1. Describe Costco’s business model? 20 points
Costco’s business model- to retain prices low, which will then increase sales measurements to lower lost profits via marketing membership. Customer must pay a membership subscription fee in order to gain entry to their low-cost goods accessible only in Costco retail, limited offers preserve Costco customers. Costco’s value proposition outweighs its competitor via providing exceptional customer service, offer excellent products and offering many services in or around its centers to attract customers. These services include food court, one-hour photo centers, pharmacies, print/copy centers, gas station at a low rate etc.
2. What is Costco’s strategy? 5 points
Costco’s strategy- offering low-cost to its customers. It contains sustaining the lowest rate possible, is identified as Cost leadership strategy. Costco’s strategy correspondingly needs membership fee to create a low-cost performance in their stance. The use of this strategy is primarily to gain an advantage over competitors; keeping operating costs and overhead low, supplying goods that sell quickly, and charging at a low price that kept customers loyalty. Generic strategy of cost leadership is essential to strengthen Costco’s business model. (Costco Case)
3. What are the chief elements of Costco’s strategy? 10 points
The chief elements of Costco’s strategy were ultralow prices, a limited selection of nationally branded and private-label products, a “treasure hunt” shopping environment, strong emphasis on low operating costs, and ongoing expansion of its geographic network of store locations. (Costco Case)
4. Does Costco have a winning strategy? Why or why not? 20 points
Yes, Costco have a winning strategy. Costco’s attracts it’s consumer by keeping the price low and selling goods in bulk. The idea is to keep generating large sales volumes. Keeping operating costs extremely low was a chief element of Costco’s strategy, which is an important key to its modest pricing. Due to Costco’s low pricing, they have a high turnover of products. Sales at Costco’s existing warehouses grew by an average of 10 percent chiefly because members shopped Costco warehouses an average of 4 percent more often and spent about 5 percent more per visit. (Costco Case)
5. How well is Craig Jelinek performing as Sinegal’s successor? 15 points
Refer to Figure 2.1 in Chapter 2 in developing your answers.
In reference to Figure 2.1 in chapter 2, Craig Jelinek performance has reflected the basic vision, core values and mission of Jim Sinegal’s. Jim Sinegal is a successful CEO, who plays a dynamic role in company’s strategic management. Jelinek basically follows the same guide line Sinegals imposes. Jelinek continued Sinegal’s vision and implementing a strategy if needed, making sure that operation production and sales growth continues to be consistent.