Costco: Internal/External Analysis

Topics: Costco, Warehouse club, Sam's Club Pages: 23 (7785 words) Published: October 6, 2008
Costco:Internal / External Analysis

Table of Contents
About Costco
Mission Statement
Corporate Governance & Stakeholder Management
Strategic Objective
Primary Activities
Support Activities
Costco Membership
Net Income
Net Sales
Membership Fees
Gross Margin
Selling, General & Administrative Expenses
Cash Flows
Expansion Plans
Environmental Scanning
Environmental Monitoring
Competitive Intelligence
Environmental Forecasting
Competitive Environment
Porter’s Five Forces
Threat of New Entrants
The Bargaining Power of Buyers
The Bargaining Power of Suppliers
The Threat of Substitute Products and Services
Intensity of Rivalry
Value Net
Strategic Groups Within an Industry

Appendix A
Financial Reports, Financial Highlights & Company Time Line
Map of Locations & Photos
Internal Analysis

About Costco
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. Costco's warehouses present one of the largest and most exclusive product category selections to be found under a single roof. Categories include groceries, candy, appliances, television and media, automotive supplies, tires, toys, hardware, sporting goods, jewelry, watches, cameras, books, house wares, apparel, health and beauty aids, tobacco, furniture, office supplies and office equipment. Costco is known for carrying top quality national and regional brands, with 100% satisfaction guaranteed, at prices consistently below traditional wholesale or retail outlets. Members can also shop for private label Kirkland Signature products, designed to be of equal or better quality than national brands, including juice, cookies, coffee, tires, house wares, luggage, appliances, clothing and detergent. The Company also operates self-service gasoline stations at a number of its U.S. and Canadian locations. Additionally, Costco Wholesale Industries, a division of the Company, operates manufacturing businesses, including special food packaging, optical laboratories, meat processing and jewelry distribution. These businesses have a common goal of providing members with high quality products at substantially lower prices. According to Jim Sinegal, the Company's President and Chief Executive Officer, "Costco is able to offer lower prices and better values by eliminating virtually all the frills and costs historically associated with conventional wholesalers and retailers, including salespeople, fancy buildings, delivery, billing and accounts receivable. We run a tight operation with extremely low overhead which enables us to pass on dramatic savings to our members." (7)

Costco Mission Statement
To continually provide our members with quality goods and services at the lowest possible prices. In order to achieve the mission they conduct business with the following Code of Ethics in mind: 1.Obey the law.

2.Take care of their members.
3.Take care of their employees.
4.Respect their suppliers.
Costco believes that if they do these four things throughout the organization, then they will achieve their ultimate goal, which is to: 5. Reward the shareholders (8)

Corporate Governance & Stakeholder Management
There are 13 Directors and Officers, 34 Executive and Senior Officers and 80 Vice Presidents in Costco’s corporate management. (9) Costco Locations
As of December 2005, Costco operated a chain of...

Cited: 1. Annual Report 2005. Costco Wholesale. August 28, 2005.
2. Buss, Dale
6. Greenhouse, Steven. How Costco Became the Anti-Wal-Mart., July 17, 2005
7. Investor relations
10. Stringer, K. (2004, November 3) Wall Street Journal, p. B.3. Retrieved February 13, 2006, from ABI/INFORM Global database.
12. Duff, M. (2005, December 19). Worldwide Warehouse. DSN Retailing Today, 44(23), 40-41. Retrieved February 13, 2006, from ABI/INFORM Global database.
13. The great Fall of China? (2004, May 13). The Economist. Retrieved February 14, 2006, from
14. Economy. (2005). Retrieved February 14, 2006, from
15. Clark, K. (2001). Two Strategies, One Popular Segment. Chain Store Age, 77(11), 56-57. Retrieved February 13, 2006, from ABI/INFORM Global database.
16. Sam’s to Sell Health Plans to Some Customers. (2005, December 30). Wall Street Journal, p. A.13. Retrieved February 13, 2006, from ABI/INFORM Global database.
17. Hudson, K. (2005, November 11). Warehouses Go Luxe; Costco, Sam’s Club Stock Wine Coolers, Grand Pianos to Tempt Holiday Shoppers. Wall Street Journal, p. B.1. Retrieved February 13, 2006, from ABI/INFORM Global database.
18. Henderson, Nell. (2006, February 14). Healthy Economic Growth Predicted. The Washington Post, p. D01. Retrieved February 14, 2006, from
19. Costco Wholesale
26. The Costco Challenge: An Alternative to Wal-Martization? (July 5, 2005)
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