1. How does Costco differ in the way it treats its employees from other large retailers? Costco differs from other retailers in treating employees on notation of “Take care of employees then they will take care of organization” • Allotting a better pay package with an average pay of 17 $ per hour which is 40 % higher than other retailers. • Covering 85 % of employees with health insurance plans even part time employees who are remained continuous 6 months which is very high in compare to other retailers. • Not having much disparity among employees of various grades in terms of pay scale or fair treatment in firm or growth opportunities etc.
Costco has developed number of operational excellence that helped to achieve low cost operations. Costco’s operational excellences are efficient management of inventory and distribution, minimum merchandise handling, and bulk purchasing to reduce the price of the products. Also, Costco has the ability to offer leading national brands at low prices by getting great discounts from the manufacturers. In addition, Costco generates high sales volume and quick inventory turnover helps in reducing inventory-handling costs and increases the liquidity of cash. Quick realization of cash helped them to pay off their vendors and receive additional discounts for early settlement.
Costco has very limited emphasis on its stores and the areas it covers. The meticulous decision making influence in its ability to more speedily respond to market conditions. Also maintaining high wage is weakness for Costco for example Costco’s average pay is $18 an hour, 43 percent higher than its competitor, Sam’s club. Opportunities Costco can expand its market in the many regions of the world specially the developing markets of China, Japan, and India. These markets display huge potential for growth of the firm.
The introduction of Costco, an extremely large business to a semi rural area will have both pros and cons for not only the area but also Costco itself. These issues include • Political Implications • Environmental Implications • Social implications • Technological Implications • Legal Implications • Economic Implications Political – Political implications on the local community would obviously include legislation and regulation. For example the products they are able to sell and also the local politicians will campaign for or against it. The government controls the sale of certain products; this means that for Costco to want to sell particular products such as alcohol there is legislation that they must abide by. Costco will also have to
The discount stores industry is highly competitive. Costco Wholesale Corporation directly competes with Wal-Mart stores and its subsidiary Sam’s Club, Target Stores, Kroger, BJ's Wholesale Club, and indirectly competes with e-commerce businesses such as Amazon.com etc. The key aspects of Costco's strategy have already been identified as ultra-low prices, limited product selection, treasure-hunt merchandising, to low-cost emphasized efficient productivity and its long-term growth strategy. Considering the data available (Exhibit 3) and from the chart below, over the past five years’ average revenue growth of Costco is higher than its competitors which is 8.31% where as Walmart landed with 3.54%, Kroger with 7.17% and Target with 2.13%. From the above chart, we can clearly observe that Costco’s sales are increasing linearly at a steady rate YOY.
Costco does not have an effective social media marketing strategy. Despite using some social media tools such as Facebook, Twitter etc., Costco has a severe lack of presence in the social media world due to an ineffective strategy or lack thereof. Their Facebook page gives very little information about any events or offers available and often directs customers to Costco.com in order to get any proper information about their products. Poor use of social media as an effective form of advertisement has seriously reduced their potential customer base. They need to develop a marketing strategy that can incorporate social media for use in marketing and
The key element to Costco overall strategy is to keep costs low. Costco’s competitors charge 20 to 50 percent markup. An alternative would be, marking up prices slightly on their private label brand items will still be significantly less than competitors’ comparable brands. Recommendations: Continue the Costco’s mission, business model, and strategy. However, increase profitability by raising prices slightly.
Non-membership retailers such as Walmart and Target are two main competitors of Costco, as they both operate instore pharmacies and offer similar products such as consumer electronics, frozen foods, personal care items, and more. What differentiates Costco from its competitors is the company’s business model. Costco’s business model differ from that of traditional discount retailers in the manner that they charge a yearly membership fee with the promise of offering lower prices and making up for the initial upfront cost. The way in which they hold their low price promise is because they have permanently capped their prices; meaning, they have established maximum price-mark ups on their items. Unlike Costco, traditional discount retailers, such as Walmart, make their money from the markup they charge, which refers to the difference between the wholesale price they pay for goods from their suppliers and the retail price they charge to
Marketing and social responsibility By karim zidan : IAU Introduction Corporate responsibility policies have been gaining increasing attention from senior executives as questions of sustainability have come to imbue business all over the world. Nowadays corporations are struggling with a new role, which is to meet the needs of the present generation without compromising the ability of the next generations to meet their own needs. organizations are being called upon to take responsibility for the ways their operations impact societies and the natural environment. They are also being asked to apply sustainability principles to the ways in which they conduct their business. Sustainability refers to an organization’s
Consumer Reports magazine reports that Costco is the leader and is the preferred retailer in the opinion of the readers based on factors such as product quality, value, friendliness of store and staff, ease of returning items, and overall service. Costco was also considered the value leader by providing the best bang for the buck. Walmart, Sam’s Club, and Target fell below Costco’s ranking in terms of popularity and value for consumers (Keshner, 2010). Psychographic characteristics typically go beyond the external focus and are not as easy to quantify but do identify why consumers buy a particular product or service (All Business,