Costco - Study Case

1)

Costocs business model was to achieve a well-acellerated inventory turnover and greater sales volume by creating memberships and offering members extreme low price on a limited variety of national brands and private-label products in a comprehensive merchandized categories. They achieved operating efficiencies by volume purchasing, efficient distribution, and reduced handling of merchandize in no-frills self service warehouse facilities. When Costco started its high sales volume and rapid inventory turnover; it changed the inventory by allowing it so sell and receive cash before it had to pay many of its merchandise vendors.

2) The corner stones of Costco’s strategy are the following: low cost, a limited product line and limited selection, and a “treasure hunt” shopping environment. It’s a very a good strategy because consumers are always going after products that are low price and have great value. Costco also offers limited products at low prices that are appealing to its members. Costco’s philosophy is to keep members coming in to shop by wowing them with low prices. Sinegal himself explained his pricing as follows: “ Were very good merchants and we offer value. The traditional retailer will say “ I’m selling this for $10. I wonder whether we can get $10.50 or $11”. We say “ we are selling this for $9. How do we get it down to $8.” We understand that our members don’t come and ship with us because of the window displays or Santa Claus or the piano player. They come and shop with us because we offer great value. This shows us how Sinegal is passionate about offering his members the lowest price possible.

3)

Jim Sinegal has given the company a variety of strategic plans to prepare for the future. Jim rolled as a director, producer, and a wise critic. He does not mind quitting the chase quickly, displaying strong focus to small details and pricing. Jim does not mind traveling to other states to check on Costco’s overall performance. In addition to...