Business Model
The company is Costco. Costco Wholesale Connections is the largest membership warehouse club chain in the United States. A warehouse club chain is a retail store that sells a wide variety of merchandise where clients are required to buy products in quantities, reducing its price markup on products up to 15%. The cheap prices, kept down by the no-frills atmosphere to the store makes the store attractive to people buying in bulk seeking cheap prices and to small-business owners. Buyers are usually also required to pay annual membership fee (currently $55) in order to shop as well as to supply their own bags or carrying materials in order to package and carry away products.
Costco is the third largest retailer in the United States and the ninth largest in the world (Top 100 Retailers ). It is the largest retailer of wines in the United States. Costco Optical is the fourth largest optical company in the States. Targeted buyers are from the upper-end of spectrum and Costco entices them with expensive goods at discount prices. Net income for Costco exceeded 1.6 billion in 2006.
Costco's goods are usually bulk packed; they do not carry multiple brands where the item is generally the same excepting when they have a house brand to sell which is usually the Kirkland Signature brand. Selling much of the latter results in a high volume of sales from a single vendor further reducing the price and reducing marketing costs. Costco saves prices in other ways, too. Not only does it not supply packaging material to consumers, but its store sis laid out in a warehouse type style with products simply arraigned, usually cluttered on shelves, on shipping pallets on the floor, or in cartons in a raw, unembellished style. Skylights reduce need for light (hence cutting down on electricity costs, whilst electric light meters automatically turn off a percentage of powered interior lights.
Costco is only open to members and their guests (maximum two) excepting purchases of gas and liqueur in some states as well as prescription drugs due to federal law. Purchase can be made in various ways: directly from the store -- which requires a membership; from its website -- no membership but 5% surcharge is added to purchases made by non-members; purchases made with Costco Cash Cards that require no membership and no surcharge (Costco Wholesale).
As per paying with credit cards, American Express is the sole card that Costco accepts due to the company paying Costco low interchange fees.
Membership fees fall into three categories: (1) the individual (Gold Star); (b) Business; (c) Executive. The latter is double the price of the original ($100) and offers the possessor additional benefits (e.g. car insurance, homeowner loans, check printing services, and car purchasing savings). Executive members also receive an annual "2% Rewards Check" of up to $7,650.00 on all purchases made (Costco Wholesale).
Costco offers other services too. It is an investment broker and travel agent (Costco. Travel) as well as offering an auto-buying program that presents customers with prearranged pricing at select auto stores. Where members can also purchase boats, RVs and power sports.
Costco also has a multifunctional photography print lab center both online and offline with unlimited free digital file storage for customers.
It has three online shopping domains: Costco.com for the U.S.; Costco.ca for Canada, and Costco.co.uk for Britain.
Costco also has a restaurant (or food court) attached to its shopping center, which offers hot dogs, sausages, drinks as well as other fast-food products.
As of 2010, Costco possessed 572 warehouses with the majority (422) being in the U.S.A., 81 in Canada, 32 in Mexico, 22 in Britain, and the rest in Japan, South Korea, Taiwan, Puerto Rico, and Australia.
Costco's form of business is a corporation which is a limited liability business that has part of its legality character from its members who are partially responsible for its maintenance and running (hence Costco's members are intrinsic to the store's continuance paying it membership fee). Costco is privately owned and for-profit, owned by shareholders who via their board elect a managerial staff to direct the corporation. It is publicly held market in that it offers its shares (e.g. stocks and bonds) to the general public.
Its category is retailer / distributor where it acts as middle-person in distributing goods from manufacturers to the customer, generating a profit via the sales or distribution. Given the complex structure that Costco has become, it can be classified under various business models. These include:
1. Bricks and clicks where the company has both the offline structure (bricks) and the online structure (clicks) enabling clients to buy...
Costco's business model is to undertake a cost leadership strategy. The company operates with a warehouse store concept. The warehouse store concept focuses on offering large volumes of goods at low prices. A typical Costco warehouse has a relatively low number of SKUs available, and any given product is usually only available in a single SKU. Consumers are attracted to the low prices associated with volume buying. Each store has
S. Just like people, corporations can have biases and even forms of ethnocentrism inherent in their cultures, a prime example of this being WalMart (Hammond, Axelrod, 2006). Clearly further analysis is necessary to understand why Costco struggles in other regions of the world, yet the company's financial performance on a global level continues to be exceptional due to the factors cited earlier. What is needed is for the company to concentrate
Costco is a mass market retailer, focusing on a "warehouse club" business model. The company has a cost leadership strategy and this helps to characterize the firm's financial statements In terms of the critical ratios, the following table outlines the results for Costco for the 2012 and 2011 fiscal years: Costco Financial Metrics Liquidity Ratios Formula Current Ratio current assets / current liabilities Quick Ratio (current assets - inventory) / current liabilities Activity Ratios Receivables turnover Sales / Avg Accounts
The strategy outlines clearly the ethical position of the organization in relation to interactions between consumers and various stakeholders. This is essential in the enhancement of service and products provisions. The organization focuses on the adherence to the law through development and implementation this marketing strategy. This enhances effectiveness and efficiency of the legal interaction between consumers, shareholders, and stakeholders. The organization also pledges to take quality care of
Costco The case notes that Costco's mission is "bringing the highest quality goods at the lowest possible prices while providing excellent customer service and adhering to a strict code of ethics…" and then the mission outlines the code of ethics. The company's operations clearly stick to this mission statement. This is possible because the mission statement is clear, and it specifically relates to what the company does. It hits upon a
Costco Wholesale Corporation is one of the membership warehouse chain operators across the globe. Costco Wholesale Corporation operates under the influence of the standards and regulations of the Wholesale Club Industry. The organization focuses on the distribution of the products with reference to fresh food, soft-lines, and ancillary as well as hard-line products. Costco implements various elements of marketing model with the aim of addressing the needs and preferences of
Our semester plans gives you unlimited, unrestricted access to our entire library of resources —writing tools, guides, example essays, tutorials, class notes, and more.
Get Started Now