Summary Of Costco Threat Of New Entrants

3.3.1 – Threat of new entrants
The treat of new entrants for Costco is low because there are many advantages that Costco has compare to its competitors. Phalguni Soni indicates that “A new competitor would also find it much harder to have the same recognition for consistency in pricing and products that Costco has, as the company has been around for decades. It would also require scale in order to pose a significant threat to Costco” (Soni). It is clear that Costco’s brand recognition is strong in not only the U.S. but also other countries where it operates. The company have operated for a long time with a large number of warehouses in all of the states of the country, so it will be the first obstacle that any new entrants have to encounter.

Justin Young illustrates that “Because of the large population of suppliers, no single supplier can easily impose its demands on firms like Costco. Suppliers’ bargaining power is further weakened because the overall supply is high, which means that a single supplier’s action is unlikely to significantly impact the level of total supply available to Costco” (Young). Costco is one of the largest retailers in the U.S., so it is obvious that the corporation will never depend on any suppliers for a particular type of product. Costco knows that the corporation can’t base the whole operation on a small number of suppliers. Moreover, the limit in suppliers will cause a lot of problems for not only operation but also the ability to compete with other competitors. Therefore, Costco will have a large number of suppliers for their products. Furthermore, for each type of product, they will have multiple suppliers to make sure that they also a variety in any kinds of product. For suppliers, they can’t cause a significant impact on Costco because they know that they aren’t the only ones that Costco bases on. There are many suppliers which want to work with Costco and are willing to replace the spot of any suppliers which make mistakes leading to lose their spot. Getting products in Costco doesn’t only help suppliers reach a large number of customers but also be able to sell more products. With many warehouses and distribution channels, Costco is a dream place to sell products for any suppliers. Suppliers themselves are also in the competition to put their products on Costco’s shelves, so it will not be an impact on bargaining power of suppliers. Even though Costco may have strict rules and regulations for their products, suppliers are obviously benefit from those things. Their products will not only have high quality but also meet particular standards that customers demand. Costco wants to distribute