Strengths and Weaknesses of Costco's Business Strategy
BA 5080 - Business Strategy
University of Cincinnati
July 19, 2024
This assignment is based on the well-recognized firm named Costco.
It is the second largest retailer after Walmart and sells its products in
many countries like US, Canada, Mexico, United Kingdom and many
more. This company sells products in large stock as it is a wholesale
business. Jim Sinegal was the co-founder and CEO since 1983. He got
retired and transferred his business in the hands of Craig Jelinek in
2011. Now, he is continuing the business in effective manner.
Costco’s Business Model
In our perspective, a company’s business model is its strategy and
operating activities that will create value for the customers, while at
the same time will generate ample amount of revenues to cover its
cost and expenses and produced profit. In reference with the book,
there are two elements of company business model which are:
Customer value proposition and its profit formula. According to the
case, the Costco business model is to deliver the highest quality of
goods and services at the lowest prices possible and providing
excellent customer service and adopting a strict code of ethics that
includes taking care of employees and members, respecting suppliers,
rewarding shareholders, and be socially responsible towards the
society and environment. Another element of Costco business model
is to generate high sales volume and rapid inventory turnover. Which
means after paying off their debt they will have significant amount of
cash in their hands. Costco CEO said that they are trying to keep their
product price low as much as possible, which makes it difficult for the
rivals to match their price. For example, they sold a hot brand of jeans
for $29.99, which was of $50 in a department store. According to their
annual reports they were facing loss if they have not charged their
customers membership fees. They have been successful so far in
making the customer value proposition and they also maintain the
profit from 2000 to 2016. In 2015, they hit the highest profit which
was $2,377 million. They provide the customers higher value and they
keep their price low which makes the customer more attractive to their
value proposition. A creative strategy of membership fees, distinctive
strategy of keeping the highest quality or branded products price low
sets them apart from the rivals and it creates a competitive advantage
for the Costco It is the most reliable ticket to earn the average above
profits than the rivals. Costco business model matches well to its
strategy, which creates a sustainable competitive advantage and
allows them to attract sufficiently large number of buyers who have a
lasting preference for its product over those offered by rivals.
Costco’s strategy
Costco has been developed a very fine business strategy along with
appreciable business elements over the years. Costco has its own
name in the business market because it always comes up with the
business tactics which can make it shine more than the competitors in
the market. Its main mission is to provide the good quality products at
the lowest prices. The chief elements of Costco are:
1) lowest prices on reputed brand products,
2) well-structured inventory which leads to fast turnovers,
3) providing membership fees.
For implementing their lowest price strategy, they have launched their
own products such a Kirkland and claimed that they are better than
other competitive brands. Also, they choose to sell the limited but
good products on low prices so that their customers can get attract to
their highly reasonably priced deals. The treasure hunt deals are
proved to be appealing for the customers who want new and bulking
deals. For making profit from the treasure hunt scheme, they get
collaborated with wholesalers to get good things at low prices. Their
main motive behind treasure hunt
initiative is to give a positive reinforcement to their pre-existing
clients to retain them. On the name of inventory turnover, they 02 sell
high volumes with low margins because they have got the idea to
make a balance between purchasing things and reselling it again to the
consumers, accordingly. For the membership, they have business
membership and the gold star membership, and they keep their
approaches of membership up to date in order to let their customers
renew their membership. They have evidence-based statistics which
are the proves of expansion on revenue from previous years. Their
business model is cost effective and the CEO of Costco Jim Singel has
been taken the responsibility of increasing the profit by all effective
ways. He keeps close eyes on every possible aspect as well as on the
product. Costco justified its cost-effective business strategy by
attracting high volume of customers all around the country. They have
given a high competition to rivals by considering effluent to low
income customers in their target list. Their high productivity and
expenditure ratios are transparent, and this statistic is a biggest proof
of their success. In a way they are satisfying needs of both the
suppliers and the customers.
Jim Sinegal’s leadership style and Craig Jelinek’s approach
Jim Sinegal was an effective leader and CEO. He tried to involve in
all warehouse operations. He used to visit 8 to 10 stores daily as a
store clerk to make good relations with employees and to find out the
visiting experiences of the customers. Jim Sinegal wander through the
aisles and try to fix the problems associated with reputation of the
company. Being an effective leader, Jim Sinegal has a special knack
in crafting and executing strategies. So, we would assign grade A
because of his mind-blowing strategies. He wanted to keep the prices
of the product low as much as possible as he did not want that
someday any competitor enters the market and beats the prices of the
Costco. He wants to establish an organization that will be there 50
years from now. In addition to this, product selection, growth strategy
and most important Treasure hunt merchandising is used a tool to
increase the regular visit of the customers. Craig Jelinek continues
the mission, vision and values of Jim Sinegal. He has a same objective
of offering low prices with best quality. He follows the ethics of
obeying laws, respecting customers, taking care of employees. Jelinek
focuses on expanding the business globally and increasing the sales.
There is always a risk for the business when new CEO is appointed.
But under his leadership, growth rate is high as compared to most of
the competitors, share price goes up and significant growth in
dividends. It is all because of better understanding of the business and
strategies. (Newsmax, 2019). Based on the information given in the
case study Costco’s business philosophy, values and code of ethics
are:
Obey the law: Obeying the law is important as it gives the framework
to the business how to act and operate. Costco follows all the rules and
regulations of every community where they operate their business.
They pledge to follow all the laws and the legal requirements,
respecting all the government official’s, meeting all the safety and
security standards, meeting all the requirements related to
employment law and ecological standard, comply with antitrust law,
following the proper laws and regulations related to foreign laws
while operating the business outside the country and working in
accordance with foreign corrupt practices act or the law of the other
countries.
Take care of our employees: Employees are one of the most important
assets of the company. Costco provides their employees with ample
growth opportunities for their personal and career growth. They
pledge to provide employees with Competitive wages, Employment
benefits, safe and healthy work environment, Career opportunities and
a work environment which is free from all the bias and harassment.
Take care of members: Members are the reason for the existence of
the business. As we all know that Costco’s members have lots of
shopping alternatives like Walmart, superstore etc. So, the company
needs to maintain the member's trust for that they pledge to provide
Top quality products at the best price, highest food safety standards,
100% satisfaction guarantee, warranty on products and services,
pleasant shopping environment and experience, best customer service
03 and provide products that are ecologically sensitive.
Respect our suppliers: Suppliers must prosper along with the
company for the success of the business. They strive to treat all the
suppliers and their representative respectfully, honour all their
commitments, protect all supplier’s assets, no gratitude’s and always
do what is right.
Reward and shareholders: As a company trades its stocks with
NASDAQ stock exchange, its shareholders are its business partners.
To be successful, we need to provide our shareholders with good
returns as they invest their money in the Costco. They pledge to
provide in the same way to their present and future shareholders, as
well as the employees will also be rewarded for their time and efforts.
Costco from financial perspective:
The various financial ratios of the years 2014, 2015 and 2016 showed
that Gross Profit Margin and total return on assets is increasing at
slow pace (from 12.59% to 13.32%), which is a good indicator to
yield high profit in future. One and only ratio that fluctuated with 3-
4% is return on stockholder’s equity. In 2014, it was above average
which has reached to 21.92% in the next year. It decreased
approximately 2.5% in 2016. EPS is also fluctuating with little
variation (from 4,65 to 5.33). Costco is weak in maintaining current
ratio (from 1.22 to 0.98). It should be higher than 1 and the best one is
2:1. This ratio has decreased continuously which shows that Costco do
not have enough current assets to pay off the current liabilities. Debt
in comparison to total assets is better than before. Company can
generate enough cash in future because its debt to equity ratio is below
1 (0.34) . There is not much variations in the inventory turnover and
inventory days. It means that whatever the company purchases get
sold off at the same ratio in relation to previous years. Overall, Costco
is doing well but weak points are always there. Company should work
on those weakness to grab more opportunities.
Recommendations
Online services and self-checkout: Every organization is expanding
with the help of technology. Online-services has made the life of
people so easier. Take an example of Amazon which provides online
shopping and home delivery services. Another example is Superstore
where we can order online all the required items and they prepare the
cart for us. We just have to go there and park the car, employees put
the stuff inside. In addition to this, there is also self-checkout option at
the superstore which is not available at Costco. It would reduce the
workload of employees and they do not need more employees as
cashier.
Improve Margin: Costco is generating huge amount of revenue from
membership fees. This is the reason that Costco prices are not too
high. Still, there are people who could pay more for the price of
product depending on the quality, but they do not want to pay the
membership fees. Costco should increase the margin by keeping
membership fees low.
Diversification: Walmart is at number one because it sells 1000 times
more variety of products which satisfy every need of customers as
compared to Costco. No doubt, that Costco is following a strategy to
keep less variety in all items, but we cannot neglect that the people
living in Canada belong to different cultures and countries. Their
choices regarding each item is different. Costco must increase the
variety keeping in mind all the residents.
No benefit for small household: Costco sells products in large
quantities. Small household requires only number of items per week.
They cannot buy that stock as that will expire after some time. So,
visiting Costco and doing shopping is only valuable for large
households. Costco should open a store to sell small quantities as well.
Expand product-line: whenever buyers visit Costco, they see only few
brands such as Adidas, Puma, Reebok but only few04 items related to
such brands are there. Experience of customers with those products is
no so good. Those might be defective pieces company sells. But to
increase sale and customer loyalty Costco should contact the famous
brands and sell their products.
Advertisement: Costco do not advertise at all. It only sends mail to the
prospective member as well as coupons to existing customers. But this
is not enough in this era where people are addicted to social media.
Number of people do not visit Costco because they do not have
membership cards. They have no experience what type of products
Costco sells or what quality they provide because there is no
advertisement. So, Costco could provide one- or two-month free trail
for shopping to bring new customers to the business if they do not
want to spend money on advertisement.
Costco’s strategy
Costco has been developed a very fine business strategy along with
appreciable business elements over the years. Costco has its own
name in the business market because it always comes up with the
business tactics which can make it shine more than the competitors in
the market. Its main mission is to provide the good quality products at
the lowest prices. The chief elements of Costco are:
1) lowest prices on reputed brand products,
2) well-structured inventory which leads to fast turnovers,
3) providing membership fees.
For implementing their lowest price strategy, they have launched their
own products such a Kirkland and claimed that they are better than
other competitive brands. Also, they choose to sell the limited but
good products on low prices so that their customers can get attract to
their highly reasonably priced deals. The treasure hunt deals are
proved to be appealing for the customers who want new and bulking
deals. For making profit from the treasure hunt scheme, they get
collaborated with wholesalers to get good things at low prices. Their
main motive behind treasure hunt
initiative is to give a positive reinforcement to their pre-existing
clients to retain them. On the name of inventory turnover, they 02 sell
high volumes with low margins because they have got the idea to
make a balance between purchasing things and reselling it again to the
consumers, accordingly. For the membership, they have business
membership and the gold star membership, and they keep their
approaches of membership up to date in order to let their customers
renew their membership. They have evidence-based statistics which
are the proves of expansion on revenue from previous years. Their
business model is cost effective and the CEO of Costco Jim Singel has
been taken the responsibility of increasing the profit by all effective
ways. He keeps close eyes on every possible aspect as well as on the
product. Costco justified its cost-effective business strategy by
attracting high volume of customers all around the country. They have
given a high competition to rivals by considering effluent to low
income customers in their target list. Their high productivity and
expenditure ratios are transparent, and this statistic is a biggest proof
of their success. In a way they are satisfying needs of both the
suppliers and the customers.
Jim Sinegal’s leadership style and Craig Jelinek’s approach
Jim Sinegal was an effective leader and CEO. He tried to involve in
all warehouse operations. He used to visit 8 to 10 stores daily as a
store clerk to make good relations with employees and to find out the
visiting experiences of the customers. Jim Sinegal wander through the
aisles and try to fix the problems associated with reputation of the
company. Being an effective leader, Jim Sinegal has a special knack
in crafting and executing strategies. So, we would assign grade A
because of his mind-blowing strategies. He wanted to keep the prices
of the product low as much as possible as he did not want that
someday any competitor enters the market and beats the prices of the
Costco. He wants to establish an organization that will be there 50
years from now. In addition to this, product selection, growth strategy
and most important Treasure hunt merchandising is used a tool to
increase the regular visit of the customers. Craig Jelinek continues
the mission, vision and values of Jim Sinegal. He has a same objective
of offering low prices with best quality. He follows the ethics of
obeying laws, respecting customers, taking care of employees. Jelinek
focuses on expanding the business globally and increasing the sales.
There is always a risk for the business when new CEO is appointed.
But under his leadership, growth rate is high as compared to most of
the competitors, share price goes up and significant growth in
dividends. It is all because of better understanding of the business and
strategies. (Newsmax, 2019). Based on the information given in the
case study Costco’s business philosophy, values and code of ethics
are:
Obey the law: Obeying the law is important as it gives the framework
to the business how to act and operate. Costco follows all the rules and
regulations of every community where they operate their business.
They pledge to follow all the laws and the legal requirements,
respecting all the government official’s, meeting all the safety and
security standards, meeting all the requirements related to
employment law and ecological standard, comply with antitrust law,
following the proper laws and regulations related to foreign laws
while operating the business outside the country and working in
accordance with foreign corrupt practices act or the law of the other
countries.
Take care of our employees: Employees are one of the most important
assets of the company. Costco provides their employees with ample
growth opportunities for their personal and career growth. They
pledge to provide employees with Competitive wages, Employment
benefits, safe and healthy work environment, Career opportunities and
a work environment which is free from all the bias and harassment.
Take care of members: Members are the reason for the existence of
the business. As we all know that Costco’s members have lots of
shopping alternatives like Walmart, superstore etc. So, the company
needs to maintain the member's trust for that they pledge to provide
Top quality products at the best price, highest food safety standards,
100% satisfaction guarantee, warranty on products and services,
pleasant shopping environment and experience, best customer service
03 and provide products that are ecologically sensitive.
Respect our suppliers: Suppliers must prosper along with the
company for the success of the business. They strive to treat all the
suppliers and their representative respectfully, honour all their
commitments, protect all supplier’s assets, no gratitude’s and always
do what is right.
Reward and shareholders: As a company trades its stocks with
NASDAQ stock exchange, its shareholders are its business partners.
To be successful, we need to provide our shareholders with good
returns as they invest their money in the Costco. They pledge to
provide in the same way to their present and future shareholders, as
well as the employees will also be rewarded for their time and efforts.
Costco from financial perspective:
The various financial ratios of the years 2014, 2015 and 2016 showed
that Gross Profit Margin and total return on assets is increasing at
slow pace (from 12.59% to 13.32%), which is a good indicator to
yield high profit in future. One and only ratio that fluctuated with 3-
4% is return on stockholder’s equity. In 2014, it was above average
which has reached to 21.92% in the next year. It decreased
approximately 2.5% in 2016. EPS is also fluctuating with little
variation (from 4,65 to 5.33). Costco is weak in maintaining current
ratio (from 1.22 to 0.98). It should be higher than 1 and the best one is
2:1. This ratio has decreased continuously which shows that Costco do
not have enough current assets to pay off the current liabilities. Debt
in comparison to total assets is better than before. Company can
generate enough cash in future because its debt to equity ratio is below
1 (0.34) . There is not much variations in the inventory turnover and
inventory days. It means that whatever the company purchases get
sold off at the same ratio in relation to previous years. Overall, Costco
is doing well but weak points are always there. Company should work
on those weakness to grab more opportunities.
Recommendations
Online services and self-checkout: Every organization is expanding
with the help of technology. Online-services has made the life of
people so easier. Take an example of Amazon which provides online
shopping and home delivery services. Another example is Superstore
where we can order online all the required items and they prepare the
cart for us. We just have to go there and park the car, employees put
the stuff inside. In addition to this, there is also self-checkout option at
the superstore which is not available at Costco. It would reduce the
workload of employees and they do not need more employees as
cashier.
Improve Margin: Costco is generating huge amount of revenue from
membership fees. This is the reason that Costco prices are not too
high. Still, there are people who could pay more for the price of
product depending on the quality, but they do not want to pay the
membership fees. Costco should increase the margin by keeping
membership fees low.
Diversification: Walmart is at number one because it sells 1000 times
more variety of products which satisfy every need of customers as
compared to Costco. No doubt, that Costco is following a strategy to
keep less variety in all items, but we cannot neglect that the people
living in Canada belong to different cultures and countries. Their
choices regarding each item is different. Costco must increase the
variety keeping in mind all the residents.
No benefit for small household: Costco sells products in large
quantities. Small household requires only number of items per week.
They cannot buy that stock as that will expire after some time. So,
visiting Costco and doing shopping is only valuable for large
households. Costco should open a store to sell small quantities as well.
Expand product-line: whenever buyers visit Costco, they see only few
brands such as Adidas, Puma, Reebok but only few04 items related to
such brands are there. Experience of customers with those products is
no so good. Those might be defective pieces company sells. But to
increase sale and customer loyalty Costco should contact the famous
brands and sell their products.
Advertisement: Costco do not advertise at all. It only sends mail to the
prospective member as well as coupons to existing customers. But this
is not enough in this era where people are addicted to social media.
Number of people do not visit Costco because they do not have
membership cards. They have no experience what type of products
Costco sells or what quality they provide because there is no
advertisement. So, Costco could provide one- or two-month free trail
for shopping to bring new customers to the business if they do not
want to spend money on advertisement.
Costco’s strategy
Costco has been developed a very fine business strategy along with
appreciable business elements over the years. Costco has its own
name in the business market because it always comes up with the
business tactics which can make it shine more than the competitors in
the market. Its main mission is to provide the good quality products at
the lowest prices. The chief elements of Costco are:
1) lowest prices on reputed brand products,
2) well-structured inventory which leads to fast turnovers,
3) providing membership fees.
For implementing their lowest price strategy, they have launched their
own products such a Kirkland and claimed that they are better than
other competitive brands. Also, they choose to sell the limited but
good products on low prices so that their customers can get attract to
their highly reasonably priced deals. The treasure hunt deals are
proved to be appealing for the customers who want new and bulking
deals. For making profit from the treasure hunt scheme, they get
collaborated with wholesalers to get good things at low prices. Their
main motive behind treasure hunt
initiative is to give a positive reinforcement to their pre-existing
clients to retain them. On the name of inventory turnover, they 02 sell
high volumes with low margins because they have got the idea to
make a balance between purchasing things and reselling it again to the
consumers, accordingly. For the membership, they have business
membership and the gold star membership, and they keep their
approaches of membership up to date in order to let their customers
renew their membership. They have evidence-based statistics which
are the proves of expansion on revenue from previous years. Their
business model is cost effective and the CEO of Costco Jim Singel has
been taken the responsibility of increasing the profit by all effective
ways. He keeps close eyes on every possible aspect as well as on the
product. Costco justified its cost-effective business strategy by
attracting high volume of customers all around the country. They have
given a high competition to rivals by considering effluent to low
income customers in their target list. Their high productivity and
expenditure ratios are transparent, and this statistic is a biggest proof
of their success. In a way they are satisfying needs of both the
suppliers and the customers.
Jim Sinegal’s leadership style and Craig Jelinek’s approach
Jim Sinegal was an effective leader and CEO. He tried to involve in
all warehouse operations. He used to visit 8 to 10 stores daily as a
store clerk to make good relations with employees and to find out the
visiting experiences of the customers. Jim Sinegal wander through the
aisles and try to fix the problems associated with reputation of the
company. Being an effective leader, Jim Sinegal has a special knack
in crafting and executing strategies. So, we would assign grade A
because of his mind-blowing strategies. He wanted to keep the prices
of the product low as much as possible as he did not want that
someday any competitor enters the market and beats the prices of the
Costco. He wants to establish an organization that will be there 50
years from now. In addition to this, product selection, growth strategy
and most important Treasure hunt merchandising is used a tool to
increase the regular visit of the customers. Craig Jelinek continues
the mission, vision and values of Jim Sinegal. He has a same objective
of offering low prices with best quality. He follows the ethics of
obeying laws, respecting customers, taking care of employees. Jelinek
focuses on expanding the business globally and increasing the sales.
There is always a risk for the business when new CEO is appointed.
But under his leadership, growth rate is high as compared to most of
the competitors, share price goes up and significant growth in
dividends. It is all because of better understanding of the business and
strategies. (Newsmax, 2019). Based on the information given in the
case study Costco’s business philosophy, values and code of ethics
are:
Obey the law: Obeying the law is important as it gives the framework
to the business how to act and operate. Costco follows all the rules and
regulations of every community where they operate their business.
They pledge to follow all the laws and the legal requirements,
respecting all the government official’s, meeting all the safety and
security standards, meeting all the requirements related to
employment law and ecological standard, comply with antitrust law,
following the proper laws and regulations related to foreign laws
while operating the business outside the country and working in
accordance with foreign corrupt practices act or the law of the other
countries.
Take care of our employees: Employees are one of the most important
assets of the company. Costco provides their employees with ample
growth opportunities for their personal and career growth. They
pledge to provide employees with Competitive wages, Employment
benefits, safe and healthy work environment, Career opportunities and
a work environment which is free from all the bias and harassment.
Take care of members: Members are the reason for the existence of
the business. As we all know that Costco’s members have lots of
shopping alternatives like Walmart, superstore etc. So, the company
needs to maintain the member's trust for that they pledge to provide
Top quality products at the best price, highest food safety standards,
100% satisfaction guarantee, warranty on products and services,
pleasant shopping environment and experience, best customer service
03 and provide products that are ecologically sensitive.
Respect our suppliers: Suppliers must prosper along with the
company for the success of the business. They strive to treat all the
suppliers and their representative respectfully, honour all their
commitments, protect all supplier’s assets, no gratitude’s and always
do what is right.
Reward and shareholders: As a company trades its stocks with
NASDAQ stock exchange, its shareholders are its business partners.
To be successful, we need to provide our shareholders with good
returns as they invest their money in the Costco. They pledge to
provide in the same way to their present and future shareholders, as
well as the employees will also be rewarded for their time and efforts.
Costco from financial perspective:
The various financial ratios of the years 2014, 2015 and 2016 showed
that Gross Profit Margin and total return on assets is increasing at
slow pace (from 12.59% to 13.32%), which is a good indicator to
yield high profit in future. One and only ratio that fluctuated with 3-
4% is return on stockholder’s equity. In 2014, it was above average
which has reached to 21.92% in the next year. It decreased
approximately 2.5% in 2016. EPS is also fluctuating with little
variation (from 4,65 to 5.33). Costco is weak in maintaining current
ratio (from 1.22 to 0.98). It should be higher than 1 and the best one is
2:1. This ratio has decreased continuously which shows that Costco do
not have enough current assets to pay off the current liabilities. Debt
in comparison to total assets is better than before. Company can
generate enough cash in future because its debt to equity ratio is below
1 (0.34) . There is not much variations in the inventory turnover and
inventory days. It means that whatever the company purchases get
sold off at the same ratio in relation to previous years. Overall, Costco
is doing well but weak points are always there. Company should work
on those weakness to grab more opportunities.
Recommendations
Online services and self-checkout: Every organization is expanding
with the help of technology. Online-services has made the life of
people so easier. Take an example of Amazon which provides online
shopping and home delivery services. Another example is Superstore
where we can order online all the required items and they prepare the
cart for us. We just have to go there and park the car, employees put
the stuff inside. In addition to this, there is also self-checkout option at
the superstore which is not available at Costco. It would reduce the
workload of employees and they do not need more employees as
cashier.
Improve Margin: Costco is generating huge amount of revenue from
membership fees. This is the reason that Costco prices are not too
high. Still, there are people who could pay more for the price of
product depending on the quality, but they do not want to pay the
membership fees. Costco should increase the margin by keeping
membership fees low.
Diversification: Walmart is at number one because it sells 1000 times
more variety of products which satisfy every need of customers as
compared to Costco. No doubt, that Costco is following a strategy to
keep less variety in all items, but we cannot neglect that the people
living in Canada belong to different cultures and countries. Their
choices regarding each item is different. Costco must increase the
variety keeping in mind all the residents.
No benefit for small household: Costco sells products in large
quantities. Small household requires only number of items per week.
They cannot buy that stock as that will expire after some time. So,
visiting Costco and doing shopping is only valuable for large
households. Costco should open a store to sell small quantities as well.
Expand product-line: whenever buyers visit Costco, they see only few
brands such as Adidas, Puma, Reebok but only few04 items related to
such brands are there. Experience of customers with those products is
no so good. Those might be defective pieces company sells. But to
increase sale and customer loyalty Costco should contact the famous
brands and sell their products.
Advertisement: Costco do not advertise at all. It only sends mail to the
prospective member as well as coupons to existing customers. But this
is not enough in this era where people are addicted to social media.
Number of people do not visit Costco because they do not have
membership cards. They have no experience what type of products
Costco sells or what quality they provide because there is no
advertisement. So, Costco could provide one- or two-month free trail
for shopping to bring new customers to the business if they do not
want to spend money on advertisement.
Costco’s strategy
Costco has been developed a very fine business strategy along with
appreciable business elements over the years. Costco has its own
name in the business market because it always comes up with the
business tactics which can make it shine more than the competitors in
the market. Its main mission is to provide the good quality products at
the lowest prices. The chief elements of Costco are:
1) lowest prices on reputed brand products,
2) well-structured inventory which leads to fast turnovers,
3) providing membership fees.
For implementing their lowest price strategy, they have launched their
own products such a Kirkland and claimed that they are better than
other competitive brands. Also, they choose to sell the limited but
good products on low prices so that their customers can get attract to
their highly reasonably priced deals. The treasure hunt deals are
proved to be appealing for the customers who want new and bulking
deals. For making profit from the treasure hunt scheme, they get
collaborated with wholesalers to get good things at low prices. Their
main motive behind treasure hunt
initiative is to give a positive reinforcement to their pre-existing
clients to retain them. On the name of inventory turnover, they 02 sell
high volumes with low margins because they have got the idea to
make a balance between purchasing things and reselling it again to the
consumers, accordingly. For the membership, they have business
membership and the gold star membership, and they keep their
approaches of membership up to date in order to let their customers
renew their membership. They have evidence-based statistics which
are the proves of expansion on revenue from previous years. Their
business model is cost effective and the CEO of Costco Jim Singel has
been taken the responsibility of increasing the profit by all effective
ways. He keeps close eyes on every possible aspect as well as on the
product. Costco justified its cost-effective business strategy by
attracting high volume of customers all around the country. They have
given a high competition to rivals by considering effluent to low
income customers in their target list. Their high productivity and
expenditure ratios are transparent, and this statistic is a biggest proof
of their success. In a way they are satisfying needs of both the
suppliers and the customers.
Jim Sinegal’s leadership style and Craig Jelinek’s approach
Jim Sinegal was an effective leader and CEO. He tried to involve in
all warehouse operations. He used to visit 8 to 10 stores daily as a
store clerk to make good relations with employees and to find out the
visiting experiences of the customers. Jim Sinegal wander through the
aisles and try to fix the problems associated with reputation of the
company. Being an effective leader, Jim Sinegal has a special knack
in crafting and executing strategies. So, we would assign grade A
because of his mind-blowing strategies. He wanted to keep the prices
of the product low as much as possible as he did not want that
someday any competitor enters the market and beats the prices of the
Costco. He wants to establish an organization that will be there 50
years from now. In addition to this, product selection, growth strategy
and most important Treasure hunt merchandising is used a tool to
increase the regular visit of the customers. Craig Jelinek continues
the mission, vision and values of Jim Sinegal. He has a same objective
of offering low prices with best quality. He follows the ethics of
obeying laws, respecting customers, taking care of employees. Jelinek
focuses on expanding the business globally and increasing the sales.
There is always a risk for the business when new CEO is appointed.
But under his leadership, growth rate is high as compared to most of
the competitors, share price goes up and significant growth in
dividends. It is all because of better understanding of the business and
strategies. (Newsmax, 2019). Based on the information given in the
case study Costco’s business philosophy, values and code of ethics
are:
Obey the law: Obeying the law is important as it gives the framework
to the business how to act and operate. Costco follows all the rules and
regulations of every community where they operate their business.
They pledge to follow all the laws and the legal requirements,
respecting all the government official’s, meeting all the safety and
security standards, meeting all the requirements related to
employment law and ecological standard, comply with antitrust law,
following the proper laws and regulations related to foreign laws
while operating the business outside the country and working in
accordance with foreign corrupt practices act or the law of the other
countries.
Take care of our employees: Employees are one of the most important
assets of the company. Costco provides their employees with ample
growth opportunities for their personal and career growth. They
pledge to provide employees with Competitive wages, Employment
benefits, safe and healthy work environment, Career opportunities and
a work environment which is free from all the bias and harassment.
Take care of members: Members are the reason for the existence of
the business. As we all know that Costco’s members have lots of
shopping alternatives like Walmart, superstore etc. So, the company
needs to maintain the member's trust for that they pledge to provide
Top quality products at the best price, highest food safety standards,
100% satisfaction guarantee, warranty on products and services,
pleasant shopping environment and experience, best customer service
03 and provide products that are ecologically sensitive.
Respect our suppliers: Suppliers must prosper along with the
company for the success of the business. They strive to treat all the
suppliers and their representative respectfully, honour all their
commitments, protect all supplier’s assets, no gratitude’s and always
do what is right.
Reward and shareholders: As a company trades its stocks with
NASDAQ stock exchange, its shareholders are its business partners.
To be successful, we need to provide our shareholders with good
returns as they invest their money in the Costco. They pledge to
provide in the same way to their present and future shareholders, as
well as the employees will also be rewarded for their time and efforts.
Costco from financial perspective:
The various financial ratios of the years 2014, 2015 and 2016 showed
that Gross Profit Margin and total return on assets is increasing at
slow pace (from 12.59% to 13.32%), which is a good indicator to
yield high profit in future. One and only ratio that fluctuated with 3-
4% is return on stockholder’s equity. In 2014, it was above average
which has reached to 21.92% in the next year. It decreased
approximately 2.5% in 2016. EPS is also fluctuating with little
variation (from 4,65 to 5.33). Costco is weak in maintaining current
ratio (from 1.22 to 0.98). It should be higher than 1 and the best one is
2:1. This ratio has decreased continuously which shows that Costco do
not have enough current assets to pay off the current liabilities. Debt
in comparison to total assets is better than before. Company can
generate enough cash in future because its debt to equity ratio is below
1 (0.34) . There is not much variations in the inventory turnover and
inventory days. It means that whatever the company purchases get
sold off at the same ratio in relation to previous years. Overall, Costco
is doing well but weak points are always there. Company should work
on those weakness to grab more opportunities.
Recommendations
Online services and self-checkout: Every organization is expanding
with the help of technology. Online-services has made the life of
people so easier. Take an example of Amazon which provides online
shopping and home delivery services. Another example is Superstore
where we can order online all the required items and they prepare the
cart for us. We just have to go there and park the car, employees put
the stuff inside. In addition to this, there is also self-checkout option at
the superstore which is not available at Costco. It would reduce the
workload of employees and they do not need more employees as
cashier.
Improve Margin: Costco is generating huge amount of revenue from
membership fees. This is the reason that Costco prices are not too
high. Still, there are people who could pay more for the price of
product depending on the quality, but they do not want to pay the
membership fees. Costco should increase the margin by keeping
membership fees low.
Diversification: Walmart is at number one because it sells 1000 times
more variety of products which satisfy every need of customers as
compared to Costco. No doubt, that Costco is following a strategy to
keep less variety in all items, but we cannot neglect that the people
living in Canada belong to different cultures and countries. Their
choices regarding each item is different. Costco must increase the
variety keeping in mind all the residents.
No benefit for small household: Costco sells products in large
quantities. Small household requires only number of items per week.
They cannot buy that stock as that will expire after some time. So,
visiting Costco and doing shopping is only valuable for large
households. Costco should open a store to sell small quantities as well.
Expand product-line: whenever buyers visit Costco, they see only few
brands such as Adidas, Puma, Reebok but only few04 items related to
such brands are there. Experience of customers with those products is
no so good. Those might be defective pieces company sells. But to
increase sale and customer loyalty Costco should contact the famous
brands and sell their products.
Advertisement: Costco do not advertise at all. It only sends mail to the
prospective member as well as coupons to existing customers. But this
is not enough in this era where people are addicted to social media.
Number of people do not visit Costco because they do not have
membership cards. They have no experience what type of products
Costco sells or what quality they provide because there is no
advertisement. So, Costco could provide one- or two-month free trail
for shopping to bring new customers to the business if they do not
want to spend money on advertisement.
Costco’s strategy
Costco has been developed a very fine business strategy along with
appreciable business elements over the years. Costco has its own
name in the business market because it always comes up with the
business tactics which can make it shine more than the competitors in
the market. Its main mission is to provide the good quality products at
the lowest prices. The chief elements of Costco are:
1) lowest prices on reputed brand products,
2) well-structured inventory which leads to fast turnovers,
3) providing membership fees.
For implementing their lowest price strategy, they have launched their
own products such a Kirkland and claimed that they are better than
other competitive brands. Also, they choose to sell the limited but
good products on low prices so that their customers can get attract to
their highly reasonably priced deals. The treasure hunt deals are
proved to be appealing for the customers who want new and bulking
deals. For making profit from the treasure hunt scheme, they get
collaborated with wholesalers to get good things at low prices. Their
main motive behind treasure hunt
initiative is to give a positive reinforcement to their pre-existing
clients to retain them. On the name of inventory turnover, they 02 sell
high volumes with low margins because they have got the idea to
make a balance between purchasing things and reselling it again to the
consumers, accordingly. For the membership, they have business
membership and the gold star membership, and they keep their
approaches of membership up to date in order to let their customers
renew their membership. They have evidence-based statistics which
are the proves of expansion on revenue from previous years. Their
business model is cost effective and the CEO of Costco Jim Singel has
been taken the responsibility of increasing the profit by all effective
ways. He keeps close eyes on every possible aspect as well as on the
product. Costco justified its cost-effective business strategy by
attracting high volume of customers all around the country. They have
given a high competition to rivals by considering effluent to low
income customers in their target list. Their high productivity and
expenditure ratios are transparent, and this statistic is a biggest proof
of their success. In a way they are satisfying needs of both the
suppliers and the customers.
Jim Sinegal’s leadership style and Craig Jelinek’s approach
Jim Sinegal was an effective leader and CEO. He tried to involve in
all warehouse operations. He used to visit 8 to 10 stores daily as a
store clerk to make good relations with employees and to find out the
visiting experiences of the customers. Jim Sinegal wander through the
aisles and try to fix the problems associated with reputation of the
company. Being an effective leader, Jim Sinegal has a special knack
in crafting and executing strategies. So, we would assign grade A
because of his mind-blowing strategies. He wanted to keep the prices
of the product low as much as possible as he did not want that
someday any competitor enters the market and beats the prices of the
Costco. He wants to establish an organization that will be there 50
years from now. In addition to this, product selection, growth strategy
and most important Treasure hunt merchandising is used a tool to
increase the regular visit of the customers. Craig Jelinek continues
the mission, vision and values of Jim Sinegal. He has a same objective
of offering low prices with best quality. He follows the ethics of
obeying laws, respecting customers, taking care of employees. Jelinek
focuses on expanding the business globally and increasing the sales.
There is always a risk for the business when new CEO is appointed.
But under his leadership, growth rate is high as compared to most of
the competitors, share price goes up and significant growth in
dividends. It is all because of better understanding of the business and
strategies. (Newsmax, 2019). Based on the information given in the
case study Costco’s business philosophy, values and code of ethics
are:
Obey the law: Obeying the law is important as it gives the framework
to the business how to act and operate. Costco follows all the rules and
regulations of every community where they operate their business.
They pledge to follow all the laws and the legal requirements,
respecting all the government official’s, meeting all the safety and
security standards, meeting all the requirements related to
employment law and ecological standard, comply with antitrust law,
following the proper laws and regulations related to foreign laws
while operating the business outside the country and working in
accordance with foreign corrupt practices act or the law of the other
countries.
Take care of our employees: Employees are one of the most important
assets of the company. Costco provides their employees with ample
growth opportunities for their personal and career growth. They
pledge to provide employees with Competitive wages, Employment
benefits, safe and healthy work environment, Career opportunities and
a work environment which is free from all the bias and harassment.
Take care of members: Members are the reason for the existence of
the business. As we all know that Costco’s members have lots of
shopping alternatives like Walmart, superstore etc. So, the company
needs to maintain the member's trust for that they pledge to provide
Top quality products at the best price, highest food safety standards,
100% satisfaction guarantee, warranty on products and services,
pleasant shopping environment and experience, best customer service
03 and provide products that are ecologically sensitive.
Respect our suppliers: Suppliers must prosper along with the
company for the success of the business. They strive to treat all the
suppliers and their representative respectfully, honour all their
commitments, protect all supplier’s assets, no gratitude’s and always
do what is right.
Reward and shareholders: As a company trades its stocks with
NASDAQ stock exchange, its shareholders are its business partners.
To be successful, we need to provide our shareholders with good
returns as they invest their money in the Costco. They pledge to
provide in the same way to their present and future shareholders, as
well as the employees will also be rewarded for their time and efforts.
Costco from financial perspective:
The various financial ratios of the years 2014, 2015 and 2016 showed
that Gross Profit Margin and total return on assets is increasing at
slow pace (from 12.59% to 13.32%), which is a good indicator to
yield high profit in future. One and only ratio that fluctuated with 3-
4% is return on stockholder’s equity. In 2014, it was above average
which has reached to 21.92% in the next year. It decreased
approximately 2.5% in 2016. EPS is also fluctuating with little
variation (from 4,65 to 5.33). Costco is weak in maintaining current
ratio (from 1.22 to 0.98). It should be higher than 1 and the best one is
2:1. This ratio has decreased continuously which shows that Costco do
not have enough current assets to pay off the current liabilities. Debt
in comparison to total assets is better than before. Company can
generate enough cash in future because its debt to equity ratio is below
1 (0.34) . There is not much variations in the inventory turnover and
inventory days. It means that whatever the company purchases get
sold off at the same ratio in relation to previous years. Overall, Costco
is doing well but weak points are always there. Company should work
on those weakness to grab more opportunities.
Recommendations
Online services and self-checkout: Every organization is expanding
with the help of technology. Online-services has made the life of
people so easier. Take an example of Amazon which provides online
shopping and home delivery services. Another example is Superstore
where we can order online all the required items and they prepare the
cart for us. We just have to go there and park the car, employees put
the stuff inside. In addition to this, there is also self-checkout option at
the superstore which is not available at Costco. It would reduce the
workload of employees and they do not need more employees as
cashier.
Improve Margin: Costco is generating huge amount of revenue from
membership fees. This is the reason that Costco prices are not too
high. Still, there are people who could pay more for the price of
product depending on the quality, but they do not want to pay the
membership fees. Costco should increase the margin by keeping
membership fees low.
Diversification: Walmart is at number one because it sells 1000 times
more variety of products which satisfy every need of customers as
compared to Costco. No doubt, that Costco is following a strategy to
keep less variety in all items, but we cannot neglect that the people
living in Canada belong to different cultures and countries. Their
choices regarding each item is different. Costco must increase the
variety keeping in mind all the residents.
No benefit for small household: Costco sells products in large
quantities. Small household requires only number of items per week.
They cannot buy that stock as that will expire after some time. So,
visiting Costco and doing shopping is only valuable for large
households. Costco should open a store to sell small quantities as well.
Expand product-line: whenever buyers visit Costco, they see only few
brands such as Adidas, Puma, Reebok but only few04 items related to
such brands are there. Experience of customers with those products is
no so good. Those might be defective pieces company sells. But to
increase sale and customer loyalty Costco should contact the famous
brands and sell their products.
Advertisement: Costco do not advertise at all. It only sends mail to the
prospective member as well as coupons to existing customers. But this
is not enough in this era where people are addicted to social media.
Number of people do not visit Costco because they do not have
membership cards. They have no experience what type of products
Costco sells or what quality they provide because there is no
advertisement. So, Costco could provide one- or two-month free trail
for shopping to bring new customers to the business if they do not
want to spend money on advertisement.
Costco’s strategy
Costco has been developed a very fine business strategy along with
appreciable business elements over the years. Costco has its own
name in the business market because it always comes up with the
business tactics which can make it shine more than the competitors in
the market. Its main mission is to provide the good quality products at
the lowest prices. The chief elements of Costco are:
1) lowest prices on reputed brand products,
2) well-structured inventory which leads to fast turnovers,
3) providing membership fees.
For implementing their lowest price strategy, they have launched their
own products such a Kirkland and claimed that they are better than
other competitive brands. Also, they choose to sell the limited but
good products on low prices so that their customers can get attract to
their highly reasonably priced deals. The treasure hunt deals are
proved to be appealing for the customers who want new and bulking
deals. For making profit from the treasure hunt scheme, they get
collaborated with wholesalers to get good things at low prices. Their
main motive behind treasure hunt
initiative is to give a positive reinforcement to their pre-existing
clients to retain them. On the name of inventory turnover, they 02 sell
high volumes with low margins because they have got the idea to
make a balance between purchasing things and reselling it again to the
consumers, accordingly. For the membership, they have business
membership and the gold star membership, and they keep their
approaches of membership up to date in order to let their customers
renew their membership. They have evidence-based statistics which
are the proves of expansion on revenue from previous years. Their
business model is cost effective and the CEO of Costco Jim Singel has
been taken the responsibility of increasing the profit by all effective
ways. He keeps close eyes on every possible aspect as well as on the
product. Costco justified its cost-effective business strategy by
attracting high volume of customers all around the country. They have
given a high competition to rivals by considering effluent to low
income customers in their target list. Their high productivity and
expenditure ratios are transparent, and this statistic is a biggest proof
of their success. In a way they are satisfying needs of both the
suppliers and the customers.
Jim Sinegal’s leadership style and Craig Jelinek’s approach
Jim Sinegal was an effective leader and CEO. He tried to involve in
all warehouse operations. He used to visit 8 to 10 stores daily as a
store clerk to make good relations with employees and to find out the
visiting experiences of the customers. Jim Sinegal wander through the
aisles and try to fix the problems associated with reputation of the
company. Being an effective leader, Jim Sinegal has a special knack
in crafting and executing strategies. So, we would assign grade A
because of his mind-blowing strategies. He wanted to keep the prices
of the product low as much as possible as he did not want that
someday any competitor enters the market and beats the prices of the
Costco. He wants to establish an organization that will be there 50
years from now. In addition to this, product selection, growth strategy
and most important Treasure hunt merchandising is used a tool to
increase the regular visit of the customers. Craig Jelinek continues
the mission, vision and values of Jim Sinegal. He has a same objective
of offering low prices with best quality. He follows the ethics of
obeying laws, respecting customers, taking care of employees. Jelinek
focuses on expanding the business globally and increasing the sales.
There is always a risk for the business when new CEO is appointed.
But under his leadership, growth rate is high as compared to most of
the competitors, share price goes up and significant growth in
dividends. It is all because of better understanding of the business and
strategies. (Newsmax, 2019). Based on the information given in the
case study Costco’s business philosophy, values and code of ethics
are:
Obey the law: Obeying the law is important as it gives the framework
to the business how to act and operate. Costco follows all the rules and
regulations of every community where they operate their business.
They pledge to follow all the laws and the legal requirements,
respecting all the government official’s, meeting all the safety and
security standards, meeting all the requirements related to
employment law and ecological standard, comply with antitrust law,
following the proper laws and regulations related to foreign laws
while operating the business outside the country and working in
accordance with foreign corrupt practices act or the law of the other
countries.
Take care of our employees: Employees are one of the most important
assets of the company. Costco provides their employees with ample
growth opportunities for their personal and career growth. They
pledge to provide employees with Competitive wages, Employment
benefits, safe and healthy work environment, Career opportunities and
a work environment which is free from all the bias and harassment.
Take care of members: Members are the reason for the existence of
the business. As we all know that Costco’s members have lots of
shopping alternatives like Walmart, superstore etc. So, the company
needs to maintain the member's trust for that they pledge to provide
Top quality products at the best price, highest food safety standards,
100% satisfaction guarantee, warranty on products and services,
pleasant shopping environment and experience, best customer service
03 and provide products that are ecologically sensitive.
Respect our suppliers: Suppliers must prosper along with the
company for the success of the business. They strive to treat all the
suppliers and their representative respectfully, honour all their
commitments, protect all supplier’s assets, no gratitude’s and always
do what is right.
Reward and shareholders: As a company trades its stocks with
NASDAQ stock exchange, its shareholders are its business partners.
To be successful, we need to provide our shareholders with good
returns as they invest their money in the Costco. They pledge to
provide in the same way to their present and future shareholders, as
well as the employees will also be rewarded for their time and efforts.
Costco from financial perspective:
The various financial ratios of the years 2014, 2015 and 2016 showed
that Gross Profit Margin and total return on assets is increasing at
slow pace (from 12.59% to 13.32%), which is a good indicator to
yield high profit in future. One and only ratio that fluctuated with 3-
4% is return on stockholder’s equity. In 2014, it was above average
which has reached to 21.92% in the next year. It decreased
approximately 2.5% in 2016. EPS is also fluctuating with little
variation (from 4,65 to 5.33). Costco is weak in maintaining current
ratio (from 1.22 to 0.98). It should be higher than 1 and the best one is
2:1. This ratio has decreased continuously which shows that Costco do
not have enough current assets to pay off the current liabilities. Debt
in comparison to total assets is better than before. Company can
generate enough cash in future because its debt to equity ratio is below
1 (0.34) . There is not much variations in the inventory turnover and
inventory days. It means that whatever the company purchases get
sold off at the same ratio in relation to previous years. Overall, Costco
is doing well but weak points are always there. Company should work
on those weakness to grab more opportunities.
Recommendations
Online services and self-checkout: Every organization is expanding
with the help of technology. Online-services has made the life of
people so easier. Take an example of Amazon which provides online
shopping and home delivery services. Another example is Superstore
where we can order online all the required items and they prepare the
cart for us. We just have to go there and park the car, employees put
the stuff inside. In addition to this, there is also self-checkout option at
the superstore which is not available at Costco. It would reduce the
workload of employees and they do not need more employees as
cashier.
Improve Margin: Costco is generating huge amount of revenue from
membership fees. This is the reason that Costco prices are not too
high. Still, there are people who could pay more for the price of
product depending on the quality, but they do not want to pay the
membership fees. Costco should increase the margin by keeping
membership fees low.
Diversification: Walmart is at number one because it sells 1000 times
more variety of products which satisfy every need of customers as
compared to Costco. No doubt, that Costco is following a strategy to
keep less variety in all items, but we cannot neglect that the people
living in Canada belong to different cultures and countries. Their
choices regarding each item is different. Costco must increase the
variety keeping in mind all the residents.
No benefit for small household: Costco sells products in large
quantities. Small household requires only number of items per week.
They cannot buy that stock as that will expire after some time. So,
visiting Costco and doing shopping is only valuable for large
households. Costco should open a store to sell small quantities as well.
Expand product-line: whenever buyers visit Costco, they see only few
brands such as Adidas, Puma, Reebok but only few04 items related to
such brands are there. Experience of customers with those products is
no so good. Those might be defective pieces company sells. But to
increase sale and customer loyalty Costco should contact the famous
brands and sell their products.
Advertisement: Costco do not advertise at all. It only sends mail to the
prospective member as well as coupons to existing customers. But this
is not enough in this era where people are addicted to social media.
Number of people do not visit Costco because they do not have
membership cards. They have no experience what type of products
Costco sells or what quality they provide because there is no
advertisement. So, Costco could provide one- or two-month free trail
for shopping to bring new customers to the business if they do not
want to spend money on advertisement.
Costco’s strategy
Costco has been developed a very fine business strategy along with
appreciable business elements over the years. Costco has its own
name in the business market because it always comes up with the
business tactics which can make it shine more than the competitors in
the market. Its main mission is to provide the good quality products at
the lowest prices. The chief elements of Costco are:
1) lowest prices on reputed brand products,
2) well-structured inventory which leads to fast turnovers,
3) providing membership fees.
For implementing their lowest price strategy, they have launched their
own products such a Kirkland and claimed that they are better than
other competitive brands. Also, they choose to sell the limited but
good products on low prices so that their customers can get attract to
their highly reasonably priced deals. The treasure hunt deals are
proved to be appealing for the customers who want new and bulking
deals. For making profit from the treasure hunt scheme, they get
collaborated with wholesalers to get good things at low prices. Their
main motive behind treasure hunt
initiative is to give a positive reinforcement to their pre-existing
clients to retain them. On the name of inventory turnover, they 02 sell
high volumes with low margins because they have got the idea to
make a balance between purchasing things and reselling it again to the
consumers, accordingly. For the membership, they have business
membership and the gold star membership, and they keep their
approaches of membership up to date in order to let their customers
renew their membership. They have evidence-based statistics which
are the proves of expansion on revenue from previous years. Their
business model is cost effective and the CEO of Costco Jim Singel has
been taken the responsibility of increasing the profit by all effective
ways. He keeps close eyes on every possible aspect as well as on the
product. Costco justified its cost-effective business strategy by
attracting high volume of customers all around the country. They have
given a high competition to rivals by considering effluent to low
income customers in their target list. Their high productivity and
expenditure ratios are transparent, and this statistic is a biggest proof
of their success. In a way they are satisfying needs of both the
suppliers and the customers.
Jim Sinegal’s leadership style and Craig Jelinek’s approach
Jim Sinegal was an effective leader and CEO. He tried to involve in
all warehouse operations. He used to visit 8 to 10 stores daily as a
store clerk to make good relations with employees and to find out the
visiting experiences of the customers. Jim Sinegal wander through the
aisles and try to fix the problems associated with reputation of the
company. Being an effective leader, Jim Sinegal has a special knack
in crafting and executing strategies. So, we would assign grade A
because of his mind-blowing strategies. He wanted to keep the prices
of the product low as much as possible as he did not want that
someday any competitor enters the market and beats the prices of the
Costco. He wants to establish an organization that will be there 50
years from now. In addition to this, product selection, growth strategy
and most important Treasure hunt merchandising is used a tool to
increase the regular visit of the customers. Craig Jelinek continues
the mission, vision and values of Jim Sinegal. He has a same objective
of offering low prices with best quality. He follows the ethics of
obeying laws, respecting customers, taking care of employees. Jelinek
focuses on expanding the business globally and increasing the sales.
There is always a risk for the business when new CEO is appointed.
But under his leadership, growth rate is high as compared to most of
the competitors, share price goes up and significant growth in
dividends. It is all because of better understanding of the business and
strategies. (Newsmax, 2019). Based on the information given in the
case study Costco’s business philosophy, values and code of ethics
are:
Obey the law: Obeying the law is important as it gives the framework
to the business how to act and operate. Costco follows all the rules and
regulations of every community where they operate their business.
They pledge to follow all the laws and the legal requirements,
respecting all the government official’s, meeting all the safety and
security standards, meeting all the requirements related to
employment law and ecological standard, comply with antitrust law,
following the proper laws and regulations related to foreign laws
while operating the business outside the country and working in
accordance with foreign corrupt practices act or the law of the other
countries.
Take care of our employees: Employees are one of the most important
assets of the company. Costco provides their employees with ample
growth opportunities for their personal and career growth. They
pledge to provide employees with Competitive wages, Employment
benefits, safe and healthy work environment, Career opportunities and
a work environment which is free from all the bias and harassment.
Take care of members: Members are the reason for the existence of
the business. As we all know that Costco’s members have lots of
shopping alternatives like Walmart, superstore etc. So, the company
needs to maintain the member's trust for that they pledge to provide
Top quality products at the best price, highest food safety standards,
100% satisfaction guarantee, warranty on products and services,
pleasant shopping environment and experience, best customer service
03 and provide products that are ecologically sensitive.
Respect our suppliers: Suppliers must prosper along with the
company for the success of the business. They strive to treat all the
suppliers and their representative respectfully, honour all their
commitments, protect all supplier’s assets, no gratitude’s and always
do what is right.
Reward and shareholders: As a company trades its stocks with
NASDAQ stock exchange, its shareholders are its business partners.
To be successful, we need to provide our shareholders with good
returns as they invest their money in the Costco. They pledge to
provide in the same way to their present and future shareholders, as
well as the employees will also be rewarded for their time and efforts.
Costco from financial perspective:
The various financial ratios of the years 2014, 2015 and 2016 showed
that Gross Profit Margin and total return on assets is increasing at
slow pace (from 12.59% to 13.32%), which is a good indicator to
yield high profit in future. One and only ratio that fluctuated with 3-
4% is return on stockholder’s equity. In 2014, it was above average
which has reached to 21.92% in the next year. It decreased
approximately 2.5% in 2016. EPS is also fluctuating with little
variation (from 4,65 to 5.33). Costco is weak in maintaining current
ratio (from 1.22 to 0.98). It should be higher than 1 and the best one is
2:1. This ratio has decreased continuously which shows that Costco do
not have enough current assets to pay off the current liabilities. Debt
in comparison to total assets is better than before. Company can
generate enough cash in future because its debt to equity ratio is below
1 (0.34) . There is not much variations in the inventory turnover and
inventory days. It means that whatever the company purchases get
sold off at the same ratio in relation to previous years. Overall, Costco
is doing well but weak points are always there. Company should work
on those weakness to grab more opportunities.
Recommendations
Online services and self-checkout: Every organization is expanding
with the help of technology. Online-services has made the life of
people so easier. Take an example of Amazon which provides online
shopping and home delivery services. Another example is Superstore
where we can order online all the required items and they prepare the
cart for us. We just have to go there and park the car, employees put
the stuff inside. In addition to this, there is also self-checkout option at
the superstore which is not available at Costco. It would reduce the
workload of employees and they do not need more employees as
cashier.
Improve Margin: Costco is generating huge amount of revenue from
membership fees. This is the reason that Costco prices are not too
high. Still, there are people who could pay more for the price of
product depending on the quality, but they do not want to pay the
membership fees. Costco should increase the margin by keeping
membership fees low.
Diversification: Walmart is at number one because it sells 1000 times
more variety of products which satisfy every need of customers as
compared to Costco. No doubt, that Costco is following a strategy to
keep less variety in all items, but we cannot neglect that the people
living in Canada belong to different cultures and countries. Their
choices regarding each item is different. Costco must increase the
variety keeping in mind all the residents.
No benefit for small household: Costco sells products in large
quantities. Small household requires only number of items per week.
They cannot buy that stock as that will expire after some time. So,
visiting Costco and doing shopping is only valuable for large
households. Costco should open a store to sell small quantities as well.
Expand product-line: whenever buyers visit Costco, they see only few
brands such as Adidas, Puma, Reebok but only few04 items related to
such brands are there. Experience of customers with those products is
no so good. Those might be defective pieces company sells. But to
increase sale and customer loyalty Costco should contact the famous
brands and sell their products.
Advertisement: Costco do not advertise at all. It only sends mail to the
prospective member as well as coupons to existing customers. But this
is not enough in this era where people are addicted to social media.
Number of people do not visit Costco because they do not have
membership cards. They have no experience what type of products
Costco sells or what quality they provide because there is no
advertisement. So, Costco could provide one- or two-month free trail
for shopping to bring new customers to the business if they do not
want to spend money on advertisement.
Costco’s strategy
Costco has been developed a very fine business strategy along with
appreciable business elements over the years. Costco has its own
name in the business market because it always comes up with the
business tactics which can make it shine more than the competitors in
the market. Its main mission is to provide the good quality products at
the lowest prices. The chief elements of Costco are:
1) lowest prices on reputed brand products,
2) well-structured inventory which leads to fast turnovers,
3) providing membership fees.
For implementing their lowest price strategy, they have launched their
own products such a Kirkland and claimed that they are better than
other competitive brands. Also, they choose to sell the limited but
good products on low prices so that their customers can get attract to
their highly reasonably priced deals. The treasure hunt deals are
proved to be appealing for the customers who want new and bulking
deals. For making profit from the treasure hunt scheme, they get
collaborated with wholesalers to get good things at low prices. Their
main motive behind treasure hunt
initiative is to give a positive reinforcement to their pre-existing
clients to retain them. On the name of inventory turnover, they 02 sell
high volumes with low margins because they have got the idea to
make a balance between purchasing things and reselling it again to the
consumers, accordingly. For the membership, they have business
membership and the gold star membership, and they keep their
approaches of membership up to date in order to let their customers
renew their membership. They have evidence-based statistics which
are the proves of expansion on revenue from previous years. Their
business model is cost effective and the CEO of Costco Jim Singel has
been taken the responsibility of increasing the profit by all effective
ways. He keeps close eyes on every possible aspect as well as on the
product. Costco justified its cost-effective business strategy by
attracting high volume of customers all around the country. They have
given a high competition to rivals by considering effluent to low
income customers in their target list. Their high productivity and
expenditure ratios are transparent, and this statistic is a biggest proof
of their success. In a way they are satisfying needs of both the
suppliers and the customers.
Jim Sinegal’s leadership style and Craig Jelinek’s approach
Jim Sinegal was an effective leader and CEO. He tried to involve in
all warehouse operations. He used to visit 8 to 10 stores daily as a
store clerk to make good relations with employees and to find out the
visiting experiences of the customers. Jim Sinegal wander through the
aisles and try to fix the problems associated with reputation of the
company. Being an effective leader, Jim Sinegal has a special knack
in crafting and executing strategies. So, we would assign grade A
because of his mind-blowing strategies. He wanted to keep the prices
of the product low as much as possible as he did not want that
someday any competitor enters the market and beats the prices of the
Costco. He wants to establish an organization that will be there 50
years from now. In addition to this, product selection, growth strategy
and most important Treasure hunt merchandising is used a tool to
increase the regular visit of the customers. Craig Jelinek continues
the mission, vision and values of Jim Sinegal. He has a same objective
of offering low prices with best quality. He follows the ethics of
obeying laws, respecting customers, taking care of employees. Jelinek
focuses on expanding the business globally and increasing the sales.
There is always a risk for the business when new CEO is appointed.
But under his leadership, growth rate is high as compared to most of
the competitors, share price goes up and significant growth in
dividends. It is all because of better understanding of the business and
strategies. (Newsmax, 2019). Based on the information given in the
case study Costco’s business philosophy, values and code of ethics
are:
Obey the law: Obeying the law is important as it gives the framework
to the business how to act and operate. Costco follows all the rules and
regulations of every community where they operate their business.
They pledge to follow all the laws and the legal requirements,
respecting all the government official’s, meeting all the safety and
security standards, meeting all the requirements related to
employment law and ecological standard, comply with antitrust law,
following the proper laws and regulations related to foreign laws
while operating the business outside the country and working in
accordance with foreign corrupt practices act or the law of the other
countries.
Take care of our employees: Employees are one of the most important
assets of the company. Costco provides their employees with ample
growth opportunities for their personal and career growth. They
pledge to provide employees with Competitive wages, Employment
benefits, safe and healthy work environment, Career opportunities and
a work environment which is free from all the bias and harassment.
Take care of members: Members are the reason for the existence of
the business. As we all know that Costco’s members have lots of
shopping alternatives like Walmart, superstore etc. So, the company
needs to maintain the member's trust for that they pledge to provide
Top quality products at the best price, highest food safety standards,
100% satisfaction guarantee, warranty on products and services,
pleasant shopping environment and experience, best customer service
03 and provide products that are ecologically sensitive.
Respect our suppliers: Suppliers must prosper along with the
company for the success of the business. They strive to treat all the
suppliers and their representative respectfully, honour all their
commitments, protect all supplier’s assets, no gratitude’s and always
do what is right.
Reward and shareholders: As a company trades its stocks with
NASDAQ stock exchange, its shareholders are its business partners.
To be successful, we need to provide our shareholders with good
returns as they invest their money in the Costco. They pledge to
provide in the same way to their present and future shareholders, as
well as the employees will also be rewarded for their time and efforts.
Costco from financial perspective:
The various financial ratios of the years 2014, 2015 and 2016 showed
that Gross Profit Margin and total return on assets is increasing at
slow pace (from 12.59% to 13.32%), which is a good indicator to
yield high profit in future. One and only ratio that fluctuated with 3-
4% is return on stockholder’s equity. In 2014, it was above average
which has reached to 21.92% in the next year. It decreased
approximately 2.5% in 2016. EPS is also fluctuating with little
variation (from 4,65 to 5.33). Costco is weak in maintaining current
ratio (from 1.22 to 0.98). It should be higher than 1 and the best one is
2:1. This ratio has decreased continuously which shows that Costco do
not have enough current assets to pay off the current liabilities. Debt
in comparison to total assets is better than before. Company can
generate enough cash in future because its debt to equity ratio is below
1 (0.34) . There is not much variations in the inventory turnover and
inventory days. It means that whatever the company purchases get
sold off at the same ratio in relation to previous years. Overall, Costco
is doing well but weak points are always there. Company should work
on those weakness to grab more opportunities.
Recommendations
Online services and self-checkout: Every organization is expanding
with the help of technology. Online-services has made the life of
people so easier. Take an example of Amazon which provides online
shopping and home delivery services. Another example is Superstore
where we can order online all the required items and they prepare the
cart for us. We just have to go there and park the car, employees put
the stuff inside. In addition to this, there is also self-checkout option at
the superstore which is not available at Costco. It would reduce the
workload of employees and they do not need more employees as
cashier.
Improve Margin: Costco is generating huge amount of revenue from
membership fees. This is the reason that Costco prices are not too
high. Still, there are people who could pay more for the price of
product depending on the quality, but they do not want to pay the
membership fees. Costco should increase the margin by keeping
membership fees low.
Diversification: Walmart is at number one because it sells 1000 times
more variety of products which satisfy every need of customers as
compared to Costco. No doubt, that Costco is following a strategy to
keep less variety in all items, but we cannot neglect that the people
living in Canada belong to different cultures and countries. Their
choices regarding each item is different. Costco must increase the
variety keeping in mind all the residents.
No benefit for small household: Costco sells products in large
quantities. Small household requires only number of items per week.
They cannot buy that stock as that will expire after some time. So,
visiting Costco and doing shopping is only valuable for large
households. Costco should open a store to sell small quantities as well.
Expand product-line: whenever buyers visit Costco, they see only few
brands such as Adidas, Puma, Reebok but only few04 items related to
such brands are there. Experience of customers with those products is
no so good. Those might be defective pieces company sells. But to
increase sale and customer loyalty Costco should contact the famous
brands and sell their products.
Advertisement: Costco do not advertise at all. It only sends mail to the
prospective member as well as coupons to existing customers. But this
is not enough in this era where people are addicted to social media.
Number of people do not visit Costco because they do not have
membership cards. They have no experience what type of products
Costco sells or what quality they provide because there is no
advertisement. So, Costco could provide one- or two-month free trail
for shopping to bring new customers to the business if they do not
want to spend money on advertisement.
Costco’s strategy
Costco has been developed a very fine business strategy along with
appreciable business elements over the years. Costco has its own
name in the business market because it always comes up with the
business tactics which can make it shine more than the competitors in
the market. Its main mission is to provide the good quality products at
the lowest prices. The chief elements of Costco are:
1) lowest prices on reputed brand products,
2) well-structured inventory which leads to fast turnovers,
3) providing membership fees.
For implementing their lowest price strategy, they have launched their
own products such a Kirkland and claimed that they are better than
other competitive brands. Also, they choose to sell the limited but
good products on low prices so that their customers can get attract to
their highly reasonably priced deals. The treasure hunt deals are
proved to be appealing for the customers who want new and bulking
deals. For making profit from the treasure hunt scheme, they get
collaborated with wholesalers to get good things at low prices. Their
main motive behind treasure hunt
initiative is to give a positive reinforcement to their pre-existing
clients to retain them. On the name of inventory turnover, they 02 sell
high volumes with low margins because they have got the idea to
make a balance between purchasing things and reselling it again to the
consumers, accordingly. For the membership, they have business
membership and the gold star membership, and they keep their
approaches of membership up to date in order to let their customers
renew their membership. They have evidence-based statistics which
are the proves of expansion on revenue from previous years. Their
business model is cost effective and the CEO of Costco Jim Singel has
been taken the responsibility of increasing the profit by all effective
ways. He keeps close eyes on every possible aspect as well as on the
product. Costco justified its cost-effective business strategy by
attracting high volume of customers all around the country. They have
given a high competition to rivals by considering effluent to low
income customers in their target list. Their high productivity and
expenditure ratios are transparent, and this statistic is a biggest proof
of their success. In a way they are satisfying needs of both the
suppliers and the customers.
Jim Sinegal’s leadership style and Craig Jelinek’s approach
Jim Sinegal was an effective leader and CEO. He tried to involve in
all warehouse operations. He used to visit 8 to 10 stores daily as a
store clerk to make good relations with employees and to find out the
visiting experiences of the customers. Jim Sinegal wander through the
aisles and try to fix the problems associated with reputation of the
company. Being an effective leader, Jim Sinegal has a special knack
in crafting and executing strategies. So, we would assign grade A
because of his mind-blowing strategies. He wanted to keep the prices
of the product low as much as possible as he did not want that
someday any competitor enters the market and beats the prices of the
Costco. He wants to establish an organization that will be there 50
years from now. In addition to this, product selection, growth strategy
and most important Treasure hunt merchandising is used a tool to
increase the regular visit of the customers. Craig Jelinek continues
the mission, vision and values of Jim Sinegal. He has a same objective
of offering low prices with best quality. He follows the ethics of
obeying laws, respecting customers, taking care of employees. Jelinek
focuses on expanding the business globally and increasing the sales.
There is always a risk for the business when new CEO is appointed.
But under his leadership, growth rate is high as compared to most of
the competitors, share price goes up and significant growth in
dividends. It is all because of better understanding of the business and
strategies. (Newsmax, 2019). Based on the information given in the
case study Costco’s business philosophy, values and code of ethics
are:
Obey the law: Obeying the law is important as it gives the framework
to the business how to act and operate. Costco follows all the rules and
regulations of every community where they operate their business.
They pledge to follow all the laws and the legal requirements,
respecting all the government official’s, meeting all the safety and
security standards, meeting all the requirements related to
employment law and ecological standard, comply with antitrust law,
following the proper laws and regulations related to foreign laws
while operating the business outside the country and working in
accordance with foreign corrupt practices act or the law of the other
countries.
Take care of our employees: Employees are one of the most important
assets of the company. Costco provides their employees with ample
growth opportunities for their personal and career growth. They
pledge to provide employees with Competitive wages, Employment
benefits, safe and healthy work environment, Career opportunities and
a work environment which is free from all the bias and harassment.
Take care of members: Members are the reason for the existence of
the business. As we all know that Costco’s members have lots of
shopping alternatives like Walmart, superstore etc. So, the company
needs to maintain the member's trust for that they pledge to provide
Top quality products at the best price, highest food safety standards,
100% satisfaction guarantee, warranty on products and services,
pleasant shopping environment and experience, best customer service
03 and provide products that are ecologically sensitive.
Respect our suppliers: Suppliers must prosper along with the
company for the success of the business. They strive to treat all the
suppliers and their representative respectfully, honour all their
commitments, protect all supplier’s assets, no gratitude’s and always
do what is right.
Reward and shareholders: As a company trades its stocks with
NASDAQ stock exchange, its shareholders are its business partners.
To be successful, we need to provide our shareholders with good
returns as they invest their money in the Costco. They pledge to
provide in the same way to their present and future shareholders, as
well as the employees will also be rewarded for their time and efforts.
Costco from financial perspective:
The various financial ratios of the years 2014, 2015 and 2016 showed
that Gross Profit Margin and total return on assets is increasing at
slow pace (from 12.59% to 13.32%), which is a good indicator to
yield high profit in future. One and only ratio that fluctuated with 3-
4% is return on stockholder’s equity. In 2014, it was above average
which has reached to 21.92% in the next year. It decreased
approximately 2.5% in 2016. EPS is also fluctuating with little
variation (from 4,65 to 5.33). Costco is weak in maintaining current
ratio (from 1.22 to 0.98). It should be higher than 1 and the best one is
2:1. This ratio has decreased continuously which shows that Costco do
not have enough current assets to pay off the current liabilities. Debt
in comparison to total assets is better than before. Company can
generate enough cash in future because its debt to equity ratio is below
1 (0.34) . There is not much variations in the inventory turnover and
inventory days. It means that whatever the company purchases get
sold off at the same ratio in relation to previous years. Overall, Costco
is doing well but weak points are always there. Company should work
on those weakness to grab more opportunities.
Recommendations
Online services and self-checkout: Every organization is expanding
with the help of technology. Online-services has made the life of
people so easier. Take an example of Amazon which provides online
shopping and home delivery services. Another example is Superstore
where we can order online all the required items and they prepare the
cart for us. We just have to go there and park the car, employees put
the stuff inside. In addition to this, there is also self-checkout option at
the superstore which is not available at Costco. It would reduce the
workload of employees and they do not need more employees as
cashier.
Improve Margin: Costco is generating huge amount of revenue from
membership fees. This is the reason that Costco prices are not too
high. Still, there are people who could pay more for the price of
product depending on the quality, but they do not want to pay the
membership fees. Costco should increase the margin by keeping
membership fees low.
Diversification: Walmart is at number one because it sells 1000 times
more variety of products which satisfy every need of customers as
compared to Costco. No doubt, that Costco is following a strategy to
keep less variety in all items, but we cannot neglect that the people
living in Canada belong to different cultures and countries. Their
choices regarding each item is different. Costco must increase the
variety keeping in mind all the residents.
No benefit for small household: Costco sells products in large
quantities. Small household requires only number of items per week.
They cannot buy that stock as that will expire after some time. So,
visiting Costco and doing shopping is only valuable for large
households. Costco should open a store to sell small quantities as well.
Expand product-line: whenever buyers visit Costco, they see only few
brands such as Adidas, Puma, Reebok but only few04 items related to
such brands are there. Experience of customers with those products is
no so good. Those might be defective pieces company sells. But to
increase sale and customer loyalty Costco should contact the famous
brands and sell their products.
Advertisement: Costco do not advertise at all. It only sends mail to the
prospective member as well as coupons to existing customers. But this
is not enough in this era where people are addicted to social media.
Number of people do not visit Costco because they do not have
membership cards. They have no experience what type of products
Costco sells or what quality they provide because there is no
advertisement. So, Costco could provide one- or two-month free trail
for shopping to bring new customers to the business if they do not
want to spend money on advertisement.
Costco’s strategy
Costco has been developed a very fine business strategy along with
appreciable business elements over the years. Costco has its own
name in the business market because it always comes up with the
business tactics which can make it shine more than the competitors in
the market. Its main mission is to provide the good quality products at
the lowest prices. The chief elements of Costco are:
1) lowest prices on reputed brand products,
2) well-structured inventory which leads to fast turnovers,
3) providing membership fees.
For implementing their lowest price strategy, they have launched their
own products such a Kirkland and claimed that they are better than
other competitive brands. Also, they choose to sell the limited but
good products on low prices so that their customers can get attract to
their highly reasonably priced deals. The treasure hunt deals are
proved to be appealing for the customers who want new and bulking
deals. For making profit from the treasure hunt scheme, they get
collaborated with wholesalers to get good things at low prices. Their
main motive behind treasure hunt
initiative is to give a positive reinforcement to their pre-existing
clients to retain them. On the name of inventory turnover, they 02 sell
high volumes with low margins because they have got the idea to
make a balance between purchasing things and reselling it again to the
consumers, accordingly. For the membership, they have business
membership and the gold star membership, and they keep their
approaches of membership up to date in order to let their customers
renew their membership. They have evidence-based statistics which
are the proves of expansion on revenue from previous years. Their
business model is cost effective and the CEO of Costco Jim Singel has
been taken the responsibility of increasing the profit by all effective
ways. He keeps close eyes on every possible aspect as well as on the
product. Costco justified its cost-effective business strategy by
attracting high volume of customers all around the country. They have
given a high competition to rivals by considering effluent to low
income customers in their target list. Their high productivity and
expenditure ratios are transparent, and this statistic is a biggest proof
of their success. In a way they are satisfying needs of both the
suppliers and the customers.
Jim Sinegal’s leadership style and Craig Jelinek’s approach
Jim Sinegal was an effective leader and CEO. He tried to involve in
all warehouse operations. He used to visit 8 to 10 stores daily as a
store clerk to make good relations with employees and to find out the
visiting experiences of the customers. Jim Sinegal wander through the
aisles and try to fix the problems associated with reputation of the
company. Being an effective leader, Jim Sinegal has a special knack
in crafting and executing strategies. So, we would assign grade A
because of his mind-blowing strategies. He wanted to keep the prices
of the product low as much as possible as he did not want that
someday any competitor enters the market and beats the prices of the
Costco. He wants to establish an organization that will be there 50
years from now. In addition to this, product selection, growth strategy
and most important Treasure hunt merchandising is used a tool to
increase the regular visit of the customers. Craig Jelinek continues
the mission, vision and values of Jim Sinegal. He has a same objective
of offering low prices with best quality. He follows the ethics of
obeying laws, respecting customers, taking care of employees. Jelinek
focuses on expanding the business globally and increasing the sales.
There is always a risk for the business when new CEO is appointed.
But under his leadership, growth rate is high as compared to most of
the competitors, share price goes up and significant growth in
dividends. It is all because of better understanding of the business and
strategies. (Newsmax, 2019). Based on the information given in the
case study Costco’s business philosophy, values and code of ethics
are:
Obey the law: Obeying the law is important as it gives the framework
to the business how to act and operate. Costco follows all the rules and
regulations of every community where they operate their business.
They pledge to follow all the laws and the legal requirements,
respecting all the government official’s, meeting all the safety and
security standards, meeting all the requirements related to
employment law and ecological standard, comply with antitrust law,
following the proper laws and regulations related to foreign laws
while operating the business outside the country and working in
accordance with foreign corrupt practices act or the law of the other
countries.
Take care of our employees: Employees are one of the most important
assets of the company. Costco provides their employees with ample
growth opportunities for their personal and career growth. They
pledge to provide employees with Competitive wages, Employment
benefits, safe and healthy work environment, Career opportunities and
a work environment which is free from all the bias and harassment.
Take care of members: Members are the reason for the existence of
the business. As we all know that Costco’s members have lots of
shopping alternatives like Walmart, superstore etc. So, the company
needs to maintain the member's trust for that they pledge to provide
Top quality products at the best price, highest food safety standards,
100% satisfaction guarantee, warranty on products and services,
pleasant shopping environment and experience, best customer service
03 and provide products that are ecologically sensitive.
Respect our suppliers: Suppliers must prosper along with the
company for the success of the business. They strive to treat all the
suppliers and their representative respectfully, honour all their
commitments, protect all supplier’s assets, no gratitude’s and always
do what is right.
Reward and shareholders: As a company trades its stocks with
NASDAQ stock exchange, its shareholders are its business partners.
To be successful, we need to provide our shareholders with good
returns as they invest their money in the Costco. They pledge to
provide in the same way to their present and future shareholders, as
well as the employees will also be rewarded for their time and efforts.
Costco from financial perspective:
The various financial ratios of the years 2014, 2015 and 2016 showed
that Gross Profit Margin and total return on assets is increasing at
slow pace (from 12.59% to 13.32%), which is a good indicator to
yield high profit in future. One and only ratio that fluctuated with 3-
4% is return on stockholder’s equity. In 2014, it was above average
which has reached to 21.92% in the next year. It decreased
approximately 2.5% in 2016. EPS is also fluctuating with little
variation (from 4,65 to 5.33). Costco is weak in maintaining current
ratio (from 1.22 to 0.98). It should be higher than 1 and the best one is
2:1. This ratio has decreased continuously which shows that Costco do
not have enough current assets to pay off the current liabilities. Debt
in comparison to total assets is better than before. Company can
generate enough cash in future because its debt to equity ratio is below
1 (0.34) . There is not much variations in the inventory turnover and
inventory days. It means that whatever the company purchases get
sold off at the same ratio in relation to previous years. Overall, Costco
is doing well but weak points are always there. Company should work
on those weakness to grab more opportunities.
Recommendations
Online services and self-checkout: Every organization is expanding
with the help of technology. Online-services has made the life of
people so easier. Take an example of Amazon which provides online
shopping and home delivery services. Another example is Superstore
where we can order online all the required items and they prepare the
cart for us. We just have to go there and park the car, employees put
the stuff inside. In addition to this, there is also self-checkout option at
the superstore which is not available at Costco. It would reduce the
workload of employees and they do not need more employees as
cashier.
Improve Margin: Costco is generating huge amount of revenue from
membership fees. This is the reason that Costco prices are not too
high. Still, there are people who could pay more for the price of
product depending on the quality, but they do not want to pay the
membership fees. Costco should increase the margin by keeping
membership fees low.
Diversification: Walmart is at number one because it sells 1000 times
more variety of products which satisfy every need of customers as
compared to Costco. No doubt, that Costco is following a strategy to
keep less variety in all items, but we cannot neglect that the people
living in Canada belong to different cultures and countries. Their
choices regarding each item is different. Costco must increase the
variety keeping in mind all the residents.
No benefit for small household: Costco sells products in large
quantities. Small household requires only number of items per week.
They cannot buy that stock as that will expire after some time. So,
visiting Costco and doing shopping is only valuable for large
households. Costco should open a store to sell small quantities as well.
Expand product-line: whenever buyers visit Costco, they see only few
brands such as Adidas, Puma, Reebok but only few04 items related to
such brands are there. Experience of customers with those products is
no so good. Those might be defective pieces company sells. But to
increase sale and customer loyalty Costco should contact the famous
brands and sell their products.
Advertisement: Costco do not advertise at all. It only sends mail to the
prospective member as well as coupons to existing customers. But this
is not enough in this era where people are addicted to social media.
Number of people do not visit Costco because they do not have
membership cards. They have no experience what type of products
Costco sells or what quality they provide because there is no
advertisement. So, Costco could provide one- or two-month free trail
for shopping to bring new customers to the business if they do not
want to spend money on advertisement.
Costco’s strategy
Costco has been developed a very fine business strategy along with
appreciable business elements over the years. Costco has its own
name in the business market because it always comes up with the
business tactics which can make it shine more than the competitors in
the market. Its main mission is to provide the good quality products at
the lowest prices. The chief elements of Costco are:
1) lowest prices on reputed brand products,
2) well-structured inventory which leads to fast turnovers,
3) providing membership fees.
For implementing their lowest price strategy, they have launched their
own products such a Kirkland and claimed that they are better than
other competitive brands. Also, they choose to sell the limited but
good products on low prices so that their customers can get attract to
their highly reasonably priced deals. The treasure hunt deals are
proved to be appealing for the customers who want new and bulking
deals. For making profit from the treasure hunt scheme, they get
collaborated with wholesalers to get good things at low prices. Their
main motive behind treasure hunt
initiative is to give a positive reinforcement to their pre-existing
clients to retain them. On the name of inventory turnover, they 02 sell
high volumes with low margins because they have got the idea to
make a balance between purchasing things and reselling it again to the
consumers, accordingly. For the membership, they have business
membership and the gold star membership, and they keep their
approaches of membership up to date in order to let their customers
renew their membership. They have evidence-based statistics which
are the proves of expansion on revenue from previous years. Their
business model is cost effective and the CEO of Costco Jim Singel has
been taken the responsibility of increasing the profit by all effective
ways. He keeps close eyes on every possible aspect as well as on the
product. Costco justified its cost-effective business strategy by
attracting high volume of customers all around the country. They have
given a high competition to rivals by considering effluent to low
income customers in their target list. Their high productivity and
expenditure ratios are transparent, and this statistic is a biggest proof
of their success. In a way they are satisfying needs of both the
suppliers and the customers.
Jim Sinegal’s leadership style and Craig Jelinek’s approach
Jim Sinegal was an effective leader and CEO. He tried to involve in
all warehouse operations. He used to visit 8 to 10 stores daily as a
store clerk to make good relations with employees and to find out the
visiting experiences of the customers. Jim Sinegal wander through the
aisles and try to fix the problems associated with reputation of the
company. Being an effective leader, Jim Sinegal has a special knack
in crafting and executing strategies. So, we would assign grade A
because of his mind-blowing strategies. He wanted to keep the prices
of the product low as much as possible as he did not want that
someday any competitor enters the market and beats the prices of the
Costco. He wants to establish an organization that will be there 50
years from now. In addition to this, product selection, growth strategy
and most important Treasure hunt merchandising is used a tool to
increase the regular visit of the customers. Craig Jelinek continues
the mission, vision and values of Jim Sinegal. He has a same objective
of offering low prices with best quality. He follows the ethics of
obeying laws, respecting customers, taking care of employees. Jelinek
focuses on expanding the business globally and increasing the sales.
There is always a risk for the business when new CEO is appointed.
But under his leadership, growth rate is high as compared to most of
the competitors, share price goes up and significant growth in
dividends. It is all because of better understanding of the business and
strategies. (Newsmax, 2019). Based on the information given in the
case study Costco’s business philosophy, values and code of ethics
are:
Obey the law: Obeying the law is important as it gives the framework
to the business how to act and operate. Costco follows all the rules and
regulations of every community where they operate their business.
They pledge to follow all the laws and the legal requirements,
respecting all the government official’s, meeting all the safety and
security standards, meeting all the requirements related to
employment law and ecological standard, comply with antitrust law,
following the proper laws and regulations related to foreign laws
while operating the business outside the country and working in
accordance with foreign corrupt practices act or the law of the other
countries.
Take care of our employees: Employees are one of the most important
assets of the company. Costco provides their employees with ample
growth opportunities for their personal and career growth. They
pledge to provide employees with Competitive wages, Employment
benefits, safe and healthy work environment, Career opportunities and
a work environment which is free from all the bias and harassment.
Take care of members: Members are the reason for the existence of
the business. As we all know that Costco’s members have lots of
shopping alternatives like Walmart, superstore etc. So, the company
needs to maintain the member's trust for that they pledge to provide
Top quality products at the best price, highest food safety standards,
100% satisfaction guarantee, warranty on products and services,
pleasant shopping environment and experience, best customer service
03 and provide products that are ecologically sensitive.
Respect our suppliers: Suppliers must prosper along with the
company for the success of the business. They strive to treat all the
suppliers and their representative respectfully, honour all their
commitments, protect all supplier’s assets, no gratitude’s and always
do what is right.
Reward and shareholders: As a company trades its stocks with
NASDAQ stock exchange, its shareholders are its business partners.
To be successful, we need to provide our shareholders with good
returns as they invest their money in the Costco. They pledge to
provide in the same way to their present and future shareholders, as
well as the employees will also be rewarded for their time and efforts.
Costco from financial perspective:
The various financial ratios of the years 2014, 2015 and 2016 showed
that Gross Profit Margin and total return on assets is increasing at
slow pace (from 12.59% to 13.32%), which is a good indicator to
yield high profit in future. One and only ratio that fluctuated with 3-
4% is return on stockholder’s equity. In 2014, it was above average
which has reached to 21.92% in the next year. It decreased
approximately 2.5% in 2016. EPS is also fluctuating with little
variation (from 4,65 to 5.33). Costco is weak in maintaining current
ratio (from 1.22 to 0.98). It should be higher than 1 and the best one is
2:1. This ratio has decreased continuously which shows that Costco do
not have enough current assets to pay off the current liabilities. Debt
in comparison to total assets is better than before. Company can
generate enough cash in future because its debt to equity ratio is below
1 (0.34) . There is not much variations in the inventory turnover and
inventory days. It means that whatever the company purchases get
sold off at the same ratio in relation to previous years. Overall, Costco
is doing well but weak points are always there. Company should work
on those weakness to grab more opportunities.
Recommendations
Online services and self-checkout: Every organization is expanding
with the help of technology. Online-services has made the life of
people so easier. Take an example of Amazon which provides online
shopping and home delivery services. Another example is Superstore
where we can order online all the required items and they prepare the
cart for us. We just have to go there and park the car, employees put
the stuff inside. In addition to this, there is also self-checkout option at
the superstore which is not available at Costco. It would reduce the
workload of employees and they do not need more employees as
cashier.
Improve Margin: Costco is generating huge amount of revenue from
membership fees. This is the reason that Costco prices are not too
high. Still, there are people who could pay more for the price of
product depending on the quality, but they do not want to pay the
membership fees. Costco should increase the margin by keeping
membership fees low.
Diversification: Walmart is at number one because it sells 1000 times
more variety of products which satisfy every need of customers as
compared to Costco. No doubt, that Costco is following a strategy to
keep less variety in all items, but we cannot neglect that the people
living in Canada belong to different cultures and countries. Their
choices regarding each item is different. Costco must increase the
variety keeping in mind all the residents.
No benefit for small household: Costco sells products in large
quantities. Small household requires only number of items per week.
They cannot buy that stock as that will expire after some time. So,
visiting Costco and doing shopping is only valuable for large
households. Costco should open a store to sell small quantities as well.
Expand product-line: whenever buyers visit Costco, they see only few
brands such as Adidas, Puma, Reebok but only few04 items related to
such brands are there. Experience of customers with those products is
no so good. Those might be defective pieces company sells. But to
increase sale and customer loyalty Costco should contact the famous
brands and sell their products.
Advertisement: Costco do not advertise at all. It only sends mail to the
prospective member as well as coupons to existing customers. But this
is not enough in this era where people are addicted to social media.
Number of people do not visit Costco because they do not have
membership cards. They have no experience what type of products
Costco sells or what quality they provide because there is no
advertisement. So, Costco could provide one- or two-month free trail
for shopping to bring new customers to the business if they do not
want to spend money on advertisement.
Costco’s strategy
Costco has been developed a very fine business strategy along with
appreciable business elements over the years. Costco has its own
name in the business market because it always comes up with the
business tactics which can make it shine more than the competitors in
the market. Its main mission is to provide the good quality products at
the lowest prices. The chief elements of Costco are:
1) lowest prices on reputed brand products,
2) well-structured inventory which leads to fast turnovers,
3) providing membership fees.
For implementing their lowest price strategy, they have launched their
own products such a Kirkland and claimed that they are better than
other competitive brands. Also, they choose to sell the limited but
good products on low prices so that their customers can get attract to
their highly reasonably priced deals. The treasure hunt deals are
proved to be appealing for the customers who want new and bulking
deals. For making profit from the treasure hunt scheme, they get
collaborated with wholesalers to get good things at low prices. Their
main motive behind treasure hunt
initiative is to give a positive reinforcement to their pre-existing
clients to retain them. On the name of inventory turnover, they 02 sell
high volumes with low margins because they have got the idea to
make a balance between purchasing things and reselling it again to the
consumers, accordingly. For the membership, they have business
membership and the gold star membership, and they keep their
approaches of membership up to date in order to let their customers
renew their membership. They have evidence-based statistics which
are the proves of expansion on revenue from previous years. Their
business model is cost effective and the CEO of Costco Jim Singel has
been taken the responsibility of increasing the profit by all effective
ways. He keeps close eyes on every possible aspect as well as on the
product. Costco justified its cost-effective business strategy by
attracting high volume of customers all around the country. They have
given a high competition to rivals by considering effluent to low
income customers in their target list. Their high productivity and
expenditure ratios are transparent, and this statistic is a biggest proof
of their success. In a way they are satisfying needs of both the
suppliers and the customers.
Jim Sinegal’s leadership style and Craig Jelinek’s approach
Jim Sinegal was an effective leader and CEO. He tried to involve in
all warehouse operations. He used to visit 8 to 10 stores daily as a
store clerk to make good relations with employees and to find out the
visiting experiences of the customers. Jim Sinegal wander through the
aisles and try to fix the problems associated with reputation of the
company. Being an effective leader, Jim Sinegal has a special knack
in crafting and executing strategies. So, we would assign grade A
because of his mind-blowing strategies. He wanted to keep the prices
of the product low as much as possible as he did not want that
someday any competitor enters the market and beats the prices of the
Costco. He wants to establish an organization that will be there 50
years from now. In addition to this, product selection, growth strategy
and most important Treasure hunt merchandising is used a tool to
increase the regular visit of the customers. Craig Jelinek continues
the mission, vision and values of Jim Sinegal. He has a same objective
of offering low prices with best quality. He follows the ethics of
obeying laws, respecting customers, taking care of employees. Jelinek
focuses on expanding the business globally and increasing the sales.
There is always a risk for the business when new CEO is appointed.
But under his leadership, growth rate is high as compared to most of
the competitors, share price goes up and significant growth in
dividends. It is all because of better understanding of the business and
strategies. (Newsmax, 2019). Based on the information given in the
case study Costco’s business philosophy, values and code of ethics
are:
Obey the law: Obeying the law is important as it gives the framework
to the business how to act and operate. Costco follows all the rules and
regulations of every community where they operate their business.
They pledge to follow all the laws and the legal requirements,
respecting all the government official’s, meeting all the safety and
security standards, meeting all the requirements related to
employment law and ecological standard, comply with antitrust law,
following the proper laws and regulations related to foreign laws
while operating the business outside the country and working in
accordance with foreign corrupt practices act or the law of the other
countries.
Take care of our employees: Employees are one of the most important
assets of the company. Costco provides their employees with ample
growth opportunities for their personal and career growth. They
pledge to provide employees with Competitive wages, Employment
benefits, safe and healthy work environment, Career opportunities and
a work environment which is free from all the bias and harassment.
Take care of members: Members are the reason for the existence of
the business. As we all know that Costco’s members have lots of
shopping alternatives like Walmart, superstore etc. So, the company
needs to maintain the member's trust for that they pledge to provide
Top quality products at the best price, highest food safety standards,
100% satisfaction guarantee, warranty on products and services,
pleasant shopping environment and experience, best customer service
03 and provide products that are ecologically sensitive.
Respect our suppliers: Suppliers must prosper along with the
company for the success of the business. They strive to treat all the
suppliers and their representative respectfully, honour all their
commitments, protect all supplier’s assets, no gratitude’s and always
do what is right.
Reward and shareholders: As a company trades its stocks with
NASDAQ stock exchange, its shareholders are its business partners.
To be successful, we need to provide our shareholders with good
returns as they invest their money in the Costco. They pledge to
provide in the same way to their present and future shareholders, as
well as the employees will also be rewarded for their time and efforts.
Costco from financial perspective:
The various financial ratios of the years 2014, 2015 and 2016 showed
that Gross Profit Margin and total return on assets is increasing at
slow pace (from 12.59% to 13.32%), which is a good indicator to
yield high profit in future. One and only ratio that fluctuated with 3-
4% is return on stockholder’s equity. In 2014, it was above average
which has reached to 21.92% in the next year. It decreased
approximately 2.5% in 2016. EPS is also fluctuating with little
variation (from 4,65 to 5.33). Costco is weak in maintaining current
ratio (from 1.22 to 0.98). It should be higher than 1 and the best one is
2:1. This ratio has decreased continuously which shows that Costco do
not have enough current assets to pay off the current liabilities. Debt
in comparison to total assets is better than before. Company can
generate enough cash in future because its debt to equity ratio is below
1 (0.34) . There is not much variations in the inventory turnover and
inventory days. It means that whatever the company purchases get
sold off at the same ratio in relation to previous years. Overall, Costco
is doing well but weak points are always there. Company should work
on those weakness to grab more opportunities.
Recommendations
Online services and self-checkout: Every organization is expanding
with the help of technology. Online-services has made the life of
people so easier. Take an example of Amazon which provides online
shopping and home delivery services. Another example is Superstore
where we can order online all the required items and they prepare the
cart for us. We just have to go there and park the car, employees put
the stuff inside. In addition to this, there is also self-checkout option at
the superstore which is not available at Costco. It would reduce the
workload of employees and they do not need more employees as
cashier.
Improve Margin: Costco is generating huge amount of revenue from
membership fees. This is the reason that Costco prices are not too
high. Still, there are people who could pay more for the price of
product depending on the quality, but they do not want to pay the
membership fees. Costco should increase the margin by keeping
membership fees low.
Diversification: Walmart is at number one because it sells 1000 times
more variety of products which satisfy every need of customers as
compared to Costco. No doubt, that Costco is following a strategy to
keep less variety in all items, but we cannot neglect that the people
living in Canada belong to different cultures and countries. Their
choices regarding each item is different. Costco must increase the
variety keeping in mind all the residents.
No benefit for small household: Costco sells products in large
quantities. Small household requires only number of items per week.
They cannot buy that stock as that will expire after some time. So,
visiting Costco and doing shopping is only valuable for large
households. Costco should open a store to sell small quantities as well.
Expand product-line: whenever buyers visit Costco, they see only few
brands such as Adidas, Puma, Reebok but only few04 items related to
such brands are there. Experience of customers with those products is
no so good. Those might be defective pieces company sells. But to
increase sale and customer loyalty Costco should contact the famous
brands and sell their products.
Advertisement: Costco do not advertise at all. It only sends mail to the
prospective member as well as coupons to existing customers. But this
is not enough in this era where people are addicted to social media.
Number of people do not visit Costco because they do not have
membership cards. They have no experience what type of products
Costco sells or what quality they provide because there is no
advertisement. So, Costco could provide one- or two-month free trail
for shopping to bring new customers to the business if they do not
want to spend money on advertisement.
Costco’s strategy
Costco has been developed a very fine business strategy along with
appreciable business elements over the years. Costco has its own
name in the business market because it always comes up with the
business tactics which can make it shine more than the competitors in
the market. Its main mission is to provide the good quality products at
the lowest prices. The chief elements of Costco are:
1) lowest prices on reputed brand products,
2) well-structured inventory which leads to fast turnovers,
3) providing membership fees.
For implementing their lowest price strategy, they have launched their
own products such a Kirkland and claimed that they are better than
other competitive brands. Also, they choose to sell the limited but
good products on low prices so that their customers can get attract to
their highly reasonably priced deals. The treasure hunt deals are
proved to be appealing for the customers who want new and bulking
deals. For making profit from the treasure hunt scheme, they get
collaborated with wholesalers to get good things at low prices. Their
main motive behind treasure hunt
initiative is to give a positive reinforcement to their pre-existing
clients to retain them. On the name of inventory turnover, they 02 sell
high volumes with low margins because they have got the idea to
make a balance between purchasing things and reselling it again to the
consumers, accordingly. For the membership, they have business
membership and the gold star membership, and they keep their
approaches of membership up to date in order to let their customers
renew their membership. They have evidence-based statistics which
are the proves of expansion on revenue from previous years. Their
business model is cost effective and the CEO of Costco Jim Singel has
been taken the responsibility of increasing the profit by all effective
ways. He keeps close eyes on every possible aspect as well as on the
product. Costco justified its cost-effective business strategy by
attracting high volume of customers all around the country. They have
given a high competition to rivals by considering effluent to low
income customers in their target list. Their high productivity and
expenditure ratios are transparent, and this statistic is a biggest proof
of their success. In a way they are satisfying needs of both the
suppliers and the customers.
Jim Sinegal’s leadership style and Craig Jelinek’s approach
Jim Sinegal was an effective leader and CEO. He tried to involve in
all warehouse operations. He used to visit 8 to 10 stores daily as a
store clerk to make good relations with employees and to find out the
visiting experiences of the customers. Jim Sinegal wander through the
aisles and try to fix the problems associated with reputation of the
company. Being an effective leader, Jim Sinegal has a special knack
in crafting and executing strategies. So, we would assign grade A
because of his mind-blowing strategies. He wanted to keep the prices
of the product low as much as possible as he did not want that
someday any competitor enters the market and beats the prices of the
Costco. He wants to establish an organization that will be there 50
years from now. In addition to this, product selection, growth strategy
and most important Treasure hunt merchandising is used a tool to
increase the regular visit of the customers. Craig Jelinek continues
the mission, vision and values of Jim Sinegal. He has a same objective
of offering low prices with best quality. He follows the ethics of
obeying laws, respecting customers, taking care of employees. Jelinek
focuses on expanding the business globally and increasing the sales.
There is always a risk for the business when new CEO is appointed.
But under his leadership, growth rate is high as compared to most of
the competitors, share price goes up and significant growth in
dividends. It is all because of better understanding of the business and
strategies. (Newsmax, 2019). Based on the information given in the
case study Costco’s business philosophy, values and code of ethics
are:
Obey the law: Obeying the law is important as it gives the framework
to the business how to act and operate. Costco follows all the rules and
regulations of every community where they operate their business.
They pledge to follow all the laws and the legal requirements,
respecting all the government official’s, meeting all the safety and
security standards, meeting all the requirements related to
employment law and ecological standard, comply with antitrust law,
following the proper laws and regulations related to foreign laws
while operating the business outside the country and working in
accordance with foreign corrupt practices act or the law of the other
countries.
Take care of our employees: Employees are one of the most important
assets of the company. Costco provides their employees with ample
growth opportunities for their personal and career growth. They
pledge to provide employees with Competitive wages, Employment
benefits, safe and healthy work environment, Career opportunities and
a work environment which is free from all the bias and harassment.
Take care of members: Members are the reason for the existence of
the business. As we all know that Costco’s members have lots of
shopping alternatives like Walmart, superstore etc. So, the company
needs to maintain the member's trust for that they pledge to provide
Top quality products at the best price, highest food safety standards,
100% satisfaction guarantee, warranty on products and services,
pleasant shopping environment and experience, best customer service
03 and provide products that are ecologically sensitive.
Respect our suppliers: Suppliers must prosper along with the
company for the success of the business. They strive to treat all the
suppliers and their representative respectfully, honour all their
commitments, protect all supplier’s assets, no gratitude’s and always
do what is right.
Reward and shareholders: As a company trades its stocks with
NASDAQ stock exchange, its shareholders are its business partners.
To be successful, we need to provide our shareholders with good
returns as they invest their money in the Costco. They pledge to
provide in the same way to their present and future shareholders, as
well as the employees will also be rewarded for their time and efforts.
Costco from financial perspective:
The various financial ratios of the years 2014, 2015 and 2016 showed
that Gross Profit Margin and total return on assets is increasing at
slow pace (from 12.59% to 13.32%), which is a good indicator to
yield high profit in future. One and only ratio that fluctuated with 3-
4% is return on stockholder’s equity. In 2014, it was above average
which has reached to 21.92% in the next year. It decreased
approximately 2.5% in 2016. EPS is also fluctuating with little
variation (from 4,65 to 5.33). Costco is weak in maintaining current
ratio (from 1.22 to 0.98). It should be higher than 1 and the best one is
2:1. This ratio has decreased continuously which shows that Costco do
not have enough current assets to pay off the current liabilities. Debt
in comparison to total assets is better than before. Company can
generate enough cash in future because its debt to equity ratio is below
1 (0.34) . There is not much variations in the inventory turnover and
inventory days. It means that whatever the company purchases get
sold off at the same ratio in relation to previous years. Overall, Costco
is doing well but weak points are always there. Company should work
on those weakness to grab more opportunities.
Recommendations
Online services and self-checkout: Every organization is expanding
with the help of technology. Online-services has made the life of
people so easier. Take an example of Amazon which provides online
shopping and home delivery services. Another example is Superstore
where we can order online all the required items and they prepare the
cart for us. We just have to go there and park the car, employees put
the stuff inside. In addition to this, there is also self-checkout option at
the superstore which is not available at Costco. It would reduce the
workload of employees and they do not need more employees as
cashier.
Improve Margin: Costco is generating huge amount of revenue from
membership fees. This is the reason that Costco prices are not too
high. Still, there are people who could pay more for the price of
product depending on the quality, but they do not want to pay the
membership fees. Costco should increase the margin by keeping
membership fees low.
Diversification: Walmart is at number one because it sells 1000 times
more variety of products which satisfy every need of customers as
compared to Costco. No doubt, that Costco is following a strategy to
keep less variety in all items, but we cannot neglect that the people
living in Canada belong to different cultures and countries. Their
choices regarding each item is different. Costco must increase the
variety keeping in mind all the residents.
No benefit for small household: Costco sells products in large
quantities. Small household requires only number of items per week.
They cannot buy that stock as that will expire after some time. So,
visiting Costco and doing shopping is only valuable for large
households. Costco should open a store to sell small quantities as well.
Expand product-line: whenever buyers visit Costco, they see only few
brands such as Adidas, Puma, Reebok but only few04 items related to
such brands are there. Experience of customers with those products is
no so good. Those might be defective pieces company sells. But to
increase sale and customer loyalty Costco should contact the famous
brands and sell their products.
Advertisement: Costco do not advertise at all. It only sends mail to the
prospective member as well as coupons to existing customers. But this
is not enough in this era where people are addicted to social media.
Number of people do not visit Costco because they do not have
membership cards. They have no experience what type of products
Costco sells or what quality they provide because there is no
advertisement. So, Costco could provide one- or two-month free trail
for shopping to bring new customers to the business if they do not
want to spend money on advertisement.
Costco’s strategy
Costco has been developed a very fine business strategy along with
appreciable business elements over the years. Costco has its own
name in the business market because it always comes up with the
business tactics which can make it shine more than the competitors in
the market. Its main mission is to provide the good quality products at
the lowest prices. The chief elements of Costco are:
1) lowest prices on reputed brand products,
2) well-structured inventory which leads to fast turnovers,
3) providing membership fees.
For implementing their lowest price strategy, they have launched their
own products such a Kirkland and claimed that they are better than
other competitive brands. Also, they choose to sell the limited but
good products on low prices so that their customers can get attract to
their highly reasonably priced deals. The treasure hunt deals are
proved to be appealing for the customers who want new and bulking
deals. For making profit from the treasure hunt scheme, they get
collaborated with wholesalers to get good things at low prices. Their
main motive behind treasure hunt
initiative is to give a positive reinforcement to their pre-existing
clients to retain them. On the name of inventory turnover, they 02 sell
high volumes with low margins because they have got the idea to
make a balance between purchasing things and reselling it again to the
consumers, accordingly. For the membership, they have business
membership and the gold star membership, and they keep their
approaches of membership up to date in order to let their customers
renew their membership. They have evidence-based statistics which
are the proves of expansion on revenue from previous years. Their
business model is cost effective and the CEO of Costco Jim Singel has
been taken the responsibility of increasing the profit by all effective
ways. He keeps close eyes on every possible aspect as well as on the
product. Costco justified its cost-effective business strategy by
attracting high volume of customers all around the country. They have
given a high competition to rivals by considering effluent to low
income customers in their target list. Their high productivity and
expenditure ratios are transparent, and this statistic is a biggest proof
of their success. In a way they are satisfying needs of both the
suppliers and the customers.
Jim Sinegal’s leadership style and Craig Jelinek’s approach
Jim Sinegal was an effective leader and CEO. He tried to involve in
all warehouse operations. He used to visit 8 to 10 stores daily as a
store clerk to make good relations with employees and to find out the
visiting experiences of the customers. Jim Sinegal wander through the
aisles and try to fix the problems associated with reputation of the
company. Being an effective leader, Jim Sinegal has a special knack
in crafting and executing strategies. So, we would assign grade A
because of his mind-blowing strategies. He wanted to keep the prices
of the product low as much as possible as he did not want that
someday any competitor enters the market and beats the prices of the
Costco. He wants to establish an organization that will be there 50
years from now. In addition to this, product selection, growth strategy
and most important Treasure hunt merchandising is used a tool to
increase the regular visit of the customers. Craig Jelinek continues
the mission, vision and values of Jim Sinegal. He has a same objective
of offering low prices with best quality. He follows the ethics of
obeying laws, respecting customers, taking care of employees. Jelinek
focuses on expanding the business globally and increasing the sales.
There is always a risk for the business when new CEO is appointed.
But under his leadership, growth rate is high as compared to most of
the competitors, share price goes up and significant growth in
dividends. It is all because of better understanding of the business and
strategies. (Newsmax, 2019). Based on the information given in the
case study Costco’s business philosophy, values and code of ethics
are:
Obey the law: Obeying the law is important as it gives the framework
to the business how to act and operate. Costco follows all the rules and
regulations of every community where they operate their business.
They pledge to follow all the laws and the legal requirements,
respecting all the government official’s, meeting all the safety and
security standards, meeting all the requirements related to
employment law and ecological standard, comply with antitrust law,
following the proper laws and regulations related to foreign laws
while operating the business outside the country and working in
accordance with foreign corrupt practices act or the law of the other
countries.
Take care of our employees: Employees are one of the most important
assets of the company. Costco provides their employees with ample
growth opportunities for their personal and career growth. They
pledge to provide employees with Competitive wages, Employment
benefits, safe and healthy work environment, Career opportunities and
a work environment which is free from all the bias and harassment.
Take care of members: Members are the reason for the existence of
the business. As we all know that Costco’s members have lots of
shopping alternatives like Walmart, superstore etc. So, the company
needs to maintain the member's trust for that they pledge to provide
Top quality products at the best price, highest food safety standards,
100% satisfaction guarantee, warranty on products and services,
pleasant shopping environment and experience, best customer service
03 and provide products that are ecologically sensitive.
Respect our suppliers: Suppliers must prosper along with the
company for the success of the business. They strive to treat all the
suppliers and their representative respectfully, honour all their
commitments, protect all supplier’s assets, no gratitude’s and always
do what is right.
Reward and shareholders: As a company trades its stocks with
NASDAQ stock exchange, its shareholders are its business partners.
To be successful, we need to provide our shareholders with good
returns as they invest their money in the Costco. They pledge to
provide in the same way to their present and future shareholders, as
well as the employees will also be rewarded for their time and efforts.
Costco from financial perspective:
The various financial ratios of the years 2014, 2015 and 2016 showed
that Gross Profit Margin and total return on assets is increasing at
slow pace (from 12.59% to 13.32%), which is a good indicator to
yield high profit in future. One and only ratio that fluctuated with 3-
4% is return on stockholder’s equity. In 2014, it was above average
which has reached to 21.92% in the next year. It decreased
approximately 2.5% in 2016. EPS is also fluctuating with little
variation (from 4,65 to 5.33). Costco is weak in maintaining current
ratio (from 1.22 to 0.98). It should be higher than 1 and the best one is
2:1. This ratio has decreased continuously which shows that Costco do
not have enough current assets to pay off the current liabilities. Debt
in comparison to total assets is better than before. Company can
generate enough cash in future because its debt to equity ratio is below
1 (0.34) . There is not much variations in the inventory turnover and
inventory days. It means that whatever the company purchases get
sold off at the same ratio in relation to previous years. Overall, Costco
is doing well but weak points are always there. Company should work
on those weakness to grab more opportunities.
Recommendations
Online services and self-checkout: Every organization is expanding
with the help of technology. Online-services has made the life of
people so easier. Take an example of Amazon which provides online
shopping and home delivery services. Another example is Superstore
where we can order online all the required items and they prepare the
cart for us. We just have to go there and park the car, employees put
the stuff inside. In addition to this, there is also self-checkout option at
the superstore which is not available at Costco. It would reduce the
workload of employees and they do not need more employees as
cashier.
Improve Margin: Costco is generating huge amount of revenue from
membership fees. This is the reason that Costco prices are not too
high. Still, there are people who could pay more for the price of
product depending on the quality, but they do not want to pay the
membership fees. Costco should increase the margin by keeping
membership fees low.
Diversification: Walmart is at number one because it sells 1000 times
more variety of products which satisfy every need of customers as
compared to Costco. No doubt, that Costco is following a strategy to
keep less variety in all items, but we cannot neglect that the people
living in Canada belong to different cultures and countries. Their
choices regarding each item is different. Costco must increase the
variety keeping in mind all the residents.
No benefit for small household: Costco sells products in large
quantities. Small household requires only number of items per week.
They cannot buy that stock as that will expire after some time. So,
visiting Costco and doing shopping is only valuable for large
households. Costco should open a store to sell small quantities as well.
Expand product-line: whenever buyers visit Costco, they see only few
brands such as Adidas, Puma, Reebok but only few04 items related to
such brands are there. Experience of customers with those products is
no so good. Those might be defective pieces company sells. But to
increase sale and customer loyalty Costco should contact the famous
brands and sell their products.
Advertisement: Costco do not advertise at all. It only sends mail to the
prospective member as well as coupons to existing customers. But this
is not enough in this era where people are addicted to social media.
Number of people do not visit Costco because they do not have
membership cards. They have no experience what type of products
Costco sells or what quality they provide because there is no
advertisement. So, Costco could provide one- or two-month free trail
for shopping to bring new customers to the business if they do not
want to spend money on advertisement.
Costco’s strategy
Costco has been developed a very fine business strategy along with
appreciable business elements over the years. Costco has its own
name in the business market because it always comes up with the
business tactics which can make it shine more than the competitors in
the market. Its main mission is to provide the good quality products at
the lowest prices. The chief elements of Costco are:
1) lowest prices on reputed brand products,
2) well-structured inventory which leads to fast turnovers,
3) providing membership fees.
For implementing their lowest price strategy, they have launched their
own products such a Kirkland and claimed that they are better than
other competitive brands. Also, they choose to sell the limited but
good products on low prices so that their customers can get attract to
their highly reasonably priced deals. The treasure hunt deals are
proved to be appealing for the customers who want new and bulking
deals. For making profit from the treasure hunt scheme, they get
collaborated with wholesalers to get good things at low prices. Their
main motive behind treasure hunt
initiative is to give a positive reinforcement to their pre-existing
clients to retain them. On the name of inventory turnover, they 02 sell
high volumes with low margins because they have got the idea to
make a balance between purchasing things and reselling it again to the
consumers, accordingly. For the membership, they have business
membership and the gold star membership, and they keep their
approaches of membership up to date in order to let their customers
renew their membership. They have evidence-based statistics which
are the proves of expansion on revenue from previous years. Their
business model is cost effective and the CEO of Costco Jim Singel has
been taken the responsibility of increasing the profit by all effective
ways. He keeps close eyes on every possible aspect as well as on the
product. Costco justified its cost-effective business strategy by
attracting high volume of customers all around the country. They have
given a high competition to rivals by considering effluent to low
income customers in their target list. Their high productivity and
expenditure ratios are transparent, and this statistic is a biggest proof
of their success. In a way they are satisfying needs of both the
suppliers and the customers.
Jim Sinegal’s leadership style and Craig Jelinek’s approach
Jim Sinegal was an effective leader and CEO. He tried to involve in
all warehouse operations. He used to visit 8 to 10 stores daily as a
store clerk to make good relations with employees and to find out the
visiting experiences of the customers. Jim Sinegal wander through the
aisles and try to fix the problems associated with reputation of the
company. Being an effective leader, Jim Sinegal has a special knack
in crafting and executing strategies. So, we would assign grade A
because of his mind-blowing strategies. He wanted to keep the prices
of the product low as much as possible as he did not want that
someday any competitor enters the market and beats the prices of the
Costco. He wants to establish an organization that will be there 50
years from now. In addition to this, product selection, growth strategy
and most important Treasure hunt merchandising is used a tool to
increase the regular visit of the customers. Craig Jelinek continues
the mission, vision and values of Jim Sinegal. He has a same objective
of offering low prices with best quality. He follows the ethics of
obeying laws, respecting customers, taking care of employees. Jelinek
focuses on expanding the business globally and increasing the sales.
There is always a risk for the business when new CEO is appointed.
But under his leadership, growth rate is high as compared to most of
the competitors, share price goes up and significant growth in
dividends. It is all because of better understanding of the business and
strategies. (Newsmax, 2019). Based on the information given in the
case study Costco’s business philosophy, values and code of ethics
are:
Obey the law: Obeying the law is important as it gives the framework
to the business how to act and operate. Costco follows all the rules and
regulations of every community where they operate their business.
They pledge to follow all the laws and the legal requirements,
respecting all the government official’s, meeting all the safety and
security standards, meeting all the requirements related to
employment law and ecological standard, comply with antitrust law,
following the proper laws and regulations related to foreign laws
while operating the business outside the country and working in
accordance with foreign corrupt practices act or the law of the other
countries.
Take care of our employees: Employees are one of the most important
assets of the company. Costco provides their employees with ample
growth opportunities for their personal and career growth. They
pledge to provide employees with Competitive wages, Employment
benefits, safe and healthy work environment, Career opportunities and
a work environment which is free from all the bias and harassment.
Take care of members: Members are the reason for the existence of
the business. As we all know that Costco’s members have lots of
shopping alternatives like Walmart, superstore etc. So, the company
needs to maintain the member's trust for that they pledge to provide
Top quality products at the best price, highest food safety standards,
100% satisfaction guarantee, warranty on products and services,
pleasant shopping environment and experience, best customer service
03 and provide products that are ecologically sensitive.
Respect our suppliers: Suppliers must prosper along with the
company for the success of the business. They strive to treat all the
suppliers and their representative respectfully, honour all their
commitments, protect all supplier’s assets, no gratitude’s and always
do what is right.
Reward and shareholders: As a company trades its stocks with
NASDAQ stock exchange, its shareholders are its business partners.
To be successful, we need to provide our shareholders with good
returns as they invest their money in the Costco. They pledge to
provide in the same way to their present and future shareholders, as
well as the employees will also be rewarded for their time and efforts.
Costco from financial perspective:
The various financial ratios of the years 2014, 2015 and 2016 showed
that Gross Profit Margin and total return on assets is increasing at
slow pace (from 12.59% to 13.32%), which is a good indicator to
yield high profit in future. One and only ratio that fluctuated with 3-
4% is return on stockholder’s equity. In 2014, it was above average
which has reached to 21.92% in the next year. It decreased
approximately 2.5% in 2016. EPS is also fluctuating with little
variation (from 4,65 to 5.33). Costco is weak in maintaining current
ratio (from 1.22 to 0.98). It should be higher than 1 and the best one is
2:1. This ratio has decreased continuously which shows that Costco do
not have enough current assets to pay off the current liabilities. Debt
in comparison to total assets is better than before. Company can
generate enough cash in future because its debt to equity ratio is below
1 (0.34) . There is not much variations in the inventory turnover and
inventory days. It means that whatever the company purchases get
sold off at the same ratio in relation to previous years. Overall, Costco
is doing well but weak points are always there. Company should work
on those weakness to grab more opportunities.
Recommendations
Online services and self-checkout: Every organization is expanding
with the help of technology. Online-services has made the life of
people so easier. Take an example of Amazon which provides online
shopping and home delivery services. Another example is Superstore
where we can order online all the required items and they prepare the
cart for us. We just have to go there and park the car, employees put
the stuff inside. In addition to this, there is also self-checkout option at
the superstore which is not available at Costco. It would reduce the
workload of employees and they do not need more employees as
cashier.
Improve Margin: Costco is generating huge amount of revenue from
membership fees. This is the reason that Costco prices are not too
high. Still, there are people who could pay more for the price of
product depending on the quality, but they do not want to pay the
membership fees. Costco should increase the margin by keeping
membership fees low.
Diversification: Walmart is at number one because it sells 1000 times
more variety of products which satisfy every need of customers as
compared to Costco. No doubt, that Costco is following a strategy to
keep less variety in all items, but we cannot neglect that the people
living in Canada belong to different cultures and countries. Their
choices regarding each item is different. Costco must increase the
variety keeping in mind all the residents.
No benefit for small household: Costco sells products in large
quantities. Small household requires only number of items per week.
They cannot buy that stock as that will expire after some time. So,
visiting Costco and doing shopping is only valuable for large
households. Costco should open a store to sell small quantities as well.
Expand product-line: whenever buyers visit Costco, they see only few
brands such as Adidas, Puma, Reebok but only few04 items related to
such brands are there. Experience of customers with those products is
no so good. Those might be defective pieces company sells. But to
increase sale and customer loyalty Costco should contact the famous
brands and sell their products.
Advertisement: Costco do not advertise at all. It only sends mail to the
prospective member as well as coupons to existing customers. But this
is not enough in this era where people are addicted to social media.
Number of people do not visit Costco because they do not have
membership cards. They have no experience what type of products
Costco sells or what quality they provide because there is no
advertisement. So, Costco could provide one- or two-month free trail
for shopping to bring new customers to the business if they do not
want to spend money on advertisement.
Costco’s strategy
Costco has been developed a very fine business strategy along with
appreciable business elements over the years. Costco has its own
name in the business market because it always comes up with the
business tactics which can make it shine more than the competitors in
the market. Its main mission is to provide the good quality products at
the lowest prices. The chief elements of Costco are:
1) lowest prices on reputed brand products,
2) well-structured inventory which leads to fast turnovers,
3) providing membership fees.
For implementing their lowest price strategy, they have launched their
own products such a Kirkland and claimed that they are better than
other competitive brands. Also, they choose to sell the limited but
good products on low prices so that their customers can get attract to
their highly reasonably priced deals. The treasure hunt deals are
proved to be appealing for the customers who want new and bulking
deals. For making profit from the treasure hunt scheme, they get
collaborated with wholesalers to get good things at low prices. Their
main motive behind treasure hunt
initiative is to give a positive reinforcement to their pre-existing
clients to retain them. On the name of inventory turnover, they 02 sell
high volumes with low margins because they have got the idea to
make a balance between purchasing things and reselling it again to the
consumers, accordingly. For the membership, they have business
membership and the gold star membership, and they keep their
approaches of membership up to date in order to let their customers
renew their membership. They have evidence-based statistics which
are the proves of expansion on revenue from previous years. Their
business model is cost effective and the CEO of Costco Jim Singel has
been taken the responsibility of increasing the profit by all effective
ways. He keeps close eyes on every possible aspect as well as on the
product. Costco justified its cost-effective business strategy by
attracting high volume of customers all around the country. They have
given a high competition to rivals by considering effluent to low
income customers in their target list. Their high productivity and
expenditure ratios are transparent, and this statistic is a biggest proof
of their success. In a way they are satisfying needs of both the
suppliers and the customers.
Jim Sinegal’s leadership style and Craig Jelinek’s approach
Jim Sinegal was an effective leader and CEO. He tried to involve in
all warehouse operations. He used to visit 8 to 10 stores daily as a
store clerk to make good relations with employees and to find out the
visiting experiences of the customers. Jim Sinegal wander through the
aisles and try to fix the problems associated with reputation of the
company. Being an effective leader, Jim Sinegal has a special knack
in crafting and executing strategies. So, we would assign grade A
because of his mind-blowing strategies. He wanted to keep the prices
of the product low as much as possible as he did not want that
someday any competitor enters the market and beats the prices of the
Costco. He wants to establish an organization that will be there 50
years from now. In addition to this, product selection, growth strategy
and most important Treasure hunt merchandising is used a tool to
increase the regular visit of the customers. Craig Jelinek continues
the mission, vision and values of Jim Sinegal. He has a same objective
of offering low prices with best quality. He follows the ethics of
obeying laws, respecting customers, taking care of employees. Jelinek
focuses on expanding the business globally and increasing the sales.
There is always a risk for the business when new CEO is appointed.
But under his leadership, growth rate is high as compared to most of
the competitors, share price goes up and significant growth in
dividends. It is all because of better understanding of the business and
strategies. (Newsmax, 2019). Based on the information given in the
case study Costco’s business philosophy, values and code of ethics
are:
Obey the law: Obeying the law is important as it gives the framework
to the business how to act and operate. Costco follows all the rules and
regulations of every community where they operate their business.
They pledge to follow all the laws and the legal requirements,
respecting all the government official’s, meeting all the safety and
security standards, meeting all the requirements related to
employment law and ecological standard, comply with antitrust law,
following the proper laws and regulations related to foreign laws
while operating the business outside the country and working in
accordance with foreign corrupt practices act or the law of the other
countries.
Take care of our employees: Employees are one of the most important
assets of the company. Costco provides their employees with ample
growth opportunities for their personal and career growth. They
pledge to provide employees with Competitive wages, Employment
benefits, safe and healthy work environment, Career opportunities and
a work environment which is free from all the bias and harassment.
Take care of members: Members are the reason for the existence of
the business. As we all know that Costco’s members have lots of
shopping alternatives like Walmart, superstore etc. So, the company
needs to maintain the member's trust for that they pledge to provide
Top quality products at the best price, highest food safety standards,
100% satisfaction guarantee, warranty on products and services,
pleasant shopping environment and experience, best customer service
03 and provide products that are ecologically sensitive.
Respect our suppliers: Suppliers must prosper along with the
company for the success of the business. They strive to treat all the
suppliers and their representative respectfully, honour all their
commitments, protect all supplier’s assets, no gratitude’s and always
do what is right.
Reward and shareholders: As a company trades its stocks with
NASDAQ stock exchange, its shareholders are its business partners.
To be successful, we need to provide our shareholders with good
returns as they invest their money in the Costco. They pledge to
provide in the same way to their present and future shareholders, as
well as the employees will also be rewarded for their time and efforts.
Costco from financial perspective:
The various financial ratios of the years 2014, 2015 and 2016 showed
that Gross Profit Margin and total return on assets is increasing at
slow pace (from 12.59% to 13.32%), which is a good indicator to
yield high profit in future. One and only ratio that fluctuated with 3-
4% is return on stockholder’s equity. In 2014, it was above average
which has reached to 21.92% in the next year. It decreased
approximately 2.5% in 2016. EPS is also fluctuating with little
variation (from 4,65 to 5.33). Costco is weak in maintaining current
ratio (from 1.22 to 0.98). It should be higher than 1 and the best one is
2:1. This ratio has decreased continuously which shows that Costco do
not have enough current assets to pay off the current liabilities. Debt
in comparison to total assets is better than before. Company can
generate enough cash in future because its debt to equity ratio is below
1 (0.34) . There is not much variations in the inventory turnover and
inventory days. It means that whatever the company purchases get
sold off at the same ratio in relation to previous years. Overall, Costco
is doing well but weak points are always there. Company should work
on those weakness to grab more opportunities.
Recommendations
Online services and self-checkout: Every organization is expanding
with the help of technology. Online-services has made the life of
people so easier. Take an example of Amazon which provides online
shopping and home delivery services. Another example is Superstore
where we can order online all the required items and they prepare the
cart for us. We just have to go there and park the car, employees put
the stuff inside. In addition to this, there is also self-checkout option at
the superstore which is not available at Costco. It would reduce the
workload of employees and they do not need more employees as
cashier.
Improve Margin: Costco is generating huge amount of revenue from
membership fees. This is the reason that Costco prices are not too
high. Still, there are people who could pay more for the price of
product depending on the quality, but they do not want to pay the
membership fees. Costco should increase the margin by keeping
membership fees low.
Diversification: Walmart is at number one because it sells 1000 times
more variety of products which satisfy every need of customers as
compared to Costco. No doubt, that Costco is following a strategy to
keep less variety in all items, but we cannot neglect that the people
living in Canada belong to different cultures and countries. Their
choices regarding each item is different. Costco must increase the
variety keeping in mind all the residents.
No benefit for small household: Costco sells products in large
quantities. Small household requires only number of items per week.
They cannot buy that stock as that will expire after some time. So,
visiting Costco and doing shopping is only valuable for large
households. Costco should open a store to sell small quantities as well.
Expand product-line: whenever buyers visit Costco, they see only few
brands such as Adidas, Puma, Reebok but only few04 items related to
such brands are there. Experience of customers with those products is
no so good. Those might be defective pieces company sells. But to
increase sale and customer loyalty Costco should contact the famous
brands and sell their products.
Advertisement: Costco do not advertise at all. It only sends mail to the
prospective member as well as coupons to existing customers. But this
is not enough in this era where people are addicted to social media.
Number of people do not visit Costco because they do not have
membership cards. They have no experience what type of products
Costco sells or what quality they provide because there is no
advertisement. So, Costco could provide one- or two-month free trail
for shopping to bring new customers to the business if they do not
want to spend money on advertisement.
Costco’s strategy
Costco has been developed a very fine business strategy along with
appreciable business elements over the years. Costco has its own
name in the business market because it always comes up with the
business tactics which can make it shine more than the competitors in
the market. Its main mission is to provide the good quality products at
the lowest prices. The chief elements of Costco are:
1) lowest prices on reputed brand products,
2) well-structured inventory which leads to fast turnovers,
3) providing membership fees.
For implementing their lowest price strategy, they have launched their
own products such a Kirkland and claimed that they are better than
other competitive brands. Also, they choose to sell the limited but
good products on low prices so that their customers can get attract to
their highly reasonably priced deals. The treasure hunt deals are
proved to be appealing for the customers who want new and bulking
deals. For making profit from the treasure hunt scheme, they get
collaborated with wholesalers to get good things at low prices. Their
main motive behind treasure hunt
initiative is to give a positive reinforcement to their pre-existing
clients to retain them. On the name of inventory turnover, they 02 sell
high volumes with low margins because they have got the idea to
make a balance between purchasing things and reselling it again to the
consumers, accordingly. For the membership, they have business
membership and the gold star membership, and they keep their
approaches of membership up to date in order to let their customers
renew their membership. They have evidence-based statistics which
are the proves of expansion on revenue from previous years. Their
business model is cost effective and the CEO of Costco Jim Singel has
been taken the responsibility of increasing the profit by all effective
ways. He keeps close eyes on every possible aspect as well as on the
product. Costco justified its cost-effective business strategy by
attracting high volume of customers all around the country. They have
given a high competition to rivals by considering effluent to low
income customers in their target list. Their high productivity and
expenditure ratios are transparent, and this statistic is a biggest proof
of their success. In a way they are satisfying needs of both the
suppliers and the customers.
Jim Sinegal’s leadership style and Craig Jelinek’s approach
Jim Sinegal was an effective leader and CEO. He tried to involve in
all warehouse operations. He used to visit 8 to 10 stores daily as a
store clerk to make good relations with employees and to find out the
visiting experiences of the customers. Jim Sinegal wander through the
aisles and try to fix the problems associated with reputation of the
company. Being an effective leader, Jim Sinegal has a special knack
in crafting and executing strategies. So, we would assign grade A
because of his mind-blowing strategies. He wanted to keep the prices
of the product low as much as possible as he did not want that
someday any competitor enters the market and beats the prices of the
Costco. He wants to establish an organization that will be there 50
years from now. In addition to this, product selection, growth strategy
and most important Treasure hunt merchandising is used a tool to
increase the regular visit of the customers. Craig Jelinek continues
the mission, vision and values of Jim Sinegal. He has a same objective
of offering low prices with best quality. He follows the ethics of
obeying laws, respecting customers, taking care of employees. Jelinek
focuses on expanding the business globally and increasing the sales.
There is always a risk for the business when new CEO is appointed.
But under his leadership, growth rate is high as compared to most of
the competitors, share price goes up and significant growth in
dividends. It is all because of better understanding of the business and
strategies. (Newsmax, 2019). Based on the information given in the
case study Costco’s business philosophy, values and code of ethics
are:
Obey the law: Obeying the law is important as it gives the framework
to the business how to act and operate. Costco follows all the rules and
regulations of every community where they operate their business.
They pledge to follow all the laws and the legal requirements,
respecting all the government official’s, meeting all the safety and
security standards, meeting all the requirements related to
employment law and ecological standard, comply with antitrust law,
following the proper laws and regulations related to foreign laws
while operating the business outside the country and working in
accordance with foreign corrupt practices act or the law of the other
countries.
Take care of our employees: Employees are one of the most important
assets of the company. Costco provides their employees with ample
growth opportunities for their personal and career growth. They
pledge to provide employees with Competitive wages, Employment
benefits, safe and healthy work environment, Career opportunities and
a work environment which is free from all the bias and harassment.
Take care of members: Members are the reason for the existence of
the business. As we all know that Costco’s members have lots of
shopping alternatives like Walmart, superstore etc. So, the company
needs to maintain the member's trust for that they pledge to provide
Top quality products at the best price, highest food safety standards,
100% satisfaction guarantee, warranty on products and services,
pleasant shopping environment and experience, best customer service
03 and provide products that are ecologically sensitive.
Respect our suppliers: Suppliers must prosper along with the
company for the success of the business. They strive to treat all the
suppliers and their representative respectfully, honour all their
commitments, protect all supplier’s assets, no gratitude’s and always
do what is right.
Reward and shareholders: As a company trades its stocks with
NASDAQ stock exchange, its shareholders are its business partners.
To be successful, we need to provide our shareholders with good
returns as they invest their money in the Costco. They pledge to
provide in the same way to their present and future shareholders, as
well as the employees will also be rewarded for their time and efforts.
Costco from financial perspective:
The various financial ratios of the years 2014, 2015 and 2016 showed
that Gross Profit Margin and total return on assets is increasing at
slow pace (from 12.59% to 13.32%), which is a good indicator to
yield high profit in future. One and only ratio that fluctuated with 3-
4% is return on stockholder’s equity. In 2014, it was above average
which has reached to 21.92% in the next year. It decreased
approximately 2.5% in 2016. EPS is also fluctuating with little
variation (from 4,65 to 5.33). Costco is weak in maintaining current
ratio (from 1.22 to 0.98). It should be higher than 1 and the best one is
2:1. This ratio has decreased continuously which shows that Costco do
not have enough current assets to pay off the current liabilities. Debt
in comparison to total assets is better than before. Company can
generate enough cash in future because its debt to equity ratio is below
1 (0.34) . There is not much variations in the inventory turnover and
inventory days. It means that whatever the company purchases get
sold off at the same ratio in relation to previous years. Overall, Costco
is doing well but weak points are always there. Company should work
on those weakness to grab more opportunities.
Recommendations
Online services and self-checkout: Every organization is expanding
with the help of technology. Online-services has made the life of
people so easier. Take an example of Amazon which provides online
shopping and home delivery services. Another example is Superstore
where we can order online all the required items and they prepare the
cart for us. We just have to go there and park the car, employees put
the stuff inside. In addition to this, there is also self-checkout option at
the superstore which is not available at Costco. It would reduce the
workload of employees and they do not need more employees as
cashier.
Improve Margin: Costco is generating huge amount of revenue from
membership fees. This is the reason that Costco prices are not too
high. Still, there are people who could pay more for the price of
product depending on the quality, but they do not want to pay the
membership fees. Costco should increase the margin by keeping
membership fees low.
Diversification: Walmart is at number one because it sells 1000 times
more variety of products which satisfy every need of customers as
compared to Costco. No doubt, that Costco is following a strategy to
keep less variety in all items, but we cannot neglect that the people
living in Canada belong to different cultures and countries. Their
choices regarding each item is different. Costco must increase the
variety keeping in mind all the residents.
No benefit for small household: Costco sells products in large
quantities. Small household requires only number of items per week.
They cannot buy that stock as that will expire after some time. So,
visiting Costco and doing shopping is only valuable for large
households. Costco should open a store to sell small quantities as well.
Expand product-line: whenever buyers visit Costco, they see only few
brands such as Adidas, Puma, Reebok but only few04 items related to
such brands are there. Experience of customers with those products is
no so good. Those might be defective pieces company sells. But to
increase sale and customer loyalty Costco should contact the famous
brands and sell their products.
Advertisement: Costco do not advertise at all. It only sends mail to the
prospective member as well as coupons to existing customers. But this
is not enough in this era where people are addicted to social media.
Number of people do not visit Costco because they do not have
membership cards. They have no experience what type of products
Costco sells or what quality they provide because there is no
advertisement. So, Costco could provide one- or two-month free trail
for shopping to bring new customers to the business if they do not
want to spend money on advertisement.
Costco’s strategy
Costco has been developed a very fine business strategy along with
appreciable business elements over the years. Costco has its own
name in the business market because it always comes up with the
business tactics which can make it shine more than the competitors in
the market. Its main mission is to provide the good quality products at
the lowest prices. The chief elements of Costco are:
1) lowest prices on reputed brand products,
2) well-structured inventory which leads to fast turnovers,
3) providing membership fees.
For implementing their lowest price strategy, they have launched their
own products such a Kirkland and claimed that they are better than
other competitive brands. Also, they choose to sell the limited but
good products on low prices so that their customers can get attract to
their highly reasonably priced deals. The treasure hunt deals are
proved to be appealing for the customers who want new and bulking
deals. For making profit from the treasure hunt scheme, they get
collaborated with wholesalers to get good things at low prices. Their
main motive behind treasure hunt
initiative is to give a positive reinforcement to their pre-existing
clients to retain them. On the name of inventory turnover, they 02 sell
high volumes with low margins because they have got the idea to
make a balance between purchasing things and reselling it again to the
consumers, accordingly. For the membership, they have business
membership and the gold star membership, and they keep their
approaches of membership up to date in order to let their customers
renew their membership. They have evidence-based statistics which
are the proves of expansion on revenue from previous years. Their
business model is cost effective and the CEO of Costco Jim Singel has
been taken the responsibility of increasing the profit by all effective
ways. He keeps close eyes on every possible aspect as well as on the
product. Costco justified its cost-effective business strategy by
attracting high volume of customers all around the country. They have
given a high competition to rivals by considering effluent to low
income customers in their target list. Their high productivity and
expenditure ratios are transparent, and this statistic is a biggest proof
of their success. In a way they are satisfying needs of both the
suppliers and the customers.
Jim Sinegal’s leadership style and Craig Jelinek’s approach
Jim Sinegal was an effective leader and CEO. He tried to involve in
all warehouse operations. He used to visit 8 to 10 stores daily as a
store clerk to make good relations with employees and to find out the
visiting experiences of the customers. Jim Sinegal wander through the
aisles and try to fix the problems associated with reputation of the
company. Being an effective leader, Jim Sinegal has a special knack
in crafting and executing strategies. So, we would assign grade A
because of his mind-blowing strategies. He wanted to keep the prices
of the product low as much as possible as he did not want that
someday any competitor enters the market and beats the prices of the
Costco. He wants to establish an organization that will be there 50
years from now. In addition to this, product selection, growth strategy
and most important Treasure hunt merchandising is used a tool to
increase the regular visit of the customers. Craig Jelinek continues
the mission, vision and values of Jim Sinegal. He has a same objective
of offering low prices with best quality. He follows the ethics of
obeying laws, respecting customers, taking care of employees. Jelinek
focuses on expanding the business globally and increasing the sales.
There is always a risk for the business when new CEO is appointed.
But under his leadership, growth rate is high as compared to most of
the competitors, share price goes up and significant growth in
dividends. It is all because of better understanding of the business and
strategies. (Newsmax, 2019). Based on the information given in the
case study Costco’s business philosophy, values and code of ethics
are:
Obey the law: Obeying the law is important as it gives the framework
to the business how to act and operate. Costco follows all the rules and
regulations of every community where they operate their business.
They pledge to follow all the laws and the legal requirements,
respecting all the government official’s, meeting all the safety and
security standards, meeting all the requirements related to
employment law and ecological standard, comply with antitrust law,
following the proper laws and regulations related to foreign laws
while operating the business outside the country and working in
accordance with foreign corrupt practices act or the law of the other
countries.
Take care of our employees: Employees are one of the most important
assets of the company. Costco provides their employees with ample
growth opportunities for their personal and career growth. They
pledge to provide employees with Competitive wages, Employment
benefits, safe and healthy work environment, Career opportunities and
a work environment which is free from all the bias and harassment.
Take care of members: Members are the reason for the existence of
the business. As we all know that Costco’s members have lots of
shopping alternatives like Walmart, superstore etc. So, the company
needs to maintain the member's trust for that they pledge to provide
Top quality products at the best price, highest food safety standards,
100% satisfaction guarantee, warranty on products and services,
pleasant shopping environment and experience, best customer service
03 and provide products that are ecologically sensitive.
Respect our suppliers: Suppliers must prosper along with the
company for the success of the business. They strive to treat all the
suppliers and their representative respectfully, honour all their
commitments, protect all supplier’s assets, no gratitude’s and always
do what is right.
Reward and shareholders: As a company trades its stocks with
NASDAQ stock exchange, its shareholders are its business partners.
To be successful, we need to provide our shareholders with good
returns as they invest their money in the Costco. They pledge to
provide in the same way to their present and future shareholders, as
well as the employees will also be rewarded for their time and efforts.
Costco from financial perspective:
The various financial ratios of the years 2014, 2015 and 2016 showed
that Gross Profit Margin and total return on assets is increasing at
slow pace (from 12.59% to 13.32%), which is a good indicator to
yield high profit in future. One and only ratio that fluctuated with 3-
4% is return on stockholder’s equity. In 2014, it was above average
which has reached to 21.92% in the next year. It decreased
approximately 2.5% in 2016. EPS is also fluctuating with little
variation (from 4,65 to 5.33). Costco is weak in maintaining current
ratio (from 1.22 to 0.98). It should be higher than 1 and the best one is
2:1. This ratio has decreased continuously which shows that Costco do
not have enough current assets to pay off the current liabilities. Debt
in comparison to total assets is better than before. Company can
generate enough cash in future because its debt to equity ratio is below
1 (0.34) . There is not much variations in the inventory turnover and
inventory days. It means that whatever the company purchases get
sold off at the same ratio in relation to previous years. Overall, Costco
is doing well but weak points are always there. Company should work
on those weakness to grab more opportunities.
Recommendations
Online services and self-checkout: Every organization is expanding
with the help of technology. Online-services has made the life of
people so easier. Take an example of Amazon which provides online
shopping and home delivery services. Another example is Superstore
where we can order online all the required items and they prepare the
cart for us. We just have to go there and park the car, employees put
the stuff inside. In addition to this, there is also self-checkout option at
the superstore which is not available at Costco. It would reduce the
workload of employees and they do not need more employees as
cashier.
Improve Margin: Costco is generating huge amount of revenue from
membership fees. This is the reason that Costco prices are not too
high. Still, there are people who could pay more for the price of
product depending on the quality, but they do not want to pay the
membership fees. Costco should increase the margin by keeping
membership fees low.
Diversification: Walmart is at number one because it sells 1000 times
more variety of products which satisfy every need of customers as
compared to Costco. No doubt, that Costco is following a strategy to
keep less variety in all items, but we cannot neglect that the people
living in Canada belong to different cultures and countries. Their
choices regarding each item is different. Costco must increase the
variety keeping in mind all the residents.
No benefit for small household: Costco sells products in large
quantities. Small household requires only number of items per week.
They cannot buy that stock as that will expire after some time. So,
visiting Costco and doing shopping is only valuable for large
households. Costco should open a store to sell small quantities as well.
Expand product-line: whenever buyers visit Costco, they see only few
brands such as Adidas, Puma, Reebok but only few04 items related to
such brands are there. Experience of customers with those products is
no so good. Those might be defective pieces company sells. But to
increase sale and customer loyalty Costco should contact the famous
brands and sell their products.
Advertisement: Costco do not advertise at all. It only sends mail to the
prospective member as well as coupons to existing customers. But this
is not enough in this era where people are addicted to social media.
Number of people do not visit Costco because they do not have
membership cards. They have no experience what type of products
Costco sells or what quality they provide because there is no
advertisement. So, Costco could provide one- or two-month free trail
for shopping to bring new customers to the business if they do not
want to spend money on advertisement.
Costco’s strategy
Costco has been developed a very fine business strategy along with
appreciable business elements over the years. Costco has its own
name in the business market because it always comes up with the
business tactics which can make it shine more than the competitors in
the market. Its main mission is to provide the good quality products at
the lowest prices. The chief elements of Costco are:
1) lowest prices on reputed brand products,
2) well-structured inventory which leads to fast turnovers,
3) providing membership fees.
For implementing their lowest price strategy, they have launched their
own products such a Kirkland and claimed that they are better than
other competitive brands. Also, they choose to sell the limited but
good products on low prices so that their customers can get attract to
their highly reasonably priced deals. The treasure hunt deals are
proved to be appealing for the customers who want new and bulking
deals. For making profit from the treasure hunt scheme, they get
collaborated with wholesalers to get good things at low prices. Their
main motive behind treasure hunt
initiative is to give a positive reinforcement to their pre-existing
clients to retain them. On the name of inventory turnover, they 02 sell
high volumes with low margins because they have got the idea to
make a balance between purchasing things and reselling it again to the
consumers, accordingly. For the membership, they have business
membership and the gold star membership, and they keep their
approaches of membership up to date in order to let their customers
renew their membership. They have evidence-based statistics which
are the proves of expansion on revenue from previous years. Their
business model is cost effective and the CEO of Costco Jim Singel has
been taken the responsibility of increasing the profit by all effective
ways. He keeps close eyes on every possible aspect as well as on the
product. Costco justified its cost-effective business strategy by
attracting high volume of customers all around the country. They have
given a high competition to rivals by considering effluent to low
income customers in their target list. Their high productivity and
expenditure ratios are transparent, and this statistic is a biggest proof
of their success. In a way they are satisfying needs of both the
suppliers and the customers.
Jim Sinegal’s leadership style and Craig Jelinek’s approach
Jim Sinegal was an effective leader and CEO. He tried to involve in
all warehouse operations. He used to visit 8 to 10 stores daily as a
store clerk to make good relations with employees and to find out the
visiting experiences of the customers. Jim Sinegal wander through the
aisles and try to fix the problems associated with reputation of the
company. Being an effective leader, Jim Sinegal has a special knack
in crafting and executing strategies. So, we would assign grade A
because of his mind-blowing strategies. He wanted to keep the prices
of the product low as much as possible as he did not want that
someday any competitor enters the market and beats the prices of the
Costco. He wants to establish an organization that will be there 50
years from now. In addition to this, product selection, growth strategy
and most important Treasure hunt merchandising is used a tool to
increase the regular visit of the customers. Craig Jelinek continues
the mission, vision and values of Jim Sinegal. He has a same objective
of offering low prices with best quality. He follows the ethics of
obeying laws, respecting customers, taking care of employees. Jelinek
focuses on expanding the business globally and increasing the sales.
There is always a risk for the business when new CEO is appointed.
But under his leadership, growth rate is high as compared to most of
the competitors, share price goes up and significant growth in
dividends. It is all because of better understanding of the business and
strategies. (Newsmax, 2019). Based on the information given in the
case study Costco’s business philosophy, values and code of ethics
are:
Obey the law: Obeying the law is important as it gives the framework
to the business how to act and operate. Costco follows all the rules and
regulations of every community where they operate their business.
They pledge to follow all the laws and the legal requirements,
respecting all the government official’s, meeting all the safety and
security standards, meeting all the requirements related to
employment law and ecological standard, comply with antitrust law,
following the proper laws and regulations related to foreign laws
while operating the business outside the country and working in
accordance with foreign corrupt practices act or the law of the other
countries.
Take care of our employees: Employees are one of the most important
assets of the company. Costco provides their employees with ample
growth opportunities for their personal and career growth. They
pledge to provide employees with Competitive wages, Employment
benefits, safe and healthy work environment, Career opportunities and
a work environment which is free from all the bias and harassment.
Take care of members: Members are the reason for the existence of
the business. As we all know that Costco’s members have lots of
shopping alternatives like Walmart, superstore etc. So, the company
needs to maintain the member's trust for that they pledge to provide
Top quality products at the best price, highest food safety standards,
100% satisfaction guarantee, warranty on products and services,
pleasant shopping environment and experience, best customer service
03 and provide products that are ecologically sensitive.
Respect our suppliers: Suppliers must prosper along with the
company for the success of the business. They strive to treat all the
suppliers and their representative respectfully, honour all their
commitments, protect all supplier’s assets, no gratitude’s and always
do what is right.
Reward and shareholders: As a company trades its stocks with
NASDAQ stock exchange, its shareholders are its business partners.
To be successful, we need to provide our shareholders with good
returns as they invest their money in the Costco. They pledge to
provide in the same way to their present and future shareholders, as
well as the employees will also be rewarded for their time and efforts.
Costco from financial perspective:
The various financial ratios of the years 2014, 2015 and 2016 showed
that Gross Profit Margin and total return on assets is increasing at
slow pace (from 12.59% to 13.32%), which is a good indicator to
yield high profit in future. One and only ratio that fluctuated with 3-
4% is return on stockholder’s equity. In 2014, it was above average
which has reached to 21.92% in the next year. It decreased
approximately 2.5% in 2016. EPS is also fluctuating with little
variation (from 4,65 to 5.33). Costco is weak in maintaining current
ratio (from 1.22 to 0.98). It should be higher than 1 and the best one is
2:1. This ratio has decreased continuously which shows that Costco do
not have enough current assets to pay off the current liabilities. Debt
in comparison to total assets is better than before. Company can
generate enough cash in future because its debt to equity ratio is below
1 (0.34) . There is not much variations in the inventory turnover and
inventory days. It means that whatever the company purchases get
sold off at the same ratio in relation to previous years. Overall, Costco
is doing well but weak points are always there. Company should work
on those weakness to grab more opportunities.
Recommendations
Online services and self-checkout: Every organization is expanding
with the help of technology. Online-services has made the life of
people so easier. Take an example of Amazon which provides online
shopping and home delivery services. Another example is Superstore
where we can order online all the required items and they prepare the
cart for us. We just have to go there and park the car, employees put
the stuff inside. In addition to this, there is also self-checkout option at
the superstore which is not available at Costco. It would reduce the
workload of employees and they do not need more employees as
cashier.
Improve Margin: Costco is generating huge amount of revenue from
membership fees. This is the reason that Costco prices are not too
high. Still, there are people who could pay more for the price of
product depending on the quality, but they do not want to pay the
membership fees. Costco should increase the margin by keeping
membership fees low.
Diversification: Walmart is at number one because it sells 1000 times
more variety of products which satisfy every need of customers as
compared to Costco. No doubt, that Costco is following a strategy to
keep less variety in all items, but we cannot neglect that the people
living in Canada belong to different cultures and countries. Their
choices regarding each item is different. Costco must increase the
variety keeping in mind all the residents.
No benefit for small household: Costco sells products in large
quantities. Small household requires only number of items per week.
They cannot buy that stock as that will expire after some time. So,
visiting Costco and doing shopping is only valuable for large
households. Costco should open a store to sell small quantities as well.
Expand product-line: whenever buyers visit Costco, they see only few
brands such as Adidas, Puma, Reebok but only few04 items related to
such brands are there. Experience of customers with those products is
no so good. Those might be defective pieces company sells. But to
increase sale and customer loyalty Costco should contact the famous
brands and sell their products.
Advertisement: Costco do not advertise at all. It only sends mail to the
prospective member as well as coupons to existing customers. But this
is not enough in this era where people are addicted to social media.
Number of people do not visit Costco because they do not have
membership cards. They have no experience what type of products
Costco sells or what quality they provide because there is no
advertisement. So, Costco could provide one- or two-month free trail
for shopping to bring new customers to the business if they do not
want to spend money on advertisement.
Costco’s strategy
Costco has been developed a very fine business strategy along with
appreciable business elements over the years. Costco has its own
name in the business market because it always comes up with the
business tactics which can make it shine more than the competitors in
the market. Its main mission is to provide the good quality products at
the lowest prices. The chief elements of Costco are:
1) lowest prices on reputed brand products,
2) well-structured inventory which leads to fast turnovers,
3) providing membership fees.
For implementing their lowest price strategy, they have launched their
own products such a Kirkland and claimed that they are better than
other competitive brands. Also, they choose to sell the limited but
good products on low prices so that their customers can get attract to
their highly reasonably priced deals. The treasure hunt deals are
proved to be appealing for the customers who want new and bulking
deals. For making profit from the treasure hunt scheme, they get
collaborated with wholesalers to get good things at low prices. Their
main motive behind treasure hunt
initiative is to give a positive reinforcement to their pre-existing
clients to retain them. On the name of inventory turnover, they 02 sell
high volumes with low margins because they have got the idea to
make a balance between purchasing things and reselling it again to the
consumers, accordingly. For the membership, they have business
membership and the gold star membership, and they keep their
approaches of membership up to date in order to let their customers
renew their membership. They have evidence-based statistics which
are the proves of expansion on revenue from previous years. Their
business model is cost effective and the CEO of Costco Jim Singel has
been taken the responsibility of increasing the profit by all effective
ways. He keeps close eyes on every possible aspect as well as on the
product. Costco justified its cost-effective business strategy by
attracting high volume of customers all around the country. They have
given a high competition to rivals by considering effluent to low
income customers in their target list. Their high productivity and
expenditure ratios are transparent, and this statistic is a biggest proof
of their success. In a way they are satisfying needs of both the
suppliers and the customers.
Jim Sinegal’s leadership style and Craig Jelinek’s approach
Jim Sinegal was an effective leader and CEO. He tried to involve in
all warehouse operations. He used to visit 8 to 10 stores daily as a
store clerk to make good relations with employees and to find out the
visiting experiences of the customers. Jim Sinegal wander through the
aisles and try to fix the problems associated with reputation of the
company. Being an effective leader, Jim Sinegal has a special knack
in crafting and executing strategies. So, we would assign grade A
because of his mind-blowing strategies. He wanted to keep the prices
of the product low as much as possible as he did not want that
someday any competitor enters the market and beats the prices of the
Costco. He wants to establish an organization that will be there 50
years from now. In addition to this, product selection, growth strategy
and most important Treasure hunt merchandising is used a tool to
increase the regular visit of the customers. Craig Jelinek continues
the mission, vision and values of Jim Sinegal. He has a same objective
of offering low prices with best quality. He follows the ethics of
obeying laws, respecting customers, taking care of employees. Jelinek
focuses on expanding the business globally and increasing the sales.
There is always a risk for the business when new CEO is appointed.
But under his leadership, growth rate is high as compared to most of
the competitors, share price goes up and significant growth in
dividends. It is all because of better understanding of the business and
strategies. (Newsmax, 2019). Based on the information given in the
case study Costco’s business philosophy, values and code of ethics
are:
Obey the law: Obeying the law is important as it gives the framework
to the business how to act and operate. Costco follows all the rules and
regulations of every community where they operate their business.
They pledge to follow all the laws and the legal requirements,
respecting all the government official’s, meeting all the safety and
security standards, meeting all the requirements related to
employment law and ecological standard, comply with antitrust law,
following the proper laws and regulations related to foreign laws
while operating the business outside the country and working in
accordance with foreign corrupt practices act or the law of the other
countries.
Take care of our employees: Employees are one of the most important
assets of the company. Costco provides their employees with ample
growth opportunities for their personal and career growth. They
pledge to provide employees with Competitive wages, Employment
benefits, safe and healthy work environment, Career opportunities and
a work environment which is free from all the bias and harassment.
Take care of members: Members are the reason for the existence of
the business. As we all know that Costco’s members have lots of
shopping alternatives like Walmart, superstore etc. So, the company
needs to maintain the member's trust for that they pledge to provide
Top quality products at the best price, highest food safety standards,
100% satisfaction guarantee, warranty on products and services,
pleasant shopping environment and experience, best customer service
03 and provide products that are ecologically sensitive.
Respect our suppliers: Suppliers must prosper along with the
company for the success of the business. They strive to treat all the
suppliers and their representative respectfully, honour all their
commitments, protect all supplier’s assets, no gratitude’s and always
do what is right.
Reward and shareholders: As a company trades its stocks with
NASDAQ stock exchange, its shareholders are its business partners.
To be successful, we need to provide our shareholders with good
returns as they invest their money in the Costco. They pledge to
provide in the same way to their present and future shareholders, as
well as the employees will also be rewarded for their time and efforts.
Costco from financial perspective:
The various financial ratios of the years 2014, 2015 and 2016 showed
that Gross Profit Margin and total return on assets is increasing at
slow pace (from 12.59% to 13.32%), which is a good indicator to
yield high profit in future. One and only ratio that fluctuated with 3-
4% is return on stockholder’s equity. In 2014, it was above average
which has reached to 21.92% in the next year. It decreased
approximately 2.5% in 2016. EPS is also fluctuating with little
variation (from 4,65 to 5.33). Costco is weak in maintaining current
ratio (from 1.22 to 0.98). It should be higher than 1 and the best one is
2:1. This ratio has decreased continuously which shows that Costco do
not have enough current assets to pay off the current liabilities. Debt
in comparison to total assets is better than before. Company can
generate enough cash in future because its debt to equity ratio is below
1 (0.34) . There is not much variations in the inventory turnover and
inventory days. It means that whatever the company purchases get
sold off at the same ratio in relation to previous years. Overall, Costco
is doing well but weak points are always there. Company should work
on those weakness to grab more opportunities.
Recommendations
Online services and self-checkout: Every organization is expanding
with the help of technology. Online-services has made the life of
people so easier. Take an example of Amazon which provides online
shopping and home delivery services. Another example is Superstore
where we can order online all the required items and they prepare the
cart for us. We just have to go there and park the car, employees put
the stuff inside. In addition to this, there is also self-checkout option at
the superstore which is not available at Costco. It would reduce the
workload of employees and they do not need more employees as
cashier.
Improve Margin: Costco is generating huge amount of revenue from
membership fees. This is the reason that Costco prices are not too
high. Still, there are people who could pay more for the price of
product depending on the quality, but they do not want to pay the
membership fees. Costco should increase the margin by keeping
membership fees low.
Diversification: Walmart is at number one because it sells 1000 times
more variety of products which satisfy every need of customers as
compared to Costco. No doubt, that Costco is following a strategy to
keep less variety in all items, but we cannot neglect that the people
living in Canada belong to different cultures and countries. Their
choices regarding each item is different. Costco must increase the
variety keeping in mind all the residents.
No benefit for small household: Costco sells products in large
quantities. Small household requires only number of items per week.
They cannot buy that stock as that will expire after some time. So,
visiting Costco and doing shopping is only valuable for large
households. Costco should open a store to sell small quantities as well.
Expand product-line: whenever buyers visit Costco, they see only few
brands such as Adidas, Puma, Reebok but only few04 items related to
such brands are there. Experience of customers with those products is
no so good. Those might be defective pieces company sells. But to
increase sale and customer loyalty Costco should contact the famous
brands and sell their products.
Advertisement: Costco do not advertise at all. It only sends mail to the
prospective member as well as coupons to existing customers. But this
is not enough in this era where people are addicted to social media.
Number of people do not visit Costco because they do not have
membership cards. They have no experience what type of products
Costco sells or what quality they provide because there is no
advertisement. So, Costco could provide one- or two-month free trail
for shopping to bring new customers to the business if they do not
want to spend money on advertisement.
Costco’s strategy
Costco has been developed a very fine business strategy along with
appreciable business elements over the years. Costco has its own
name in the business market because it always comes up with the
business tactics which can make it shine more than the competitors in
the market. Its main mission is to provide the good quality products at
the lowest prices. The chief elements of Costco are:
1) lowest prices on reputed brand products,
2) well-structured inventory which leads to fast turnovers,
3) providing membership fees.
For implementing their lowest price strategy, they have launched their
own products such a Kirkland and claimed that they are better than
other competitive brands. Also, they choose to sell the limited but
good products on low prices so that their customers can get attract to
their highly reasonably priced deals. The treasure hunt deals are
proved to be appealing for the customers who want new and bulking
deals. For making profit from the treasure hunt scheme, they get
collaborated with wholesalers to get good things at low prices. Their
main motive behind treasure hunt
initiative is to give a positive reinforcement to their pre-existing
clients to retain them. On the name of inventory turnover, they 02 sell
high volumes with low margins because they have got the idea to
make a balance between purchasing things and reselling it again to the
consumers, accordingly. For the membership, they have business
membership and the gold star membership, and they keep their
approaches of membership up to date in order to let their customers
renew their membership. They have evidence-based statistics which
are the proves of expansion on revenue from previous years. Their
business model is cost effective and the CEO of Costco Jim Singel has
been taken the responsibility of increasing the profit by all effective
ways. He keeps close eyes on every possible aspect as well as on the
product. Costco justified its cost-effective business strategy by
attracting high volume of customers all around the country. They have
given a high competition to rivals by considering effluent to low
income customers in their target list. Their high productivity and
expenditure ratios are transparent, and this statistic is a biggest proof
of their success. In a way they are satisfying needs of both the
suppliers and the customers.
Jim Sinegal’s leadership style and Craig Jelinek’s approach
Jim Sinegal was an effective leader and CEO. He tried to involve in
all warehouse operations. He used to visit 8 to 10 stores daily as a
store clerk to make good relations with employees and to find out the
visiting experiences of the customers. Jim Sinegal wander through the
aisles and try to fix the problems associated with reputation of the
company. Being an effective leader, Jim Sinegal has a special knack
in crafting and executing strategies. So, we would assign grade A
because of his mind-blowing strategies. He wanted to keep the prices
of the product low as much as possible as he did not want that
someday any competitor enters the market and beats the prices of the
Costco. He wants to establish an organization that will be there 50
years from now. In addition to this, product selection, growth strategy
and most important Treasure hunt merchandising is used a tool to
increase the regular visit of the customers. Craig Jelinek continues
the mission, vision and values of Jim Sinegal. He has a same objective
of offering low prices with best quality. He follows the ethics of
obeying laws, respecting customers, taking care of employees. Jelinek
focuses on expanding the business globally and increasing the sales.
There is always a risk for the business when new CEO is appointed.
But under his leadership, growth rate is high as compared to most of
the competitors, share price goes up and significant growth in
dividends. It is all because of better understanding of the business and
strategies. (Newsmax, 2019). Based on the information given in the
case study Costco’s business philosophy, values and code of ethics
are:
Obey the law: Obeying the law is important as it gives the framework
to the business how to act and operate. Costco follows all the rules and
regulations of every community where they operate their business.
They pledge to follow all the laws and the legal requirements,
respecting all the government official’s, meeting all the safety and
security standards, meeting all the requirements related to
employment law and ecological standard, comply with antitrust law,
following the proper laws and regulations related to foreign laws
while operating the business outside the country and working in
accordance with foreign corrupt practices act or the law of the other
countries.
Take care of our employees: Employees are one of the most important
assets of the company. Costco provides their employees with ample
growth opportunities for their personal and career growth. They
pledge to provide employees with Competitive wages, Employment
benefits, safe and healthy work environment, Career opportunities and
a work environment which is free from all the bias and harassment.
Take care of members: Members are the reason for the existence of
the business. As we all know that Costco’s members have lots of
shopping alternatives like Walmart, superstore etc. So, the company
needs to maintain the member's trust for that they pledge to provide
Top quality products at the best price, highest food safety standards,
100% satisfaction guarantee, warranty on products and services,
pleasant shopping environment and experience, best customer service
03 and provide products that are ecologically sensitive.
Respect our suppliers: Suppliers must prosper along with the
company for the success of the business. They strive to treat all the
suppliers and their representative respectfully, honour all their
commitments, protect all supplier’s assets, no gratitude’s and always
do what is right.
Reward and shareholders: As a company trades its stocks with
NASDAQ stock exchange, its shareholders are its business partners.
To be successful, we need to provide our shareholders with good
returns as they invest their money in the Costco. They pledge to
provide in the same way to their present and future shareholders, as
well as the employees will also be rewarded for their time and efforts.
Costco from financial perspective:
The various financial ratios of the years 2014, 2015 and 2016 showed
that Gross Profit Margin and total return on assets is increasing at
slow pace (from 12.59% to 13.32%), which is a good indicator to
yield high profit in future. One and only ratio that fluctuated with 3-
4% is return on stockholder’s equity. In 2014, it was above average
which has reached to 21.92% in the next year. It decreased
approximately 2.5% in 2016. EPS is also fluctuating with little
variation (from 4,65 to 5.33). Costco is weak in maintaining current
ratio (from 1.22 to 0.98). It should be higher than 1 and the best one is
2:1. This ratio has decreased continuously which shows that Costco do
not have enough current assets to pay off the current liabilities. Debt
in comparison to total assets is better than before. Company can
generate enough cash in future because its debt to equity ratio is below
1 (0.34) . There is not much variations in the inventory turnover and
inventory days. It means that whatever the company purchases get
sold off at the same ratio in relation to previous years. Overall, Costco
is doing well but weak points are always there. Company should work
on those weakness to grab more opportunities.
Recommendations
Online services and self-checkout: Every organization is expanding
with the help of technology. Online-services has made the life of
people so easier. Take an example of Amazon which provides online
shopping and home delivery services. Another example is Superstore
where we can order online all the required items and they prepare the
cart for us. We just have to go there and park the car, employees put
the stuff inside. In addition to this, there is also self-checkout option at
the superstore which is not available at Costco. It would reduce the
workload of employees and they do not need more employees as
cashier.
Improve Margin: Costco is generating huge amount of revenue from
membership fees. This is the reason that Costco prices are not too
high. Still, there are people who could pay more for the price of
product depending on the quality, but they do not want to pay the
membership fees. Costco should increase the margin by keeping
membership fees low.
Diversification: Walmart is at number one because it sells 1000 times
more variety of products which satisfy every need of customers as
compared to Costco. No doubt, that Costco is following a strategy to
keep less variety in all items, but we cannot neglect that the people
living in Canada belong to different cultures and countries. Their
choices regarding each item is different. Costco must increase the
variety keeping in mind all the residents.
No benefit for small household: Costco sells products in large
quantities. Small household requires only number of items per week.
They cannot buy that stock as that will expire after some time. So,
visiting Costco and doing shopping is only valuable for large
households. Costco should open a store to sell small quantities as well.
Expand product-line: whenever buyers visit Costco, they see only few
brands such as Adidas, Puma, Reebok but only few04 items related to
such brands are there. Experience of customers with those products is
no so good. Those might be defective pieces company sells. But to
increase sale and customer loyalty Costco should contact the famous
brands and sell their products.
Advertisement: Costco do not advertise at all. It only sends mail to the
prospective member as well as coupons to existing customers. But this
is not enough in this era where people are addicted to social media.
Number of people do not visit Costco because they do not have
membership cards. They have no experience what type of products
Costco sells or what quality they provide because there is no
advertisement. So, Costco could provide one- or two-month free trail
for shopping to bring new customers to the business if they do not
want to spend money on advertisement.
Costco’s strategy
Costco has been developed a very fine business strategy along with
appreciable business elements over the years. Costco has its own
name in the business market because it always comes up with the
business tactics which can make it shine more than the competitors in
the market. Its main mission is to provide the good quality products at
the lowest prices. The chief elements of Costco are:
1) lowest prices on reputed brand products,
2) well-structured inventory which leads to fast turnovers,
3) providing membership fees.
For implementing their lowest price strategy, they have launched their
own products such a Kirkland and claimed that they are better than
other competitive brands. Also, they choose to sell the limited but
good products on low prices so that their customers can get attract to
their highly reasonably priced deals. The treasure hunt deals are
proved to be appealing for the customers who want new and bulking
deals. For making profit from the treasure hunt scheme, they get
collaborated with wholesalers to get good things at low prices. Their
main motive behind treasure hunt
initiative is to give a positive reinforcement to their pre-existing
clients to retain them. On the name of inventory turnover, they 02 sell
high volumes with low margins because they have got the idea to
make a balance between purchasing things and reselling it again to the
consumers, accordingly. For the membership, they have business
membership and the gold star membership, and they keep their
approaches of membership up to date in order to let their customers
renew their membership. They have evidence-based statistics which
are the proves of expansion on revenue from previous years. Their
business model is cost effective and the CEO of Costco Jim Singel has
been taken the responsibility of increasing the profit by all effective
ways. He keeps close eyes on every possible aspect as well as on the
product. Costco justified its cost-effective business strategy by
attracting high volume of customers all around the country. They have
given a high competition to rivals by considering effluent to low
income customers in their target list. Their high productivity and
expenditure ratios are transparent, and this statistic is a biggest proof
of their success. In a way they are satisfying needs of both the
suppliers and the customers.
Jim Sinegal’s leadership style and Craig Jelinek’s approach
Jim Sinegal was an effective leader and CEO. He tried to involve in
all warehouse operations. He used to visit 8 to 10 stores daily as a
store clerk to make good relations with employees and to find out the
visiting experiences of the customers. Jim Sinegal wander through the
aisles and try to fix the problems associated with reputation of the
company. Being an effective leader, Jim Sinegal has a special knack
in crafting and executing strategies. So, we would assign grade A
because of his mind-blowing strategies. He wanted to keep the prices
of the product low as much as possible as he did not want that
someday any competitor enters the market and beats the prices of the
Costco. He wants to establish an organization that will be there 50
years from now. In addition to this, product selection, growth strategy
and most important Treasure hunt merchandising is used a tool to
increase the regular visit of the customers. Craig Jelinek continues
the mission, vision and values of Jim Sinegal. He has a same objective
of offering low prices with best quality. He follows the ethics of
obeying laws, respecting customers, taking care of employees. Jelinek
focuses on expanding the business globally and increasing the sales.
There is always a risk for the business when new CEO is appointed.
But under his leadership, growth rate is high as compared to most of
the competitors, share price goes up and significant growth in
dividends. It is all because of better understanding of the business and
strategies. (Newsmax, 2019). Based on the information given in the
case study Costco’s business philosophy, values and code of ethics
are:
Obey the law: Obeying the law is important as it gives the framework
to the business how to act and operate. Costco follows all the rules and
regulations of every community where they operate their business.
They pledge to follow all the laws and the legal requirements,
respecting all the government official’s, meeting all the safety and
security standards, meeting all the requirements related to
employment law and ecological standard, comply with antitrust law,
following the proper laws and regulations related to foreign laws
while operating the business outside the country and working in
accordance with foreign corrupt practices act or the law of the other
countries.
Take care of our employees: Employees are one of the most important
assets of the company. Costco provides their employees with ample
growth opportunities for their personal and career growth. They
pledge to provide employees with Competitive wages, Employment
benefits, safe and healthy work environment, Career opportunities and
a work environment which is free from all the bias and harassment.
Take care of members: Members are the reason for the existence of
the business. As we all know that Costco’s members have lots of
shopping alternatives like Walmart, superstore etc. So, the company
needs to maintain the member's trust for that they pledge to provide
Top quality products at the best price, highest food safety standards,
100% satisfaction guarantee, warranty on products and services,
pleasant shopping environment and experience, best customer service
03 and provide products that are ecologically sensitive.
Respect our suppliers: Suppliers must prosper along with the
company for the success of the business. They strive to treat all the
suppliers and their representative respectfully, honour all their
commitments, protect all supplier’s assets, no gratitude’s and always
do what is right.
Reward and shareholders: As a company trades its stocks with
NASDAQ stock exchange, its shareholders are its business partners.
To be successful, we need to provide our shareholders with good
returns as they invest their money in the Costco. They pledge to
provide in the same way to their present and future shareholders, as
well as the employees will also be rewarded for their time and efforts.
Costco from financial perspective:
The various financial ratios of the years 2014, 2015 and 2016 showed
that Gross Profit Margin and total return on assets is increasing at
slow pace (from 12.59% to 13.32%), which is a good indicator to
yield high profit in future. One and only ratio that fluctuated with 3-
4% is return on stockholder’s equity. In 2014, it was above average
which has reached to 21.92% in the next year. It decreased
approximately 2.5% in 2016. EPS is also fluctuating with little
variation (from 4,65 to 5.33). Costco is weak in maintaining current
ratio (from 1.22 to 0.98). It should be higher than 1 and the best one is
2:1. This ratio has decreased continuously which shows that Costco do
not have enough current assets to pay off the current liabilities. Debt
in comparison to total assets is better than before. Company can
generate enough cash in future because its debt to equity ratio is below
1 (0.34) . There is not much variations in the inventory turnover and
inventory days. It means that whatever the company purchases get
sold off at the same ratio in relation to previous years. Overall, Costco
is doing well but weak points are always there. Company should work
on those weakness to grab more opportunities.
Recommendations
Online services and self-checkout: Every organization is expanding
with the help of technology. Online-services has made the life of
people so easier. Take an example of Amazon which provides online
shopping and home delivery services. Another example is Superstore
where we can order online all the required items and they prepare the
cart for us. We just have to go there and park the car, employees put
the stuff inside. In addition to this, there is also self-checkout option at
the superstore which is not available at Costco. It would reduce the
workload of employees and they do not need more employees as
cashier.
Improve Margin: Costco is generating huge amount of revenue from
membership fees. This is the reason that Costco prices are not too
high. Still, there are people who could pay more for the price of
product depending on the quality, but they do not want to pay the
membership fees. Costco should increase the margin by keeping
membership fees low.
Diversification: Walmart is at number one because it sells 1000 times
more variety of products which satisfy every need of customers as
compared to Costco. No doubt, that Costco is following a strategy to
keep less variety in all items, but we cannot neglect that the people
living in Canada belong to different cultures and countries. Their
choices regarding each item is different. Costco must increase the
variety keeping in mind all the residents.
No benefit for small household: Costco sells products in large
quantities. Small household requires only number of items per week.
They cannot buy that stock as that will expire after some time. So,
visiting Costco and doing shopping is only valuable for large
households. Costco should open a store to sell small quantities as well.
Expand product-line: whenever buyers visit Costco, they see only few
brands such as Adidas, Puma, Reebok but only few04 items related to
such brands are there. Experience of customers with those products is
no so good. Those might be defective pieces company sells. But to
increase sale and customer loyalty Costco should contact the famous
brands and sell their products.
Advertisement: Costco do not advertise at all. It only sends mail to the
prospective member as well as coupons to existing customers. But this
is not enough in this era where people are addicted to social media.
Number of people do not visit Costco because they do not have
membership cards. They have no experience what type of products
Costco sells or what quality they provide because there is no
advertisement. So, Costco could provide one- or two-month free trail
for shopping to bring new customers to the business if they do not
want to spend money on advertisement.
Costco’s strategy
Costco has been developed a very fine business strategy along with
appreciable business elements over the years. Costco has its own
name in the business market because it always comes up with the
business tactics which can make it shine more than the competitors in
the market. Its main mission is to provide the good quality products at
the lowest prices. The chief elements of Costco are:
1) lowest prices on reputed brand products,
2) well-structured inventory which leads to fast turnovers,
3) providing membership fees.
For implementing their lowest price strategy, they have launched their
own products such a Kirkland and claimed that they are better than
other competitive brands. Also, they choose to sell the limited but
good products on low prices so that their customers can get attract to
their highly reasonably priced deals. The treasure hunt deals are
proved to be appealing for the customers who want new and bulking
deals. For making profit from the treasure hunt scheme, they get
collaborated with wholesalers to get good things at low prices. Their
main motive behind treasure hunt
initiative is to give a positive reinforcement to their pre-existing
clients to retain them. On the name of inventory turnover, they 02 sell
high volumes with low margins because they have got the idea to
make a balance between purchasing things and reselling it again to the
consumers, accordingly. For the membership, they have business
membership and the gold star membership, and they keep their
approaches of membership up to date in order to let their customers
renew their membership. They have evidence-based statistics which
are the proves of expansion on revenue from previous years. Their
business model is cost effective and the CEO of Costco Jim Singel has
been taken the responsibility of increasing the profit by all effective
ways. He keeps close eyes on every possible aspect as well as on the
product. Costco justified its cost-effective business strategy by
attracting high volume of customers all around the country. They have
given a high competition to rivals by considering effluent to low
income customers in their target list. Their high productivity and
expenditure ratios are transparent, and this statistic is a biggest proof
of their success. In a way they are satisfying needs of both the
suppliers and the customers.
Jim Sinegal’s leadership style and Craig Jelinek’s approach
Jim Sinegal was an effective leader and CEO. He tried to involve in
all warehouse operations. He used to visit 8 to 10 stores daily as a
store clerk to make good relations with employees and to find out the
visiting experiences of the customers. Jim Sinegal wander through the
aisles and try to fix the problems associated with reputation of the
company. Being an effective leader, Jim Sinegal has a special knack
in crafting and executing strategies. So, we would assign grade A
because of his mind-blowing strategies. He wanted to keep the prices
of the product low as much as possible as he did not want that
someday any competitor enters the market and beats the prices of the
Costco. He wants to establish an organization that will be there 50
years from now. In addition to this, product selection, growth strategy
and most important Treasure hunt merchandising is used a tool to
increase the regular visit of the customers. Craig Jelinek continues
the mission, vision and values of Jim Sinegal. He has a same objective
of offering low prices with best quality. He follows the ethics of
obeying laws, respecting customers, taking care of employees. Jelinek
focuses on expanding the business globally and increasing the sales.
There is always a risk for the business when new CEO is appointed.
But under his leadership, growth rate is high as compared to most of
the competitors, share price goes up and significant growth in
dividends. It is all because of better understanding of the business and
strategies. (Newsmax, 2019). Based on the information given in the
case study Costco’s business philosophy, values and code of ethics
are:
Obey the law: Obeying the law is important as it gives the framework
to the business how to act and operate. Costco follows all the rules and
regulations of every community where they operate their business.
They pledge to follow all the laws and the legal requirements,
respecting all the government official’s, meeting all the safety and
security standards, meeting all the requirements related to
employment law and ecological standard, comply with antitrust law,
following the proper laws and regulations related to foreign laws
while operating the business outside the country and working in
accordance with foreign corrupt practices act or the law of the other
countries.
Take care of our employees: Employees are one of the most important
assets of the company. Costco provides their employees with ample
growth opportunities for their personal and career growth. They
pledge to provide employees with Competitive wages, Employment
benefits, safe and healthy work environment, Career opportunities and
a work environment which is free from all the bias and harassment.
Take care of members: Members are the reason for the existence of
the business. As we all know that Costco’s members have lots of
shopping alternatives like Walmart, superstore etc. So, the company
needs to maintain the member's trust for that they pledge to provide
Top quality products at the best price, highest food safety standards,
100% satisfaction guarantee, warranty on products and services,
pleasant shopping environment and experience, best customer service
03 and provide products that are ecologically sensitive.
Respect our suppliers: Suppliers must prosper along with the
company for the success of the business. They strive to treat all the
suppliers and their representative respectfully, honour all their
commitments, protect all supplier’s assets, no gratitude’s and always
do what is right.
Reward and shareholders: As a company trades its stocks with
NASDAQ stock exchange, its shareholders are its business partners.
To be successful, we need to provide our shareholders with good
returns as they invest their money in the Costco. They pledge to
provide in the same way to their present and future shareholders, as
well as the employees will also be rewarded for their time and efforts.
Costco from financial perspective:
The various financial ratios of the years 2014, 2015 and 2016 showed
that Gross Profit Margin and total return on assets is increasing at
slow pace (from 12.59% to 13.32%), which is a good indicator to
yield high profit in future. One and only ratio that fluctuated with 3-
4% is return on stockholder’s equity. In 2014, it was above average
which has reached to 21.92% in the next year. It decreased
approximately 2.5% in 2016. EPS is also fluctuating with little
variation (from 4,65 to 5.33). Costco is weak in maintaining current
ratio (from 1.22 to 0.98). It should be higher than 1 and the best one is
2:1. This ratio has decreased continuously which shows that Costco do
not have enough current assets to pay off the current liabilities. Debt
in comparison to total assets is better than before. Company can
generate enough cash in future because its debt to equity ratio is below
1 (0.34) . There is not much variations in the inventory turnover and
inventory days. It means that whatever the company purchases get
sold off at the same ratio in relation to previous years. Overall, Costco
is doing well but weak points are always there. Company should work
on those weakness to grab more opportunities.
Recommendations
Online services and self-checkout: Every organization is expanding
with the help of technology. Online-services has made the life of
people so easier. Take an example of Amazon which provides online
shopping and home delivery services. Another example is Superstore
where we can order online all the required items and they prepare the
cart for us. We just have to go there and park the car, employees put
the stuff inside. In addition to this, there is also self-checkout option at
the superstore which is not available at Costco. It would reduce the
workload of employees and they do not need more employees as
cashier.
Improve Margin: Costco is generating huge amount of revenue from
membership fees. This is the reason that Costco prices are not too
high. Still, there are people who could pay more for the price of
product depending on the quality, but they do not want to pay the
membership fees. Costco should increase the margin by keeping
membership fees low.
Diversification: Walmart is at number one because it sells 1000 times
more variety of products which satisfy every need of customers as
compared to Costco. No doubt, that Costco is following a strategy to
keep less variety in all items, but we cannot neglect that the people
living in Canada belong to different cultures and countries. Their
choices regarding each item is different. Costco must increase the
variety keeping in mind all the residents.
No benefit for small household: Costco sells products in large
quantities. Small household requires only number of items per week.
They cannot buy that stock as that will expire after some time. So,
visiting Costco and doing shopping is only valuable for large
households. Costco should open a store to sell small quantities as well.
Expand product-line: whenever buyers visit Costco, they see only few
brands such as Adidas, Puma, Reebok but only few04 items related to
such brands are there. Experience of customers with those products is
no so good. Those might be defective pieces company sells. But to
increase sale and customer loyalty Costco should contact the famous
brands and sell their products.
Advertisement: Costco do not advertise at all. It only sends mail to the
prospective member as well as coupons to existing customers. But this
is not enough in this era where people are addicted to social media.
Number of people do not visit Costco because they do not have
membership cards. They have no experience what type of products
Costco sells or what quality they provide because there is no
advertisement. So, Costco could provide one- or two-month free trail
for shopping to bring new customers to the business if they do not
want to spend money on advertisement.
Costco’s strategy
Costco has been developed a very fine business strategy along with
appreciable business elements over the years. Costco has its own
name in the business market because it always comes up with the
business tactics which can make it shine more than the competitors in
the market. Its main mission is to provide the good quality products at
the lowest prices. The chief elements of Costco are:
1) lowest prices on reputed brand products,
2) well-structured inventory which leads to fast turnovers,
3) providing membership fees.
For implementing their lowest price strategy, they have launched their
own products such a Kirkland and claimed that they are better than
other competitive brands. Also, they choose to sell the limited but
good products on low prices so that their customers can get attract to
their highly reasonably priced deals. The treasure hunt deals are
proved to be appealing for the customers who want new and bulking
deals. For making profit from the treasure hunt scheme, they get
collaborated with wholesalers to get good things at low prices. Their
main motive behind treasure hunt
initiative is to give a positive reinforcement to their pre-existing
clients to retain them. On the name of inventory turnover, they 02 sell
high volumes with low margins because they have got the idea to
make a balance between purchasing things and reselling it again to the
consumers, accordingly. For the membership, they have business
membership and the gold star membership, and they keep their
approaches of membership up to date in order to let their customers
renew their membership. They have evidence-based statistics which
are the proves of expansion on revenue from previous years. Their
business model is cost effective and the CEO of Costco Jim Singel has
been taken the responsibility of increasing the profit by all effective
ways. He keeps close eyes on every possible aspect as well as on the
product. Costco justified its cost-effective business strategy by
attracting high volume of customers all around the country. They have
given a high competition to rivals by considering effluent to low
income customers in their target list. Their high productivity and
expenditure ratios are transparent, and this statistic is a biggest proof
of their success. In a way they are satisfying needs of both the
suppliers and the customers.
Jim Sinegal’s leadership style and Craig Jelinek’s approach
Jim Sinegal was an effective leader and CEO. He tried to involve in
all warehouse operations. He used to visit 8 to 10 stores daily as a
store clerk to make good relations with employees and to find out the
visiting experiences of the customers. Jim Sinegal wander through the
aisles and try to fix the problems associated with reputation of the
company. Being an effective leader, Jim Sinegal has a special knack
in crafting and executing strategies. So, we would assign grade A
because of his mind-blowing strategies. He wanted to keep the prices
of the product low as much as possible as he did not want that
someday any competitor enters the market and beats the prices of the
Costco. He wants to establish an organization that will be there 50
years from now. In addition to this, product selection, growth strategy
and most important Treasure hunt merchandising is used a tool to
increase the regular visit of the customers. Craig Jelinek continues
the mission, vision and values of Jim Sinegal. He has a same objective
of offering low prices with best quality. He follows the ethics of
obeying laws, respecting customers, taking care of employees. Jelinek
focuses on expanding the business globally and increasing the sales.
There is always a risk for the business when new CEO is appointed.
But under his leadership, growth rate is high as compared to most of
the competitors, share price goes up and significant growth in
dividends. It is all because of better understanding of the business and
strategies. (Newsmax, 2019). Based on the information given in the
case study Costco’s business philosophy, values and code of ethics
are:
Obey the law: Obeying the law is important as it gives the framework
to the business how to act and operate. Costco follows all the rules and
regulations of every community where they operate their business.
They pledge to follow all the laws and the legal requirements,
respecting all the government official’s, meeting all the safety and
security standards, meeting all the requirements related to
employment law and ecological standard, comply with antitrust law,
following the proper laws and regulations related to foreign laws
while operating the business outside the country and working in
accordance with foreign corrupt practices act or the law of the other
countries.
Take care of our employees: Employees are one of the most important
assets of the company. Costco provides their employees with ample
growth opportunities for their personal and career growth. They
pledge to provide employees with Competitive wages, Employment
benefits, safe and healthy work environment, Career opportunities and
a work environment which is free from all the bias and harassment.
Take care of members: Members are the reason for the existence of
the business. As we all know that Costco’s members have lots of
shopping alternatives like Walmart, superstore etc. So, the company
needs to maintain the member's trust for that they pledge to provide
Top quality products at the best price, highest food safety standards,
100% satisfaction guarantee, warranty on products and services,
pleasant shopping environment and experience, best customer service
03 and provide products that are ecologically sensitive.
Respect our suppliers: Suppliers must prosper along with the
company for the success of the business. They strive to treat all the
suppliers and their representative respectfully, honour all their
commitments, protect all supplier’s assets, no gratitude’s and always
do what is right.
Reward and shareholders: As a company trades its stocks with
NASDAQ stock exchange, its shareholders are its business partners.
To be successful, we need to provide our shareholders with good
returns as they invest their money in the Costco. They pledge to
provide in the same way to their present and future shareholders, as
well as the employees will also be rewarded for their time and efforts.
Costco from financial perspective:
The various financial ratios of the years 2014, 2015 and 2016 showed
that Gross Profit Margin and total return on assets is increasing at
slow pace (from 12.59% to 13.32%), which is a good indicator to
yield high profit in future. One and only ratio that fluctuated with 3-
4% is return on stockholder’s equity. In 2014, it was above average
which has reached to 21.92% in the next year. It decreased
approximately 2.5% in 2016. EPS is also fluctuating with little
variation (from 4,65 to 5.33). Costco is weak in maintaining current
ratio (from 1.22 to 0.98). It should be higher than 1 and the best one is
2:1. This ratio has decreased continuously which shows that Costco do
not have enough current assets to pay off the current liabilities. Debt
in comparison to total assets is better than before. Company can
generate enough cash in future because its debt to equity ratio is below
1 (0.34) . There is not much variations in the inventory turnover and
inventory days. It means that whatever the company purchases get
sold off at the same ratio in relation to previous years. Overall, Costco
is doing well but weak points are always there. Company should work
on those weakness to grab more opportunities.
Recommendations
Online services and self-checkout: Every organization is expanding
with the help of technology. Online-services has made the life of
people so easier. Take an example of Amazon which provides online
shopping and home delivery services. Another example is Superstore
where we can order online all the required items and they prepare the
cart for us. We just have to go there and park the car, employees put
the stuff inside. In addition to this, there is also self-checkout option at
the superstore which is not available at Costco. It would reduce the
workload of employees and they do not need more employees as
cashier.
Improve Margin: Costco is generating huge amount of revenue from
membership fees. This is the reason that Costco prices are not too
high. Still, there are people who could pay more for the price of
product depending on the quality, but they do not want to pay the
membership fees. Costco should increase the margin by keeping
membership fees low.
Diversification: Walmart is at number one because it sells 1000 times
more variety of products which satisfy every need of customers as
compared to Costco. No doubt, that Costco is following a strategy to
keep less variety in all items, but we cannot neglect that the people
living in Canada belong to different cultures and countries. Their
choices regarding each item is different. Costco must increase the
variety keeping in mind all the residents.
No benefit for small household: Costco sells products in large
quantities. Small household requires only number of items per week.
They cannot buy that stock as that will expire after some time. So,
visiting Costco and doing shopping is only valuable for large
households. Costco should open a store to sell small quantities as well.
Expand product-line: whenever buyers visit Costco, they see only few
brands such as Adidas, Puma, Reebok but only few04 items related to
such brands are there. Experience of customers with those products is
no so good. Those might be defective pieces company sells. But to
increase sale and customer loyalty Costco should contact the famous
brands and sell their products.
Advertisement: Costco do not advertise at all. It only sends mail to the
prospective member as well as coupons to existing customers. But this
is not enough in this era where people are addicted to social media.
Number of people do not visit Costco because they do not have
membership cards. They have no experience what type of products
Costco sells or what quality they provide because there is no
advertisement. So, Costco could provide one- or two-month free trail
for shopping to bring new customers to the business if they do not
want to spend money on advertisement.
Costco’s strategy
Costco has been developed a very fine business strategy along with
appreciable business elements over the years. Costco has its own
name in the business market because it always comes up with the
business tactics which can make it shine more than the competitors in
the market. Its main mission is to provide the good quality products at
the lowest prices. The chief elements of Costco are:
1) lowest prices on reputed brand products,
2) well-structured inventory which leads to fast turnovers,
3) providing membership fees.
For implementing their lowest price strategy, they have launched their
own products such a Kirkland and claimed that they are better than
other competitive brands. Also, they choose to sell the limited but
good products on low prices so that their customers can get attract to
their highly reasonably priced deals. The treasure hunt deals are
proved to be appealing for the customers who want new and bulking
deals. For making profit from the treasure hunt scheme, they get
collaborated with wholesalers to get good things at low prices. Their
main motive behind treasure hunt
initiative is to give a positive reinforcement to their pre-existing
clients to retain them. On the name of inventory turnover, they 02 sell
high volumes with low margins because they have got the idea to
make a balance between purchasing things and reselling it again to the
consumers, accordingly. For the membership, they have business
membership and the gold star membership, and they keep their
approaches of membership up to date in order to let their customers
renew their membership. They have evidence-based statistics which
are the proves of expansion on revenue from previous years. Their
business model is cost effective and the CEO of Costco Jim Singel has
been taken the responsibility of increasing the profit by all effective
ways. He keeps close eyes on every possible aspect as well as on the
product. Costco justified its cost-effective business strategy by
attracting high volume of customers all around the country. They have
given a high competition to rivals by considering effluent to low
income customers in their target list. Their high productivity and
expenditure ratios are transparent, and this statistic is a biggest proof
of their success. In a way they are satisfying needs of both the
suppliers and the customers.
Jim Sinegal’s leadership style and Craig Jelinek’s approach
Jim Sinegal was an effective leader and CEO. He tried to involve in
all warehouse operations. He used to visit 8 to 10 stores daily as a
store clerk to make good relations with employees and to find out the
visiting experiences of the customers. Jim Sinegal wander through the
aisles and try to fix the problems associated with reputation of the
company. Being an effective leader, Jim Sinegal has a special knack
in crafting and executing strategies. So, we would assign grade A
because of his mind-blowing strategies. He wanted to keep the prices
of the product low as much as possible as he did not want that
someday any competitor enters the market and beats the prices of the
Costco. He wants to establish an organization that will be there 50
years from now. In addition to this, product selection, growth strategy
and most important Treasure hunt merchandising is used a tool to
increase the regular visit of the customers. Craig Jelinek continues
the mission, vision and values of Jim Sinegal. He has a same objective
of offering low prices with best quality. He follows the ethics of
obeying laws, respecting customers, taking care of employees. Jelinek
focuses on expanding the business globally and increasing the sales.
There is always a risk for the business when new CEO is appointed.
But under his leadership, growth rate is high as compared to most of
the competitors, share price goes up and significant growth in
dividends. It is all because of better understanding of the business and
strategies. (Newsmax, 2019). Based on the information given in the
case study Costco’s business philosophy, values and code of ethics
are:
Obey the law: Obeying the law is important as it gives the framework
to the business how to act and operate. Costco follows all the rules and
regulations of every community where they operate their business.
They pledge to follow all the laws and the legal requirements,
respecting all the government official’s, meeting all the safety and
security standards, meeting all the requirements related to
employment law and ecological standard, comply with antitrust law,
following the proper laws and regulations related to foreign laws
while operating the business outside the country and working in
accordance with foreign corrupt practices act or the law of the other
countries.
Take care of our employees: Employees are one of the most important
assets of the company. Costco provides their employees with ample
growth opportunities for their personal and career growth. They
pledge to provide employees with Competitive wages, Employment
benefits, safe and healthy work environment, Career opportunities and
a work environment which is free from all the bias and harassment.
Take care of members: Members are the reason for the existence of
the business. As we all know that Costco’s members have lots of
shopping alternatives like Walmart, superstore etc. So, the company
needs to maintain the member's trust for that they pledge to provide
Top quality products at the best price, highest food safety standards,
100% satisfaction guarantee, warranty on products and services,
pleasant shopping environment and experience, best customer service
03 and provide products that are ecologically sensitive.
Respect our suppliers: Suppliers must prosper along with the
company for the success of the business. They strive to treat all the
suppliers and their representative respectfully, honour all their
commitments, protect all supplier’s assets, no gratitude’s and always
do what is right.
Reward and shareholders: As a company trades its stocks with
NASDAQ stock exchange, its shareholders are its business partners.
To be successful, we need to provide our shareholders with good
returns as they invest their money in the Costco. They pledge to
provide in the same way to their present and future shareholders, as
well as the employees will also be rewarded for their time and efforts.
Costco from financial perspective:
The various financial ratios of the years 2014, 2015 and 2016 showed
that Gross Profit Margin and total return on assets is increasing at
slow pace (from 12.59% to 13.32%), which is a good indicator to
yield high profit in future. One and only ratio that fluctuated with 3-
4% is return on stockholder’s equity. In 2014, it was above average
which has reached to 21.92% in the next year. It decreased
approximately 2.5% in 2016. EPS is also fluctuating with little
variation (from 4,65 to 5.33). Costco is weak in maintaining current
ratio (from 1.22 to 0.98). It should be higher than 1 and the best one is
2:1. This ratio has decreased continuously which shows that Costco do
not have enough current assets to pay off the current liabilities. Debt
in comparison to total assets is better than before. Company can
generate enough cash in future because its debt to equity ratio is below
1 (0.34) . There is not much variations in the inventory turnover and
inventory days. It means that whatever the company purchases get
sold off at the same ratio in relation to previous years. Overall, Costco
is doing well but weak points are always there. Company should work
on those weakness to grab more opportunities.
Recommendations
Online services and self-checkout: Every organization is expanding
with the help of technology. Online-services has made the life of
people so easier. Take an example of Amazon which provides online
shopping and home delivery services. Another example is Superstore
where we can order online all the required items and they prepare the
cart for us. We just have to go there and park the car, employees put
the stuff inside. In addition to this, there is also self-checkout option at
the superstore which is not available at Costco. It would reduce the
workload of employees and they do not need more employees as
cashier.
Improve Margin: Costco is generating huge amount of revenue from
membership fees. This is the reason that Costco prices are not too
high. Still, there are people who could pay more for the price of
product depending on the quality, but they do not want to pay the
membership fees. Costco should increase the margin by keeping
membership fees low.
Diversification: Walmart is at number one because it sells 1000 times
more variety of products which satisfy every need of customers as
compared to Costco. No doubt, that Costco is following a strategy to
keep less variety in all items, but we cannot neglect that the people
living in Canada belong to different cultures and countries. Their
choices regarding each item is different. Costco must increase the
variety keeping in mind all the residents.
No benefit for small household: Costco sells products in large
quantities. Small household requires only number of items per week.
They cannot buy that stock as that will expire after some time. So,
visiting Costco and doing shopping is only valuable for large
households. Costco should open a store to sell small quantities as well.
Expand product-line: whenever buyers visit Costco, they see only few
brands such as Adidas, Puma, Reebok but only few04 items related to
such brands are there. Experience of customers with those products is
no so good. Those might be defective pieces company sells. But to
increase sale and customer loyalty Costco should contact the famous
brands and sell their products.
Advertisement: Costco do not advertise at all. It only sends mail to the
prospective member as well as coupons to existing customers. But this
is not enough in this era where people are addicted to social media.
Number of people do not visit Costco because they do not have
membership cards. They have no experience what type of products
Costco sells or what quality they provide because there is no
advertisement. So, Costco could provide one- or two-month free trail
for shopping to bring new customers to the business if they do not
want to spend money on advertisement.
Referencess
1. Newsmaxfinanace. (2019, February 9). Retrieved from
www.newsmax.com:
https://www.newsmax.com/finance/benreynolds/costco-ceo-
company
2. Gamble, J. E., Thompson, A. A., Jr., & Peteraf, M. A. (2019).
Essentials of strategic management: The quest for competitive
advantage. Dubuque: McGraw-Hill Education.
