In the current market situation where the economy is constantly on a downfall and people are doing everything that is necessary to reduce cost and save money. Food products and daily essentials are one the major contributors of cost for everyone. Especially younger generation are willing to lead a simplistic and cost effective life style to save money. Despite being the second largest retail chain in the world, 2015. And also one of the cheapest retailer in the market it is finding very hard to attract the Millennials in to their stores. Costco is the largest retailer when it comes to membership only stores and it is estimated that the net income of the company to be around $2.38 billion US dollars (http://www.marketwatch.com/investing/stock/cost/financials). …show more content…
Their business model is aimed at small business and sub urban households. They offer lower prices when you buy in huge amounts. In order to shop at Costco one has to have access to a car in order to carry all those items and also space at home to store those items. But when it comes to younger generation most of them doesn’t have a car and most of them live in shared apartments where there is no place to store these bulk products and even if they find a way to store them, they won’t be in a position to utilize all these products before their expiration date which is also huge factor that forces younger generation to shop some where …show more content…
Costco has to change the way it handles social media and it also should offer benefits according to the demographic of the people. Methodology In this paper we are going to use different methods to understand in detail where the problem lies and what the root causes of the issue. SWOT Analysis SWOT analysis is one of the most widely used technique and most effective technique that can be used to determine the strengths, weakness, opportunities and threats that are associated with in organization. With this we can form a clear idea about what step should be taken to rise to the next level. 1. Strength • It is the second largest retailer in the world. • It has stores all over US and Canada. • It offers wide range of products. • It has good image among the general public. 2. Weakness • Lack of presence in social media • Lack ability to provide lower quantity products • Membership fee • Poor online
Price: All the Costco products have a maximum mark up of 15%, keeping their prices competitive and almost always cheaper than their competitors which usually mark up at 25%. In the video the founder is seen comparing the price of one of their products (a toy truck) to Sam’s Club which was offering it at a lower price, and reconsidering their pricing for it. Their pricing does however force the consumer to buy the product in bulk- making them assume that they are getting the best possible price.
Costco’s business strategy is different from their competitor’s in the wholesale retail industry because their purpose is to keep overhead down and pass the savings to their customers. They do this by choosing not to advertise, sell fewer brands and having an innovative approach by having their own manufacturing facilities for a variety of merchandise. Costco does not market their warehouses and their marketing is through word of mouth from current customers who also must have a membership to shop at Costco. When compared to Walmart Costco sells four brands of toothpaste and Walmart sells sixty brands of toothpaste. Costco can buy more for less from the manufacturer of the four brands of toothpaste and pass the savings on to their customers. Costco’s strategy is to sale a limited number of items because this strategy according to (Lutz, 2013) “increases sales volume and helps drive discounts.” Because of Costco’s profitability in the retail market they have managed to continue to be profitable even in an oppressed economy. Costco’s focus is on high-end customers indicated by some of the brands they carry such as Coach Handbags. Costco offers three different levels of membership and is only open to customers who have a membership. Costco’s philosophy is they do not advertise or markup items more than 15% in order to save their customer’s money. These practices lowers the overhead costs and continues passing the savings to the customer. Costco is an international company and has (Costco Wholesale Corporation, n.d.) “462 locations in 43 U.S. States & Puerto Rico; 87 locations in nine Canadian provinces; 25 locations in the United Kingdom; 10 locations in Taiwan; 9...
The SWOT analysis is a method used to evaluate the attributes (of a particular company) that will support the firm's effort in achieving their goals as well as the attributes that will weaken the company.
Costco was founded on September 15th, 1983 by Jeffery Brotman and James Sinegal (Chesley). It became renowned for its warehouse club retail model, pioneered by former competitor Price Club. After a major merger in 1993 with Price Club, Costco expanded to 206 locations, doubling the size of the company (“Costco Wholesale Historical Highlights”). The decision was based on the fact Costco and Price Club shared similar business philosophies, operations, and the looming threat of being taken over by Sam’s Club. Operating as PriceCostco, international expansion began with development of stores in Mexico, the opening of two stores in England, and the licensing of a Price Club in South Korea ("Costco Wholesale Corporation").
SWOT analysis is a necessary tool for business that allows corporations to analyze where their strengths, weaknesses, opportunities and threats lie. The SWOT tool contains paramount information about the industry and helps the executives of the business make decisions that are necessary for the business’s survival and success.
As for the second issue, it seems that Costco’s efforts to become an international company are moving slowly. They have not reached a point where their US and Canadian warehouses provide a backbone for their finances. Costco’s third issue is their expenses, which include merchandising costs and pre-opening expenses, have been increasing steadily and they need to balance this out to keep a positive net income. Analysis: Key Issue #1: Costco has many competitors, with the primary two being Sam’s Club, a wholesale business managed by Walmart, and BJ’s wholesale club. Sam’s Club offers the same services as Costco.
A SWOT analysis is simple exercise that could be implemented on multiple subjects including an individual or a whole corporation. The SWOT analysis is an operational tool for managing change, defining strategic direction and setting realistic goals and objectives according to Simoneaux and Stroud (2011). Discovering new opportunities and manage and eliminate threats that are present in the company and the surrounding market. SWOT is a valuable technique that leads to a better understanding of the strengths, weaknesses, opportunities and treats both internally and externally. The strengths and weakness are to be considered internal factors and opportunities and threats to be e...
According to Belicove (2012) in article, NLRB Slams Costco On Social Media Usage Policy: What It Means For your Business, “A ruling by the National Labor Relations Board (NLRB) in a case involving Costco earlier this month makes it clear that employers who want to avoid labor disputes would be well served to schedule a sit-down with their legal counsel and take a close look at their existing social media use policies." In this particular case the NLRB disagrees with Costco Wholesale Corp's employee policies in regards to the use of internet and social media usage and limitations by its employees. After complaints made by over 300 employees the NLRB has finally stepped in siding that Costco is in violation of the National Labor Relations Act. "The three-person NLRB panel deemed that the third largest retailer in the U.S. has employee policies in place that are “too br...
The definition of SWOT analysis is comprehensively summaries the internal and external conditions, critical evaluate advantages and disadvantages of organization, facing the opportunities and threats, in order to the combination of company 's strategy and internal resources and external environment (Yuan, 2013). In contrast, SWOT analysis method is a descriptive model, because the enterprise strategy is often a typical uncertainty problem, the lack of adequate analysis and logic, and a SWOT analysis cannot provide the specifically, format of strategic advice (David,
A SWOT analysis is a measure tool to summarize a company’s internal and external aspects. By measuring the company’s strengths, weaknesses, opportunities and threats and looking for improving solutions by using the strengths and opportunities to improve on the weaknesses and take the necessary actions concerning any threats a company can survive in today’s world market.
Historically, Dollar General operated in a highly price sensitive market segment, with 55% of its consumer base earning an average annual gross income of less than $40,000.[2] To attract these customers, Dollar General employed an Everyday Low Price strategy similar to Wal-Mart’s. Thus, keeping costs low and driving high traffic volumes were critical to the company’s financial success. Dollar General achieved this strategy in several ways, including keeping rents and labor costs low, locating in low-income, high traffic areas that offered consumers few substitutes, and offering a wide variety of popular CPG and white label goods.
What is a SWOT analysis? This concept involves assisting businesses to identify their strengths, weaknesses, opportunities and threats. It is often used to analyze an organization and its environment. Businesses find the analysis useful in assisting them to improve their business, establish goals and objectives.
Overall, Costco exploits the Porter’s value chain elements to increase the productivity and efficiency of its operations while also lowering the cost of margins related to the operations of the organization (Guo, 2016). These benefits result in different competitive advantages to the company, which in turn increases the profitability of the organization. For each of the Porter’s value elements, the different stakeholders of the company are also impacted positively. Financial Analysis of Costco Table 1:1 Financial Data in Comparison to the Competitors 2016 2015 2014 Costco Revenue 1620 1467 1350 Net Income 76 72
Wal-Mart is coming off a disappointing third quarter when its largest revenue generator, sales from U.S. stores, dropped 0.3%. The company also has forecasted flat earnings during the critically important holiday season. While lowering its full-year forecast, Wal-Mart still expects to see modest sales growth in FY2015 through the opening of smaller, more targeted stores, and its longtime strategy of lowering prices. However, there is some doubt whether these measures will be enough to stave off Wal-Mart 's competitors. Costco NASDAQ: COST is coming off a big year with more than $100 billion in revenue, 5% growth in U.S. store sales, and 7% growth in international sales. As Costco continues to challenge Wal-Mart domestically and internationally,
The SWOT analysis is used to gauge a company’s strengths and weaknesses. It also outlines opportunities for tapping and presents possible threats that could affect a company’s operations.