Public Domain Costco Wholesale Corporation maintains its position as the second biggest retailer in the world through successful operations management OM. The 10 strategic decisions of operations management tackle the operational concerns in various areas of the business.
Excerpt from Research Paper: Strategic Management and Strategic Competitiveness Costco Wholesale Corporation is a membership-based retailer offering private label as well as branded products in a range of merchandise categories including meat, deli, bakery, and produce; home furnishings, house wares, domestics; institutionally packaged as well as dry foods; motor vehicle and related products, seasonal items, toys, sports merchandise and items, beauty aids, and electronic products; food items, alcoholic and non-alcoholic beverages, and candy, to name but a few.
The company additionally operates travel businesses, hearing aids centers, one-hour photo centers, optical dispensing centers, food courts, pharmacies, and gas stations in various local and international locations.
With a total of warehouses, of them in the U. The Effect of Globalization and Technology Changes Globalization translates to a higher number of both producers and consumers, increased diversity issues, higher trade volumes, a wider product variety, and of course, more intense competition.
One of the most significant benefits of the globalization of markets is reduced cost of marketing "Global Business Environment," n. To this end, a company "can make identical products for the global market and then simply design different packaging to account for the language spoken in each market" "Global Business Environment," n.
This kind of saving, coupled with the fact that the company does not advertise its products have been responsible for the ever-increasing budget savings, which are a key source of competitive advantage for the company. Like many other companies operating on a global scale, Costco uses its international sales to level uneven streams of domestic income, thereby eliminating "wide variations in sales between seasons," and subsequently steadying cash flows "Global Business Environment," n.
The company has, however, not had a smooth run in regard to technological advancement and technology changes. The same technology has been to blame for some of the highest losses the company has had to incur, with the most recent case involving a loophole that made it possible for shoppers to skirt membership fees by paying with a gift card.
Differences in business regulations across countries have also posed a challenge for the company.
Costco has to comply with regulations set by each of the countries it chooses to trade in; Australia, for instance, has one of the most liberal alcohol licensing policies, permitting the sale of the same on shelves within the store; Japan, on the other hand, has very strict laws governing the sale and trade of alcoholic drinks "Global Business Environment," n.
To this end, a firm has to locate the industry that presents the most attractive platforms for it to compete.
Switching costs are low, and members can easily switch from one club to another Calstalela, n. There is significant similarity in the merchandise offered in all the three stores; weak product differentiation fosters rivalry. Threat Posed by Potential Entrants: The bargaining power of any single supplier is limited because "no single supplier constitutes a large percentage of the merchandise that the wholesale club stock" Calstalela, n.
Individual members are in no position to negotiate for better prices with their wholesale clubs because such clubs often have numerous members, buying in "relatively small quantities, with no single member accounting for a meaningful fraction of" the total sales Calstalela, n.
Threat Posed by Substitutes: Members would be willing to pay a price premium for such products for purposes of convenience. In other words, the strategies selected should enable the firm to use its unique resources to gain competitive advantage over other industry players.
A SWOT analysis on Costco reveals that the company has significant strengths, including high membership retention rates; relatively low prices; strong brand, great reputation; and high employee retention.
For this reason, Costco has one of the lowest employee turnover rates in the U. This happy-employee base is a strong resource and a fundamental source of competitive advantage for the company. The company could involve unions in….Costco Wholesale Corporation’s 10 strategic decisions of operations management are shown in this case study and analysis on business areas and productivity.
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MBA – COSTCO Strategic Management Case Project This project is to be construct a detailed and well-thought-out analysis of the business of COSTCO in employing all the relevant strategic analysis tools. View Homework Help - Costco Case Study from MKTG at Azusa Pacific University. Johnson 1 Kim Johnson Dr.
Skalnik Strategic Marketing Management February 20, Costco Case Study 1) SWOT80%(5). Costco case study and strategic analysis. Written by Miles Media on May 30 The mission statement of the Costco is well understood throughout the organization by the management and employees.
Costco offers their customers with low prices on selected private and a limited selection of nationally branded products in a wide range of merchandise. Apr 11, · Costco case study and strategic analysis 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.