Costco mini case study
Case 2 questions-Costco
1. What is Costco’s business model? Is the company’s business model appealing? Why or why not?
Generating high sales volume and rapid inventory turnover by offering fee-paying members low prices on nationally branded and private-label products. Yes, it is appealing because the fees paid by members allowed for sufficient supplemental revenues while the turnover rates allowed Costco to receive cash for inventory before it had to pay many of its merchandise vendors.
2. What are the chief elements of Costco’s strategy? How good is the strategy?
Pricing, product selection, treasure hunt merchandising, low cost emphasis, and growth are the chief elements of Costco’s strategy. It is a very good strategy because they offer the lowest prices no matter what.
3. Do you think Jim Sinegal has been 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.
Yes, I do think Jim Sinegal has been an effective CEO. I would give him an A in crafting and executing Costco’s strategy because he has been excellent in developing a strategic vision of a no-frills and low-cost store, mission, and core values, along with setting objectives of fast inventory turnover and offering the lowest prices at Costco. He has also done a good job of crafting the strategy by finding out what works best while in charge of his first store, Price Club. He executes and monitors the strategy to achieve the objectives and vision by visiting his own stores and making sure that operations are running in the most smooth and cost efficient way possible for both businesses and individual members.
4. What core values or business principles has Jim Sinegal stressed at Costco?
Sinegal’s five core values include: Obey the law, take care of our members, take care of our employees, respect our suppliers, and reward our
1. What is Costco’s business model? Is the company’s business model appealing? Why or why not?
Generating high sales volume and rapid inventory turnover by offering fee-paying members low prices on nationally branded and private-label products. Yes, it is appealing because the fees paid by members allowed for sufficient supplemental revenues while the turnover rates allowed Costco to receive cash for inventory before it had to pay many of its merchandise vendors.
2. What are the chief elements of Costco’s strategy? How good is the strategy?
Pricing, product selection, treasure hunt merchandising, low cost emphasis, and growth are the chief elements of Costco’s strategy. It is a very good strategy because they offer the lowest prices no matter what.
3. Do you think Jim Sinegal has been 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.
Yes, I do think Jim Sinegal has been an effective CEO. I would give him an A in crafting and executing Costco’s strategy because he has been excellent in developing a strategic vision of a no-frills and low-cost store, mission, and core values, along with setting objectives of fast inventory turnover and offering the lowest prices at Costco. He has also done a good job of crafting the strategy by finding out what works best while in charge of his first store, Price Club. He executes and monitors the strategy to achieve the objectives and vision by visiting his own stores and making sure that operations are running in the most smooth and cost efficient way possible for both businesses and individual members.
4. What core values or business principles has Jim Sinegal stressed at Costco?
Sinegal’s five core values include: Obey the law, take care of our members, take care of our employees, respect our suppliers, and reward our