Costco Case Study Essay
Costco Wholesale Corp.: Case Study
1. What is Costcoʼs business model? Is the companyʼs business model appealing? Why or why not.
1.1. The companyʼs business model was “to generate high sales volumes and rapid inventory turnover by offering members very low prices on a limited selection of nationally branded and selected private label products in a wide range of merchandise categories.” As a consumer this is a attractive business model because it saves money for the people purchasing while maintaining a strong business and not having to maintain capital.
2. What are the chief elements of Costcoʼs strategy? How good is the strategy?
2.1. The chief elements of Costcoʼs strategy is to offer members low prices of limited selection of nationally …show more content…
I believe Jim Sinegal is a effective CEO and I believe without him in the company Costco would not be in the positive place they are now in. Sinegal has an objective for the company (rapid turnover) and he takes action to make business run effectively to get results. He has gotten consumers to purchase a wide variety of brands and products at all ranges of prices such as 1 million pumpkin pies during Thanksgiving week in 2007, gasoline sales of 4.6 billion in 2007, and 40 rotisserie chickens in 2008. Without the 232,000 members and growing, Costco would not be the go-to store for last minute and holiday needs resulting in the average bill being $150 per customer. Jim Sinegal also cares about his employees just as much as his customers which is above average for any CEO. He makes visits to Costco stores and is sure to greet all employees and makes them feel as normal as possible and has gone above average standards and offers employees great benefits and a pay wage that goes above other companies. Because of my reasoning I would give him a Abecause there is always room for improvement to become the leader in this retail …show more content…
But the profits could become minimal if they raise their prices and lose their customer base. The biggest attraction for all customers is the huge savings. If they where to reduce that opportunity then they would risk the loss of their huge customer base which they need for a high product turnover that is the foundation of their business model. Therefore the argument of the price being too low is valid but in my opinion they are not too low. The low prices are necessary to maintain the customer
1. What is Costcoʼs business model? Is the companyʼs business model appealing? Why or why not.
1.1. The companyʼs business model was “to generate high sales volumes and rapid inventory turnover by offering members very low prices on a limited selection of nationally branded and selected private label products in a wide range of merchandise categories.” As a consumer this is a attractive business model because it saves money for the people purchasing while maintaining a strong business and not having to maintain capital.
2. What are the chief elements of Costcoʼs strategy? How good is the strategy?
2.1. The chief elements of Costcoʼs strategy is to offer members low prices of limited selection of nationally …show more content…
I believe Jim Sinegal is a effective CEO and I believe without him in the company Costco would not be in the positive place they are now in. Sinegal has an objective for the company (rapid turnover) and he takes action to make business run effectively to get results. He has gotten consumers to purchase a wide variety of brands and products at all ranges of prices such as 1 million pumpkin pies during Thanksgiving week in 2007, gasoline sales of 4.6 billion in 2007, and 40 rotisserie chickens in 2008. Without the 232,000 members and growing, Costco would not be the go-to store for last minute and holiday needs resulting in the average bill being $150 per customer. Jim Sinegal also cares about his employees just as much as his customers which is above average for any CEO. He makes visits to Costco stores and is sure to greet all employees and makes them feel as normal as possible and has gone above average standards and offers employees great benefits and a pay wage that goes above other companies. Because of my reasoning I would give him a Abecause there is always room for improvement to become the leader in this retail …show more content…
But the profits could become minimal if they raise their prices and lose their customer base. The biggest attraction for all customers is the huge savings. If they where to reduce that opportunity then they would risk the loss of their huge customer base which they need for a high product turnover that is the foundation of their business model. Therefore the argument of the price being too low is valid but in my opinion they are not too low. The low prices are necessary to maintain the customer