Costco Case Analysis

COSTCO ASSIGNMENT QUESTIONS

1. What is Costco’s business model? Is the company’s business model appealing? Why or why not?

Costco operates on a low-cost business model, which is extremely successful for them. They strive to keep their customers coming back by providing them with the lowest possible prices every time. They also focus on providing their customers with products they will actually want and will buy. This is a very appealing business model because since they run on a membership fee and because of their extremely fast turnover rates, they know that they will be financially stable for a while. We can also see that their business model is effective based on their financial statements, so we know that whatever they are doing is working for them as a company.

2. What are the chief elements of Costco’s strategy? How good is the strategy?

The chief elements elements of Costco’s strategy include: low-cost, providing their customers with active items, limited selections of brands, “treasure hunt experience” and company expansion. I believe that because of their super low prices, they make a large amount of their money from the membership fees, without that they might not be nearly as profitable. However, because of the treasure hunt experience, geographical expansion, and product selection they do have a good strategy and allows them to be successful.

3. Do you think Jim Sinegal has been an effective CEO? What grades would you give him in leading the process of crafting and executing Costco’s strategy? What support can you offer for these grades? Refer to Figure 2.1 in Chapter 2 in developing your answers.

I believe Jim Sinegal was an extremely effective CEO, he created a great company culture that made the customers and employees all feel welcome. He was clearly extremely knowledgeable and had a lot of experience in the industry. Starting working in the industry at the age of 18 and serving under Sol Price, he had learned so...