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.
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.
Costco’s goal is to try and sell first-class merchandize at the lowest price possible to the customers. Costco has many big competitors including Wal-Mart Stores that own Sam’s Club, The Target Corporation and The Kroger Co. who owns Ralphs and FoodsCo. Costco figures out the customers buying habits and needs so they can buy and sell the right product that match’s what people want and need. They need to have a productive supply chain, that allows Costco to measure and identify through their ads and marketing efforts what kinds of products are successful or not. Costco uses Porter’s value chain that uses five marketing services.
Exclusivity to members: As we all know, Costco are the membership system. This system allows exclusivity to members, and exclude other shoppers. It restricts the shoppers shop easily. Even there are more than 81.3 million cardholders, not everyone has the cards. For example, there are many tour groups come to California, especially Chinese tour groups.
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.
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
Tesco online is operating in 270 store across the world where millions of people can purchase their products online. Brand value Tesco having a strong brand name in the United Kingdom, so other parts of the world have believed in their brand. The value of their brand name has built up as, the organisation has continuously used quality goods to serve differently to their customers. Weaknesses Reliance upon the United Kingdom market, the organisation has expanded and generated profits from their other international branch but highly depend and greatly contributed from their United Kingdom market and not contributed or concentrated to the international market. Debt reduction the organisation has always hugely invested in the new spacious stores they have opened which has not allowed the organisation to save money for other
In Costco’s macro-environment, a variety of factors could affect the company’s economic viability. External factors such as inflation, foreign currency exchange rates, levels of unemployment, reduced consumer confidence, and changes in tax policies could unfavorably affect the demand for Costco’s products and services. Prices of some goods and services including food products, are often variant and subject to fluctuations deriving from changes in domestic and foreign supply and demand, competition, taxes, labor costs, or delays in delivery which could significantly affect Costco’s sales. Therefore, the product’s costs and selling could also increase affecting financial results. Other important economic factors include the increasing international
Costco provides a great benefit to their employees. According to Costco in Canada, “Costco has one of the most competitive benefits packages in the industry. Not only do we provide our employees with a full spectrum of benefits but employees may also elect coverage for their spouse and children” (2016, para7). It shows that the company cares their employees and employees’ families. It can motivate employees to work and have more productivities because family issues can influence their work also it will affect to the