1. What is Costco business model?
Costco business model is to generate high sales volume and rapid inventory turnover by offering fee paying members attractively low prices on a limited selection of nationally branded and selected private-label products in a wide range of merchandise categories.
Is the company’s business model appealing? Why or why not? I do agree that the business model is appealing because people want to feel like they are exclusive with VIP treatment and they would be able to buy the name brand items they love for exceptionally lower than average price.
2. What are the chief elements of Costco’s strategy?
Ultra low prices
Limited selection of nationally branded and private label products “Treasure Hunt” shopping environment
Strong emphasis on low operation cost
How good is the strategy?
The low prices keeps the customers coming back
Costco offers more product selection than the avg supermarket Keeping overhead cost down allows Costco to offer better value eliminating cost history associated with conventional wholesalers and retailers The growth of the company was intended to show 5% growth, however, the existing warehouses grew by an avg. of 10%
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 developing your answers.
Yes, I do think that Jim Sinegal has been very effective as CEO. For grading, I would give Jim Sinegal an A because of the increase of profits to
4. What core values or business principles has Jim Sinegal stressed at Costco? Obey the law
Take care of members
Take care of employees
5. What is the competition like in the North American Wholesalers Club? Competition among the warehouse clubs (Costco, Sam’s Club, BJ’s Wholesale Club) are based on such factors as price,...
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