Putri Amandhari64 INT B | Strategic ManagementChapter 2 and Case 2 of Costco Wholesale

Charting Companys Direction: Vision, Mission, Objective and Strategy

Costco Wholesale was one of the third largest retailer in the United States, the seventh largest retailer in the world, and the clear leader of the discount warehouse and wholesale club segment of the North American retailing industry. With the total 598 warehouses in total. Jim Sinegal is the co-founder and CEO that are the person in-chafe in every situation happened in practices. Defining the Companys Direction first started with strategic vision as the first task.

Costco focusing generating their business model as high generated sales volume and rapid inventory turnover by attractive low price offering fee-paying members.

were going to be a company thats on a first-name basis with everyone[footnoteRef:1] [1: Jim Sinegal c-6]

Costco crafted their strategy into: Pricing, they emphasize on low pricing. Product Selection, stocked about 40,000 items. Treasure-Hunt Merchandising, opportunities of the Costcos members to get the cheap-deal in between. Low-cost emphasis. and for Growth strategy they have 12 regional cross-docking depots. And about the membership, they have two types of Business and Gold Star (annual fee $55) and could upgrade into Executive Membership for an annual fee of $110. Had 92,000 full-time employee and 72,000 part-time employees with health and dental care plans, health care, convenient prescription, dependent care reimbursement, insurance, ESOP.

Corporate cultures and manner are one of the bottom line of the companys. Its shows hows their company as a corporate and the employees should behave. From the Costcos wholesale Case as it mention on the books they have five corporate cultures and manners that applied on their atmosphere: 1) Obey the law 2) Take care of our member 3) Take care of our employees 4) Respect our suppliers 5) Reward our shareholder.

EvaluationOverall, Costco sounds like a perfect of company with great demand and opportunities through their internal and external practices. They do take care about they customers, their stores, and one things that almost valuable their employees. Their CEO, Mr. Jim Sinegal also playing a huge part into to show their employee if he really care and always planned to have company visit through the Costco store that spread all over Europe.

Costco company not only make their corporates culture to be seen in a wall. good business need somebody to act, experience and implement what is really written on their vision and mission. In this case, Jim Sinegal try to prove this good business practice and jump into it. Through this kind of CEO, their top level management can learn what really happening and what really the situation up in the air. Beside the efficiency of business control, they can also learn from their mistakes and fix it immediately without any third-party-side involved.

BASIC COMPETITOR ANALYSISThough we already understand if Costco if implement the good business practices, they also need to adjust with their dynamic situation of competition. As mentioned one the case that Costco has two other main competitors who also operate almost in the similar focused and target.

And yes, there is no comfort zone when once youre in into the market. Costco need to face and learn from their competitor. First, Sams Clubhouse is a wholesale opened in 1984. In early 2012 there were 611 Sams Club locations in the United States with 49 million members and record-high fiscal 2012 sales of $53.8 billion.[footnoteRef:2] Stocked about 4000 items, and also have a supporting departments like photo processing, pharmacy, optical department and self-service gasoline pumps. Sams Clubhouse membership worth $40 and has a premium member club that cost $100. Shipped almost 65% of non fuel-merchandise from some 25 distribution facilities. They also have more than 100,000 people across all aspects of its operation in the United States. [2: c-21]

Meanwhile, BJs wholesale started on the mid-1980s and had a total of 195 stores. Merchandise almost 7,000 items and about 70% percent of BJs product line can be found in the supermarket. But they have different style on reaching their consumer: 1) More focusing on individual consumer 2) clustering club locations to achieve the benefit of name recognition and maximize the efficiencies of management support, distribution and marketing activities 3) more creation on mixing food and general merchandise 4) open longer (10 hours)

SUGGESTIONSCostcos should aware about the competitors movement because Sams Clubhouse and BJs are competing in the almost same area as a warehouse. Competition among warehouse clubs was based on such factors as price, merchandise, quality and selection, location, and member service and its all almost the same.

For companys strategies, Costco should think about extend their business into some level of variance that not only focusing on the wholesale. Learn from the BJs for example, focusing on the groceries and individual market could brought different experiences on their business practices. and by that, its to extend into some type of markets and play into the supermarket or even hyper mart.

Their main income still comes from their member. Members are the interesting part of any good and especially customers to be treat not as any regular customers who just came by and out. Costco should learn about their market and psychographic aspects really well to prevent the saturated market that might happen. Treating the member are by learning by their behavior, their trends and maximizing on the engagement. Because we are not talking about the small numbers of members at one place, because Costco it spread almost in all over United States and some Europes also Asias markets. From those three key aspects, if Costco really care bout their members, I guarantee its a 100% of increasing number of new members might come on the prosperous opportunity .

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