The company's suppliers can create a series of negative situations if they do not deliver the goods in time. This creates a chain of complaints that the company cannot resolve. Also, a good relationship between the company and its suppliers on the long-term can bring a series of benefits for the company.
Another important principle that Costco used when developing its general strategy is represented by the company's shareholders and their reward. Certain theories sustain that the shareholders are the most important part of the company and that the company's objectives must be oriented towards increasing the profits for these shareholders.
Costco Financial Position
The strategy was very successful for Costco, given the increased sales that followed. The company's sales evolution over the past five years was the following: $31,621 in 2000, $37,993 in 2002, $47,146 in 2004, $51,862 in 2005, and $58,963 in 2006.
Other examples that prove this strategy was right for Costco are represented by the record sales registered by the company, like: 96,000 carats of diamonds in 2006, 1.5 million TVs, $300 million worth of digital cameras, 28 million rotisserie chickens, 40% of the Tuscan olive oil in the U.S., $3 billion worth of gasoline, and others.
As one may observe, the company is in full expansion and development process. Costco's financial situation is following an ascending trend. And all these in spite of the low prices practiced by Costco. The impressive financial figures reported by Costco were achieved due to the large number of customers shopping at Costco.
In addition to the low prices practiced by Costco, the company is also trying to attract customers by providing an extremely wide range of products and services. In other words, the customers should be able to find in the Costco stores all the items and brands they need, so that they will not search them in competitors' stores. Also, the items that cannot be found in some of Costco's stores can be found online, on the company's website that also provides assistance for the company's customers.
Costco Generic Strategy
The elements that support the implementation of Costco's general strategy include:
Pricing
Product selection
Treasure-hunt merchandising
Marketing and advertising
Growth strategy
Web site sales
As mentioned...
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