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Crafting And Executing Strategy 17th Edition Ppt
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Crafting And Executing Strategy

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Costco Wholesale Corporation (Costco), one among the few largest wholesaler giant differentiates itself applying unique strategies relating to production and operations, and marketing which make it stand out from the rest of the retailers who are also said to be competitive in the retailing and wholesaling business globally. Costco is one of the innovative wholesalers teamed by very dynamic management team and dedicated, motivated and satisfied workforce with the mission “to continually provide its members the best quality products at the lowest possible prices” (Costco Annual Report 2006). Some of the fundamental principle of the Costco is that they obey the law, they take care of their members, they take care of their employees, they respect their suppliers, and finally they reward their shareholders.

Some of the reasons how Costco can serve those highest quality goods of national brands for the lowest possible prices is that they eliminate different cost associated with delivery expenditures, account receivable, inventory, sales people, and fancy buildings. And they successfully operate themselves in the competitive environment serving not only an individual customers but also a legal customers (a company), and small business customers.

Costco believe that society and the community is one of the key factors of their success. Therefore, they are willing to give back to their community and the society in terms of quality goods in lowest possible prices. Not only this but also, Costco encouraged its employees to actively participate in the social welfare program by volunteering in every possible occasions in the locality wherever they are located.

SWOT Analysis

Weakness
·Internal (Home grown) top management team in majority ·Employee’s turnover within a year of recruitment is just six percent ·Unique ability to keep overhead cost low resulting in low prices of goods and services ·High inventory turnover comparing to its competitors ·Incredible return policy	·Comparatively less attractive store layout for luxury items ·Weak advertisement base leading to the inability of reaching full range of membership base. ·Not widely scattered around the world than its competitors ·Location is not attractive in terms of real-estate ·Primary focus on business customers rather than individual customers
Opportunities
·Costco’s operations is mainly targeted in countries where there is high GDP and high disposable income of the consumers (Canada, U.S.A and Japan) with low inflation rate in the countries ·Serves the democratic countries with political and governmental stability ·Possibility of international expansion ·Increasing brand awareness ·Positive image in terms of employees pay and social responsibility	·Costco cannot attract people who are below poverty line due to its membership fees and bulk purchase ·Not well diversified in terms of geography (presence) ·Highly dependent on United States and Canadian market. ·Largely dependent on vendors for timely supply of quality merchandise at reasonable price ·High market expectation in terms of price, quality and financial performance

In the core of their strategy, Costco sells limited numbers of products in fewer varieties to keep the cost down and they rely on high volume sales. But unlike their competitors they pay well to their employees. One of the key uniqueness and strength is that they sell membership to their customers that not only generate the fixed revenue every year but also increase the brand loyalty and awareness of the customers towards Costco. They advertise very less thereby reducing the cost by two percent each year.

One of the crucial factors of Costco is their pricing strategy. They have unique way or mechanism that helps them keep the price lower than that of competitors and they can still afford to pay 48 percent higher salaries to their employees than their major competitors mainly Wal-Mart. Their membership base is growing and they are able to retain their customers. Virtually, they do everything to retain their customers. Most importantly they have very incredible return policies in hand to attract and retain customers. Furthermore, they try to find the best value pack for almost every product they sell in their location (store). For example, they have thousand packet box of Splenda (sugar free sweetener). They generally engage in bigger packages because they believe that bigger package provides better value and cost savings to their customers.

Costco applies several other strategies to achieve corporate wide price leadership strategies. For example, to achieve the price leadership they reduce handling and storage cost, they maintain in-stock positions without being overstocked and transition seasonal merchandise, they utilize just-in-time principles when ordering merchandise to minimize the cost of inventory, keep best value pack product to assure low prices through volume buying, expense reduction and low gross margins etc. in addition to this, Costco doesn’t spent a lot in advertising and use word of mouth advertising for marketing which is not only one of the cheapest way to advertise but it is one of the most effective ways of advertisement.

Costco’s mission statement is to focus on bringing high quality goods and services to the market at the lowest possible prices every day, but to do it with integrity at ever

Crafting And Executing Strategy 17th Edition Slideshare