Costco's Competitive Advantage

Cutco corporation is the largest manufacturer and marketer of kitchen cutlery and accessories in the United States and Canada (instructors manual, Pg. 22). This company utilizes a direct marketing channel to distribute their high quality goods to customers allowing for most direct route from manufacturer to client. One of the incredible attractions for customers is the “forever guarantee,” that is offered with the purchase of any Cutco Product. The corporate objective is simple, to design and manufacture the highest quality product available. The foundation of this manufacturers product is incredibly high in quality and it has the backing of the forever guarantee ensuring that their support extends long after the purchase date,

In the recent years Walmart has been far our performing its top two competitors; Costco and Target. With a market cap of 212,195,024, Walmart had beaten its competitors who remain at 65,969,279 for Costco and 43,701,237 Target (NASDAQ, Competitors). This means that for Walmart, the total market of all of their goods and services far surpasses its top two market competitors. As investors, you may ask why Costco is second to Walmart’s regarding sales. Well when we take a closer look, we see that “Walmart’s treatment of its customers and employees has not always been then best. Yet, in comparison to Costco, who is using a membership based program to turn Walmart in its head; providing industry-leading benefits to employees and satisfying customers

For the business-level, Trader Joe’s adopted a differentiation focus strategy. According to our textbook with this strategy, Trader Joe’s seeks to differentiate in its target market. They rely on providing better service than broad-based competitors. Specifically, they focus on the special needs of the buyer in other segments (Dess, Page 159). Joe’s differentiates its self from other grocers by providing a unique shopping experience fortified with their private label goods and great service from their crew members. Their unique shopping experience stems from their smaller store locations with the chevron pattern. They don’t have a large array of products, but they provide high quality goods under their brand name that continues to attract customers.

As legally required The Cheesecake Factory Incorporated has a Code of Ethics and Code of Code of Business Conduct. The Code of Ethics and Code of Business Conduct assures compliance with the Sarbanes – Oxley Act for companies whose stock is publicly traded. The Code of Ethics and Code of Business Conduct also assures the success of The Cheesecake Factory Incorporated. The implementation of the Code of Ethics and Code of Business Conduct is pertinent to being an ethically and socially responsive business.

As mentioned earlier, Costco’s code of ethics devotes the first section of the document to addressing compliance with laws and regulations. Being an enterprise that does business in various areas, the code makes it a mandate to comply with the laws of every community Costco operates in. Compliance with product safety and security standards, ecological standards, labor laws, antitrust laws, and corporate reporting and disclosures with the SEC and public communications are the major legal elements addressed in the company code of ethics. In addition, the code discourages illegal and unethical behavior by directing employees and company representatives not to offer, give, ask, or accept bribes, kickbacks, or any payments to influence the government

Eighty percent of its gross profit comes from membership fees; customers renew their memberships at a rate of close to 90 percent (Stone 2013). The company’s stock has doubled since 2009. In 2012, Costco’s beloved co-founder and Chief Executive Officer, Jim Sinegal, retired and Craig Jelinek took over. Share prices rose 30 percent on the heels of this change. Possibly because Jelinek shares the same value system and leadership style as his predecessor. “If you treat consumers with respect and treat employees with respect, good things are going to happen to you,” Jelinek says (Stone

Over the last few years, Costco has seen an exponential increase in the number of new memberships. While the Costco gained 2.3 million memberships in the financial year of 2009. Greater than 4 million customers signed up in the financial year of 2011. The Costco’s membership base saw a rise of 3 million in the financial year of 2012 and another 4.2 million in 2013. The strong exponential growth in the memberships continued in 2014 as well. Currently Costco holds 81.3 million cardholders and they buy in relatively small quantities, with no specific customer/member accounting for a meaningful fraction of a Costco’s total sales. Subsequently, individual members of wholesale clubs have little power or leverage to deal with a wholesale club over

Dollar Tree’s competitive strategy, when measured by Porter’s strategic typology, is low-cost with focus. Being a dollar store, Dollar Tree has a strategy of offering its customer low-priced merchandise and is focused on budget-conscious customers and customers with limited incomes. According to Parnell (2014), low-cost with focus firms must ensure the company controls costs in order to continue to operate while offering low prices, leaving it exposed price competition (p. 188). According to Miles’ and Snow’s strategy, Dollar Tree’s competitive approach is analyzer. Dollar Tree has been quite successful with its growth and acquisition, however as a dollar store, Dollar Tree must ensure their costs are controlled in order to be profitable.

What attracted us to Costco was that it has a strong membership group, which translates into loyal shoppers. The company also has a strong brand that customers know and feel like they get great value at a low price. Continually growing in net sales and net income despite a very competitive market. Our idea that attracts us to Costco is what they don’t have and are not known for is smaller stores that still give customers great value in smaller packs along with customer service which Costco is not known for. In regards to customer service we feel there is nowhere to go but up and we feel Costco has the financial means to build these stores and create a simple service program that customers will recognize immediately versus their

In conclusion, for businesses to be ethical in small ways, may not seem to effect the community or the consumer. However, in the example of Costco, it made a difference to many people having a job during the recession was life changing. In doing so Costco has gained valuable employees and customers for years to come. On the contrary, Wells Fargo lost millions of dollars by allowing unethical practices to continue for years. In doing so Wells Fargo lost consumer

Neither one of the companies breaks this standard. Before we go too far, however, let us characterize corporate-level procedures as they apply to this study. The corporate-level procedure is the methodology executed by an organization which intends to extend the organization past its present achieve either through mergers and acquisitions, associations, or inward development and

Costco operates on a membership only basis, therefore customers and businesses must purchase a membership to shop at the retailer. Costco currently has two memberships available, which are their individual membership, also known as Gold Star, and their Business membership, both of which cost $55 annually (10-K, 2015). For $110, a customer can upgrade to an executive membership, where they can enjoy a 2% discount (SWOT, 2015). They currently have around 75 million members, and due to their no-frills approach, low prices, and high quality products they have a high member retention rate of 91% in the U.S. and Canada, and an international rate of 87% (Forbes, 2016).

To be of value market segments must be measurable, substantial, accessible, differentiable, and actionable (Kotler & Keller, 2012). Segmentation of demographics for Costco is vast as the current product offerings include all genders, ethnicities, incomes. age groups, and social classes. When considering demographics, it is important to consider the average or typical characteristics of the target market. As mentioned earlier the target market or focus for this company is supplying the small- to medium-sized business and targets the middle- to high-end consumer with its private label brand Kirkland Signature. Categories of products currently include major appliances, furniture, electronics, luxury items, special events,

What are the two types of core competencies that drive a firm’s competitive advantage? Which firms demonstrate a clear competitive advantage because of (a) major value-creating skills/core capabilities and/or (b) superior assets or resources? Which firms have demonstrated sustainable sources of competitive advantage?

Walmart has succeeded in achieving the leading position in the retail industry. Walmart now stands as the biggest retailer in the world. However, the external factors constitute pressure on the company that must be address carefully.