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Date Submitted: 05/09/2011 08:55 PM
Team C Executive Summary
Angelo Martin, Bhagat Singh, Lee Burkowitz
ACCY287
January 22, 2009
Janelle Washington
Team C Executive Summary
Bigger is better. True or not that is the premise of the business model successfully used by big box stores. Large warehouse-type stores and immense volume result in hefty profits, at least in the case of Costco Warehouse. Costco’s financial statements paint a pretty picture of gross profit growth year over year despite world-wide recession. Costco’s mission statement “to continually provide our members with quality goods and services at the lowest possible prices” (Costco Warehouse, 2010) has proven to be a prosperous one and it is reflected in their financial statements.
Costco is a giant retailer in the United States and specializes in bulk goods. According to Costco (Costco Wholesale, 2010), “Costco warehouses are designed to help small-to-medium sized businesses reduce costs in purchasing for resale and for everyday business use” (Investor Relations, para. 1). Costco was founded in Kirkland, Washington, by Jim Sinegal and Jeffrey Brotman in 1983. Today, the company operates more than 580 retail stores in the United States and has locations oversees in countries such as the United Kingdom, Mexico, and Japan. The company has more than 150,000 employees with a member base of at least 60 million worldwide helping Costco become the third largest retailer in the United States, and the ninth largest in the world. Costco’s main competitors include Sam’s Club and BJ’s Wholesale Club and smaller stores such as Kohl’s, Amazon.com, and Target.
Costco charges a membership fee for the privilege of shopping in their stores. Three levels of membership are offered by the company. Business and retail customers may belong for a $50 annual fee. The Executive membership pays an annual reward of 2% back on most purchases made at Costco in addition to other member discounts and costs $100 annually. Costco began selling a hot dog and...