In: Business and Management

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Strategia aziendale - Formulazione ed esecuzione Arthur A. Thompson, A. J. Strickland III, John E. Gamble

Copyright © 2009 - The McGraw-Hill Companies srl



Costco Wholesale Corporation: Mission, Business Model, and Strategy he was prone to display irritation when he disagreed sharply with what people were saying to him. In touring a Costco store with the local store manager, Sinegal was very much the person-in-charge. He functioned as producer, director, and knowledgeable critic. He cut to the chase quickly, exhibiting intense attention to detail and pricing, wandering through store aisles firing a barrage of questions at store managers about sales volumes and stock levels of particular items, critiquing merchandising displays or the position of certain products in the stores, commenting on any aspect of store operations that caught his eye, and asking managers to do further research and get back to him with more information whenever he found their answers to his questions less than satisfying. It was readily apparent that Sinegal had tremendous merchandising savvy, that he demanded much of store managers and employees, and that his views about discount retailing set the tone for how the company operated. Knowledgeable observers regarded Jim Sinegal’s merchandising expertise as being on a par with that of the legendary Sam Walton. In 2006, Costco’s sales totaled almost $59 billion at 496 stores in 37 states, Puerto Rico, Canada, the United Kingdom, Taiwan, Japan, Korea, and Mexico. About 26 million households and 5.2 million businesses had membership cards entitling them to shop at Costco, generating nearly $1.2 billion in membership fees for the company. Annual sales per store averaged about $128 million, nearly double the $67 million figure for Sam’s Club, Costco’s chief competitor in the membership warehouse retail segment.

Arthur A. Thompson…...

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...In September of 1983, Costco Wholesale Corporation began operations in Seattle, Washington. The company was founded by James Sinegal, current President and CEO of Costco, and Jeffrey Brotman, Chairman of the Board of Directors. In October of 1993 Costco merged with a Delaware company called The Price Company to form Price/Costco, Inc. The price company was the first to establish the concept of a membership warehouse. In 1999, the company changed its name to Costco Whole sale Corporation and moved themselves back to Washington. Costco is currently one of the largest retail stores in the industry, it operates 335 warehouses throughout the United States, Canada, Mexico, England , Scotland , Japan, Taiwan and Korea. Costco now employees a staff of approximately 2,000 at it’s Home Office in Issaquah , Washington, and counts nearly 80,000 employees worldwide. Costco is a mission driven company, and their mission is to continually provide our members with quality goods and services at the lowest possible prices.( In order to achieve their mission , Costco conducts business with the following Code of Ethics : obey law, they have to take care of their costumers, take care of their employees. As James Sinegal said “ And if we do those things, we think that we will reward our share holders” ( And to reward the shareholder is ultimate goal of Costco. Costco conducts business in total compliance with the laws of every community where they do business. They......

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...1. Main similarities between Costco and Target They both operate in the supermarket industry; however they have quite different approaches: a. Costco: Operates membership warehouses, offering low prices in a limited selection of products that can be offered thanks to high volume purchases and inventory turnover. Additionally there are lower labor costs due to lees handling of inventory, self service facilities. b. Target: Broad range of merchandising, online services, tries to deliver a shopping experience. As a result the company has higher SG&A and COGS (higher quality and less purchases volumes). 2. How do these differences reflect in Financial Statements? Let’s write the Du Pont Formula: ROE= Net Income/Pretax Income * Pretax Income / EBIT * EBIT/Sales * Sales/Assets * Assets / Equity Target should have a higher profitability margin and Costco a higher asset turnover. [pic] [pic] 3. Which company is more profitable? We can see that Target is more profitable than Costco, mainly because of a profitability issue. Nevertheless it is possible to observe that Costco has a higher Asset Turnover. 4. Technical questions: a. ROA v/s ROE numerators: It has to do with the fact that ROA is a profitability measure of the whole company while ROE is a profitability measure for shareholders. The financial structure of the company affects the ROE not the ROA. ...

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...Clubs: Costco Wholesale vs. Sam’s Club vs. BJ’s Wholesale Tami Bouldin-Golt March 1, 2013 Provide an overview of the company and/or industry and add any pertinent information relevant to the case (5 points) From eggs to tires to coffee, the everyday consumer can find whatever he or she needs in a warehouse club; at a much lower price from the common retailer the drawback: annual membership fee. The warehouse industry operates on the idea that by customers buying memberships to shop at their locations, the companies can afford to lower their prices beyond that of major retailers. The idea of having a membership to shop somewhere not only allows the company to lower prices but also creates a loyal customer base that tends to come back year after year. There are three major competitors in this industry, Costco Wholesale Corporation, Sam’s Club (a subsidiary of Wal-Mart), and BJs Wholesale club. Costco and Sam’s Club opened in 1983 to immediate success. By the end of 1984, Costco had nine stores and over 200,000 members and became the first company to reach over $1 billion in sales within the first six years. Sam’s Club had sales in excess of $12.3 billion within 10 years. Both companies rely on a low-cost strategy. B J’s is considerably smaller than Costco and Sam’s club but has still maintained success behind a best cost strategy. While BJs has fewer locations, their stores offer over 7,000 products compared to 4,000 at both Costco and......

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...Factors on Marketing Decisions of Costco Wholesale Corporation Environmental factors consist of all the factors and activities which have a considerable impact on the running of the business. Environmental factors have a powerful impact on the normal functioning of the any business, especially in the marketing decisions (Pagell & Halperin, 2000). These factors pose challenges and threats to the success of any business. In order to deal with such environmental factors a firm should enhance its core competencies and make sound strategies (Staff, 2009). There are various factors which would have deep impact on these new services offered by the firm. The firm should make a strategy after considering these factors. David Jobber describes in his book that with the help of this analysis, the company becomes more competitive and effective to implement the various strategies (Jobber, 2001). Costco Wholesale Corporation is one of the biggest organizations in the retail industry, which operates at the global level. The company was founded by James Sinegal and Jeffrey Brotman (Costco Wholesale Corporation, 2009). On the basis of the sales volume, the company is considered among the world's largest membership warehouses (Costco: About Company, 2009). The company has taken the position of the five largest companies in the United Sates in retail Industry. The Headquarter of the company is situated at Issaquah (Washington) in the United States (Costco Wholesale Corporation......

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...STANFORD GRADUATE SCHOOL OF BUSINESS CASE: A-186A DATE: 06/19/03 CosTco WHOLESALE CORPORATION FINANCIAL STATEMENT ANALYSIS (A) INTRODUCTION Margarita Torres first purchased shares in Costco Wholesale Corporation in 1997 as part of her personal investment portfolio. Between 1997 and 2002, she added slightly to her holdings from time to time when the company sold stock for what she felt was a reasonable valuation, and up to that time she did not sell any of her shares. Having watched Costco grow from 265 warehouses to 365 worldwide, and from sales revenue of $21.8 billion to $34.1 billion, she wondered what factors led to such successful growth. She also wanted to determine whether those factors would hold consistent going forward. At this point, Costco was one of a special breed of retailers called wholesale clubs. Unlike other retailers, wholesale clubs required that customers purchase annual memberships in order to shop at their stores. Costco operated a chain of warehouses that sold food and general merchandise at large discounts to member customers. The company was able to maintain low margins by selling items in bulk, keeping operating expenses to a minimum, and turning inventory over rapidly. Costco’s closest competitors were SAM’S Club (a division of Wal-Mart) and BJ’s Wholesale, which both operated as wholesale clubs. Other competitors included general discounters (such as Wal-Mart), general retailers (such as Sears),......

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...Costco Wholesale Corporation is the largest membership warehouse club chain in the world. The company is headquartered in Issaquah, Washington, United States. Costco's first location, opened in 1976 under the "Price Club" name and it was housed in a Quonset shed in San Diego. The company’s one of the kind model serving mostly regions with a large number of small business owners and higher income professionals with a demand for high end goods proved to be the winning formula. Accomplishment encouraged James Sinegal and Jeffrey Brotman to open the first Costco warehouse location in Seattle which is still the company’s flagship location. The new project proved very successful; Costco became the first company ever to grow from zero to $3 billion in sales in less than six years. In 1993, Costco and Price Club merged, forming "PriceCostco." The combined company had 206 locations generating $16 billion in annual sales and created the company's current structure. Costco's web site was first introduced in 1995, and it started conducting e-commerce in 1998 at In 1997, PriceCostco changed its name back to Costco, under which the company currently operates. Costco has also changed the site of its corporate headquarters from Kirkland, Washington, to Issaquah. As of December 18, 2009, Costco has 566 locations: 413 in forty U.S states and Puertorico, 77 in Canada, 32 in Mexico (joint venture with Comercial Mexicana), 21 in United Kingdom, 9 in Japan, 7 in South Korea, 6 in......

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...7 Things You Need to Know About Costco Whether you’re a member or not, here’s what you should keep in mind By Harriet Edleson January 16, 2014 RSS Feed Print Many people shop at Costco because they want good value on the more than 3,700 items in stock. Yet few people know just how Costco is able to give its customers such quality and value, or what makes Costco different from other wholesale companies. We spoke with regular Costco shoppers — or members, as the company calls them — as well as with Costco executives and retail analysts to get the inside story on what attracts 72 million Costco members and $103 billion in sales per year. Here are seven things you should know about the warehouse store: If you want brand names for less, you'll find them here. Costco is a source for brand-name merchandise but the store doesn't tell you which designer brands they carry because brands vary and the designers don't want that information revealed. "We sell high-end items at a great value or at a great price," says Jeff Elliott, assistant vice president, finance and investor relations for Costco. "We're not a fashion retailer. We're a general merchandise retailer, generally basics. It could be the latest merchandise but we're in the basics business." Apparel is a risky category, he adds, so fashion is not Costco's focus. That doesn't mean you can't find better brands of winter boots, for example, or leather jackets. [See: How to Manage Your Money in Your 20s.] When you go......

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...facilities and supplemental membership fee revenue. Another magnet is because of the high sales volume and fast inventory turnover style of this business model, the accelerated money conversion cycle permissible Costco to gather the funds for inventory before marketer liabilities changing into due. This provided for marketer finance and also the ability to require advantage of early payment discounts that additional reduced operational prices. As a testament to the success of this business model, from 2008 through 2011, Costco was able to increase the amount of warehouses by 15.6%, revenues by 22.6%, and earnings by 14.0%. 2. What are the chief elements of Costco’s current strategy and is it effective? Costco’s key strategy components consist of: * Ultra-low costs, * A restricted choice of across the country branded and private-label merchandise, * A “treasure hunt” searching surroundings, * Low overhead stress, and Geographic growth Due to ultra-low costs, they need to be being able to lure a bigger population of affluent customers. From 2010 to 2011 income enhanced by14. 0% and membership fee revenue by 10.4% annual goal was 5% or additional. However, once membership revenue is systematically over earnings. Therefore, while not the membership revenue, Costco would be operational within the red. Also, once reviewing ROS from 2000 to 2011, although sales have enhanced, the price has not been contained as expeditiously. This can be proven by the......

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...HBS Case Study 2: Costco Wholesale Corporation Financial Statement Analysis (A) Lee Hathaway MMS 185: Managerial Finance Professor Veraldi September 27, 2007 It is important for stockholders to continuously re-evaluate their investments. Although some investors do this more frequently and thoroughly than others, the majority of shareholders do so at least once each year. Therefore, Torres’ desire to update her analysis in order to determine whether Costco was still operating efficiently makes perfect sense. After thorough examination, my analysis proves that Costco remains one of the industry’s leading competitors and there seems to be no reason for Torres to sell her shares as long as she wishes to retain holdings of a retail wholesale club in her portfolio. The common-size financial statements evaluating the period 1997-2001 (exhibit 9) reveal valuable information regarding Costco. Torres noticed that there were two revenue lines: net sale of goods and membership fees. She decided to use net sales of goods as the point of comparison and express other line items, including membership fees, as a percentage of net sales in order to allow for a clearer reflection of gross and operating margins. This format enabled her to analyze the profit and asset structures of Costco over time. To begin, Margarita Torres’ common-size financial statements for Costco demonstrate a rise in membership fees and other sources of revenue from 1.82% in 1997 to 1.93% in 2001...

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Costco 1. History In 1976 Price Club was founded in San Diego, California. A year before their business reached over $1 billion dollars in sales, Costco opened its first warehouse in Seattle, Washington. In 1986 Price Club had 22 locations and 3.2 million members while Costco had 17 locations and 1.3 million members. In 1993 these two companies formed under a merger, but it wasn’t until 1997 that they changed their name from PriceCostco to Costco Companies Inc. Costco’s mission is to offer quality, brand name products at a substantially lower rate than their competitors. Although Costco targets small-to-medium-sized businesses in large cities throughout the world to help reduce costs in purchasing for resale and for everyday business use, they also sell to customers for their personal needs. Businesses and large families are Costco’s greatest customers. "Costco is able to offer lower prices and better values by eliminating virtually all the frills and costs historically associated with conventional wholesalers and retailers, including salespeople, fancy buildings, delivery, billing and accounts receivable. We run a tight operation with extremely low overhead which enables us to pass on dramatic savings to our members." Soon after their merger, Costco introduced their Kirkland Signature brand name- products that boast to be of equal or better quality than leading brands. Some of the products under the Kirkland label include juice,...

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...“Costco is a warehouse that offers members a limited selection of nationally branded and selected private-label products in a wide range of merchandise categories. We concentrate on our mission to continually bring quality goods and services to our members at the lowest possible prices, while being responsible corporate citizens, taking care of our members and our employees, and respect in our vendors.” (Annual Report 2010)” Costco is the way to go when it comes to online and in-store shopping. The retail chain store ranked No. 1 in a recent Consumer Reports survey of 10 stores — besting JCPenney, Kmart, Kohl’s, Macy’s, Meijer, Sam’s Club, Sears, Target and Wal-Mart for its overall shopping experience, according to This is not an easy feat, considering they opened their doors in 1983, only selling to small businesses. There are numerous reasons why Costco has become a huge phenomenon amongst shoppers; these eight warehouse trends have been the reason for their success. While Costco has seen more profit through these trends, the warehouse industry is growing. Firstly, warehouses are striving to become more environmentally friendly and customers have gained notice of this. Since this is a national trend, it boasts their appearance as a customer friendly store. Secondly, Warehouses have expanded their stores to be more competitive in the marketplace. This is due to the growing number of these types of stores, and their desire to have a competitive......

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...Clarence Morris Case Analysis 1: Costco Wholesale MGT 442Strategic Management & Business Policy Dr. McDaniel The first Costco store began operations in Seattle in 1983, the same year that Wal-Mart launched its warehouse membership format, Sam’s Club. Jim Sinegal (CEO) and Seattle Entrepreneur Jeff Brotman (now chairman of the board of directors) founded Costco in 1982. Jim Sinegal derived the idea of a warehouse membership format while working out in San Diego as a manager for his mentor Sol Price’s Price Club. Sinegal had a special knack for discount retailing and for spotting what a store was doing wrong (usually either not being in the right merchandise categories or not selling items at the right price points). Sinegal was constantly improving store operations, keeping operating costs and overhead low, stocking items that moved quickly, and charging ultra-low prices that kept customers coming back to shop while at Price Club. The first Costco Warehouse opened in September in Seattle, Washington. By the end of 1983, two additional locations had opened in Portland, Oregon and Spokane, Washington. The fourth Costco warehouse opened in Salt Lake City, Utah in 1984 and by calendar year-end, there were nine Costco’s in five states serving over 200,00 members. In October 1993, Costco merged with The Price Company, which had pioneered the membership warehouse concept in 1976, to form Price/Costco, Inc., a Delaware corporation. In January 1997, non-warehouse assets......

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