That is very impressive considering they have only been in the industry for about 30 years. They are member based and provide quality goods and services to member only. Their members not just every day people but people who run small business so not only customers buy their product but sell them to others in their own stores as well. While their competitor, Wal-Mart, looks to provide lowest price but inlike Costco’s they overlook the quality. While BJ tries to look pretty to their customer, Costco pay less attention to their look and more to provide the lowest prices for their members. From 1997 to 2001, Wal-Mart store numbers were increased by 53, BJ 's stores went up by 50, but Costco went up by 91.…

    • 1312 Words
    • 4 Pages
    Better Essays
  • Good Essays

    Risings costs, difficulties associated with opening new stores while maintaining growth, prosperity of existing ones…

    • 766 Words
    • 4 Pages
    Good Essays
  • Good Essays

    Directions: Please answer each of the following questions and provide examples from the text, if applicable. Each response should be at least two paragraphs in length and be written in complete sentences.…

    • 1129 Words
    • 5 Pages
    Good Essays
  • Better Essays

    Costco Case Study

    • 1118 Words
    • 5 Pages

    Costco has developed a brand named Kirkland. The Kirkland brand has the Costco expectation to be equivalent or better than national brands. A continual product improvement is the exact objective for the maximum competing goal. Product quality and price comparison is continuously revisited by the internal Costco research team. Sam’s club is a division from the Wal-Mart Corporation. Although Sam’s and Costco have a close race, there is an outstanding difference when considering the research that goes into product expectations and supplier preference. Costco is very similar to Sam’s but in resent comparison Costco has beat out many companies in the same bulk market. Costco and Sam’s have excellent programs for their employees and team effort climate has both companies at an outstanding stance to overall organizational…

    • 1118 Words
    • 5 Pages
    Better Essays
  • Satisfactory Essays

    Costco Swot Analysis

    • 167 Words
    • 1 Page

    As we look at our current economical status, we see how the global financial market is in turbulence due to changes in demographics. To subdue these changes Costco has constantly tried to pull in and retain customers. This allows them to keep a strong position in market share and acquiring profits. Costco is in the membership wholesale industry that provides merchandize at a much lower price than others. Although Costco is one of the biggest companies in the USA, there are many strengths and weaknesses in their strategy. Taken that Costco has many competitors, it must continue to respond to industry pressure through innovation. Considering the many accomplishments of Costco, there are many things they can improve on. Increasing profitability…

    • 167 Words
    • 1 Page
    Satisfactory Essays
  • Powerful Essays

    In today’s economy, even most successful businesses, including Costco Company also suffers from the recent economic trends. Despite from the economic crisis, it is imperative for Costco Company to focus on the strategy in providing items in bulk and at low prices to give assistance in sustaining growth during the slow economic times. The successful pursuit of a low-cost strategy lets Costco charge less than its competitors and still make profits. The pricing tactic that Costco has executed focuses on the price-sensitivity of its consumers. The company has shined in keeping its prices low by capping the markup on its merchandise. Costco is precise at organizing for example, using floor space, and producing high revenues from its products within its stores. Besides a wholesale club, Costco delivered more value to customers by, including ancillary services for…

    • 1454 Words
    • 6 Pages
    Powerful Essays
  • Best Essays

    The purpose of this Organizational Analysis is to discuss Costco’s current mission and values, provide a snapshot of their existing overall business model and the environment they are working in, and then discuss the key success factors required to succeed in their industry. Beyond that will be an examination of what resources (tangible, intangible, and human) and capabilities (functional and value chain) are needed to deliver on these key success factors, as well as analyze how Costco ‘stacks up’ to the competition in those areas. Finally there will be a discussion of what areas should be either improved or exploited moving forward to give Costco a more distinct competitive advantage (and therefore increased profits) in this industry.…

    • 3826 Words
    • 16 Pages
    Best Essays
  • Powerful Essays

    Costco Wholesale Corporation operates an international chain of membership warehouses, mainly under the "Costco Wholesale" name, that carry quality, brand name merchandise at substantially lower prices than the merchandise typically found at conventional wholesale or retail sources. The warehouses are designed to help small-to-medium-sized businesses reduce costs in purchasing for resale and for everyday business use. Individual consumers may also purchase for their personal needs.…

    • 7785 Words
    • 32 Pages
    Powerful Essays
  • Better Essays

    Costco Analysus

    • 1172 Words
    • 5 Pages

    Costco has great capabilities in reducing cost and expanding business. Also, they are strong in understanding their customer base with managers who had a…

    • 1172 Words
    • 5 Pages
    Better Essays
  • Best Essays

    This objective of this paper is to analyze Costco's competitive advantage and business strategy. As part of this analysis, we will compare Costco's business model to its closest publicly traded competitor, BJ's Wholesale, to understand the competitive dynamics of their interactions with customers. Furthermore, we will analyze whether Costco's competitive advantages are sustainable in the long run.…

    • 2932 Words
    • 12 Pages
    Best Essays
  • Powerful Essays

    Costco mini case study

    • 1265 Words
    • 4 Pages

    1. What is Costco’s business model? Is the company’s business model appealing? Why or why not?…

    • 1265 Words
    • 4 Pages
    Powerful Essays