INTEGRATED BUSINESS

EXPERIENCE 2-

CASE STUDY ANALYSIS

TRAN TRUNG HIEU - MBA29152271

NGUYEN HY MINH HOANG ndash MBA 29152195

NGUYEN MINH HOANG ndash MBA29152299

WARM UP

Rules

Same as Chiec non ky dieu Gameshow

You will have 04 Hints to guess

Point to be counted for correct answer at Hints

Hint 1 5 points

Hint 2 4 points

Hint 3 3 points

Hint 4 2 points

Sample Question1 2 3 4 5 6 7 8

1 2 3 4 5 6 7 8

1 2 3 4

Hint 1 30 Total

Sample Question1 2 3 4 5 6 7 8

1 2 3 4 5 6 7 8

1 2 3 4

Hint 2

Sample Question1 2 3 4 5 6 7 8

1 2 3 4 5 6 7 8

1 2 3 4

Hint 3

Sample Question1 2 3 4 5 6 7 8

1 2 3 4 5 6 7 8

1 2 3 4

Hint 4

1159

1 2 3 4 5 6 7 8

B U S I N E S S1 2 3 4 5 6 7 8

S T R A T E G Y1 2 3 4

G A M E

Sample Question

Question 1

Hint 1

1 2 3 4 5 6

Hint 2

Question 1

1 2 3 4 5 6

Hint 3

Question 1

1 2 3 4 5 6

Hint 4 Start with letter ldquoRrdquo

Question 1

1 2 3 4 5 6

Question 1

1 2 3 4 5 6

R E T A I L

Question 2

1 2 3 4 5 6 7 8 9 10 11 12 13

Hint 1

Question 2

1 2 3 4 5 6 7 8 9 10 11 12 13

Hint 2

Question 2

1 2 3 4 5 6 7 8 9 10 11 12 13

Hint 3

Question 2

1 2 3 4 5 6 7 8 9 10 11 12 13

Hint 4

Question 2

1 2 3 4 5 6 7 8 9 10 11 12 13

M U L T I N A T I O N A L

1 2 3 4 5 6 7 8 9 10

Question 3

Hint 1

1 2 3 4 5 6 7 8 9 10

Question 3

Hint 2

Question 3

Hint 3

1 2 3 4 5 6 7 8 9 10

1 2 3 4 5 6 7 8 9 10

Question 3

Hint 4

Question 3

1 2 3 4 5 6 7 8 9 10

M E M B E R S H I P

1Retail

2Multinational

3Membership

Savings Too Big To Get Home

>

Costco Today

Costco Facts - 2nd largest global retailer (National Retail Federation 2015)

- 18th largest in Fortune 500 (Costco 2015)

- $71 billion market cap (Costco 2016)

- 698 locations worldwide (568 in North America) (Costco 2016)

Costco Stores

Overall Competitive Landscape

- Costco dominated Canada wholesale club industry with a 72 share of value sales and 60 of the total number of outlets (Euromonitor 2016)

- In the US Costco outperformed both Samrsquos Club and BJrsquos Wholesale club over the 2009 ndash 2014 period (Euromonitor 2015)

- In 2014 Costco accounted for 52 of the total US market share (Euromonitor 2015)

Overall Competitive Landscape

- Competition is based among the following factors price merchandise quality and selection location and customer service (MarketLine 2015)

- Highly competitive industry whereas Costco will have to compete against

(1) other players in wholesale club industry

(2) other forms of retailing businesses such as retail discounters (Walmart and Dollar General) supermarkets general merchandise chains specialty chains gasoline station and Internet retailers (Arthur 2012)

COSTCOrsquoS MISSION amp BUSINESS MODEL

A company mission statement describes its present business scope and purpose (ldquowhere we are what we do and why we are hererdquo)

According to Costcorsquos its mission statement is (ldquoto continually provide our members with quality goods and services at the lowest possible pricerdquo)

BUSINESS MODEL

Overview

The plan implemented by a company to generate revenue and make a profit from operations

The model includes the components and functions of the business as well as the revenues it generates and the

expenses it incurs

COSTCOrsquoS BUSINESS MODEL High sale volume and rapid inventory turnover

Offering fee-paying members attractively low prices on a limited selection of nationally branded and selected private- label products in a wide range of merchandise categories

Allowing it to sell and receive cash for inventory before it had to pay many merchandise vendors even when vendor payments were made in time to take advantage of early payment discount

COSTCOrsquoS BUSINESS MODEL A unique aspect of Costcorsquos business model

Limits marketing advertising and promotional activities to new warehouse openings

Occasional direct mail marketing to prospective new members and regular direct marketing programs (such as The Costco Connection a magazine we publish for our members and coupon mailershellip)

MARKETING AND ADVERTISING

Costco has developed a reputation as a socially responsible company by its actions and not by its marketing

Costco does not have a public relations department or staff

Costco relies primarily on word-of-mouth from its members to spread its brand messages

MARKETING AND ADVERTISING

Using direct marketing to existing customers to promote merchandize

The executive membership program offers additional benefits on member services

Its low prices and reputation for making shopping at Costco something of a treasure-hunt made it unnecessary to engage in extensive advertising or sales campaigns

These practices result in lower marketing expenses as compared to typical retailers

APPEALING BUSINESS MODEL

Their mission is to provide quality goods and services at the lowest possible price

Satisfying buyer needs and requirements at a price they will consider a good value

The greater the value delivered and the lower the price to get the value the more appealing a companyrsquos value proposition and product offering

Costco Strategy 1 Pricing

2 Product Selection

3 Treasure Hunt Merchandising

4 Low Cost Emphasis

Chief Elements of Costco Strategy

Ultra-low prices Keep the customers going to the shop by wowing them with low prices Low markup on brand-name merchandise at 14 (compared to 20 ndash 50 markups at other discounters and many supermarkets Jim Sinegal - CEO of Costco said ldquoWe understand that our members do not come to us because the window displays or the Santa Claus or the piano player They come and shop with us because we offer great valuesrdquo

Product Selection

Product Selection

The selection within each product category was restricted in some cases to a single offering

Costco stocked only a 325 ndash count bottle of Advil ndash a size that many shoppers might find too large for their needs

Costco had opened ancillary departments within the next to most Costco warehouses see the table on the next slidehellip

Costcorsquo s Strategy - Treasure Hunt Merchandising

Dozens of featured specials came and went very quickly sometimes in several days or a week ndash like Italian ndash made Hathaway shirts priced at $2999 and $800 leather sectional sofas

The strategy was to entice the shoppers and bargain ndash hunting shoppers would go to Costco more frequently than for periodic ldquostock uprdquo trips

The shoppers quickly learned that they need to buy treasure ndash hunt specials that interested them because these items would very likely not available on their next shopping trip

Costcorsquo s StrategyLow cost emphasis

Costco eliminate all the frills and costs historically associated with conventional retailers including salespeople fancy buildings delivery billing and accounts receivable

They locate warehouses on high ndash traffic routes in or near upscale suburbs that were easily accessible by small businesses and residents with above ndash average incomes it avoided prime real estate sites in order to contain land costs

Warehouse building material Metal pre-engineered design concrete floors and minimal interior deacutecor

COSTCOrsquoS WAREHOUSE

Costcorsquo s Strategy Growth Strategy

Costco had opened between 14 and 34 new locations annually (most in the US) In the fiscal year 2011 Costco spent $13 billion to open 20 new locations two newly relocated warehouses and several distribution depots In the fiscal year 2012 4 new warehouses in the US and 2 new warehouses in Japan (first 4 months of fiscal year 2012) and planned to open an additional 12 new warehouses on September 2012

Grade the CEO

Game Name Right Names

By whom you are inspired

Source httpwwwcnbccom20090424Portfolios-Best-American-CEOs-of-All-Timehtmlslide=12

WARM UP

Rules

Same as Chiec non ky dieu Gameshow

You will have 04 Hints to guess

Point to be counted for correct answer at Hints

Hint 1 5 points

Hint 2 4 points

Hint 3 3 points

Hint 4 2 points

Sample Question1 2 3 4 5 6 7 8

1 2 3 4 5 6 7 8

1 2 3 4

Hint 1 30 Total

Sample Question1 2 3 4 5 6 7 8

1 2 3 4 5 6 7 8

1 2 3 4

Hint 2

Sample Question1 2 3 4 5 6 7 8

1 2 3 4 5 6 7 8

1 2 3 4

Hint 3

Sample Question1 2 3 4 5 6 7 8

1 2 3 4 5 6 7 8

1 2 3 4

Hint 4

1159

1 2 3 4 5 6 7 8

B U S I N E S S1 2 3 4 5 6 7 8

S T R A T E G Y1 2 3 4

G A M E

Sample Question

Question 1

Hint 1

1 2 3 4 5 6

Hint 2

Question 1

1 2 3 4 5 6

Hint 3

Question 1

1 2 3 4 5 6

Hint 4 Start with letter ldquoRrdquo

Question 1

1 2 3 4 5 6

Question 1

1 2 3 4 5 6

R E T A I L

Question 2

1 2 3 4 5 6 7 8 9 10 11 12 13

Hint 1

Question 2

1 2 3 4 5 6 7 8 9 10 11 12 13

Hint 2

Question 2

1 2 3 4 5 6 7 8 9 10 11 12 13

Hint 3

Question 2

1 2 3 4 5 6 7 8 9 10 11 12 13

Hint 4

Question 2

1 2 3 4 5 6 7 8 9 10 11 12 13

M U L T I N A T I O N A L

1 2 3 4 5 6 7 8 9 10

Question 3

Hint 1

1 2 3 4 5 6 7 8 9 10

Question 3

Hint 2

Question 3

Hint 3

1 2 3 4 5 6 7 8 9 10

1 2 3 4 5 6 7 8 9 10

Question 3

Hint 4

Question 3

1 2 3 4 5 6 7 8 9 10

M E M B E R S H I P

1Retail

2Multinational

3Membership

Savings Too Big To Get Home

>

Costco Today

Costco Facts - 2nd largest global retailer (National Retail Federation 2015)

- 18th largest in Fortune 500 (Costco 2015)

- $71 billion market cap (Costco 2016)

- 698 locations worldwide (568 in North America) (Costco 2016)

Costco Stores

Overall Competitive Landscape

- Costco dominated Canada wholesale club industry with a 72 share of value sales and 60 of the total number of outlets (Euromonitor 2016)

- In the US Costco outperformed both Samrsquos Club and BJrsquos Wholesale club over the 2009 ndash 2014 period (Euromonitor 2015)

- In 2014 Costco accounted for 52 of the total US market share (Euromonitor 2015)

Overall Competitive Landscape

- Competition is based among the following factors price merchandise quality and selection location and customer service (MarketLine 2015)

- Highly competitive industry whereas Costco will have to compete against

(1) other players in wholesale club industry

(2) other forms of retailing businesses such as retail discounters (Walmart and Dollar General) supermarkets general merchandise chains specialty chains gasoline station and Internet retailers (Arthur 2012)

COSTCOrsquoS MISSION amp BUSINESS MODEL

A company mission statement describes its present business scope and purpose (ldquowhere we are what we do and why we are hererdquo)

According to Costcorsquos its mission statement is (ldquoto continually provide our members with quality goods and services at the lowest possible pricerdquo)

BUSINESS MODEL

Overview

The plan implemented by a company to generate revenue and make a profit from operations

The model includes the components and functions of the business as well as the revenues it generates and the

expenses it incurs

COSTCOrsquoS BUSINESS MODEL High sale volume and rapid inventory turnover

Offering fee-paying members attractively low prices on a limited selection of nationally branded and selected private- label products in a wide range of merchandise categories

Allowing it to sell and receive cash for inventory before it had to pay many merchandise vendors even when vendor payments were made in time to take advantage of early payment discount

COSTCOrsquoS BUSINESS MODEL A unique aspect of Costcorsquos business model

Limits marketing advertising and promotional activities to new warehouse openings

Occasional direct mail marketing to prospective new members and regular direct marketing programs (such as The Costco Connection a magazine we publish for our members and coupon mailershellip)

MARKETING AND ADVERTISING

Costco has developed a reputation as a socially responsible company by its actions and not by its marketing

Costco does not have a public relations department or staff

Costco relies primarily on word-of-mouth from its members to spread its brand messages

MARKETING AND ADVERTISING

Using direct marketing to existing customers to promote merchandize

The executive membership program offers additional benefits on member services

Its low prices and reputation for making shopping at Costco something of a treasure-hunt made it unnecessary to engage in extensive advertising or sales campaigns

These practices result in lower marketing expenses as compared to typical retailers

APPEALING BUSINESS MODEL

Their mission is to provide quality goods and services at the lowest possible price

Satisfying buyer needs and requirements at a price they will consider a good value

The greater the value delivered and the lower the price to get the value the more appealing a companyrsquos value proposition and product offering

Costco Strategy 1 Pricing

2 Product Selection

3 Treasure Hunt Merchandising

4 Low Cost Emphasis

Chief Elements of Costco Strategy

Ultra-low prices Keep the customers going to the shop by wowing them with low prices Low markup on brand-name merchandise at 14 (compared to 20 ndash 50 markups at other discounters and many supermarkets Jim Sinegal - CEO of Costco said ldquoWe understand that our members do not come to us because the window displays or the Santa Claus or the piano player They come and shop with us because we offer great valuesrdquo

Product Selection

Product Selection

The selection within each product category was restricted in some cases to a single offering

Costco stocked only a 325 ndash count bottle of Advil ndash a size that many shoppers might find too large for their needs

Costco had opened ancillary departments within the next to most Costco warehouses see the table on the next slidehellip

Costcorsquo s Strategy - Treasure Hunt Merchandising

Dozens of featured specials came and went very quickly sometimes in several days or a week ndash like Italian ndash made Hathaway shirts priced at $2999 and $800 leather sectional sofas

The strategy was to entice the shoppers and bargain ndash hunting shoppers would go to Costco more frequently than for periodic ldquostock uprdquo trips

The shoppers quickly learned that they need to buy treasure ndash hunt specials that interested them because these items would very likely not available on their next shopping trip

Costcorsquo s StrategyLow cost emphasis

Costco eliminate all the frills and costs historically associated with conventional retailers including salespeople fancy buildings delivery billing and accounts receivable

They locate warehouses on high ndash traffic routes in or near upscale suburbs that were easily accessible by small businesses and residents with above ndash average incomes it avoided prime real estate sites in order to contain land costs

Warehouse building material Metal pre-engineered design concrete floors and minimal interior deacutecor

COSTCOrsquoS WAREHOUSE

Costcorsquo s Strategy Growth Strategy

Costco had opened between 14 and 34 new locations annually (most in the US) In the fiscal year 2011 Costco spent $13 billion to open 20 new locations two newly relocated warehouses and several distribution depots In the fiscal year 2012 4 new warehouses in the US and 2 new warehouses in Japan (first 4 months of fiscal year 2012) and planned to open an additional 12 new warehouses on September 2012

Grade the CEO

Game Name Right Names

By whom you are inspired

Source httpwwwcnbccom20090424Portfolios-Best-American-CEOs-of-All-Timehtmlslide=12

Rules

Same as Chiec non ky dieu Gameshow

You will have 04 Hints to guess

Point to be counted for correct answer at Hints

Hint 1 5 points

Hint 2 4 points

Hint 3 3 points

Hint 4 2 points

Sample Question1 2 3 4 5 6 7 8

1 2 3 4 5 6 7 8

1 2 3 4

Hint 1 30 Total

Sample Question1 2 3 4 5 6 7 8

1 2 3 4 5 6 7 8

1 2 3 4

Hint 2

Sample Question1 2 3 4 5 6 7 8

1 2 3 4 5 6 7 8

1 2 3 4

Hint 3

Sample Question1 2 3 4 5 6 7 8

1 2 3 4 5 6 7 8

1 2 3 4

Hint 4

1159

1 2 3 4 5 6 7 8

B U S I N E S S1 2 3 4 5 6 7 8

S T R A T E G Y1 2 3 4

G A M E

Sample Question

Question 1

Hint 1

1 2 3 4 5 6

Hint 2

Question 1

1 2 3 4 5 6

Hint 3

Question 1

1 2 3 4 5 6

Hint 4 Start with letter ldquoRrdquo

Question 1

1 2 3 4 5 6

Question 1

1 2 3 4 5 6

R E T A I L

Question 2

1 2 3 4 5 6 7 8 9 10 11 12 13

Hint 1

Question 2

1 2 3 4 5 6 7 8 9 10 11 12 13

Hint 2

Question 2

1 2 3 4 5 6 7 8 9 10 11 12 13

Hint 3

Question 2

1 2 3 4 5 6 7 8 9 10 11 12 13

Hint 4

Question 2

1 2 3 4 5 6 7 8 9 10 11 12 13

M U L T I N A T I O N A L

1 2 3 4 5 6 7 8 9 10

Question 3

Hint 1

1 2 3 4 5 6 7 8 9 10

Question 3

Hint 2

Question 3

Hint 3

1 2 3 4 5 6 7 8 9 10

1 2 3 4 5 6 7 8 9 10

Question 3

Hint 4

Question 3

1 2 3 4 5 6 7 8 9 10

M E M B E R S H I P

1Retail

2Multinational

3Membership

Savings Too Big To Get Home

>

Costco Today

Costco Facts - 2nd largest global retailer (National Retail Federation 2015)

- 18th largest in Fortune 500 (Costco 2015)

- $71 billion market cap (Costco 2016)

- 698 locations worldwide (568 in North America) (Costco 2016)

Costco Stores

Overall Competitive Landscape

- Costco dominated Canada wholesale club industry with a 72 share of value sales and 60 of the total number of outlets (Euromonitor 2016)

- In the US Costco outperformed both Samrsquos Club and BJrsquos Wholesale club over the 2009 ndash 2014 period (Euromonitor 2015)

- In 2014 Costco accounted for 52 of the total US market share (Euromonitor 2015)

Overall Competitive Landscape

- Competition is based among the following factors price merchandise quality and selection location and customer service (MarketLine 2015)

- Highly competitive industry whereas Costco will have to compete against

(1) other players in wholesale club industry

(2) other forms of retailing businesses such as retail discounters (Walmart and Dollar General) supermarkets general merchandise chains specialty chains gasoline station and Internet retailers (Arthur 2012)

COSTCOrsquoS MISSION amp BUSINESS MODEL

A company mission statement describes its present business scope and purpose (ldquowhere we are what we do and why we are hererdquo)

According to Costcorsquos its mission statement is (ldquoto continually provide our members with quality goods and services at the lowest possible pricerdquo)

BUSINESS MODEL

Overview

The plan implemented by a company to generate revenue and make a profit from operations

The model includes the components and functions of the business as well as the revenues it generates and the

expenses it incurs

COSTCOrsquoS BUSINESS MODEL High sale volume and rapid inventory turnover

Offering fee-paying members attractively low prices on a limited selection of nationally branded and selected private- label products in a wide range of merchandise categories

Allowing it to sell and receive cash for inventory before it had to pay many merchandise vendors even when vendor payments were made in time to take advantage of early payment discount

COSTCOrsquoS BUSINESS MODEL A unique aspect of Costcorsquos business model

Limits marketing advertising and promotional activities to new warehouse openings

Occasional direct mail marketing to prospective new members and regular direct marketing programs (such as The Costco Connection a magazine we publish for our members and coupon mailershellip)

MARKETING AND ADVERTISING

Costco has developed a reputation as a socially responsible company by its actions and not by its marketing

Costco does not have a public relations department or staff

Costco relies primarily on word-of-mouth from its members to spread its brand messages

MARKETING AND ADVERTISING

Using direct marketing to existing customers to promote merchandize

The executive membership program offers additional benefits on member services

Its low prices and reputation for making shopping at Costco something of a treasure-hunt made it unnecessary to engage in extensive advertising or sales campaigns

These practices result in lower marketing expenses as compared to typical retailers

APPEALING BUSINESS MODEL

Their mission is to provide quality goods and services at the lowest possible price

Satisfying buyer needs and requirements at a price they will consider a good value

The greater the value delivered and the lower the price to get the value the more appealing a companyrsquos value proposition and product offering

Costco Strategy 1 Pricing

2 Product Selection

3 Treasure Hunt Merchandising

4 Low Cost Emphasis

Chief Elements of Costco Strategy

Ultra-low prices Keep the customers going to the shop by wowing them with low prices Low markup on brand-name merchandise at 14 (compared to 20 ndash 50 markups at other discounters and many supermarkets Jim Sinegal - CEO of Costco said ldquoWe understand that our members do not come to us because the window displays or the Santa Claus or the piano player They come and shop with us because we offer great valuesrdquo

Product Selection

Product Selection

The selection within each product category was restricted in some cases to a single offering

Costco stocked only a 325 ndash count bottle of Advil ndash a size that many shoppers might find too large for their needs

Costco had opened ancillary departments within the next to most Costco warehouses see the table on the next slidehellip

Costcorsquo s Strategy - Treasure Hunt Merchandising

Dozens of featured specials came and went very quickly sometimes in several days or a week ndash like Italian ndash made Hathaway shirts priced at $2999 and $800 leather sectional sofas

The strategy was to entice the shoppers and bargain ndash hunting shoppers would go to Costco more frequently than for periodic ldquostock uprdquo trips

The shoppers quickly learned that they need to buy treasure ndash hunt specials that interested them because these items would very likely not available on their next shopping trip

Costcorsquo s StrategyLow cost emphasis

Costco eliminate all the frills and costs historically associated with conventional retailers including salespeople fancy buildings delivery billing and accounts receivable

They locate warehouses on high ndash traffic routes in or near upscale suburbs that were easily accessible by small businesses and residents with above ndash average incomes it avoided prime real estate sites in order to contain land costs

Warehouse building material Metal pre-engineered design concrete floors and minimal interior deacutecor

COSTCOrsquoS WAREHOUSE

Costcorsquo s Strategy Growth Strategy

Costco had opened between 14 and 34 new locations annually (most in the US) In the fiscal year 2011 Costco spent $13 billion to open 20 new locations two newly relocated warehouses and several distribution depots In the fiscal year 2012 4 new warehouses in the US and 2 new warehouses in Japan (first 4 months of fiscal year 2012) and planned to open an additional 12 new warehouses on September 2012

Grade the CEO

Game Name Right Names

By whom you are inspired

Source httpwwwcnbccom20090424Portfolios-Best-American-CEOs-of-All-Timehtmlslide=12

Sample Question1 2 3 4 5 6 7 8

1 2 3 4 5 6 7 8

1 2 3 4

Hint 1 30 Total

Sample Question1 2 3 4 5 6 7 8

1 2 3 4 5 6 7 8

1 2 3 4

Hint 2

Sample Question1 2 3 4 5 6 7 8

1 2 3 4 5 6 7 8

1 2 3 4

Hint 3

Sample Question1 2 3 4 5 6 7 8

1 2 3 4 5 6 7 8

1 2 3 4

Hint 4

1159

1 2 3 4 5 6 7 8

B U S I N E S S1 2 3 4 5 6 7 8

S T R A T E G Y1 2 3 4

G A M E

Sample Question

Question 1

Hint 1

1 2 3 4 5 6

Hint 2

Question 1

1 2 3 4 5 6

Hint 3

Question 1

1 2 3 4 5 6

Hint 4 Start with letter ldquoRrdquo

Question 1

1 2 3 4 5 6

Question 1

1 2 3 4 5 6

R E T A I L

Question 2

1 2 3 4 5 6 7 8 9 10 11 12 13

Hint 1

Question 2

1 2 3 4 5 6 7 8 9 10 11 12 13

Hint 2

Question 2

1 2 3 4 5 6 7 8 9 10 11 12 13

Hint 3

Question 2

1 2 3 4 5 6 7 8 9 10 11 12 13

Hint 4

Question 2

1 2 3 4 5 6 7 8 9 10 11 12 13

M U L T I N A T I O N A L

1 2 3 4 5 6 7 8 9 10

Question 3

Hint 1

1 2 3 4 5 6 7 8 9 10

Question 3

Hint 2

Question 3

Hint 3

1 2 3 4 5 6 7 8 9 10

1 2 3 4 5 6 7 8 9 10

Question 3

Hint 4

Question 3

1 2 3 4 5 6 7 8 9 10

M E M B E R S H I P

1Retail

2Multinational

3Membership

Savings Too Big To Get Home

>

Costco Today

Costco Facts - 2nd largest global retailer (National Retail Federation 2015)

- 18th largest in Fortune 500 (Costco 2015)

- $71 billion market cap (Costco 2016)

- 698 locations worldwide (568 in North America) (Costco 2016)

Costco Stores

Overall Competitive Landscape

- Costco dominated Canada wholesale club industry with a 72 share of value sales and 60 of the total number of outlets (Euromonitor 2016)

- In the US Costco outperformed both Samrsquos Club and BJrsquos Wholesale club over the 2009 ndash 2014 period (Euromonitor 2015)

- In 2014 Costco accounted for 52 of the total US market share (Euromonitor 2015)

Overall Competitive Landscape

- Competition is based among the following factors price merchandise quality and selection location and customer service (MarketLine 2015)

- Highly competitive industry whereas Costco will have to compete against

(1) other players in wholesale club industry

(2) other forms of retailing businesses such as retail discounters (Walmart and Dollar General) supermarkets general merchandise chains specialty chains gasoline station and Internet retailers (Arthur 2012)

COSTCOrsquoS MISSION amp BUSINESS MODEL

A company mission statement describes its present business scope and purpose (ldquowhere we are what we do and why we are hererdquo)

According to Costcorsquos its mission statement is (ldquoto continually provide our members with quality goods and services at the lowest possible pricerdquo)

BUSINESS MODEL

Overview

The plan implemented by a company to generate revenue and make a profit from operations

The model includes the components and functions of the business as well as the revenues it generates and the

expenses it incurs

COSTCOrsquoS BUSINESS MODEL High sale volume and rapid inventory turnover

Offering fee-paying members attractively low prices on a limited selection of nationally branded and selected private- label products in a wide range of merchandise categories

Allowing it to sell and receive cash for inventory before it had to pay many merchandise vendors even when vendor payments were made in time to take advantage of early payment discount

COSTCOrsquoS BUSINESS MODEL A unique aspect of Costcorsquos business model

Limits marketing advertising and promotional activities to new warehouse openings

Occasional direct mail marketing to prospective new members and regular direct marketing programs (such as The Costco Connection a magazine we publish for our members and coupon mailershellip)

MARKETING AND ADVERTISING

Costco has developed a reputation as a socially responsible company by its actions and not by its marketing

Costco does not have a public relations department or staff

Costco relies primarily on word-of-mouth from its members to spread its brand messages

MARKETING AND ADVERTISING

Using direct marketing to existing customers to promote merchandize

The executive membership program offers additional benefits on member services

Its low prices and reputation for making shopping at Costco something of a treasure-hunt made it unnecessary to engage in extensive advertising or sales campaigns

These practices result in lower marketing expenses as compared to typical retailers

APPEALING BUSINESS MODEL

Their mission is to provide quality goods and services at the lowest possible price

Satisfying buyer needs and requirements at a price they will consider a good value

The greater the value delivered and the lower the price to get the value the more appealing a companyrsquos value proposition and product offering

Costco Strategy 1 Pricing

2 Product Selection

3 Treasure Hunt Merchandising

4 Low Cost Emphasis

Chief Elements of Costco Strategy

Ultra-low prices Keep the customers going to the shop by wowing them with low prices Low markup on brand-name merchandise at 14 (compared to 20 ndash 50 markups at other discounters and many supermarkets Jim Sinegal - CEO of Costco said ldquoWe understand that our members do not come to us because the window displays or the Santa Claus or the piano player They come and shop with us because we offer great valuesrdquo

Product Selection

Product Selection

The selection within each product category was restricted in some cases to a single offering

Costco stocked only a 325 ndash count bottle of Advil ndash a size that many shoppers might find too large for their needs

Costco had opened ancillary departments within the next to most Costco warehouses see the table on the next slidehellip

Costcorsquo s Strategy - Treasure Hunt Merchandising

Dozens of featured specials came and went very quickly sometimes in several days or a week ndash like Italian ndash made Hathaway shirts priced at $2999 and $800 leather sectional sofas

The strategy was to entice the shoppers and bargain ndash hunting shoppers would go to Costco more frequently than for periodic ldquostock uprdquo trips

The shoppers quickly learned that they need to buy treasure ndash hunt specials that interested them because these items would very likely not available on their next shopping trip

Costcorsquo s StrategyLow cost emphasis

Costco eliminate all the frills and costs historically associated with conventional retailers including salespeople fancy buildings delivery billing and accounts receivable

They locate warehouses on high ndash traffic routes in or near upscale suburbs that were easily accessible by small businesses and residents with above ndash average incomes it avoided prime real estate sites in order to contain land costs

Warehouse building material Metal pre-engineered design concrete floors and minimal interior deacutecor

COSTCOrsquoS WAREHOUSE

Costcorsquo s Strategy Growth Strategy

Costco had opened between 14 and 34 new locations annually (most in the US) In the fiscal year 2011 Costco spent $13 billion to open 20 new locations two newly relocated warehouses and several distribution depots In the fiscal year 2012 4 new warehouses in the US and 2 new warehouses in Japan (first 4 months of fiscal year 2012) and planned to open an additional 12 new warehouses on September 2012

Grade the CEO

Game Name Right Names

By whom you are inspired

Source httpwwwcnbccom20090424Portfolios-Best-American-CEOs-of-All-Timehtmlslide=12

Sample Question1 2 3 4 5 6 7 8

1 2 3 4 5 6 7 8

1 2 3 4

Hint 2

Sample Question1 2 3 4 5 6 7 8

1 2 3 4 5 6 7 8

1 2 3 4

Hint 3

Sample Question1 2 3 4 5 6 7 8

1 2 3 4 5 6 7 8

1 2 3 4

Hint 4

1159

1 2 3 4 5 6 7 8

B U S I N E S S1 2 3 4 5 6 7 8

S T R A T E G Y1 2 3 4

G A M E

Sample Question

Question 1

Hint 1

1 2 3 4 5 6

Hint 2

Question 1

1 2 3 4 5 6

Hint 3

Question 1

1 2 3 4 5 6

Hint 4 Start with letter ldquoRrdquo

Question 1

1 2 3 4 5 6

Question 1

1 2 3 4 5 6

R E T A I L

Question 2

1 2 3 4 5 6 7 8 9 10 11 12 13

Hint 1

Question 2

1 2 3 4 5 6 7 8 9 10 11 12 13

Hint 2

Question 2

1 2 3 4 5 6 7 8 9 10 11 12 13

Hint 3

Question 2

1 2 3 4 5 6 7 8 9 10 11 12 13

Hint 4

Question 2

1 2 3 4 5 6 7 8 9 10 11 12 13

M U L T I N A T I O N A L

1 2 3 4 5 6 7 8 9 10

Question 3

Hint 1

1 2 3 4 5 6 7 8 9 10

Question 3

Hint 2

Question 3

Hint 3

1 2 3 4 5 6 7 8 9 10

1 2 3 4 5 6 7 8 9 10

Question 3

Hint 4

Question 3

1 2 3 4 5 6 7 8 9 10

M E M B E R S H I P

1Retail

2Multinational

3Membership

Savings Too Big To Get Home

>

Costco Today

Costco Facts - 2nd largest global retailer (National Retail Federation 2015)

- 18th largest in Fortune 500 (Costco 2015)

- $71 billion market cap (Costco 2016)

- 698 locations worldwide (568 in North America) (Costco 2016)

Costco Stores

Overall Competitive Landscape

- Costco dominated Canada wholesale club industry with a 72 share of value sales and 60 of the total number of outlets (Euromonitor 2016)

- In the US Costco outperformed both Samrsquos Club and BJrsquos Wholesale club over the 2009 ndash 2014 period (Euromonitor 2015)

- In 2014 Costco accounted for 52 of the total US market share (Euromonitor 2015)

Overall Competitive Landscape

- Competition is based among the following factors price merchandise quality and selection location and customer service (MarketLine 2015)

- Highly competitive industry whereas Costco will have to compete against

(1) other players in wholesale club industry

(2) other forms of retailing businesses such as retail discounters (Walmart and Dollar General) supermarkets general merchandise chains specialty chains gasoline station and Internet retailers (Arthur 2012)

COSTCOrsquoS MISSION amp BUSINESS MODEL

A company mission statement describes its present business scope and purpose (ldquowhere we are what we do and why we are hererdquo)

According to Costcorsquos its mission statement is (ldquoto continually provide our members with quality goods and services at the lowest possible pricerdquo)

BUSINESS MODEL

Overview

The plan implemented by a company to generate revenue and make a profit from operations

The model includes the components and functions of the business as well as the revenues it generates and the

expenses it incurs

COSTCOrsquoS BUSINESS MODEL High sale volume and rapid inventory turnover

Offering fee-paying members attractively low prices on a limited selection of nationally branded and selected private- label products in a wide range of merchandise categories

Allowing it to sell and receive cash for inventory before it had to pay many merchandise vendors even when vendor payments were made in time to take advantage of early payment discount

COSTCOrsquoS BUSINESS MODEL A unique aspect of Costcorsquos business model

Limits marketing advertising and promotional activities to new warehouse openings

Occasional direct mail marketing to prospective new members and regular direct marketing programs (such as The Costco Connection a magazine we publish for our members and coupon mailershellip)

MARKETING AND ADVERTISING

Costco has developed a reputation as a socially responsible company by its actions and not by its marketing

Costco does not have a public relations department or staff

Costco relies primarily on word-of-mouth from its members to spread its brand messages

MARKETING AND ADVERTISING

Using direct marketing to existing customers to promote merchandize

The executive membership program offers additional benefits on member services

Its low prices and reputation for making shopping at Costco something of a treasure-hunt made it unnecessary to engage in extensive advertising or sales campaigns

These practices result in lower marketing expenses as compared to typical retailers

APPEALING BUSINESS MODEL

Their mission is to provide quality goods and services at the lowest possible price

Satisfying buyer needs and requirements at a price they will consider a good value

The greater the value delivered and the lower the price to get the value the more appealing a companyrsquos value proposition and product offering

Costco Strategy 1 Pricing

2 Product Selection

3 Treasure Hunt Merchandising

4 Low Cost Emphasis

Chief Elements of Costco Strategy

Ultra-low prices Keep the customers going to the shop by wowing them with low prices Low markup on brand-name merchandise at 14 (compared to 20 ndash 50 markups at other discounters and many supermarkets Jim Sinegal - CEO of Costco said ldquoWe understand that our members do not come to us because the window displays or the Santa Claus or the piano player They come and shop with us because we offer great valuesrdquo

Product Selection

Product Selection

The selection within each product category was restricted in some cases to a single offering

Costco stocked only a 325 ndash count bottle of Advil ndash a size that many shoppers might find too large for their needs

Costco had opened ancillary departments within the next to most Costco warehouses see the table on the next slidehellip

Costcorsquo s Strategy - Treasure Hunt Merchandising

Dozens of featured specials came and went very quickly sometimes in several days or a week ndash like Italian ndash made Hathaway shirts priced at $2999 and $800 leather sectional sofas

The strategy was to entice the shoppers and bargain ndash hunting shoppers would go to Costco more frequently than for periodic ldquostock uprdquo trips

The shoppers quickly learned that they need to buy treasure ndash hunt specials that interested them because these items would very likely not available on their next shopping trip

Costcorsquo s StrategyLow cost emphasis

Costco eliminate all the frills and costs historically associated with conventional retailers including salespeople fancy buildings delivery billing and accounts receivable

They locate warehouses on high ndash traffic routes in or near upscale suburbs that were easily accessible by small businesses and residents with above ndash average incomes it avoided prime real estate sites in order to contain land costs

Warehouse building material Metal pre-engineered design concrete floors and minimal interior deacutecor

COSTCOrsquoS WAREHOUSE

Costcorsquo s Strategy Growth Strategy

Costco had opened between 14 and 34 new locations annually (most in the US) In the fiscal year 2011 Costco spent $13 billion to open 20 new locations two newly relocated warehouses and several distribution depots In the fiscal year 2012 4 new warehouses in the US and 2 new warehouses in Japan (first 4 months of fiscal year 2012) and planned to open an additional 12 new warehouses on September 2012

Grade the CEO

Game Name Right Names

By whom you are inspired

Source httpwwwcnbccom20090424Portfolios-Best-American-CEOs-of-All-Timehtmlslide=12

Sample Question1 2 3 4 5 6 7 8

1 2 3 4 5 6 7 8

1 2 3 4

Hint 3

Sample Question1 2 3 4 5 6 7 8

1 2 3 4 5 6 7 8

1 2 3 4

Hint 4

1159

1 2 3 4 5 6 7 8

B U S I N E S S1 2 3 4 5 6 7 8

S T R A T E G Y1 2 3 4

G A M E

Sample Question

Question 1

Hint 1

1 2 3 4 5 6

Hint 2

Question 1

1 2 3 4 5 6

Hint 3

Question 1

1 2 3 4 5 6

Hint 4 Start with letter ldquoRrdquo

Question 1

1 2 3 4 5 6

Question 1

1 2 3 4 5 6

R E T A I L

Question 2

1 2 3 4 5 6 7 8 9 10 11 12 13

Hint 1

Question 2

1 2 3 4 5 6 7 8 9 10 11 12 13

Hint 2

Question 2

1 2 3 4 5 6 7 8 9 10 11 12 13

Hint 3

Question 2

1 2 3 4 5 6 7 8 9 10 11 12 13

Hint 4

Question 2

1 2 3 4 5 6 7 8 9 10 11 12 13

M U L T I N A T I O N A L

1 2 3 4 5 6 7 8 9 10

Question 3

Hint 1

1 2 3 4 5 6 7 8 9 10

Question 3

Hint 2

Question 3

Hint 3

1 2 3 4 5 6 7 8 9 10

1 2 3 4 5 6 7 8 9 10

Question 3

Hint 4

Question 3

1 2 3 4 5 6 7 8 9 10

M E M B E R S H I P

1Retail

2Multinational

3Membership

Savings Too Big To Get Home

>

Costco Today

Costco Facts - 2nd largest global retailer (National Retail Federation 2015)

- 18th largest in Fortune 500 (Costco 2015)

- $71 billion market cap (Costco 2016)

- 698 locations worldwide (568 in North America) (Costco 2016)

Costco Stores

Overall Competitive Landscape

- Costco dominated Canada wholesale club industry with a 72 share of value sales and 60 of the total number of outlets (Euromonitor 2016)

- In the US Costco outperformed both Samrsquos Club and BJrsquos Wholesale club over the 2009 ndash 2014 period (Euromonitor 2015)

- In 2014 Costco accounted for 52 of the total US market share (Euromonitor 2015)

Overall Competitive Landscape

- Competition is based among the following factors price merchandise quality and selection location and customer service (MarketLine 2015)

- Highly competitive industry whereas Costco will have to compete against

(1) other players in wholesale club industry

(2) other forms of retailing businesses such as retail discounters (Walmart and Dollar General) supermarkets general merchandise chains specialty chains gasoline station and Internet retailers (Arthur 2012)

COSTCOrsquoS MISSION amp BUSINESS MODEL

A company mission statement describes its present business scope and purpose (ldquowhere we are what we do and why we are hererdquo)

According to Costcorsquos its mission statement is (ldquoto continually provide our members with quality goods and services at the lowest possible pricerdquo)

BUSINESS MODEL

Overview

The plan implemented by a company to generate revenue and make a profit from operations

The model includes the components and functions of the business as well as the revenues it generates and the

expenses it incurs

COSTCOrsquoS BUSINESS MODEL High sale volume and rapid inventory turnover

Offering fee-paying members attractively low prices on a limited selection of nationally branded and selected private- label products in a wide range of merchandise categories

Allowing it to sell and receive cash for inventory before it had to pay many merchandise vendors even when vendor payments were made in time to take advantage of early payment discount

COSTCOrsquoS BUSINESS MODEL A unique aspect of Costcorsquos business model

Limits marketing advertising and promotional activities to new warehouse openings

Occasional direct mail marketing to prospective new members and regular direct marketing programs (such as The Costco Connection a magazine we publish for our members and coupon mailershellip)

MARKETING AND ADVERTISING

Costco has developed a reputation as a socially responsible company by its actions and not by its marketing

Costco does not have a public relations department or staff

Costco relies primarily on word-of-mouth from its members to spread its brand messages

MARKETING AND ADVERTISING

Using direct marketing to existing customers to promote merchandize

The executive membership program offers additional benefits on member services

Its low prices and reputation for making shopping at Costco something of a treasure-hunt made it unnecessary to engage in extensive advertising or sales campaigns

These practices result in lower marketing expenses as compared to typical retailers

APPEALING BUSINESS MODEL

Their mission is to provide quality goods and services at the lowest possible price

Satisfying buyer needs and requirements at a price they will consider a good value

The greater the value delivered and the lower the price to get the value the more appealing a companyrsquos value proposition and product offering

Costco Strategy 1 Pricing

2 Product Selection

3 Treasure Hunt Merchandising

4 Low Cost Emphasis

Chief Elements of Costco Strategy

Ultra-low prices Keep the customers going to the shop by wowing them with low prices Low markup on brand-name merchandise at 14 (compared to 20 ndash 50 markups at other discounters and many supermarkets Jim Sinegal - CEO of Costco said ldquoWe understand that our members do not come to us because the window displays or the Santa Claus or the piano player They come and shop with us because we offer great valuesrdquo

Product Selection

Product Selection

The selection within each product category was restricted in some cases to a single offering

Costco stocked only a 325 ndash count bottle of Advil ndash a size that many shoppers might find too large for their needs

Costco had opened ancillary departments within the next to most Costco warehouses see the table on the next slidehellip

Costcorsquo s Strategy - Treasure Hunt Merchandising

Dozens of featured specials came and went very quickly sometimes in several days or a week ndash like Italian ndash made Hathaway shirts priced at $2999 and $800 leather sectional sofas

The strategy was to entice the shoppers and bargain ndash hunting shoppers would go to Costco more frequently than for periodic ldquostock uprdquo trips

The shoppers quickly learned that they need to buy treasure ndash hunt specials that interested them because these items would very likely not available on their next shopping trip

Costcorsquo s StrategyLow cost emphasis

Costco eliminate all the frills and costs historically associated with conventional retailers including salespeople fancy buildings delivery billing and accounts receivable

They locate warehouses on high ndash traffic routes in or near upscale suburbs that were easily accessible by small businesses and residents with above ndash average incomes it avoided prime real estate sites in order to contain land costs

Warehouse building material Metal pre-engineered design concrete floors and minimal interior deacutecor

COSTCOrsquoS WAREHOUSE

Costcorsquo s Strategy Growth Strategy

Costco had opened between 14 and 34 new locations annually (most in the US) In the fiscal year 2011 Costco spent $13 billion to open 20 new locations two newly relocated warehouses and several distribution depots In the fiscal year 2012 4 new warehouses in the US and 2 new warehouses in Japan (first 4 months of fiscal year 2012) and planned to open an additional 12 new warehouses on September 2012

Grade the CEO

Game Name Right Names

By whom you are inspired

Source httpwwwcnbccom20090424Portfolios-Best-American-CEOs-of-All-Timehtmlslide=12

Sample Question1 2 3 4 5 6 7 8

1 2 3 4 5 6 7 8

1 2 3 4

Hint 4

1159

1 2 3 4 5 6 7 8

B U S I N E S S1 2 3 4 5 6 7 8

S T R A T E G Y1 2 3 4

G A M E

Sample Question

Question 1

Hint 1

1 2 3 4 5 6

Hint 2

Question 1

1 2 3 4 5 6

Hint 3

Question 1

1 2 3 4 5 6

Hint 4 Start with letter ldquoRrdquo

Question 1

1 2 3 4 5 6

Question 1

1 2 3 4 5 6

R E T A I L

Question 2

1 2 3 4 5 6 7 8 9 10 11 12 13

Hint 1

Question 2

1 2 3 4 5 6 7 8 9 10 11 12 13

Hint 2

Question 2

1 2 3 4 5 6 7 8 9 10 11 12 13

Hint 3

Question 2

1 2 3 4 5 6 7 8 9 10 11 12 13

Hint 4

Question 2

1 2 3 4 5 6 7 8 9 10 11 12 13

M U L T I N A T I O N A L

1 2 3 4 5 6 7 8 9 10

Question 3

Hint 1

1 2 3 4 5 6 7 8 9 10

Question 3

Hint 2

Question 3

Hint 3

1 2 3 4 5 6 7 8 9 10

1 2 3 4 5 6 7 8 9 10

Question 3

Hint 4

Question 3

1 2 3 4 5 6 7 8 9 10

M E M B E R S H I P

1Retail

2Multinational

3Membership

Savings Too Big To Get Home

>

Costco Today

Costco Facts - 2nd largest global retailer (National Retail Federation 2015)

- 18th largest in Fortune 500 (Costco 2015)

- $71 billion market cap (Costco 2016)

- 698 locations worldwide (568 in North America) (Costco 2016)

Costco Stores

Overall Competitive Landscape

- Costco dominated Canada wholesale club industry with a 72 share of value sales and 60 of the total number of outlets (Euromonitor 2016)

- In the US Costco outperformed both Samrsquos Club and BJrsquos Wholesale club over the 2009 ndash 2014 period (Euromonitor 2015)

- In 2014 Costco accounted for 52 of the total US market share (Euromonitor 2015)

Overall Competitive Landscape

- Competition is based among the following factors price merchandise quality and selection location and customer service (MarketLine 2015)

- Highly competitive industry whereas Costco will have to compete against

(1) other players in wholesale club industry

(2) other forms of retailing businesses such as retail discounters (Walmart and Dollar General) supermarkets general merchandise chains specialty chains gasoline station and Internet retailers (Arthur 2012)

COSTCOrsquoS MISSION amp BUSINESS MODEL

A company mission statement describes its present business scope and purpose (ldquowhere we are what we do and why we are hererdquo)

According to Costcorsquos its mission statement is (ldquoto continually provide our members with quality goods and services at the lowest possible pricerdquo)

BUSINESS MODEL

Overview

The plan implemented by a company to generate revenue and make a profit from operations

The model includes the components and functions of the business as well as the revenues it generates and the

expenses it incurs

COSTCOrsquoS BUSINESS MODEL High sale volume and rapid inventory turnover

Offering fee-paying members attractively low prices on a limited selection of nationally branded and selected private- label products in a wide range of merchandise categories

Allowing it to sell and receive cash for inventory before it had to pay many merchandise vendors even when vendor payments were made in time to take advantage of early payment discount

COSTCOrsquoS BUSINESS MODEL A unique aspect of Costcorsquos business model

Limits marketing advertising and promotional activities to new warehouse openings

Occasional direct mail marketing to prospective new members and regular direct marketing programs (such as The Costco Connection a magazine we publish for our members and coupon mailershellip)

MARKETING AND ADVERTISING

Costco has developed a reputation as a socially responsible company by its actions and not by its marketing

Costco does not have a public relations department or staff

Costco relies primarily on word-of-mouth from its members to spread its brand messages

MARKETING AND ADVERTISING

Using direct marketing to existing customers to promote merchandize

The executive membership program offers additional benefits on member services

Its low prices and reputation for making shopping at Costco something of a treasure-hunt made it unnecessary to engage in extensive advertising or sales campaigns

These practices result in lower marketing expenses as compared to typical retailers

APPEALING BUSINESS MODEL

Their mission is to provide quality goods and services at the lowest possible price

Satisfying buyer needs and requirements at a price they will consider a good value

The greater the value delivered and the lower the price to get the value the more appealing a companyrsquos value proposition and product offering

Costco Strategy 1 Pricing

2 Product Selection

3 Treasure Hunt Merchandising

4 Low Cost Emphasis

Chief Elements of Costco Strategy

Ultra-low prices Keep the customers going to the shop by wowing them with low prices Low markup on brand-name merchandise at 14 (compared to 20 ndash 50 markups at other discounters and many supermarkets Jim Sinegal - CEO of Costco said ldquoWe understand that our members do not come to us because the window displays or the Santa Claus or the piano player They come and shop with us because we offer great valuesrdquo

Product Selection

Product Selection

The selection within each product category was restricted in some cases to a single offering

Costco stocked only a 325 ndash count bottle of Advil ndash a size that many shoppers might find too large for their needs

Costco had opened ancillary departments within the next to most Costco warehouses see the table on the next slidehellip

Costcorsquo s Strategy - Treasure Hunt Merchandising

Dozens of featured specials came and went very quickly sometimes in several days or a week ndash like Italian ndash made Hathaway shirts priced at $2999 and $800 leather sectional sofas

The strategy was to entice the shoppers and bargain ndash hunting shoppers would go to Costco more frequently than for periodic ldquostock uprdquo trips

The shoppers quickly learned that they need to buy treasure ndash hunt specials that interested them because these items would very likely not available on their next shopping trip

Costcorsquo s StrategyLow cost emphasis

Costco eliminate all the frills and costs historically associated with conventional retailers including salespeople fancy buildings delivery billing and accounts receivable

They locate warehouses on high ndash traffic routes in or near upscale suburbs that were easily accessible by small businesses and residents with above ndash average incomes it avoided prime real estate sites in order to contain land costs

Warehouse building material Metal pre-engineered design concrete floors and minimal interior deacutecor

COSTCOrsquoS WAREHOUSE

Costcorsquo s Strategy Growth Strategy

Costco had opened between 14 and 34 new locations annually (most in the US) In the fiscal year 2011 Costco spent $13 billion to open 20 new locations two newly relocated warehouses and several distribution depots In the fiscal year 2012 4 new warehouses in the US and 2 new warehouses in Japan (first 4 months of fiscal year 2012) and planned to open an additional 12 new warehouses on September 2012

Grade the CEO

Game Name Right Names

By whom you are inspired

Source httpwwwcnbccom20090424Portfolios-Best-American-CEOs-of-All-Timehtmlslide=12

1 2 3 4 5 6 7 8

B U S I N E S S1 2 3 4 5 6 7 8

S T R A T E G Y1 2 3 4

G A M E

Sample Question

Question 1

Hint 1

1 2 3 4 5 6

Hint 2

Question 1

1 2 3 4 5 6

Hint 3

Question 1

1 2 3 4 5 6

Hint 4 Start with letter ldquoRrdquo

Question 1

1 2 3 4 5 6

Question 1

1 2 3 4 5 6

R E T A I L

Question 2

1 2 3 4 5 6 7 8 9 10 11 12 13

Hint 1

Question 2

1 2 3 4 5 6 7 8 9 10 11 12 13

Hint 2

Question 2

1 2 3 4 5 6 7 8 9 10 11 12 13

Hint 3

Question 2

1 2 3 4 5 6 7 8 9 10 11 12 13

Hint 4

Question 2

1 2 3 4 5 6 7 8 9 10 11 12 13

M U L T I N A T I O N A L

1 2 3 4 5 6 7 8 9 10

Question 3

Hint 1

1 2 3 4 5 6 7 8 9 10

Question 3

Hint 2

Question 3

Hint 3

1 2 3 4 5 6 7 8 9 10

1 2 3 4 5 6 7 8 9 10

Question 3

Hint 4

Question 3

1 2 3 4 5 6 7 8 9 10

M E M B E R S H I P

1Retail

2Multinational

3Membership

Savings Too Big To Get Home

>

Costco Today

Costco Facts - 2nd largest global retailer (National Retail Federation 2015)

- 18th largest in Fortune 500 (Costco 2015)

- $71 billion market cap (Costco 2016)

- 698 locations worldwide (568 in North America) (Costco 2016)

Costco Stores

Overall Competitive Landscape

- Costco dominated Canada wholesale club industry with a 72 share of value sales and 60 of the total number of outlets (Euromonitor 2016)

- In the US Costco outperformed both Samrsquos Club and BJrsquos Wholesale club over the 2009 ndash 2014 period (Euromonitor 2015)

- In 2014 Costco accounted for 52 of the total US market share (Euromonitor 2015)

Overall Competitive Landscape

- Competition is based among the following factors price merchandise quality and selection location and customer service (MarketLine 2015)

- Highly competitive industry whereas Costco will have to compete against

(1) other players in wholesale club industry

(2) other forms of retailing businesses such as retail discounters (Walmart and Dollar General) supermarkets general merchandise chains specialty chains gasoline station and Internet retailers (Arthur 2012)

COSTCOrsquoS MISSION amp BUSINESS MODEL

A company mission statement describes its present business scope and purpose (ldquowhere we are what we do and why we are hererdquo)

According to Costcorsquos its mission statement is (ldquoto continually provide our members with quality goods and services at the lowest possible pricerdquo)

BUSINESS MODEL

Overview

The plan implemented by a company to generate revenue and make a profit from operations

The model includes the components and functions of the business as well as the revenues it generates and the

expenses it incurs

COSTCOrsquoS BUSINESS MODEL High sale volume and rapid inventory turnover

Offering fee-paying members attractively low prices on a limited selection of nationally branded and selected private- label products in a wide range of merchandise categories

Allowing it to sell and receive cash for inventory before it had to pay many merchandise vendors even when vendor payments were made in time to take advantage of early payment discount

COSTCOrsquoS BUSINESS MODEL A unique aspect of Costcorsquos business model

Limits marketing advertising and promotional activities to new warehouse openings

Occasional direct mail marketing to prospective new members and regular direct marketing programs (such as The Costco Connection a magazine we publish for our members and coupon mailershellip)

MARKETING AND ADVERTISING

Costco has developed a reputation as a socially responsible company by its actions and not by its marketing

Costco does not have a public relations department or staff

Costco relies primarily on word-of-mouth from its members to spread its brand messages

MARKETING AND ADVERTISING

Using direct marketing to existing customers to promote merchandize

The executive membership program offers additional benefits on member services

Its low prices and reputation for making shopping at Costco something of a treasure-hunt made it unnecessary to engage in extensive advertising or sales campaigns

These practices result in lower marketing expenses as compared to typical retailers

APPEALING BUSINESS MODEL

Their mission is to provide quality goods and services at the lowest possible price

Satisfying buyer needs and requirements at a price they will consider a good value

The greater the value delivered and the lower the price to get the value the more appealing a companyrsquos value proposition and product offering

Costco Strategy 1 Pricing

2 Product Selection

3 Treasure Hunt Merchandising

4 Low Cost Emphasis

Chief Elements of Costco Strategy

Ultra-low prices Keep the customers going to the shop by wowing them with low prices Low markup on brand-name merchandise at 14 (compared to 20 ndash 50 markups at other discounters and many supermarkets Jim Sinegal - CEO of Costco said ldquoWe understand that our members do not come to us because the window displays or the Santa Claus or the piano player They come and shop with us because we offer great valuesrdquo

Product Selection

Product Selection

The selection within each product category was restricted in some cases to a single offering

Costco stocked only a 325 ndash count bottle of Advil ndash a size that many shoppers might find too large for their needs

Costco had opened ancillary departments within the next to most Costco warehouses see the table on the next slidehellip

Costcorsquo s Strategy - Treasure Hunt Merchandising

Dozens of featured specials came and went very quickly sometimes in several days or a week ndash like Italian ndash made Hathaway shirts priced at $2999 and $800 leather sectional sofas

The strategy was to entice the shoppers and bargain ndash hunting shoppers would go to Costco more frequently than for periodic ldquostock uprdquo trips

The shoppers quickly learned that they need to buy treasure ndash hunt specials that interested them because these items would very likely not available on their next shopping trip

Costcorsquo s StrategyLow cost emphasis

Costco eliminate all the frills and costs historically associated with conventional retailers including salespeople fancy buildings delivery billing and accounts receivable

They locate warehouses on high ndash traffic routes in or near upscale suburbs that were easily accessible by small businesses and residents with above ndash average incomes it avoided prime real estate sites in order to contain land costs

Warehouse building material Metal pre-engineered design concrete floors and minimal interior deacutecor

COSTCOrsquoS WAREHOUSE

Costcorsquo s Strategy Growth Strategy

Costco had opened between 14 and 34 new locations annually (most in the US) In the fiscal year 2011 Costco spent $13 billion to open 20 new locations two newly relocated warehouses and several distribution depots In the fiscal year 2012 4 new warehouses in the US and 2 new warehouses in Japan (first 4 months of fiscal year 2012) and planned to open an additional 12 new warehouses on September 2012

Grade the CEO

Game Name Right Names

By whom you are inspired

Source httpwwwcnbccom20090424Portfolios-Best-American-CEOs-of-All-Timehtmlslide=12

Question 1

Hint 1

1 2 3 4 5 6

Hint 2

Question 1

1 2 3 4 5 6

Hint 3

Question 1

1 2 3 4 5 6

Hint 4 Start with letter ldquoRrdquo

Question 1

1 2 3 4 5 6

Question 1

1 2 3 4 5 6

R E T A I L

Question 2

1 2 3 4 5 6 7 8 9 10 11 12 13

Hint 1

Question 2

1 2 3 4 5 6 7 8 9 10 11 12 13

Hint 2

Question 2

1 2 3 4 5 6 7 8 9 10 11 12 13

Hint 3

Question 2

1 2 3 4 5 6 7 8 9 10 11 12 13

Hint 4

Question 2

1 2 3 4 5 6 7 8 9 10 11 12 13

M U L T I N A T I O N A L

1 2 3 4 5 6 7 8 9 10

Question 3

Hint 1

1 2 3 4 5 6 7 8 9 10

Question 3

Hint 2

Question 3

Hint 3

1 2 3 4 5 6 7 8 9 10

1 2 3 4 5 6 7 8 9 10

Question 3

Hint 4

Question 3

1 2 3 4 5 6 7 8 9 10

M E M B E R S H I P

1Retail

2Multinational

3Membership

Savings Too Big To Get Home

>

Costco Today

Costco Facts - 2nd largest global retailer (National Retail Federation 2015)

- 18th largest in Fortune 500 (Costco 2015)

- $71 billion market cap (Costco 2016)

- 698 locations worldwide (568 in North America) (Costco 2016)

Costco Stores

Overall Competitive Landscape

- Costco dominated Canada wholesale club industry with a 72 share of value sales and 60 of the total number of outlets (Euromonitor 2016)

- In the US Costco outperformed both Samrsquos Club and BJrsquos Wholesale club over the 2009 ndash 2014 period (Euromonitor 2015)

- In 2014 Costco accounted for 52 of the total US market share (Euromonitor 2015)

Overall Competitive Landscape

- Competition is based among the following factors price merchandise quality and selection location and customer service (MarketLine 2015)

- Highly competitive industry whereas Costco will have to compete against

(1) other players in wholesale club industry

(2) other forms of retailing businesses such as retail discounters (Walmart and Dollar General) supermarkets general merchandise chains specialty chains gasoline station and Internet retailers (Arthur 2012)

COSTCOrsquoS MISSION amp BUSINESS MODEL

A company mission statement describes its present business scope and purpose (ldquowhere we are what we do and why we are hererdquo)

According to Costcorsquos its mission statement is (ldquoto continually provide our members with quality goods and services at the lowest possible pricerdquo)

BUSINESS MODEL

Overview

The plan implemented by a company to generate revenue and make a profit from operations

The model includes the components and functions of the business as well as the revenues it generates and the

expenses it incurs

COSTCOrsquoS BUSINESS MODEL High sale volume and rapid inventory turnover

Offering fee-paying members attractively low prices on a limited selection of nationally branded and selected private- label products in a wide range of merchandise categories

Allowing it to sell and receive cash for inventory before it had to pay many merchandise vendors even when vendor payments were made in time to take advantage of early payment discount

COSTCOrsquoS BUSINESS MODEL A unique aspect of Costcorsquos business model

Limits marketing advertising and promotional activities to new warehouse openings

Occasional direct mail marketing to prospective new members and regular direct marketing programs (such as The Costco Connection a magazine we publish for our members and coupon mailershellip)

MARKETING AND ADVERTISING

Costco has developed a reputation as a socially responsible company by its actions and not by its marketing

Costco does not have a public relations department or staff

Costco relies primarily on word-of-mouth from its members to spread its brand messages

MARKETING AND ADVERTISING

Using direct marketing to existing customers to promote merchandize

The executive membership program offers additional benefits on member services

Its low prices and reputation for making shopping at Costco something of a treasure-hunt made it unnecessary to engage in extensive advertising or sales campaigns

These practices result in lower marketing expenses as compared to typical retailers

APPEALING BUSINESS MODEL

Their mission is to provide quality goods and services at the lowest possible price

Satisfying buyer needs and requirements at a price they will consider a good value

The greater the value delivered and the lower the price to get the value the more appealing a companyrsquos value proposition and product offering

Costco Strategy 1 Pricing

2 Product Selection

3 Treasure Hunt Merchandising

4 Low Cost Emphasis

Chief Elements of Costco Strategy

Ultra-low prices Keep the customers going to the shop by wowing them with low prices Low markup on brand-name merchandise at 14 (compared to 20 ndash 50 markups at other discounters and many supermarkets Jim Sinegal - CEO of Costco said ldquoWe understand that our members do not come to us because the window displays or the Santa Claus or the piano player They come and shop with us because we offer great valuesrdquo

Product Selection

Product Selection

The selection within each product category was restricted in some cases to a single offering

Costco stocked only a 325 ndash count bottle of Advil ndash a size that many shoppers might find too large for their needs

Costco had opened ancillary departments within the next to most Costco warehouses see the table on the next slidehellip

Costcorsquo s Strategy - Treasure Hunt Merchandising

Dozens of featured specials came and went very quickly sometimes in several days or a week ndash like Italian ndash made Hathaway shirts priced at $2999 and $800 leather sectional sofas

The strategy was to entice the shoppers and bargain ndash hunting shoppers would go to Costco more frequently than for periodic ldquostock uprdquo trips

The shoppers quickly learned that they need to buy treasure ndash hunt specials that interested them because these items would very likely not available on their next shopping trip

Costcorsquo s StrategyLow cost emphasis

Costco eliminate all the frills and costs historically associated with conventional retailers including salespeople fancy buildings delivery billing and accounts receivable

They locate warehouses on high ndash traffic routes in or near upscale suburbs that were easily accessible by small businesses and residents with above ndash average incomes it avoided prime real estate sites in order to contain land costs

Warehouse building material Metal pre-engineered design concrete floors and minimal interior deacutecor

COSTCOrsquoS WAREHOUSE

Costcorsquo s Strategy Growth Strategy

Costco had opened between 14 and 34 new locations annually (most in the US) In the fiscal year 2011 Costco spent $13 billion to open 20 new locations two newly relocated warehouses and several distribution depots In the fiscal year 2012 4 new warehouses in the US and 2 new warehouses in Japan (first 4 months of fiscal year 2012) and planned to open an additional 12 new warehouses on September 2012

Grade the CEO

Game Name Right Names

By whom you are inspired

Source httpwwwcnbccom20090424Portfolios-Best-American-CEOs-of-All-Timehtmlslide=12

Hint 2

Question 1

1 2 3 4 5 6

Hint 3

Question 1

1 2 3 4 5 6

Hint 4 Start with letter ldquoRrdquo

Question 1

1 2 3 4 5 6

Question 1

1 2 3 4 5 6

R E T A I L

Question 2

1 2 3 4 5 6 7 8 9 10 11 12 13

Hint 1

Question 2

1 2 3 4 5 6 7 8 9 10 11 12 13

Hint 2

Question 2

1 2 3 4 5 6 7 8 9 10 11 12 13

Hint 3

Question 2

1 2 3 4 5 6 7 8 9 10 11 12 13

Hint 4

Question 2

1 2 3 4 5 6 7 8 9 10 11 12 13

M U L T I N A T I O N A L

1 2 3 4 5 6 7 8 9 10

Question 3

Hint 1

1 2 3 4 5 6 7 8 9 10

Question 3

Hint 2

Question 3

Hint 3

1 2 3 4 5 6 7 8 9 10

1 2 3 4 5 6 7 8 9 10

Question 3

Hint 4

Question 3

1 2 3 4 5 6 7 8 9 10

M E M B E R S H I P

1Retail

2Multinational

3Membership

Savings Too Big To Get Home

>

Costco Today

Costco Facts - 2nd largest global retailer (National Retail Federation 2015)

- 18th largest in Fortune 500 (Costco 2015)

- $71 billion market cap (Costco 2016)

- 698 locations worldwide (568 in North America) (Costco 2016)

Costco Stores

Overall Competitive Landscape

- Costco dominated Canada wholesale club industry with a 72 share of value sales and 60 of the total number of outlets (Euromonitor 2016)

- In the US Costco outperformed both Samrsquos Club and BJrsquos Wholesale club over the 2009 ndash 2014 period (Euromonitor 2015)

- In 2014 Costco accounted for 52 of the total US market share (Euromonitor 2015)

Overall Competitive Landscape

- Competition is based among the following factors price merchandise quality and selection location and customer service (MarketLine 2015)

- Highly competitive industry whereas Costco will have to compete against

(1) other players in wholesale club industry

(2) other forms of retailing businesses such as retail discounters (Walmart and Dollar General) supermarkets general merchandise chains specialty chains gasoline station and Internet retailers (Arthur 2012)

COSTCOrsquoS MISSION amp BUSINESS MODEL

A company mission statement describes its present business scope and purpose (ldquowhere we are what we do and why we are hererdquo)

According to Costcorsquos its mission statement is (ldquoto continually provide our members with quality goods and services at the lowest possible pricerdquo)

BUSINESS MODEL

Overview

The plan implemented by a company to generate revenue and make a profit from operations

The model includes the components and functions of the business as well as the revenues it generates and the

expenses it incurs

COSTCOrsquoS BUSINESS MODEL High sale volume and rapid inventory turnover

Offering fee-paying members attractively low prices on a limited selection of nationally branded and selected private- label products in a wide range of merchandise categories

Allowing it to sell and receive cash for inventory before it had to pay many merchandise vendors even when vendor payments were made in time to take advantage of early payment discount

COSTCOrsquoS BUSINESS MODEL A unique aspect of Costcorsquos business model

Limits marketing advertising and promotional activities to new warehouse openings

Occasional direct mail marketing to prospective new members and regular direct marketing programs (such as The Costco Connection a magazine we publish for our members and coupon mailershellip)

MARKETING AND ADVERTISING

Costco has developed a reputation as a socially responsible company by its actions and not by its marketing

Costco does not have a public relations department or staff

Costco relies primarily on word-of-mouth from its members to spread its brand messages

MARKETING AND ADVERTISING

Using direct marketing to existing customers to promote merchandize

The executive membership program offers additional benefits on member services

Its low prices and reputation for making shopping at Costco something of a treasure-hunt made it unnecessary to engage in extensive advertising or sales campaigns

These practices result in lower marketing expenses as compared to typical retailers

APPEALING BUSINESS MODEL

Their mission is to provide quality goods and services at the lowest possible price

Satisfying buyer needs and requirements at a price they will consider a good value

The greater the value delivered and the lower the price to get the value the more appealing a companyrsquos value proposition and product offering

Costco Strategy 1 Pricing

2 Product Selection

3 Treasure Hunt Merchandising

4 Low Cost Emphasis

Chief Elements of Costco Strategy

Ultra-low prices Keep the customers going to the shop by wowing them with low prices Low markup on brand-name merchandise at 14 (compared to 20 ndash 50 markups at other discounters and many supermarkets Jim Sinegal - CEO of Costco said ldquoWe understand that our members do not come to us because the window displays or the Santa Claus or the piano player They come and shop with us because we offer great valuesrdquo

Product Selection

Product Selection

The selection within each product category was restricted in some cases to a single offering

Costco stocked only a 325 ndash count bottle of Advil ndash a size that many shoppers might find too large for their needs

Costco had opened ancillary departments within the next to most Costco warehouses see the table on the next slidehellip

Costcorsquo s Strategy - Treasure Hunt Merchandising

Dozens of featured specials came and went very quickly sometimes in several days or a week ndash like Italian ndash made Hathaway shirts priced at $2999 and $800 leather sectional sofas

The strategy was to entice the shoppers and bargain ndash hunting shoppers would go to Costco more frequently than for periodic ldquostock uprdquo trips

The shoppers quickly learned that they need to buy treasure ndash hunt specials that interested them because these items would very likely not available on their next shopping trip

Costcorsquo s StrategyLow cost emphasis

Costco eliminate all the frills and costs historically associated with conventional retailers including salespeople fancy buildings delivery billing and accounts receivable

They locate warehouses on high ndash traffic routes in or near upscale suburbs that were easily accessible by small businesses and residents with above ndash average incomes it avoided prime real estate sites in order to contain land costs

Warehouse building material Metal pre-engineered design concrete floors and minimal interior deacutecor

COSTCOrsquoS WAREHOUSE

Costcorsquo s Strategy Growth Strategy

Costco had opened between 14 and 34 new locations annually (most in the US) In the fiscal year 2011 Costco spent $13 billion to open 20 new locations two newly relocated warehouses and several distribution depots In the fiscal year 2012 4 new warehouses in the US and 2 new warehouses in Japan (first 4 months of fiscal year 2012) and planned to open an additional 12 new warehouses on September 2012

Grade the CEO

Game Name Right Names

By whom you are inspired

Source httpwwwcnbccom20090424Portfolios-Best-American-CEOs-of-All-Timehtmlslide=12

Hint 3

Question 1

1 2 3 4 5 6

Hint 4 Start with letter ldquoRrdquo

Question 1

1 2 3 4 5 6

Question 1

1 2 3 4 5 6

R E T A I L

Question 2

1 2 3 4 5 6 7 8 9 10 11 12 13

Hint 1

Question 2

1 2 3 4 5 6 7 8 9 10 11 12 13

Hint 2

Question 2

1 2 3 4 5 6 7 8 9 10 11 12 13

Hint 3

Question 2

1 2 3 4 5 6 7 8 9 10 11 12 13

Hint 4

Question 2

1 2 3 4 5 6 7 8 9 10 11 12 13

M U L T I N A T I O N A L

1 2 3 4 5 6 7 8 9 10

Question 3

Hint 1

1 2 3 4 5 6 7 8 9 10

Question 3

Hint 2

Question 3

Hint 3

1 2 3 4 5 6 7 8 9 10

1 2 3 4 5 6 7 8 9 10

Question 3

Hint 4

Question 3

1 2 3 4 5 6 7 8 9 10

M E M B E R S H I P

1Retail

2Multinational

3Membership

Savings Too Big To Get Home

>

Costco Today

Costco Facts - 2nd largest global retailer (National Retail Federation 2015)

- 18th largest in Fortune 500 (Costco 2015)

- $71 billion market cap (Costco 2016)

- 698 locations worldwide (568 in North America) (Costco 2016)

Costco Stores

Overall Competitive Landscape

- Costco dominated Canada wholesale club industry with a 72 share of value sales and 60 of the total number of outlets (Euromonitor 2016)

- In the US Costco outperformed both Samrsquos Club and BJrsquos Wholesale club over the 2009 ndash 2014 period (Euromonitor 2015)

- In 2014 Costco accounted for 52 of the total US market share (Euromonitor 2015)

Overall Competitive Landscape

- Competition is based among the following factors price merchandise quality and selection location and customer service (MarketLine 2015)

- Highly competitive industry whereas Costco will have to compete against

(1) other players in wholesale club industry

(2) other forms of retailing businesses such as retail discounters (Walmart and Dollar General) supermarkets general merchandise chains specialty chains gasoline station and Internet retailers (Arthur 2012)

COSTCOrsquoS MISSION amp BUSINESS MODEL

A company mission statement describes its present business scope and purpose (ldquowhere we are what we do and why we are hererdquo)

According to Costcorsquos its mission statement is (ldquoto continually provide our members with quality goods and services at the lowest possible pricerdquo)

BUSINESS MODEL

Overview

The plan implemented by a company to generate revenue and make a profit from operations

The model includes the components and functions of the business as well as the revenues it generates and the

expenses it incurs

COSTCOrsquoS BUSINESS MODEL High sale volume and rapid inventory turnover

Offering fee-paying members attractively low prices on a limited selection of nationally branded and selected private- label products in a wide range of merchandise categories

Allowing it to sell and receive cash for inventory before it had to pay many merchandise vendors even when vendor payments were made in time to take advantage of early payment discount

COSTCOrsquoS BUSINESS MODEL A unique aspect of Costcorsquos business model

Limits marketing advertising and promotional activities to new warehouse openings

Occasional direct mail marketing to prospective new members and regular direct marketing programs (such as The Costco Connection a magazine we publish for our members and coupon mailershellip)

MARKETING AND ADVERTISING

Costco has developed a reputation as a socially responsible company by its actions and not by its marketing

Costco does not have a public relations department or staff

Costco relies primarily on word-of-mouth from its members to spread its brand messages

MARKETING AND ADVERTISING

Using direct marketing to existing customers to promote merchandize

The executive membership program offers additional benefits on member services

Its low prices and reputation for making shopping at Costco something of a treasure-hunt made it unnecessary to engage in extensive advertising or sales campaigns

These practices result in lower marketing expenses as compared to typical retailers

APPEALING BUSINESS MODEL

Their mission is to provide quality goods and services at the lowest possible price

Satisfying buyer needs and requirements at a price they will consider a good value

The greater the value delivered and the lower the price to get the value the more appealing a companyrsquos value proposition and product offering

Costco Strategy 1 Pricing

2 Product Selection

3 Treasure Hunt Merchandising

4 Low Cost Emphasis

Chief Elements of Costco Strategy

Ultra-low prices Keep the customers going to the shop by wowing them with low prices Low markup on brand-name merchandise at 14 (compared to 20 ndash 50 markups at other discounters and many supermarkets Jim Sinegal - CEO of Costco said ldquoWe understand that our members do not come to us because the window displays or the Santa Claus or the piano player They come and shop with us because we offer great valuesrdquo

Product Selection

Product Selection

The selection within each product category was restricted in some cases to a single offering

Costco stocked only a 325 ndash count bottle of Advil ndash a size that many shoppers might find too large for their needs

Costco had opened ancillary departments within the next to most Costco warehouses see the table on the next slidehellip

Costcorsquo s Strategy - Treasure Hunt Merchandising

Dozens of featured specials came and went very quickly sometimes in several days or a week ndash like Italian ndash made Hathaway shirts priced at $2999 and $800 leather sectional sofas

The strategy was to entice the shoppers and bargain ndash hunting shoppers would go to Costco more frequently than for periodic ldquostock uprdquo trips

The shoppers quickly learned that they need to buy treasure ndash hunt specials that interested them because these items would very likely not available on their next shopping trip

Costcorsquo s StrategyLow cost emphasis

Costco eliminate all the frills and costs historically associated with conventional retailers including salespeople fancy buildings delivery billing and accounts receivable

They locate warehouses on high ndash traffic routes in or near upscale suburbs that were easily accessible by small businesses and residents with above ndash average incomes it avoided prime real estate sites in order to contain land costs

Warehouse building material Metal pre-engineered design concrete floors and minimal interior deacutecor

COSTCOrsquoS WAREHOUSE

Costcorsquo s Strategy Growth Strategy

Costco had opened between 14 and 34 new locations annually (most in the US) In the fiscal year 2011 Costco spent $13 billion to open 20 new locations two newly relocated warehouses and several distribution depots In the fiscal year 2012 4 new warehouses in the US and 2 new warehouses in Japan (first 4 months of fiscal year 2012) and planned to open an additional 12 new warehouses on September 2012

Grade the CEO

Game Name Right Names

By whom you are inspired

Source httpwwwcnbccom20090424Portfolios-Best-American-CEOs-of-All-Timehtmlslide=12

Hint 4 Start with letter ldquoRrdquo

Question 1

1 2 3 4 5 6

Question 1

1 2 3 4 5 6

R E T A I L

Question 2

1 2 3 4 5 6 7 8 9 10 11 12 13

Hint 1

Question 2

1 2 3 4 5 6 7 8 9 10 11 12 13

Hint 2

Question 2

1 2 3 4 5 6 7 8 9 10 11 12 13

Hint 3

Question 2

1 2 3 4 5 6 7 8 9 10 11 12 13

Hint 4

Question 2

1 2 3 4 5 6 7 8 9 10 11 12 13

M U L T I N A T I O N A L

1 2 3 4 5 6 7 8 9 10

Question 3

Hint 1

1 2 3 4 5 6 7 8 9 10

Question 3

Hint 2

Question 3

Hint 3

1 2 3 4 5 6 7 8 9 10

1 2 3 4 5 6 7 8 9 10

Question 3

Hint 4

Question 3

1 2 3 4 5 6 7 8 9 10

M E M B E R S H I P

1Retail

2Multinational

3Membership

Savings Too Big To Get Home

>

Costco Today

Costco Facts - 2nd largest global retailer (National Retail Federation 2015)

- 18th largest in Fortune 500 (Costco 2015)

- $71 billion market cap (Costco 2016)

- 698 locations worldwide (568 in North America) (Costco 2016)

Costco Stores

Overall Competitive Landscape

- Costco dominated Canada wholesale club industry with a 72 share of value sales and 60 of the total number of outlets (Euromonitor 2016)

- In the US Costco outperformed both Samrsquos Club and BJrsquos Wholesale club over the 2009 ndash 2014 period (Euromonitor 2015)

- In 2014 Costco accounted for 52 of the total US market share (Euromonitor 2015)

Overall Competitive Landscape

- Competition is based among the following factors price merchandise quality and selection location and customer service (MarketLine 2015)

- Highly competitive industry whereas Costco will have to compete against

(1) other players in wholesale club industry

(2) other forms of retailing businesses such as retail discounters (Walmart and Dollar General) supermarkets general merchandise chains specialty chains gasoline station and Internet retailers (Arthur 2012)

COSTCOrsquoS MISSION amp BUSINESS MODEL

A company mission statement describes its present business scope and purpose (ldquowhere we are what we do and why we are hererdquo)

According to Costcorsquos its mission statement is (ldquoto continually provide our members with quality goods and services at the lowest possible pricerdquo)

BUSINESS MODEL

Overview

The plan implemented by a company to generate revenue and make a profit from operations

The model includes the components and functions of the business as well as the revenues it generates and the

expenses it incurs

COSTCOrsquoS BUSINESS MODEL High sale volume and rapid inventory turnover

Offering fee-paying members attractively low prices on a limited selection of nationally branded and selected private- label products in a wide range of merchandise categories

Allowing it to sell and receive cash for inventory before it had to pay many merchandise vendors even when vendor payments were made in time to take advantage of early payment discount

COSTCOrsquoS BUSINESS MODEL A unique aspect of Costcorsquos business model

Limits marketing advertising and promotional activities to new warehouse openings

Occasional direct mail marketing to prospective new members and regular direct marketing programs (such as The Costco Connection a magazine we publish for our members and coupon mailershellip)

MARKETING AND ADVERTISING

Costco has developed a reputation as a socially responsible company by its actions and not by its marketing

Costco does not have a public relations department or staff

Costco relies primarily on word-of-mouth from its members to spread its brand messages

MARKETING AND ADVERTISING

Using direct marketing to existing customers to promote merchandize

The executive membership program offers additional benefits on member services

Its low prices and reputation for making shopping at Costco something of a treasure-hunt made it unnecessary to engage in extensive advertising or sales campaigns

These practices result in lower marketing expenses as compared to typical retailers

APPEALING BUSINESS MODEL

Their mission is to provide quality goods and services at the lowest possible price

Satisfying buyer needs and requirements at a price they will consider a good value

The greater the value delivered and the lower the price to get the value the more appealing a companyrsquos value proposition and product offering

Costco Strategy 1 Pricing

2 Product Selection

3 Treasure Hunt Merchandising

4 Low Cost Emphasis

Chief Elements of Costco Strategy

Ultra-low prices Keep the customers going to the shop by wowing them with low prices Low markup on brand-name merchandise at 14 (compared to 20 ndash 50 markups at other discounters and many supermarkets Jim Sinegal - CEO of Costco said ldquoWe understand that our members do not come to us because the window displays or the Santa Claus or the piano player They come and shop with us because we offer great valuesrdquo

Product Selection

Product Selection

The selection within each product category was restricted in some cases to a single offering

Costco stocked only a 325 ndash count bottle of Advil ndash a size that many shoppers might find too large for their needs

Costco had opened ancillary departments within the next to most Costco warehouses see the table on the next slidehellip

Costcorsquo s Strategy - Treasure Hunt Merchandising

Dozens of featured specials came and went very quickly sometimes in several days or a week ndash like Italian ndash made Hathaway shirts priced at $2999 and $800 leather sectional sofas

The strategy was to entice the shoppers and bargain ndash hunting shoppers would go to Costco more frequently than for periodic ldquostock uprdquo trips

The shoppers quickly learned that they need to buy treasure ndash hunt specials that interested them because these items would very likely not available on their next shopping trip

Costcorsquo s StrategyLow cost emphasis

Costco eliminate all the frills and costs historically associated with conventional retailers including salespeople fancy buildings delivery billing and accounts receivable

They locate warehouses on high ndash traffic routes in or near upscale suburbs that were easily accessible by small businesses and residents with above ndash average incomes it avoided prime real estate sites in order to contain land costs

Warehouse building material Metal pre-engineered design concrete floors and minimal interior deacutecor

COSTCOrsquoS WAREHOUSE

Costcorsquo s Strategy Growth Strategy

Costco had opened between 14 and 34 new locations annually (most in the US) In the fiscal year 2011 Costco spent $13 billion to open 20 new locations two newly relocated warehouses and several distribution depots In the fiscal year 2012 4 new warehouses in the US and 2 new warehouses in Japan (first 4 months of fiscal year 2012) and planned to open an additional 12 new warehouses on September 2012

Grade the CEO

Game Name Right Names

By whom you are inspired

Source httpwwwcnbccom20090424Portfolios-Best-American-CEOs-of-All-Timehtmlslide=12

Question 1

1 2 3 4 5 6

R E T A I L

Question 2

1 2 3 4 5 6 7 8 9 10 11 12 13

Hint 1

Question 2

1 2 3 4 5 6 7 8 9 10 11 12 13

Hint 2

Question 2

1 2 3 4 5 6 7 8 9 10 11 12 13

Hint 3

Question 2

1 2 3 4 5 6 7 8 9 10 11 12 13

Hint 4

Question 2

1 2 3 4 5 6 7 8 9 10 11 12 13

M U L T I N A T I O N A L

1 2 3 4 5 6 7 8 9 10

Question 3

Hint 1

1 2 3 4 5 6 7 8 9 10

Question 3

Hint 2

Question 3

Hint 3

1 2 3 4 5 6 7 8 9 10

1 2 3 4 5 6 7 8 9 10

Question 3

Hint 4

Question 3

1 2 3 4 5 6 7 8 9 10

M E M B E R S H I P

1Retail

2Multinational

3Membership

Savings Too Big To Get Home

>

Costco Today

Costco Facts - 2nd largest global retailer (National Retail Federation 2015)

- 18th largest in Fortune 500 (Costco 2015)

- $71 billion market cap (Costco 2016)

- 698 locations worldwide (568 in North America) (Costco 2016)

Costco Stores

Overall Competitive Landscape

- Costco dominated Canada wholesale club industry with a 72 share of value sales and 60 of the total number of outlets (Euromonitor 2016)

- In the US Costco outperformed both Samrsquos Club and BJrsquos Wholesale club over the 2009 ndash 2014 period (Euromonitor 2015)

- In 2014 Costco accounted for 52 of the total US market share (Euromonitor 2015)

Overall Competitive Landscape

- Competition is based among the following factors price merchandise quality and selection location and customer service (MarketLine 2015)

- Highly competitive industry whereas Costco will have to compete against

(1) other players in wholesale club industry

(2) other forms of retailing businesses such as retail discounters (Walmart and Dollar General) supermarkets general merchandise chains specialty chains gasoline station and Internet retailers (Arthur 2012)

COSTCOrsquoS MISSION amp BUSINESS MODEL

A company mission statement describes its present business scope and purpose (ldquowhere we are what we do and why we are hererdquo)

According to Costcorsquos its mission statement is (ldquoto continually provide our members with quality goods and services at the lowest possible pricerdquo)

BUSINESS MODEL

Overview

The plan implemented by a company to generate revenue and make a profit from operations

The model includes the components and functions of the business as well as the revenues it generates and the

expenses it incurs

COSTCOrsquoS BUSINESS MODEL High sale volume and rapid inventory turnover

Offering fee-paying members attractively low prices on a limited selection of nationally branded and selected private- label products in a wide range of merchandise categories

Allowing it to sell and receive cash for inventory before it had to pay many merchandise vendors even when vendor payments were made in time to take advantage of early payment discount

COSTCOrsquoS BUSINESS MODEL A unique aspect of Costcorsquos business model

Limits marketing advertising and promotional activities to new warehouse openings

Occasional direct mail marketing to prospective new members and regular direct marketing programs (such as The Costco Connection a magazine we publish for our members and coupon mailershellip)

MARKETING AND ADVERTISING

Costco has developed a reputation as a socially responsible company by its actions and not by its marketing

Costco does not have a public relations department or staff

Costco relies primarily on word-of-mouth from its members to spread its brand messages

MARKETING AND ADVERTISING

Using direct marketing to existing customers to promote merchandize

The executive membership program offers additional benefits on member services

Its low prices and reputation for making shopping at Costco something of a treasure-hunt made it unnecessary to engage in extensive advertising or sales campaigns

These practices result in lower marketing expenses as compared to typical retailers

APPEALING BUSINESS MODEL

Their mission is to provide quality goods and services at the lowest possible price

Satisfying buyer needs and requirements at a price they will consider a good value

The greater the value delivered and the lower the price to get the value the more appealing a companyrsquos value proposition and product offering

Costco Strategy 1 Pricing

2 Product Selection

3 Treasure Hunt Merchandising

4 Low Cost Emphasis

Chief Elements of Costco Strategy

Ultra-low prices Keep the customers going to the shop by wowing them with low prices Low markup on brand-name merchandise at 14 (compared to 20 ndash 50 markups at other discounters and many supermarkets Jim Sinegal - CEO of Costco said ldquoWe understand that our members do not come to us because the window displays or the Santa Claus or the piano player They come and shop with us because we offer great valuesrdquo

Product Selection

Product Selection

The selection within each product category was restricted in some cases to a single offering

Costco stocked only a 325 ndash count bottle of Advil ndash a size that many shoppers might find too large for their needs

Costco had opened ancillary departments within the next to most Costco warehouses see the table on the next slidehellip

Costcorsquo s Strategy - Treasure Hunt Merchandising

Dozens of featured specials came and went very quickly sometimes in several days or a week ndash like Italian ndash made Hathaway shirts priced at $2999 and $800 leather sectional sofas

The strategy was to entice the shoppers and bargain ndash hunting shoppers would go to Costco more frequently than for periodic ldquostock uprdquo trips

The shoppers quickly learned that they need to buy treasure ndash hunt specials that interested them because these items would very likely not available on their next shopping trip

Costcorsquo s StrategyLow cost emphasis

Costco eliminate all the frills and costs historically associated with conventional retailers including salespeople fancy buildings delivery billing and accounts receivable

They locate warehouses on high ndash traffic routes in or near upscale suburbs that were easily accessible by small businesses and residents with above ndash average incomes it avoided prime real estate sites in order to contain land costs

Warehouse building material Metal pre-engineered design concrete floors and minimal interior deacutecor

COSTCOrsquoS WAREHOUSE

Costcorsquo s Strategy Growth Strategy

Costco had opened between 14 and 34 new locations annually (most in the US) In the fiscal year 2011 Costco spent $13 billion to open 20 new locations two newly relocated warehouses and several distribution depots In the fiscal year 2012 4 new warehouses in the US and 2 new warehouses in Japan (first 4 months of fiscal year 2012) and planned to open an additional 12 new warehouses on September 2012

Grade the CEO

Game Name Right Names

By whom you are inspired

Source httpwwwcnbccom20090424Portfolios-Best-American-CEOs-of-All-Timehtmlslide=12

Question 2

1 2 3 4 5 6 7 8 9 10 11 12 13

Hint 1

Question 2

1 2 3 4 5 6 7 8 9 10 11 12 13

Hint 2

Question 2

1 2 3 4 5 6 7 8 9 10 11 12 13

Hint 3

Question 2

1 2 3 4 5 6 7 8 9 10 11 12 13

Hint 4

Question 2

1 2 3 4 5 6 7 8 9 10 11 12 13

M U L T I N A T I O N A L

1 2 3 4 5 6 7 8 9 10

Question 3

Hint 1

1 2 3 4 5 6 7 8 9 10

Question 3

Hint 2

Question 3

Hint 3

1 2 3 4 5 6 7 8 9 10

1 2 3 4 5 6 7 8 9 10

Question 3

Hint 4

Question 3

1 2 3 4 5 6 7 8 9 10

M E M B E R S H I P

1Retail

2Multinational

3Membership

Savings Too Big To Get Home

>

Costco Today

Costco Facts - 2nd largest global retailer (National Retail Federation 2015)

- 18th largest in Fortune 500 (Costco 2015)

- $71 billion market cap (Costco 2016)

- 698 locations worldwide (568 in North America) (Costco 2016)

Costco Stores

Overall Competitive Landscape

- Costco dominated Canada wholesale club industry with a 72 share of value sales and 60 of the total number of outlets (Euromonitor 2016)

- In the US Costco outperformed both Samrsquos Club and BJrsquos Wholesale club over the 2009 ndash 2014 period (Euromonitor 2015)

- In 2014 Costco accounted for 52 of the total US market share (Euromonitor 2015)

Overall Competitive Landscape

- Competition is based among the following factors price merchandise quality and selection location and customer service (MarketLine 2015)

- Highly competitive industry whereas Costco will have to compete against

(1) other players in wholesale club industry

(2) other forms of retailing businesses such as retail discounters (Walmart and Dollar General) supermarkets general merchandise chains specialty chains gasoline station and Internet retailers (Arthur 2012)

COSTCOrsquoS MISSION amp BUSINESS MODEL

A company mission statement describes its present business scope and purpose (ldquowhere we are what we do and why we are hererdquo)

According to Costcorsquos its mission statement is (ldquoto continually provide our members with quality goods and services at the lowest possible pricerdquo)

BUSINESS MODEL

Overview

The plan implemented by a company to generate revenue and make a profit from operations

The model includes the components and functions of the business as well as the revenues it generates and the

expenses it incurs

COSTCOrsquoS BUSINESS MODEL High sale volume and rapid inventory turnover

Offering fee-paying members attractively low prices on a limited selection of nationally branded and selected private- label products in a wide range of merchandise categories

Allowing it to sell and receive cash for inventory before it had to pay many merchandise vendors even when vendor payments were made in time to take advantage of early payment discount

COSTCOrsquoS BUSINESS MODEL A unique aspect of Costcorsquos business model

Limits marketing advertising and promotional activities to new warehouse openings

Occasional direct mail marketing to prospective new members and regular direct marketing programs (such as The Costco Connection a magazine we publish for our members and coupon mailershellip)

MARKETING AND ADVERTISING

Costco has developed a reputation as a socially responsible company by its actions and not by its marketing

Costco does not have a public relations department or staff

Costco relies primarily on word-of-mouth from its members to spread its brand messages

MARKETING AND ADVERTISING

Using direct marketing to existing customers to promote merchandize

The executive membership program offers additional benefits on member services

Its low prices and reputation for making shopping at Costco something of a treasure-hunt made it unnecessary to engage in extensive advertising or sales campaigns

These practices result in lower marketing expenses as compared to typical retailers

APPEALING BUSINESS MODEL

Their mission is to provide quality goods and services at the lowest possible price

Satisfying buyer needs and requirements at a price they will consider a good value

The greater the value delivered and the lower the price to get the value the more appealing a companyrsquos value proposition and product offering

Costco Strategy 1 Pricing

2 Product Selection

3 Treasure Hunt Merchandising

4 Low Cost Emphasis

Chief Elements of Costco Strategy

Ultra-low prices Keep the customers going to the shop by wowing them with low prices Low markup on brand-name merchandise at 14 (compared to 20 ndash 50 markups at other discounters and many supermarkets Jim Sinegal - CEO of Costco said ldquoWe understand that our members do not come to us because the window displays or the Santa Claus or the piano player They come and shop with us because we offer great valuesrdquo

Product Selection

Product Selection

The selection within each product category was restricted in some cases to a single offering

Costco stocked only a 325 ndash count bottle of Advil ndash a size that many shoppers might find too large for their needs

Costco had opened ancillary departments within the next to most Costco warehouses see the table on the next slidehellip

Costcorsquo s Strategy - Treasure Hunt Merchandising

Dozens of featured specials came and went very quickly sometimes in several days or a week ndash like Italian ndash made Hathaway shirts priced at $2999 and $800 leather sectional sofas

The strategy was to entice the shoppers and bargain ndash hunting shoppers would go to Costco more frequently than for periodic ldquostock uprdquo trips

The shoppers quickly learned that they need to buy treasure ndash hunt specials that interested them because these items would very likely not available on their next shopping trip

Costcorsquo s StrategyLow cost emphasis

Costco eliminate all the frills and costs historically associated with conventional retailers including salespeople fancy buildings delivery billing and accounts receivable

They locate warehouses on high ndash traffic routes in or near upscale suburbs that were easily accessible by small businesses and residents with above ndash average incomes it avoided prime real estate sites in order to contain land costs

Warehouse building material Metal pre-engineered design concrete floors and minimal interior deacutecor

COSTCOrsquoS WAREHOUSE

Costcorsquo s Strategy Growth Strategy

Costco had opened between 14 and 34 new locations annually (most in the US) In the fiscal year 2011 Costco spent $13 billion to open 20 new locations two newly relocated warehouses and several distribution depots In the fiscal year 2012 4 new warehouses in the US and 2 new warehouses in Japan (first 4 months of fiscal year 2012) and planned to open an additional 12 new warehouses on September 2012

Grade the CEO

Game Name Right Names

By whom you are inspired

Source httpwwwcnbccom20090424Portfolios-Best-American-CEOs-of-All-Timehtmlslide=12

Question 2

1 2 3 4 5 6 7 8 9 10 11 12 13

Hint 2

Question 2

1 2 3 4 5 6 7 8 9 10 11 12 13

Hint 3

Question 2

1 2 3 4 5 6 7 8 9 10 11 12 13

Hint 4

Question 2

1 2 3 4 5 6 7 8 9 10 11 12 13

M U L T I N A T I O N A L

1 2 3 4 5 6 7 8 9 10

Question 3

Hint 1

1 2 3 4 5 6 7 8 9 10

Question 3

Hint 2

Question 3

Hint 3

1 2 3 4 5 6 7 8 9 10

1 2 3 4 5 6 7 8 9 10

Question 3

Hint 4

Question 3

1 2 3 4 5 6 7 8 9 10

M E M B E R S H I P

1Retail

2Multinational

3Membership

Savings Too Big To Get Home

>

Costco Today

Costco Facts - 2nd largest global retailer (National Retail Federation 2015)

- 18th largest in Fortune 500 (Costco 2015)

- $71 billion market cap (Costco 2016)

- 698 locations worldwide (568 in North America) (Costco 2016)

Costco Stores

Overall Competitive Landscape

- Costco dominated Canada wholesale club industry with a 72 share of value sales and 60 of the total number of outlets (Euromonitor 2016)

- In the US Costco outperformed both Samrsquos Club and BJrsquos Wholesale club over the 2009 ndash 2014 period (Euromonitor 2015)

- In 2014 Costco accounted for 52 of the total US market share (Euromonitor 2015)

Overall Competitive Landscape

- Competition is based among the following factors price merchandise quality and selection location and customer service (MarketLine 2015)

- Highly competitive industry whereas Costco will have to compete against

(1) other players in wholesale club industry

(2) other forms of retailing businesses such as retail discounters (Walmart and Dollar General) supermarkets general merchandise chains specialty chains gasoline station and Internet retailers (Arthur 2012)

COSTCOrsquoS MISSION amp BUSINESS MODEL

A company mission statement describes its present business scope and purpose (ldquowhere we are what we do and why we are hererdquo)

According to Costcorsquos its mission statement is (ldquoto continually provide our members with quality goods and services at the lowest possible pricerdquo)

BUSINESS MODEL

Overview

The plan implemented by a company to generate revenue and make a profit from operations

The model includes the components and functions of the business as well as the revenues it generates and the

expenses it incurs

COSTCOrsquoS BUSINESS MODEL High sale volume and rapid inventory turnover

Offering fee-paying members attractively low prices on a limited selection of nationally branded and selected private- label products in a wide range of merchandise categories

Allowing it to sell and receive cash for inventory before it had to pay many merchandise vendors even when vendor payments were made in time to take advantage of early payment discount

COSTCOrsquoS BUSINESS MODEL A unique aspect of Costcorsquos business model

Limits marketing advertising and promotional activities to new warehouse openings

Occasional direct mail marketing to prospective new members and regular direct marketing programs (such as The Costco Connection a magazine we publish for our members and coupon mailershellip)

MARKETING AND ADVERTISING

Costco has developed a reputation as a socially responsible company by its actions and not by its marketing

Costco does not have a public relations department or staff

Costco relies primarily on word-of-mouth from its members to spread its brand messages

MARKETING AND ADVERTISING

Using direct marketing to existing customers to promote merchandize

The executive membership program offers additional benefits on member services

Its low prices and reputation for making shopping at Costco something of a treasure-hunt made it unnecessary to engage in extensive advertising or sales campaigns

These practices result in lower marketing expenses as compared to typical retailers

APPEALING BUSINESS MODEL

Their mission is to provide quality goods and services at the lowest possible price

Satisfying buyer needs and requirements at a price they will consider a good value

The greater the value delivered and the lower the price to get the value the more appealing a companyrsquos value proposition and product offering

Costco Strategy 1 Pricing

2 Product Selection

3 Treasure Hunt Merchandising

4 Low Cost Emphasis

Chief Elements of Costco Strategy

Ultra-low prices Keep the customers going to the shop by wowing them with low prices Low markup on brand-name merchandise at 14 (compared to 20 ndash 50 markups at other discounters and many supermarkets Jim Sinegal - CEO of Costco said ldquoWe understand that our members do not come to us because the window displays or the Santa Claus or the piano player They come and shop with us because we offer great valuesrdquo

Product Selection

Product Selection

The selection within each product category was restricted in some cases to a single offering

Costco stocked only a 325 ndash count bottle of Advil ndash a size that many shoppers might find too large for their needs

Costco had opened ancillary departments within the next to most Costco warehouses see the table on the next slidehellip

Costcorsquo s Strategy - Treasure Hunt Merchandising

Dozens of featured specials came and went very quickly sometimes in several days or a week ndash like Italian ndash made Hathaway shirts priced at $2999 and $800 leather sectional sofas

The strategy was to entice the shoppers and bargain ndash hunting shoppers would go to Costco more frequently than for periodic ldquostock uprdquo trips

The shoppers quickly learned that they need to buy treasure ndash hunt specials that interested them because these items would very likely not available on their next shopping trip

Costcorsquo s StrategyLow cost emphasis

Costco eliminate all the frills and costs historically associated with conventional retailers including salespeople fancy buildings delivery billing and accounts receivable

They locate warehouses on high ndash traffic routes in or near upscale suburbs that were easily accessible by small businesses and residents with above ndash average incomes it avoided prime real estate sites in order to contain land costs

Warehouse building material Metal pre-engineered design concrete floors and minimal interior deacutecor

COSTCOrsquoS WAREHOUSE

Costcorsquo s Strategy Growth Strategy

Costco had opened between 14 and 34 new locations annually (most in the US) In the fiscal year 2011 Costco spent $13 billion to open 20 new locations two newly relocated warehouses and several distribution depots In the fiscal year 2012 4 new warehouses in the US and 2 new warehouses in Japan (first 4 months of fiscal year 2012) and planned to open an additional 12 new warehouses on September 2012

Grade the CEO

Game Name Right Names

By whom you are inspired

Source httpwwwcnbccom20090424Portfolios-Best-American-CEOs-of-All-Timehtmlslide=12

Question 2

1 2 3 4 5 6 7 8 9 10 11 12 13

Hint 3

Question 2

1 2 3 4 5 6 7 8 9 10 11 12 13

Hint 4

Question 2

1 2 3 4 5 6 7 8 9 10 11 12 13

M U L T I N A T I O N A L

1 2 3 4 5 6 7 8 9 10

Question 3

Hint 1

1 2 3 4 5 6 7 8 9 10

Question 3

Hint 2

Question 3

Hint 3

1 2 3 4 5 6 7 8 9 10

1 2 3 4 5 6 7 8 9 10

Question 3

Hint 4

Question 3

1 2 3 4 5 6 7 8 9 10

M E M B E R S H I P

1Retail

2Multinational

3Membership

Savings Too Big To Get Home

>

Costco Today

Costco Facts - 2nd largest global retailer (National Retail Federation 2015)

- 18th largest in Fortune 500 (Costco 2015)

- $71 billion market cap (Costco 2016)

- 698 locations worldwide (568 in North America) (Costco 2016)

Costco Stores

Overall Competitive Landscape

- Costco dominated Canada wholesale club industry with a 72 share of value sales and 60 of the total number of outlets (Euromonitor 2016)

- In the US Costco outperformed both Samrsquos Club and BJrsquos Wholesale club over the 2009 ndash 2014 period (Euromonitor 2015)

- In 2014 Costco accounted for 52 of the total US market share (Euromonitor 2015)

Overall Competitive Landscape

- Competition is based among the following factors price merchandise quality and selection location and customer service (MarketLine 2015)

- Highly competitive industry whereas Costco will have to compete against

(1) other players in wholesale club industry

(2) other forms of retailing businesses such as retail discounters (Walmart and Dollar General) supermarkets general merchandise chains specialty chains gasoline station and Internet retailers (Arthur 2012)

COSTCOrsquoS MISSION amp BUSINESS MODEL

A company mission statement describes its present business scope and purpose (ldquowhere we are what we do and why we are hererdquo)

According to Costcorsquos its mission statement is (ldquoto continually provide our members with quality goods and services at the lowest possible pricerdquo)

BUSINESS MODEL

Overview

The plan implemented by a company to generate revenue and make a profit from operations

The model includes the components and functions of the business as well as the revenues it generates and the

expenses it incurs

COSTCOrsquoS BUSINESS MODEL High sale volume and rapid inventory turnover

Offering fee-paying members attractively low prices on a limited selection of nationally branded and selected private- label products in a wide range of merchandise categories

Allowing it to sell and receive cash for inventory before it had to pay many merchandise vendors even when vendor payments were made in time to take advantage of early payment discount

COSTCOrsquoS BUSINESS MODEL A unique aspect of Costcorsquos business model

Limits marketing advertising and promotional activities to new warehouse openings

Occasional direct mail marketing to prospective new members and regular direct marketing programs (such as The Costco Connection a magazine we publish for our members and coupon mailershellip)

MARKETING AND ADVERTISING

Costco has developed a reputation as a socially responsible company by its actions and not by its marketing

Costco does not have a public relations department or staff

Costco relies primarily on word-of-mouth from its members to spread its brand messages

MARKETING AND ADVERTISING

Using direct marketing to existing customers to promote merchandize

The executive membership program offers additional benefits on member services

Its low prices and reputation for making shopping at Costco something of a treasure-hunt made it unnecessary to engage in extensive advertising or sales campaigns

These practices result in lower marketing expenses as compared to typical retailers

APPEALING BUSINESS MODEL

Their mission is to provide quality goods and services at the lowest possible price

Satisfying buyer needs and requirements at a price they will consider a good value

The greater the value delivered and the lower the price to get the value the more appealing a companyrsquos value proposition and product offering

Costco Strategy 1 Pricing

2 Product Selection

3 Treasure Hunt Merchandising

4 Low Cost Emphasis

Chief Elements of Costco Strategy

Ultra-low prices Keep the customers going to the shop by wowing them with low prices Low markup on brand-name merchandise at 14 (compared to 20 ndash 50 markups at other discounters and many supermarkets Jim Sinegal - CEO of Costco said ldquoWe understand that our members do not come to us because the window displays or the Santa Claus or the piano player They come and shop with us because we offer great valuesrdquo

Product Selection

Product Selection

The selection within each product category was restricted in some cases to a single offering

Costco stocked only a 325 ndash count bottle of Advil ndash a size that many shoppers might find too large for their needs

Costco had opened ancillary departments within the next to most Costco warehouses see the table on the next slidehellip

Costcorsquo s Strategy - Treasure Hunt Merchandising

Dozens of featured specials came and went very quickly sometimes in several days or a week ndash like Italian ndash made Hathaway shirts priced at $2999 and $800 leather sectional sofas

The strategy was to entice the shoppers and bargain ndash hunting shoppers would go to Costco more frequently than for periodic ldquostock uprdquo trips

The shoppers quickly learned that they need to buy treasure ndash hunt specials that interested them because these items would very likely not available on their next shopping trip

Costcorsquo s StrategyLow cost emphasis

Costco eliminate all the frills and costs historically associated with conventional retailers including salespeople fancy buildings delivery billing and accounts receivable

They locate warehouses on high ndash traffic routes in or near upscale suburbs that were easily accessible by small businesses and residents with above ndash average incomes it avoided prime real estate sites in order to contain land costs

Warehouse building material Metal pre-engineered design concrete floors and minimal interior deacutecor

COSTCOrsquoS WAREHOUSE

Costcorsquo s Strategy Growth Strategy

Costco had opened between 14 and 34 new locations annually (most in the US) In the fiscal year 2011 Costco spent $13 billion to open 20 new locations two newly relocated warehouses and several distribution depots In the fiscal year 2012 4 new warehouses in the US and 2 new warehouses in Japan (first 4 months of fiscal year 2012) and planned to open an additional 12 new warehouses on September 2012

Grade the CEO

Game Name Right Names

By whom you are inspired

Source httpwwwcnbccom20090424Portfolios-Best-American-CEOs-of-All-Timehtmlslide=12

Question 2

1 2 3 4 5 6 7 8 9 10 11 12 13

Hint 4

Question 2

1 2 3 4 5 6 7 8 9 10 11 12 13

M U L T I N A T I O N A L

1 2 3 4 5 6 7 8 9 10

Question 3

Hint 1

1 2 3 4 5 6 7 8 9 10

Question 3

Hint 2

Question 3

Hint 3

1 2 3 4 5 6 7 8 9 10

1 2 3 4 5 6 7 8 9 10

Question 3

Hint 4

Question 3

1 2 3 4 5 6 7 8 9 10

M E M B E R S H I P

1Retail

2Multinational

3Membership

Savings Too Big To Get Home

>

Costco Today

Costco Facts - 2nd largest global retailer (National Retail Federation 2015)

- 18th largest in Fortune 500 (Costco 2015)

- $71 billion market cap (Costco 2016)

- 698 locations worldwide (568 in North America) (Costco 2016)

Costco Stores

Overall Competitive Landscape

- Costco dominated Canada wholesale club industry with a 72 share of value sales and 60 of the total number of outlets (Euromonitor 2016)

- In the US Costco outperformed both Samrsquos Club and BJrsquos Wholesale club over the 2009 ndash 2014 period (Euromonitor 2015)

- In 2014 Costco accounted for 52 of the total US market share (Euromonitor 2015)

Overall Competitive Landscape

- Competition is based among the following factors price merchandise quality and selection location and customer service (MarketLine 2015)

- Highly competitive industry whereas Costco will have to compete against

(1) other players in wholesale club industry

(2) other forms of retailing businesses such as retail discounters (Walmart and Dollar General) supermarkets general merchandise chains specialty chains gasoline station and Internet retailers (Arthur 2012)

COSTCOrsquoS MISSION amp BUSINESS MODEL

A company mission statement describes its present business scope and purpose (ldquowhere we are what we do and why we are hererdquo)

According to Costcorsquos its mission statement is (ldquoto continually provide our members with quality goods and services at the lowest possible pricerdquo)

BUSINESS MODEL

Overview

The plan implemented by a company to generate revenue and make a profit from operations

The model includes the components and functions of the business as well as the revenues it generates and the

expenses it incurs

COSTCOrsquoS BUSINESS MODEL High sale volume and rapid inventory turnover

Offering fee-paying members attractively low prices on a limited selection of nationally branded and selected private- label products in a wide range of merchandise categories

Allowing it to sell and receive cash for inventory before it had to pay many merchandise vendors even when vendor payments were made in time to take advantage of early payment discount

COSTCOrsquoS BUSINESS MODEL A unique aspect of Costcorsquos business model

Limits marketing advertising and promotional activities to new warehouse openings

Occasional direct mail marketing to prospective new members and regular direct marketing programs (such as The Costco Connection a magazine we publish for our members and coupon mailershellip)

MARKETING AND ADVERTISING

Costco has developed a reputation as a socially responsible company by its actions and not by its marketing

Costco does not have a public relations department or staff

Costco relies primarily on word-of-mouth from its members to spread its brand messages

MARKETING AND ADVERTISING

Using direct marketing to existing customers to promote merchandize

The executive membership program offers additional benefits on member services

Its low prices and reputation for making shopping at Costco something of a treasure-hunt made it unnecessary to engage in extensive advertising or sales campaigns

These practices result in lower marketing expenses as compared to typical retailers

APPEALING BUSINESS MODEL

Their mission is to provide quality goods and services at the lowest possible price

Satisfying buyer needs and requirements at a price they will consider a good value

The greater the value delivered and the lower the price to get the value the more appealing a companyrsquos value proposition and product offering

Costco Strategy 1 Pricing

2 Product Selection

3 Treasure Hunt Merchandising

4 Low Cost Emphasis

Chief Elements of Costco Strategy

Ultra-low prices Keep the customers going to the shop by wowing them with low prices Low markup on brand-name merchandise at 14 (compared to 20 ndash 50 markups at other discounters and many supermarkets Jim Sinegal - CEO of Costco said ldquoWe understand that our members do not come to us because the window displays or the Santa Claus or the piano player They come and shop with us because we offer great valuesrdquo

Product Selection

Product Selection

The selection within each product category was restricted in some cases to a single offering

Costco stocked only a 325 ndash count bottle of Advil ndash a size that many shoppers might find too large for their needs

Costco had opened ancillary departments within the next to most Costco warehouses see the table on the next slidehellip

Costcorsquo s Strategy - Treasure Hunt Merchandising

Dozens of featured specials came and went very quickly sometimes in several days or a week ndash like Italian ndash made Hathaway shirts priced at $2999 and $800 leather sectional sofas

The strategy was to entice the shoppers and bargain ndash hunting shoppers would go to Costco more frequently than for periodic ldquostock uprdquo trips

The shoppers quickly learned that they need to buy treasure ndash hunt specials that interested them because these items would very likely not available on their next shopping trip

Costcorsquo s StrategyLow cost emphasis

Costco eliminate all the frills and costs historically associated with conventional retailers including salespeople fancy buildings delivery billing and accounts receivable

They locate warehouses on high ndash traffic routes in or near upscale suburbs that were easily accessible by small businesses and residents with above ndash average incomes it avoided prime real estate sites in order to contain land costs

Warehouse building material Metal pre-engineered design concrete floors and minimal interior deacutecor

COSTCOrsquoS WAREHOUSE

Costcorsquo s Strategy Growth Strategy

Costco had opened between 14 and 34 new locations annually (most in the US) In the fiscal year 2011 Costco spent $13 billion to open 20 new locations two newly relocated warehouses and several distribution depots In the fiscal year 2012 4 new warehouses in the US and 2 new warehouses in Japan (first 4 months of fiscal year 2012) and planned to open an additional 12 new warehouses on September 2012

Grade the CEO

Game Name Right Names

By whom you are inspired

Source httpwwwcnbccom20090424Portfolios-Best-American-CEOs-of-All-Timehtmlslide=12

Question 2

1 2 3 4 5 6 7 8 9 10 11 12 13

M U L T I N A T I O N A L

1 2 3 4 5 6 7 8 9 10

Question 3

Hint 1

1 2 3 4 5 6 7 8 9 10

Question 3

Hint 2

Question 3

Hint 3

1 2 3 4 5 6 7 8 9 10

1 2 3 4 5 6 7 8 9 10

Question 3

Hint 4

Question 3

1 2 3 4 5 6 7 8 9 10

M E M B E R S H I P

1Retail

2Multinational

3Membership

Savings Too Big To Get Home

>

Costco Today

Costco Facts - 2nd largest global retailer (National Retail Federation 2015)

- 18th largest in Fortune 500 (Costco 2015)

- $71 billion market cap (Costco 2016)

- 698 locations worldwide (568 in North America) (Costco 2016)

Costco Stores

Overall Competitive Landscape

- Costco dominated Canada wholesale club industry with a 72 share of value sales and 60 of the total number of outlets (Euromonitor 2016)

- In the US Costco outperformed both Samrsquos Club and BJrsquos Wholesale club over the 2009 ndash 2014 period (Euromonitor 2015)

- In 2014 Costco accounted for 52 of the total US market share (Euromonitor 2015)

Overall Competitive Landscape

- Competition is based among the following factors price merchandise quality and selection location and customer service (MarketLine 2015)

- Highly competitive industry whereas Costco will have to compete against

(1) other players in wholesale club industry

(2) other forms of retailing businesses such as retail discounters (Walmart and Dollar General) supermarkets general merchandise chains specialty chains gasoline station and Internet retailers (Arthur 2012)

COSTCOrsquoS MISSION amp BUSINESS MODEL

A company mission statement describes its present business scope and purpose (ldquowhere we are what we do and why we are hererdquo)

According to Costcorsquos its mission statement is (ldquoto continually provide our members with quality goods and services at the lowest possible pricerdquo)

BUSINESS MODEL

Overview

The plan implemented by a company to generate revenue and make a profit from operations

The model includes the components and functions of the business as well as the revenues it generates and the

expenses it incurs

COSTCOrsquoS BUSINESS MODEL High sale volume and rapid inventory turnover

Offering fee-paying members attractively low prices on a limited selection of nationally branded and selected private- label products in a wide range of merchandise categories

Allowing it to sell and receive cash for inventory before it had to pay many merchandise vendors even when vendor payments were made in time to take advantage of early payment discount

COSTCOrsquoS BUSINESS MODEL A unique aspect of Costcorsquos business model

Limits marketing advertising and promotional activities to new warehouse openings

Occasional direct mail marketing to prospective new members and regular direct marketing programs (such as The Costco Connection a magazine we publish for our members and coupon mailershellip)

MARKETING AND ADVERTISING

Costco has developed a reputation as a socially responsible company by its actions and not by its marketing

Costco does not have a public relations department or staff

Costco relies primarily on word-of-mouth from its members to spread its brand messages

MARKETING AND ADVERTISING

Using direct marketing to existing customers to promote merchandize

The executive membership program offers additional benefits on member services

Its low prices and reputation for making shopping at Costco something of a treasure-hunt made it unnecessary to engage in extensive advertising or sales campaigns

These practices result in lower marketing expenses as compared to typical retailers

APPEALING BUSINESS MODEL

Their mission is to provide quality goods and services at the lowest possible price

Satisfying buyer needs and requirements at a price they will consider a good value

The greater the value delivered and the lower the price to get the value the more appealing a companyrsquos value proposition and product offering

Costco Strategy 1 Pricing

2 Product Selection

3 Treasure Hunt Merchandising

4 Low Cost Emphasis

Chief Elements of Costco Strategy

Ultra-low prices Keep the customers going to the shop by wowing them with low prices Low markup on brand-name merchandise at 14 (compared to 20 ndash 50 markups at other discounters and many supermarkets Jim Sinegal - CEO of Costco said ldquoWe understand that our members do not come to us because the window displays or the Santa Claus or the piano player They come and shop with us because we offer great valuesrdquo

Product Selection

Product Selection

The selection within each product category was restricted in some cases to a single offering

Costco stocked only a 325 ndash count bottle of Advil ndash a size that many shoppers might find too large for their needs

Costco had opened ancillary departments within the next to most Costco warehouses see the table on the next slidehellip

Costcorsquo s Strategy - Treasure Hunt Merchandising

Dozens of featured specials came and went very quickly sometimes in several days or a week ndash like Italian ndash made Hathaway shirts priced at $2999 and $800 leather sectional sofas

The strategy was to entice the shoppers and bargain ndash hunting shoppers would go to Costco more frequently than for periodic ldquostock uprdquo trips

The shoppers quickly learned that they need to buy treasure ndash hunt specials that interested them because these items would very likely not available on their next shopping trip

Costcorsquo s StrategyLow cost emphasis

Costco eliminate all the frills and costs historically associated with conventional retailers including salespeople fancy buildings delivery billing and accounts receivable

They locate warehouses on high ndash traffic routes in or near upscale suburbs that were easily accessible by small businesses and residents with above ndash average incomes it avoided prime real estate sites in order to contain land costs

Warehouse building material Metal pre-engineered design concrete floors and minimal interior deacutecor

COSTCOrsquoS WAREHOUSE

Costcorsquo s Strategy Growth Strategy

Costco had opened between 14 and 34 new locations annually (most in the US) In the fiscal year 2011 Costco spent $13 billion to open 20 new locations two newly relocated warehouses and several distribution depots In the fiscal year 2012 4 new warehouses in the US and 2 new warehouses in Japan (first 4 months of fiscal year 2012) and planned to open an additional 12 new warehouses on September 2012

Grade the CEO

Game Name Right Names

By whom you are inspired

Source httpwwwcnbccom20090424Portfolios-Best-American-CEOs-of-All-Timehtmlslide=12

1 2 3 4 5 6 7 8 9 10

Question 3

Hint 1

1 2 3 4 5 6 7 8 9 10

Question 3

Hint 2

Question 3

Hint 3

1 2 3 4 5 6 7 8 9 10

1 2 3 4 5 6 7 8 9 10

Question 3

Hint 4

Question 3

1 2 3 4 5 6 7 8 9 10

M E M B E R S H I P

1Retail

2Multinational

3Membership

Savings Too Big To Get Home

>

Costco Today

Costco Facts - 2nd largest global retailer (National Retail Federation 2015)

- 18th largest in Fortune 500 (Costco 2015)

- $71 billion market cap (Costco 2016)

- 698 locations worldwide (568 in North America) (Costco 2016)

Costco Stores

Overall Competitive Landscape

- Costco dominated Canada wholesale club industry with a 72 share of value sales and 60 of the total number of outlets (Euromonitor 2016)

- In the US Costco outperformed both Samrsquos Club and BJrsquos Wholesale club over the 2009 ndash 2014 period (Euromonitor 2015)

- In 2014 Costco accounted for 52 of the total US market share (Euromonitor 2015)

Overall Competitive Landscape

- Competition is based among the following factors price merchandise quality and selection location and customer service (MarketLine 2015)

- Highly competitive industry whereas Costco will have to compete against

(1) other players in wholesale club industry

(2) other forms of retailing businesses such as retail discounters (Walmart and Dollar General) supermarkets general merchandise chains specialty chains gasoline station and Internet retailers (Arthur 2012)

COSTCOrsquoS MISSION amp BUSINESS MODEL

A company mission statement describes its present business scope and purpose (ldquowhere we are what we do and why we are hererdquo)

According to Costcorsquos its mission statement is (ldquoto continually provide our members with quality goods and services at the lowest possible pricerdquo)

BUSINESS MODEL

Overview

The plan implemented by a company to generate revenue and make a profit from operations

The model includes the components and functions of the business as well as the revenues it generates and the

expenses it incurs

COSTCOrsquoS BUSINESS MODEL High sale volume and rapid inventory turnover

Offering fee-paying members attractively low prices on a limited selection of nationally branded and selected private- label products in a wide range of merchandise categories

Allowing it to sell and receive cash for inventory before it had to pay many merchandise vendors even when vendor payments were made in time to take advantage of early payment discount

COSTCOrsquoS BUSINESS MODEL A unique aspect of Costcorsquos business model

Limits marketing advertising and promotional activities to new warehouse openings

Occasional direct mail marketing to prospective new members and regular direct marketing programs (such as The Costco Connection a magazine we publish for our members and coupon mailershellip)

MARKETING AND ADVERTISING

Costco has developed a reputation as a socially responsible company by its actions and not by its marketing

Costco does not have a public relations department or staff

Costco relies primarily on word-of-mouth from its members to spread its brand messages

MARKETING AND ADVERTISING

Using direct marketing to existing customers to promote merchandize

The executive membership program offers additional benefits on member services

Its low prices and reputation for making shopping at Costco something of a treasure-hunt made it unnecessary to engage in extensive advertising or sales campaigns

These practices result in lower marketing expenses as compared to typical retailers

APPEALING BUSINESS MODEL

Their mission is to provide quality goods and services at the lowest possible price

Satisfying buyer needs and requirements at a price they will consider a good value

The greater the value delivered and the lower the price to get the value the more appealing a companyrsquos value proposition and product offering

Costco Strategy 1 Pricing

2 Product Selection

3 Treasure Hunt Merchandising

4 Low Cost Emphasis

Chief Elements of Costco Strategy

Ultra-low prices Keep the customers going to the shop by wowing them with low prices Low markup on brand-name merchandise at 14 (compared to 20 ndash 50 markups at other discounters and many supermarkets Jim Sinegal - CEO of Costco said ldquoWe understand that our members do not come to us because the window displays or the Santa Claus or the piano player They come and shop with us because we offer great valuesrdquo

Product Selection

Product Selection

The selection within each product category was restricted in some cases to a single offering

Costco stocked only a 325 ndash count bottle of Advil ndash a size that many shoppers might find too large for their needs

Costco had opened ancillary departments within the next to most Costco warehouses see the table on the next slidehellip

Costcorsquo s Strategy - Treasure Hunt Merchandising

Dozens of featured specials came and went very quickly sometimes in several days or a week ndash like Italian ndash made Hathaway shirts priced at $2999 and $800 leather sectional sofas

The strategy was to entice the shoppers and bargain ndash hunting shoppers would go to Costco more frequently than for periodic ldquostock uprdquo trips

The shoppers quickly learned that they need to buy treasure ndash hunt specials that interested them because these items would very likely not available on their next shopping trip

Costcorsquo s StrategyLow cost emphasis

Costco eliminate all the frills and costs historically associated with conventional retailers including salespeople fancy buildings delivery billing and accounts receivable

They locate warehouses on high ndash traffic routes in or near upscale suburbs that were easily accessible by small businesses and residents with above ndash average incomes it avoided prime real estate sites in order to contain land costs

Warehouse building material Metal pre-engineered design concrete floors and minimal interior deacutecor

COSTCOrsquoS WAREHOUSE

Costcorsquo s Strategy Growth Strategy

Costco had opened between 14 and 34 new locations annually (most in the US) In the fiscal year 2011 Costco spent $13 billion to open 20 new locations two newly relocated warehouses and several distribution depots In the fiscal year 2012 4 new warehouses in the US and 2 new warehouses in Japan (first 4 months of fiscal year 2012) and planned to open an additional 12 new warehouses on September 2012

Grade the CEO

Game Name Right Names

By whom you are inspired

Source httpwwwcnbccom20090424Portfolios-Best-American-CEOs-of-All-Timehtmlslide=12

1 2 3 4 5 6 7 8 9 10

Question 3

Hint 2

Question 3

Hint 3

1 2 3 4 5 6 7 8 9 10

1 2 3 4 5 6 7 8 9 10

Question 3

Hint 4

Question 3

1 2 3 4 5 6 7 8 9 10

M E M B E R S H I P

1Retail

2Multinational

3Membership

Savings Too Big To Get Home

>

Costco Today

Costco Facts - 2nd largest global retailer (National Retail Federation 2015)

- 18th largest in Fortune 500 (Costco 2015)

- $71 billion market cap (Costco 2016)

- 698 locations worldwide (568 in North America) (Costco 2016)

Costco Stores

Overall Competitive Landscape

- Costco dominated Canada wholesale club industry with a 72 share of value sales and 60 of the total number of outlets (Euromonitor 2016)

- In the US Costco outperformed both Samrsquos Club and BJrsquos Wholesale club over the 2009 ndash 2014 period (Euromonitor 2015)

- In 2014 Costco accounted for 52 of the total US market share (Euromonitor 2015)

Overall Competitive Landscape

- Competition is based among the following factors price merchandise quality and selection location and customer service (MarketLine 2015)

- Highly competitive industry whereas Costco will have to compete against

(1) other players in wholesale club industry

(2) other forms of retailing businesses such as retail discounters (Walmart and Dollar General) supermarkets general merchandise chains specialty chains gasoline station and Internet retailers (Arthur 2012)

COSTCOrsquoS MISSION amp BUSINESS MODEL

A company mission statement describes its present business scope and purpose (ldquowhere we are what we do and why we are hererdquo)

According to Costcorsquos its mission statement is (ldquoto continually provide our members with quality goods and services at the lowest possible pricerdquo)

BUSINESS MODEL

Overview

The plan implemented by a company to generate revenue and make a profit from operations

The model includes the components and functions of the business as well as the revenues it generates and the

expenses it incurs

COSTCOrsquoS BUSINESS MODEL High sale volume and rapid inventory turnover

Offering fee-paying members attractively low prices on a limited selection of nationally branded and selected private- label products in a wide range of merchandise categories

Allowing it to sell and receive cash for inventory before it had to pay many merchandise vendors even when vendor payments were made in time to take advantage of early payment discount

COSTCOrsquoS BUSINESS MODEL A unique aspect of Costcorsquos business model

Limits marketing advertising and promotional activities to new warehouse openings

Occasional direct mail marketing to prospective new members and regular direct marketing programs (such as The Costco Connection a magazine we publish for our members and coupon mailershellip)

MARKETING AND ADVERTISING

Costco has developed a reputation as a socially responsible company by its actions and not by its marketing

Costco does not have a public relations department or staff

Costco relies primarily on word-of-mouth from its members to spread its brand messages

MARKETING AND ADVERTISING

Using direct marketing to existing customers to promote merchandize

The executive membership program offers additional benefits on member services

Its low prices and reputation for making shopping at Costco something of a treasure-hunt made it unnecessary to engage in extensive advertising or sales campaigns

These practices result in lower marketing expenses as compared to typical retailers

APPEALING BUSINESS MODEL

Their mission is to provide quality goods and services at the lowest possible price

Satisfying buyer needs and requirements at a price they will consider a good value

The greater the value delivered and the lower the price to get the value the more appealing a companyrsquos value proposition and product offering

Costco Strategy 1 Pricing

2 Product Selection

3 Treasure Hunt Merchandising

4 Low Cost Emphasis

Chief Elements of Costco Strategy

Ultra-low prices Keep the customers going to the shop by wowing them with low prices Low markup on brand-name merchandise at 14 (compared to 20 ndash 50 markups at other discounters and many supermarkets Jim Sinegal - CEO of Costco said ldquoWe understand that our members do not come to us because the window displays or the Santa Claus or the piano player They come and shop with us because we offer great valuesrdquo

Product Selection

Product Selection

The selection within each product category was restricted in some cases to a single offering

Costco stocked only a 325 ndash count bottle of Advil ndash a size that many shoppers might find too large for their needs

Costco had opened ancillary departments within the next to most Costco warehouses see the table on the next slidehellip

Costcorsquo s Strategy - Treasure Hunt Merchandising

Dozens of featured specials came and went very quickly sometimes in several days or a week ndash like Italian ndash made Hathaway shirts priced at $2999 and $800 leather sectional sofas

The strategy was to entice the shoppers and bargain ndash hunting shoppers would go to Costco more frequently than for periodic ldquostock uprdquo trips

The shoppers quickly learned that they need to buy treasure ndash hunt specials that interested them because these items would very likely not available on their next shopping trip

Costcorsquo s StrategyLow cost emphasis

Costco eliminate all the frills and costs historically associated with conventional retailers including salespeople fancy buildings delivery billing and accounts receivable

They locate warehouses on high ndash traffic routes in or near upscale suburbs that were easily accessible by small businesses and residents with above ndash average incomes it avoided prime real estate sites in order to contain land costs

Warehouse building material Metal pre-engineered design concrete floors and minimal interior deacutecor

COSTCOrsquoS WAREHOUSE

Costcorsquo s Strategy Growth Strategy

Costco had opened between 14 and 34 new locations annually (most in the US) In the fiscal year 2011 Costco spent $13 billion to open 20 new locations two newly relocated warehouses and several distribution depots In the fiscal year 2012 4 new warehouses in the US and 2 new warehouses in Japan (first 4 months of fiscal year 2012) and planned to open an additional 12 new warehouses on September 2012

Grade the CEO

Game Name Right Names

By whom you are inspired

Source httpwwwcnbccom20090424Portfolios-Best-American-CEOs-of-All-Timehtmlslide=12

Question 3

Hint 3

1 2 3 4 5 6 7 8 9 10

1 2 3 4 5 6 7 8 9 10

Question 3

Hint 4

Question 3

1 2 3 4 5 6 7 8 9 10

M E M B E R S H I P

1Retail

2Multinational

3Membership

Savings Too Big To Get Home

>

Costco Today

Costco Facts - 2nd largest global retailer (National Retail Federation 2015)

- 18th largest in Fortune 500 (Costco 2015)

- $71 billion market cap (Costco 2016)

- 698 locations worldwide (568 in North America) (Costco 2016)

Costco Stores

Overall Competitive Landscape

- Costco dominated Canada wholesale club industry with a 72 share of value sales and 60 of the total number of outlets (Euromonitor 2016)

- In the US Costco outperformed both Samrsquos Club and BJrsquos Wholesale club over the 2009 ndash 2014 period (Euromonitor 2015)

- In 2014 Costco accounted for 52 of the total US market share (Euromonitor 2015)

Overall Competitive Landscape

- Competition is based among the following factors price merchandise quality and selection location and customer service (MarketLine 2015)

- Highly competitive industry whereas Costco will have to compete against

(1) other players in wholesale club industry

(2) other forms of retailing businesses such as retail discounters (Walmart and Dollar General) supermarkets general merchandise chains specialty chains gasoline station and Internet retailers (Arthur 2012)

COSTCOrsquoS MISSION amp BUSINESS MODEL

A company mission statement describes its present business scope and purpose (ldquowhere we are what we do and why we are hererdquo)

According to Costcorsquos its mission statement is (ldquoto continually provide our members with quality goods and services at the lowest possible pricerdquo)

BUSINESS MODEL

Overview

The plan implemented by a company to generate revenue and make a profit from operations

The model includes the components and functions of the business as well as the revenues it generates and the

expenses it incurs

COSTCOrsquoS BUSINESS MODEL High sale volume and rapid inventory turnover

Offering fee-paying members attractively low prices on a limited selection of nationally branded and selected private- label products in a wide range of merchandise categories

Allowing it to sell and receive cash for inventory before it had to pay many merchandise vendors even when vendor payments were made in time to take advantage of early payment discount

COSTCOrsquoS BUSINESS MODEL A unique aspect of Costcorsquos business model

Limits marketing advertising and promotional activities to new warehouse openings

Occasional direct mail marketing to prospective new members and regular direct marketing programs (such as The Costco Connection a magazine we publish for our members and coupon mailershellip)

MARKETING AND ADVERTISING

Costco has developed a reputation as a socially responsible company by its actions and not by its marketing

Costco does not have a public relations department or staff

Costco relies primarily on word-of-mouth from its members to spread its brand messages

MARKETING AND ADVERTISING

Using direct marketing to existing customers to promote merchandize

The executive membership program offers additional benefits on member services

Its low prices and reputation for making shopping at Costco something of a treasure-hunt made it unnecessary to engage in extensive advertising or sales campaigns

These practices result in lower marketing expenses as compared to typical retailers

APPEALING BUSINESS MODEL

Their mission is to provide quality goods and services at the lowest possible price

Satisfying buyer needs and requirements at a price they will consider a good value

The greater the value delivered and the lower the price to get the value the more appealing a companyrsquos value proposition and product offering

Costco Strategy 1 Pricing

2 Product Selection

3 Treasure Hunt Merchandising

4 Low Cost Emphasis

Chief Elements of Costco Strategy

Ultra-low prices Keep the customers going to the shop by wowing them with low prices Low markup on brand-name merchandise at 14 (compared to 20 ndash 50 markups at other discounters and many supermarkets Jim Sinegal - CEO of Costco said ldquoWe understand that our members do not come to us because the window displays or the Santa Claus or the piano player They come and shop with us because we offer great valuesrdquo

Product Selection

Product Selection

The selection within each product category was restricted in some cases to a single offering

Costco stocked only a 325 ndash count bottle of Advil ndash a size that many shoppers might find too large for their needs

Costco had opened ancillary departments within the next to most Costco warehouses see the table on the next slidehellip

Costcorsquo s Strategy - Treasure Hunt Merchandising

Dozens of featured specials came and went very quickly sometimes in several days or a week ndash like Italian ndash made Hathaway shirts priced at $2999 and $800 leather sectional sofas

The strategy was to entice the shoppers and bargain ndash hunting shoppers would go to Costco more frequently than for periodic ldquostock uprdquo trips

The shoppers quickly learned that they need to buy treasure ndash hunt specials that interested them because these items would very likely not available on their next shopping trip

Costcorsquo s StrategyLow cost emphasis

Costco eliminate all the frills and costs historically associated with conventional retailers including salespeople fancy buildings delivery billing and accounts receivable

They locate warehouses on high ndash traffic routes in or near upscale suburbs that were easily accessible by small businesses and residents with above ndash average incomes it avoided prime real estate sites in order to contain land costs

Warehouse building material Metal pre-engineered design concrete floors and minimal interior deacutecor

COSTCOrsquoS WAREHOUSE

Costcorsquo s Strategy Growth Strategy

Costco had opened between 14 and 34 new locations annually (most in the US) In the fiscal year 2011 Costco spent $13 billion to open 20 new locations two newly relocated warehouses and several distribution depots In the fiscal year 2012 4 new warehouses in the US and 2 new warehouses in Japan (first 4 months of fiscal year 2012) and planned to open an additional 12 new warehouses on September 2012

Grade the CEO

Game Name Right Names

By whom you are inspired

Source httpwwwcnbccom20090424Portfolios-Best-American-CEOs-of-All-Timehtmlslide=12

1 2 3 4 5 6 7 8 9 10

Question 3

Hint 4

Question 3

1 2 3 4 5 6 7 8 9 10

M E M B E R S H I P

1Retail

2Multinational

3Membership

Savings Too Big To Get Home

>

Costco Today

Costco Facts - 2nd largest global retailer (National Retail Federation 2015)

- 18th largest in Fortune 500 (Costco 2015)

- $71 billion market cap (Costco 2016)

- 698 locations worldwide (568 in North America) (Costco 2016)

Costco Stores

Overall Competitive Landscape

- Costco dominated Canada wholesale club industry with a 72 share of value sales and 60 of the total number of outlets (Euromonitor 2016)

- In the US Costco outperformed both Samrsquos Club and BJrsquos Wholesale club over the 2009 ndash 2014 period (Euromonitor 2015)

- In 2014 Costco accounted for 52 of the total US market share (Euromonitor 2015)

Overall Competitive Landscape

- Competition is based among the following factors price merchandise quality and selection location and customer service (MarketLine 2015)

- Highly competitive industry whereas Costco will have to compete against

(1) other players in wholesale club industry

(2) other forms of retailing businesses such as retail discounters (Walmart and Dollar General) supermarkets general merchandise chains specialty chains gasoline station and Internet retailers (Arthur 2012)

COSTCOrsquoS MISSION amp BUSINESS MODEL

A company mission statement describes its present business scope and purpose (ldquowhere we are what we do and why we are hererdquo)

According to Costcorsquos its mission statement is (ldquoto continually provide our members with quality goods and services at the lowest possible pricerdquo)

BUSINESS MODEL

Overview

The plan implemented by a company to generate revenue and make a profit from operations

The model includes the components and functions of the business as well as the revenues it generates and the

expenses it incurs

COSTCOrsquoS BUSINESS MODEL High sale volume and rapid inventory turnover

Offering fee-paying members attractively low prices on a limited selection of nationally branded and selected private- label products in a wide range of merchandise categories

Allowing it to sell and receive cash for inventory before it had to pay many merchandise vendors even when vendor payments were made in time to take advantage of early payment discount

COSTCOrsquoS BUSINESS MODEL A unique aspect of Costcorsquos business model

Limits marketing advertising and promotional activities to new warehouse openings

Occasional direct mail marketing to prospective new members and regular direct marketing programs (such as The Costco Connection a magazine we publish for our members and coupon mailershellip)

MARKETING AND ADVERTISING

Costco has developed a reputation as a socially responsible company by its actions and not by its marketing

Costco does not have a public relations department or staff

Costco relies primarily on word-of-mouth from its members to spread its brand messages

MARKETING AND ADVERTISING

Using direct marketing to existing customers to promote merchandize

The executive membership program offers additional benefits on member services

Its low prices and reputation for making shopping at Costco something of a treasure-hunt made it unnecessary to engage in extensive advertising or sales campaigns

These practices result in lower marketing expenses as compared to typical retailers

APPEALING BUSINESS MODEL

Their mission is to provide quality goods and services at the lowest possible price

Satisfying buyer needs and requirements at a price they will consider a good value

The greater the value delivered and the lower the price to get the value the more appealing a companyrsquos value proposition and product offering

Costco Strategy 1 Pricing

2 Product Selection

3 Treasure Hunt Merchandising

4 Low Cost Emphasis

Chief Elements of Costco Strategy

Ultra-low prices Keep the customers going to the shop by wowing them with low prices Low markup on brand-name merchandise at 14 (compared to 20 ndash 50 markups at other discounters and many supermarkets Jim Sinegal - CEO of Costco said ldquoWe understand that our members do not come to us because the window displays or the Santa Claus or the piano player They come and shop with us because we offer great valuesrdquo

Product Selection

Product Selection

The selection within each product category was restricted in some cases to a single offering

Costco stocked only a 325 ndash count bottle of Advil ndash a size that many shoppers might find too large for their needs

Costco had opened ancillary departments within the next to most Costco warehouses see the table on the next slidehellip

Costcorsquo s Strategy - Treasure Hunt Merchandising

Dozens of featured specials came and went very quickly sometimes in several days or a week ndash like Italian ndash made Hathaway shirts priced at $2999 and $800 leather sectional sofas

The strategy was to entice the shoppers and bargain ndash hunting shoppers would go to Costco more frequently than for periodic ldquostock uprdquo trips

The shoppers quickly learned that they need to buy treasure ndash hunt specials that interested them because these items would very likely not available on their next shopping trip

Costcorsquo s StrategyLow cost emphasis

Costco eliminate all the frills and costs historically associated with conventional retailers including salespeople fancy buildings delivery billing and accounts receivable

They locate warehouses on high ndash traffic routes in or near upscale suburbs that were easily accessible by small businesses and residents with above ndash average incomes it avoided prime real estate sites in order to contain land costs

Warehouse building material Metal pre-engineered design concrete floors and minimal interior deacutecor

COSTCOrsquoS WAREHOUSE

Costcorsquo s Strategy Growth Strategy

Costco had opened between 14 and 34 new locations annually (most in the US) In the fiscal year 2011 Costco spent $13 billion to open 20 new locations two newly relocated warehouses and several distribution depots In the fiscal year 2012 4 new warehouses in the US and 2 new warehouses in Japan (first 4 months of fiscal year 2012) and planned to open an additional 12 new warehouses on September 2012

Grade the CEO

Game Name Right Names

By whom you are inspired

Source httpwwwcnbccom20090424Portfolios-Best-American-CEOs-of-All-Timehtmlslide=12

Question 3

1 2 3 4 5 6 7 8 9 10

M E M B E R S H I P

1Retail

2Multinational

3Membership

Savings Too Big To Get Home

>

Costco Today

Costco Facts - 2nd largest global retailer (National Retail Federation 2015)

- 18th largest in Fortune 500 (Costco 2015)

- $71 billion market cap (Costco 2016)

- 698 locations worldwide (568 in North America) (Costco 2016)

Costco Stores

Overall Competitive Landscape

- Costco dominated Canada wholesale club industry with a 72 share of value sales and 60 of the total number of outlets (Euromonitor 2016)

- In the US Costco outperformed both Samrsquos Club and BJrsquos Wholesale club over the 2009 ndash 2014 period (Euromonitor 2015)

- In 2014 Costco accounted for 52 of the total US market share (Euromonitor 2015)

Overall Competitive Landscape

- Competition is based among the following factors price merchandise quality and selection location and customer service (MarketLine 2015)

- Highly competitive industry whereas Costco will have to compete against

(1) other players in wholesale club industry

(2) other forms of retailing businesses such as retail discounters (Walmart and Dollar General) supermarkets general merchandise chains specialty chains gasoline station and Internet retailers (Arthur 2012)

COSTCOrsquoS MISSION amp BUSINESS MODEL

A company mission statement describes its present business scope and purpose (ldquowhere we are what we do and why we are hererdquo)

According to Costcorsquos its mission statement is (ldquoto continually provide our members with quality goods and services at the lowest possible pricerdquo)

BUSINESS MODEL

Overview

The plan implemented by a company to generate revenue and make a profit from operations

The model includes the components and functions of the business as well as the revenues it generates and the

expenses it incurs

COSTCOrsquoS BUSINESS MODEL High sale volume and rapid inventory turnover

Offering fee-paying members attractively low prices on a limited selection of nationally branded and selected private- label products in a wide range of merchandise categories

Allowing it to sell and receive cash for inventory before it had to pay many merchandise vendors even when vendor payments were made in time to take advantage of early payment discount

COSTCOrsquoS BUSINESS MODEL A unique aspect of Costcorsquos business model

Limits marketing advertising and promotional activities to new warehouse openings

Occasional direct mail marketing to prospective new members and regular direct marketing programs (such as The Costco Connection a magazine we publish for our members and coupon mailershellip)

MARKETING AND ADVERTISING

Costco has developed a reputation as a socially responsible company by its actions and not by its marketing

Costco does not have a public relations department or staff

Costco relies primarily on word-of-mouth from its members to spread its brand messages

MARKETING AND ADVERTISING

Using direct marketing to existing customers to promote merchandize

The executive membership program offers additional benefits on member services

Its low prices and reputation for making shopping at Costco something of a treasure-hunt made it unnecessary to engage in extensive advertising or sales campaigns

These practices result in lower marketing expenses as compared to typical retailers

APPEALING BUSINESS MODEL

Their mission is to provide quality goods and services at the lowest possible price

Satisfying buyer needs and requirements at a price they will consider a good value

The greater the value delivered and the lower the price to get the value the more appealing a companyrsquos value proposition and product offering

Costco Strategy 1 Pricing

2 Product Selection

3 Treasure Hunt Merchandising

4 Low Cost Emphasis

Chief Elements of Costco Strategy

Ultra-low prices Keep the customers going to the shop by wowing them with low prices Low markup on brand-name merchandise at 14 (compared to 20 ndash 50 markups at other discounters and many supermarkets Jim Sinegal - CEO of Costco said ldquoWe understand that our members do not come to us because the window displays or the Santa Claus or the piano player They come and shop with us because we offer great valuesrdquo

Product Selection

Product Selection

The selection within each product category was restricted in some cases to a single offering

Costco stocked only a 325 ndash count bottle of Advil ndash a size that many shoppers might find too large for their needs

Costco had opened ancillary departments within the next to most Costco warehouses see the table on the next slidehellip

Costcorsquo s Strategy - Treasure Hunt Merchandising

Dozens of featured specials came and went very quickly sometimes in several days or a week ndash like Italian ndash made Hathaway shirts priced at $2999 and $800 leather sectional sofas

The strategy was to entice the shoppers and bargain ndash hunting shoppers would go to Costco more frequently than for periodic ldquostock uprdquo trips

The shoppers quickly learned that they need to buy treasure ndash hunt specials that interested them because these items would very likely not available on their next shopping trip

Costcorsquo s StrategyLow cost emphasis

Costco eliminate all the frills and costs historically associated with conventional retailers including salespeople fancy buildings delivery billing and accounts receivable

They locate warehouses on high ndash traffic routes in or near upscale suburbs that were easily accessible by small businesses and residents with above ndash average incomes it avoided prime real estate sites in order to contain land costs

Warehouse building material Metal pre-engineered design concrete floors and minimal interior deacutecor

COSTCOrsquoS WAREHOUSE

Costcorsquo s Strategy Growth Strategy

Costco had opened between 14 and 34 new locations annually (most in the US) In the fiscal year 2011 Costco spent $13 billion to open 20 new locations two newly relocated warehouses and several distribution depots In the fiscal year 2012 4 new warehouses in the US and 2 new warehouses in Japan (first 4 months of fiscal year 2012) and planned to open an additional 12 new warehouses on September 2012

Grade the CEO

Game Name Right Names

By whom you are inspired

Source httpwwwcnbccom20090424Portfolios-Best-American-CEOs-of-All-Timehtmlslide=12

1Retail

2Multinational

3Membership

Savings Too Big To Get Home

>

Costco Today

Costco Facts - 2nd largest global retailer (National Retail Federation 2015)

- 18th largest in Fortune 500 (Costco 2015)

- $71 billion market cap (Costco 2016)

- 698 locations worldwide (568 in North America) (Costco 2016)

Costco Stores

Overall Competitive Landscape

- Costco dominated Canada wholesale club industry with a 72 share of value sales and 60 of the total number of outlets (Euromonitor 2016)

- In the US Costco outperformed both Samrsquos Club and BJrsquos Wholesale club over the 2009 ndash 2014 period (Euromonitor 2015)

- In 2014 Costco accounted for 52 of the total US market share (Euromonitor 2015)

Overall Competitive Landscape

- Competition is based among the following factors price merchandise quality and selection location and customer service (MarketLine 2015)

- Highly competitive industry whereas Costco will have to compete against

(1) other players in wholesale club industry

(2) other forms of retailing businesses such as retail discounters (Walmart and Dollar General) supermarkets general merchandise chains specialty chains gasoline station and Internet retailers (Arthur 2012)

COSTCOrsquoS MISSION amp BUSINESS MODEL

A company mission statement describes its present business scope and purpose (ldquowhere we are what we do and why we are hererdquo)

According to Costcorsquos its mission statement is (ldquoto continually provide our members with quality goods and services at the lowest possible pricerdquo)

BUSINESS MODEL

Overview

The plan implemented by a company to generate revenue and make a profit from operations

The model includes the components and functions of the business as well as the revenues it generates and the

expenses it incurs

COSTCOrsquoS BUSINESS MODEL High sale volume and rapid inventory turnover

Offering fee-paying members attractively low prices on a limited selection of nationally branded and selected private- label products in a wide range of merchandise categories

Allowing it to sell and receive cash for inventory before it had to pay many merchandise vendors even when vendor payments were made in time to take advantage of early payment discount

COSTCOrsquoS BUSINESS MODEL A unique aspect of Costcorsquos business model

Limits marketing advertising and promotional activities to new warehouse openings

Occasional direct mail marketing to prospective new members and regular direct marketing programs (such as The Costco Connection a magazine we publish for our members and coupon mailershellip)

MARKETING AND ADVERTISING

Costco has developed a reputation as a socially responsible company by its actions and not by its marketing

Costco does not have a public relations department or staff

Costco relies primarily on word-of-mouth from its members to spread its brand messages

MARKETING AND ADVERTISING

Using direct marketing to existing customers to promote merchandize

The executive membership program offers additional benefits on member services

Its low prices and reputation for making shopping at Costco something of a treasure-hunt made it unnecessary to engage in extensive advertising or sales campaigns

These practices result in lower marketing expenses as compared to typical retailers

APPEALING BUSINESS MODEL

Their mission is to provide quality goods and services at the lowest possible price

Satisfying buyer needs and requirements at a price they will consider a good value

The greater the value delivered and the lower the price to get the value the more appealing a companyrsquos value proposition and product offering

Costco Strategy 1 Pricing

2 Product Selection

3 Treasure Hunt Merchandising

4 Low Cost Emphasis

Chief Elements of Costco Strategy

Ultra-low prices Keep the customers going to the shop by wowing them with low prices Low markup on brand-name merchandise at 14 (compared to 20 ndash 50 markups at other discounters and many supermarkets Jim Sinegal - CEO of Costco said ldquoWe understand that our members do not come to us because the window displays or the Santa Claus or the piano player They come and shop with us because we offer great valuesrdquo

Product Selection

Product Selection

The selection within each product category was restricted in some cases to a single offering

Costco stocked only a 325 ndash count bottle of Advil ndash a size that many shoppers might find too large for their needs

Costco had opened ancillary departments within the next to most Costco warehouses see the table on the next slidehellip

Costcorsquo s Strategy - Treasure Hunt Merchandising

Dozens of featured specials came and went very quickly sometimes in several days or a week ndash like Italian ndash made Hathaway shirts priced at $2999 and $800 leather sectional sofas

The strategy was to entice the shoppers and bargain ndash hunting shoppers would go to Costco more frequently than for periodic ldquostock uprdquo trips

The shoppers quickly learned that they need to buy treasure ndash hunt specials that interested them because these items would very likely not available on their next shopping trip

Costcorsquo s StrategyLow cost emphasis

Costco eliminate all the frills and costs historically associated with conventional retailers including salespeople fancy buildings delivery billing and accounts receivable

They locate warehouses on high ndash traffic routes in or near upscale suburbs that were easily accessible by small businesses and residents with above ndash average incomes it avoided prime real estate sites in order to contain land costs

Warehouse building material Metal pre-engineered design concrete floors and minimal interior deacutecor

COSTCOrsquoS WAREHOUSE

Costcorsquo s Strategy Growth Strategy

Costco had opened between 14 and 34 new locations annually (most in the US) In the fiscal year 2011 Costco spent $13 billion to open 20 new locations two newly relocated warehouses and several distribution depots In the fiscal year 2012 4 new warehouses in the US and 2 new warehouses in Japan (first 4 months of fiscal year 2012) and planned to open an additional 12 new warehouses on September 2012

Grade the CEO

Game Name Right Names

By whom you are inspired

Source httpwwwcnbccom20090424Portfolios-Best-American-CEOs-of-All-Timehtmlslide=12

Savings Too Big To Get Home

>

Costco Today

Costco Facts - 2nd largest global retailer (National Retail Federation 2015)

- 18th largest in Fortune 500 (Costco 2015)

- $71 billion market cap (Costco 2016)

- 698 locations worldwide (568 in North America) (Costco 2016)

Costco Stores

Overall Competitive Landscape

- Costco dominated Canada wholesale club industry with a 72 share of value sales and 60 of the total number of outlets (Euromonitor 2016)

- In the US Costco outperformed both Samrsquos Club and BJrsquos Wholesale club over the 2009 ndash 2014 period (Euromonitor 2015)

- In 2014 Costco accounted for 52 of the total US market share (Euromonitor 2015)

Overall Competitive Landscape

- Competition is based among the following factors price merchandise quality and selection location and customer service (MarketLine 2015)

- Highly competitive industry whereas Costco will have to compete against

(1) other players in wholesale club industry

(2) other forms of retailing businesses such as retail discounters (Walmart and Dollar General) supermarkets general merchandise chains specialty chains gasoline station and Internet retailers (Arthur 2012)

COSTCOrsquoS MISSION amp BUSINESS MODEL

A company mission statement describes its present business scope and purpose (ldquowhere we are what we do and why we are hererdquo)

According to Costcorsquos its mission statement is (ldquoto continually provide our members with quality goods and services at the lowest possible pricerdquo)

BUSINESS MODEL

Overview

The plan implemented by a company to generate revenue and make a profit from operations

The model includes the components and functions of the business as well as the revenues it generates and the

expenses it incurs

COSTCOrsquoS BUSINESS MODEL High sale volume and rapid inventory turnover

Offering fee-paying members attractively low prices on a limited selection of nationally branded and selected private- label products in a wide range of merchandise categories

Allowing it to sell and receive cash for inventory before it had to pay many merchandise vendors even when vendor payments were made in time to take advantage of early payment discount

COSTCOrsquoS BUSINESS MODEL A unique aspect of Costcorsquos business model

Limits marketing advertising and promotional activities to new warehouse openings

Occasional direct mail marketing to prospective new members and regular direct marketing programs (such as The Costco Connection a magazine we publish for our members and coupon mailershellip)

MARKETING AND ADVERTISING

Costco has developed a reputation as a socially responsible company by its actions and not by its marketing

Costco does not have a public relations department or staff

Costco relies primarily on word-of-mouth from its members to spread its brand messages

MARKETING AND ADVERTISING

Using direct marketing to existing customers to promote merchandize

The executive membership program offers additional benefits on member services

Its low prices and reputation for making shopping at Costco something of a treasure-hunt made it unnecessary to engage in extensive advertising or sales campaigns

These practices result in lower marketing expenses as compared to typical retailers

APPEALING BUSINESS MODEL

Their mission is to provide quality goods and services at the lowest possible price

Satisfying buyer needs and requirements at a price they will consider a good value

The greater the value delivered and the lower the price to get the value the more appealing a companyrsquos value proposition and product offering

Costco Strategy 1 Pricing

2 Product Selection

3 Treasure Hunt Merchandising

4 Low Cost Emphasis

Chief Elements of Costco Strategy

Ultra-low prices Keep the customers going to the shop by wowing them with low prices Low markup on brand-name merchandise at 14 (compared to 20 ndash 50 markups at other discounters and many supermarkets Jim Sinegal - CEO of Costco said ldquoWe understand that our members do not come to us because the window displays or the Santa Claus or the piano player They come and shop with us because we offer great valuesrdquo

Product Selection

Product Selection

The selection within each product category was restricted in some cases to a single offering

Costco stocked only a 325 ndash count bottle of Advil ndash a size that many shoppers might find too large for their needs

Costco had opened ancillary departments within the next to most Costco warehouses see the table on the next slidehellip

Costcorsquo s Strategy - Treasure Hunt Merchandising

Dozens of featured specials came and went very quickly sometimes in several days or a week ndash like Italian ndash made Hathaway shirts priced at $2999 and $800 leather sectional sofas

The strategy was to entice the shoppers and bargain ndash hunting shoppers would go to Costco more frequently than for periodic ldquostock uprdquo trips

The shoppers quickly learned that they need to buy treasure ndash hunt specials that interested them because these items would very likely not available on their next shopping trip

Costcorsquo s StrategyLow cost emphasis

Costco eliminate all the frills and costs historically associated with conventional retailers including salespeople fancy buildings delivery billing and accounts receivable

They locate warehouses on high ndash traffic routes in or near upscale suburbs that were easily accessible by small businesses and residents with above ndash average incomes it avoided prime real estate sites in order to contain land costs

Warehouse building material Metal pre-engineered design concrete floors and minimal interior deacutecor

COSTCOrsquoS WAREHOUSE

Costcorsquo s Strategy Growth Strategy

Costco had opened between 14 and 34 new locations annually (most in the US) In the fiscal year 2011 Costco spent $13 billion to open 20 new locations two newly relocated warehouses and several distribution depots In the fiscal year 2012 4 new warehouses in the US and 2 new warehouses in Japan (first 4 months of fiscal year 2012) and planned to open an additional 12 new warehouses on September 2012

Grade the CEO

Game Name Right Names

By whom you are inspired

Source httpwwwcnbccom20090424Portfolios-Best-American-CEOs-of-All-Timehtmlslide=12

Costco Today

Costco Facts - 2nd largest global retailer (National Retail Federation 2015)

- 18th largest in Fortune 500 (Costco 2015)

- $71 billion market cap (Costco 2016)

- 698 locations worldwide (568 in North America) (Costco 2016)

Costco Stores

Overall Competitive Landscape

- Costco dominated Canada wholesale club industry with a 72 share of value sales and 60 of the total number of outlets (Euromonitor 2016)

- In the US Costco outperformed both Samrsquos Club and BJrsquos Wholesale club over the 2009 ndash 2014 period (Euromonitor 2015)

- In 2014 Costco accounted for 52 of the total US market share (Euromonitor 2015)

Overall Competitive Landscape

- Competition is based among the following factors price merchandise quality and selection location and customer service (MarketLine 2015)

- Highly competitive industry whereas Costco will have to compete against

(1) other players in wholesale club industry

(2) other forms of retailing businesses such as retail discounters (Walmart and Dollar General) supermarkets general merchandise chains specialty chains gasoline station and Internet retailers (Arthur 2012)

COSTCOrsquoS MISSION amp BUSINESS MODEL

A company mission statement describes its present business scope and purpose (ldquowhere we are what we do and why we are hererdquo)

According to Costcorsquos its mission statement is (ldquoto continually provide our members with quality goods and services at the lowest possible pricerdquo)

BUSINESS MODEL

Overview

The plan implemented by a company to generate revenue and make a profit from operations

The model includes the components and functions of the business as well as the revenues it generates and the

expenses it incurs

COSTCOrsquoS BUSINESS MODEL High sale volume and rapid inventory turnover

Offering fee-paying members attractively low prices on a limited selection of nationally branded and selected private- label products in a wide range of merchandise categories

Allowing it to sell and receive cash for inventory before it had to pay many merchandise vendors even when vendor payments were made in time to take advantage of early payment discount

COSTCOrsquoS BUSINESS MODEL A unique aspect of Costcorsquos business model

Limits marketing advertising and promotional activities to new warehouse openings

Occasional direct mail marketing to prospective new members and regular direct marketing programs (such as The Costco Connection a magazine we publish for our members and coupon mailershellip)

MARKETING AND ADVERTISING

Costco has developed a reputation as a socially responsible company by its actions and not by its marketing

Costco does not have a public relations department or staff

Costco relies primarily on word-of-mouth from its members to spread its brand messages

MARKETING AND ADVERTISING

Using direct marketing to existing customers to promote merchandize

The executive membership program offers additional benefits on member services

Its low prices and reputation for making shopping at Costco something of a treasure-hunt made it unnecessary to engage in extensive advertising or sales campaigns

These practices result in lower marketing expenses as compared to typical retailers

APPEALING BUSINESS MODEL

Their mission is to provide quality goods and services at the lowest possible price

Satisfying buyer needs and requirements at a price they will consider a good value

The greater the value delivered and the lower the price to get the value the more appealing a companyrsquos value proposition and product offering

Costco Strategy 1 Pricing

2 Product Selection

3 Treasure Hunt Merchandising

4 Low Cost Emphasis

Chief Elements of Costco Strategy

Ultra-low prices Keep the customers going to the shop by wowing them with low prices Low markup on brand-name merchandise at 14 (compared to 20 ndash 50 markups at other discounters and many supermarkets Jim Sinegal - CEO of Costco said ldquoWe understand that our members do not come to us because the window displays or the Santa Claus or the piano player They come and shop with us because we offer great valuesrdquo

Product Selection

Product Selection

The selection within each product category was restricted in some cases to a single offering

Costco stocked only a 325 ndash count bottle of Advil ndash a size that many shoppers might find too large for their needs

Costco had opened ancillary departments within the next to most Costco warehouses see the table on the next slidehellip

Costcorsquo s Strategy - Treasure Hunt Merchandising

Dozens of featured specials came and went very quickly sometimes in several days or a week ndash like Italian ndash made Hathaway shirts priced at $2999 and $800 leather sectional sofas

The strategy was to entice the shoppers and bargain ndash hunting shoppers would go to Costco more frequently than for periodic ldquostock uprdquo trips

The shoppers quickly learned that they need to buy treasure ndash hunt specials that interested them because these items would very likely not available on their next shopping trip

Costcorsquo s StrategyLow cost emphasis

Costco eliminate all the frills and costs historically associated with conventional retailers including salespeople fancy buildings delivery billing and accounts receivable

They locate warehouses on high ndash traffic routes in or near upscale suburbs that were easily accessible by small businesses and residents with above ndash average incomes it avoided prime real estate sites in order to contain land costs

Warehouse building material Metal pre-engineered design concrete floors and minimal interior deacutecor

COSTCOrsquoS WAREHOUSE

Costcorsquo s Strategy Growth Strategy

Costco had opened between 14 and 34 new locations annually (most in the US) In the fiscal year 2011 Costco spent $13 billion to open 20 new locations two newly relocated warehouses and several distribution depots In the fiscal year 2012 4 new warehouses in the US and 2 new warehouses in Japan (first 4 months of fiscal year 2012) and planned to open an additional 12 new warehouses on September 2012

Grade the CEO

Game Name Right Names

By whom you are inspired

Source httpwwwcnbccom20090424Portfolios-Best-American-CEOs-of-All-Timehtmlslide=12

Costco Facts - 2nd largest global retailer (National Retail Federation 2015)

- 18th largest in Fortune 500 (Costco 2015)

- $71 billion market cap (Costco 2016)

- 698 locations worldwide (568 in North America) (Costco 2016)

Costco Stores

Overall Competitive Landscape

- Costco dominated Canada wholesale club industry with a 72 share of value sales and 60 of the total number of outlets (Euromonitor 2016)

- In the US Costco outperformed both Samrsquos Club and BJrsquos Wholesale club over the 2009 ndash 2014 period (Euromonitor 2015)

- In 2014 Costco accounted for 52 of the total US market share (Euromonitor 2015)

Overall Competitive Landscape

- Competition is based among the following factors price merchandise quality and selection location and customer service (MarketLine 2015)

- Highly competitive industry whereas Costco will have to compete against

(1) other players in wholesale club industry

(2) other forms of retailing businesses such as retail discounters (Walmart and Dollar General) supermarkets general merchandise chains specialty chains gasoline station and Internet retailers (Arthur 2012)

COSTCOrsquoS MISSION amp BUSINESS MODEL

A company mission statement describes its present business scope and purpose (ldquowhere we are what we do and why we are hererdquo)

According to Costcorsquos its mission statement is (ldquoto continually provide our members with quality goods and services at the lowest possible pricerdquo)

BUSINESS MODEL

Overview

The plan implemented by a company to generate revenue and make a profit from operations

The model includes the components and functions of the business as well as the revenues it generates and the

expenses it incurs

COSTCOrsquoS BUSINESS MODEL High sale volume and rapid inventory turnover

Offering fee-paying members attractively low prices on a limited selection of nationally branded and selected private- label products in a wide range of merchandise categories

Allowing it to sell and receive cash for inventory before it had to pay many merchandise vendors even when vendor payments were made in time to take advantage of early payment discount

COSTCOrsquoS BUSINESS MODEL A unique aspect of Costcorsquos business model

Limits marketing advertising and promotional activities to new warehouse openings

Occasional direct mail marketing to prospective new members and regular direct marketing programs (such as The Costco Connection a magazine we publish for our members and coupon mailershellip)

MARKETING AND ADVERTISING

Costco has developed a reputation as a socially responsible company by its actions and not by its marketing

Costco does not have a public relations department or staff

Costco relies primarily on word-of-mouth from its members to spread its brand messages

MARKETING AND ADVERTISING

Using direct marketing to existing customers to promote merchandize

The executive membership program offers additional benefits on member services

Its low prices and reputation for making shopping at Costco something of a treasure-hunt made it unnecessary to engage in extensive advertising or sales campaigns

These practices result in lower marketing expenses as compared to typical retailers

APPEALING BUSINESS MODEL

Their mission is to provide quality goods and services at the lowest possible price

Satisfying buyer needs and requirements at a price they will consider a good value

The greater the value delivered and the lower the price to get the value the more appealing a companyrsquos value proposition and product offering

Costco Strategy 1 Pricing

2 Product Selection

3 Treasure Hunt Merchandising

4 Low Cost Emphasis

Chief Elements of Costco Strategy

Ultra-low prices Keep the customers going to the shop by wowing them with low prices Low markup on brand-name merchandise at 14 (compared to 20 ndash 50 markups at other discounters and many supermarkets Jim Sinegal - CEO of Costco said ldquoWe understand that our members do not come to us because the window displays or the Santa Claus or the piano player They come and shop with us because we offer great valuesrdquo

Product Selection

Product Selection

The selection within each product category was restricted in some cases to a single offering

Costco stocked only a 325 ndash count bottle of Advil ndash a size that many shoppers might find too large for their needs

Costco had opened ancillary departments within the next to most Costco warehouses see the table on the next slidehellip

Costcorsquo s Strategy - Treasure Hunt Merchandising

Dozens of featured specials came and went very quickly sometimes in several days or a week ndash like Italian ndash made Hathaway shirts priced at $2999 and $800 leather sectional sofas

The strategy was to entice the shoppers and bargain ndash hunting shoppers would go to Costco more frequently than for periodic ldquostock uprdquo trips

The shoppers quickly learned that they need to buy treasure ndash hunt specials that interested them because these items would very likely not available on their next shopping trip

Costcorsquo s StrategyLow cost emphasis

Costco eliminate all the frills and costs historically associated with conventional retailers including salespeople fancy buildings delivery billing and accounts receivable

They locate warehouses on high ndash traffic routes in or near upscale suburbs that were easily accessible by small businesses and residents with above ndash average incomes it avoided prime real estate sites in order to contain land costs

Warehouse building material Metal pre-engineered design concrete floors and minimal interior deacutecor

COSTCOrsquoS WAREHOUSE

Costcorsquo s Strategy Growth Strategy

Costco had opened between 14 and 34 new locations annually (most in the US) In the fiscal year 2011 Costco spent $13 billion to open 20 new locations two newly relocated warehouses and several distribution depots In the fiscal year 2012 4 new warehouses in the US and 2 new warehouses in Japan (first 4 months of fiscal year 2012) and planned to open an additional 12 new warehouses on September 2012

Grade the CEO

Game Name Right Names

By whom you are inspired

Source httpwwwcnbccom20090424Portfolios-Best-American-CEOs-of-All-Timehtmlslide=12

Costco Stores

Overall Competitive Landscape

- Costco dominated Canada wholesale club industry with a 72 share of value sales and 60 of the total number of outlets (Euromonitor 2016)

- In the US Costco outperformed both Samrsquos Club and BJrsquos Wholesale club over the 2009 ndash 2014 period (Euromonitor 2015)

- In 2014 Costco accounted for 52 of the total US market share (Euromonitor 2015)

Overall Competitive Landscape

- Competition is based among the following factors price merchandise quality and selection location and customer service (MarketLine 2015)

- Highly competitive industry whereas Costco will have to compete against

(1) other players in wholesale club industry

(2) other forms of retailing businesses such as retail discounters (Walmart and Dollar General) supermarkets general merchandise chains specialty chains gasoline station and Internet retailers (Arthur 2012)

COSTCOrsquoS MISSION amp BUSINESS MODEL

A company mission statement describes its present business scope and purpose (ldquowhere we are what we do and why we are hererdquo)

According to Costcorsquos its mission statement is (ldquoto continually provide our members with quality goods and services at the lowest possible pricerdquo)

BUSINESS MODEL

Overview

The plan implemented by a company to generate revenue and make a profit from operations

The model includes the components and functions of the business as well as the revenues it generates and the

expenses it incurs

COSTCOrsquoS BUSINESS MODEL High sale volume and rapid inventory turnover

Offering fee-paying members attractively low prices on a limited selection of nationally branded and selected private- label products in a wide range of merchandise categories

Allowing it to sell and receive cash for inventory before it had to pay many merchandise vendors even when vendor payments were made in time to take advantage of early payment discount

COSTCOrsquoS BUSINESS MODEL A unique aspect of Costcorsquos business model

Limits marketing advertising and promotional activities to new warehouse openings

Occasional direct mail marketing to prospective new members and regular direct marketing programs (such as The Costco Connection a magazine we publish for our members and coupon mailershellip)

MARKETING AND ADVERTISING

Costco has developed a reputation as a socially responsible company by its actions and not by its marketing

Costco does not have a public relations department or staff

Costco relies primarily on word-of-mouth from its members to spread its brand messages

MARKETING AND ADVERTISING

Using direct marketing to existing customers to promote merchandize

The executive membership program offers additional benefits on member services

Its low prices and reputation for making shopping at Costco something of a treasure-hunt made it unnecessary to engage in extensive advertising or sales campaigns

These practices result in lower marketing expenses as compared to typical retailers

APPEALING BUSINESS MODEL

Their mission is to provide quality goods and services at the lowest possible price

Satisfying buyer needs and requirements at a price they will consider a good value

The greater the value delivered and the lower the price to get the value the more appealing a companyrsquos value proposition and product offering

Costco Strategy 1 Pricing

2 Product Selection

3 Treasure Hunt Merchandising

4 Low Cost Emphasis

Chief Elements of Costco Strategy

Ultra-low prices Keep the customers going to the shop by wowing them with low prices Low markup on brand-name merchandise at 14 (compared to 20 ndash 50 markups at other discounters and many supermarkets Jim Sinegal - CEO of Costco said ldquoWe understand that our members do not come to us because the window displays or the Santa Claus or the piano player They come and shop with us because we offer great valuesrdquo

Product Selection

Product Selection

The selection within each product category was restricted in some cases to a single offering

Costco stocked only a 325 ndash count bottle of Advil ndash a size that many shoppers might find too large for their needs

Costco had opened ancillary departments within the next to most Costco warehouses see the table on the next slidehellip

Costcorsquo s Strategy - Treasure Hunt Merchandising

Dozens of featured specials came and went very quickly sometimes in several days or a week ndash like Italian ndash made Hathaway shirts priced at $2999 and $800 leather sectional sofas

The strategy was to entice the shoppers and bargain ndash hunting shoppers would go to Costco more frequently than for periodic ldquostock uprdquo trips

The shoppers quickly learned that they need to buy treasure ndash hunt specials that interested them because these items would very likely not available on their next shopping trip

Costcorsquo s StrategyLow cost emphasis

Costco eliminate all the frills and costs historically associated with conventional retailers including salespeople fancy buildings delivery billing and accounts receivable

They locate warehouses on high ndash traffic routes in or near upscale suburbs that were easily accessible by small businesses and residents with above ndash average incomes it avoided prime real estate sites in order to contain land costs

Warehouse building material Metal pre-engineered design concrete floors and minimal interior deacutecor

COSTCOrsquoS WAREHOUSE

Costcorsquo s Strategy Growth Strategy

Costco had opened between 14 and 34 new locations annually (most in the US) In the fiscal year 2011 Costco spent $13 billion to open 20 new locations two newly relocated warehouses and several distribution depots In the fiscal year 2012 4 new warehouses in the US and 2 new warehouses in Japan (first 4 months of fiscal year 2012) and planned to open an additional 12 new warehouses on September 2012

Grade the CEO

Game Name Right Names

By whom you are inspired

Source httpwwwcnbccom20090424Portfolios-Best-American-CEOs-of-All-Timehtmlslide=12

Overall Competitive Landscape

- Costco dominated Canada wholesale club industry with a 72 share of value sales and 60 of the total number of outlets (Euromonitor 2016)

- In the US Costco outperformed both Samrsquos Club and BJrsquos Wholesale club over the 2009 ndash 2014 period (Euromonitor 2015)

- In 2014 Costco accounted for 52 of the total US market share (Euromonitor 2015)

Overall Competitive Landscape

- Competition is based among the following factors price merchandise quality and selection location and customer service (MarketLine 2015)

- Highly competitive industry whereas Costco will have to compete against

(1) other players in wholesale club industry

(2) other forms of retailing businesses such as retail discounters (Walmart and Dollar General) supermarkets general merchandise chains specialty chains gasoline station and Internet retailers (Arthur 2012)

COSTCOrsquoS MISSION amp BUSINESS MODEL

A company mission statement describes its present business scope and purpose (ldquowhere we are what we do and why we are hererdquo)

According to Costcorsquos its mission statement is (ldquoto continually provide our members with quality goods and services at the lowest possible pricerdquo)

BUSINESS MODEL

Overview

The plan implemented by a company to generate revenue and make a profit from operations

The model includes the components and functions of the business as well as the revenues it generates and the

expenses it incurs

COSTCOrsquoS BUSINESS MODEL High sale volume and rapid inventory turnover

Offering fee-paying members attractively low prices on a limited selection of nationally branded and selected private- label products in a wide range of merchandise categories

Allowing it to sell and receive cash for inventory before it had to pay many merchandise vendors even when vendor payments were made in time to take advantage of early payment discount

COSTCOrsquoS BUSINESS MODEL A unique aspect of Costcorsquos business model

Limits marketing advertising and promotional activities to new warehouse openings

Occasional direct mail marketing to prospective new members and regular direct marketing programs (such as The Costco Connection a magazine we publish for our members and coupon mailershellip)

MARKETING AND ADVERTISING

Costco has developed a reputation as a socially responsible company by its actions and not by its marketing

Costco does not have a public relations department or staff

Costco relies primarily on word-of-mouth from its members to spread its brand messages

MARKETING AND ADVERTISING

Using direct marketing to existing customers to promote merchandize

The executive membership program offers additional benefits on member services

Its low prices and reputation for making shopping at Costco something of a treasure-hunt made it unnecessary to engage in extensive advertising or sales campaigns

These practices result in lower marketing expenses as compared to typical retailers

APPEALING BUSINESS MODEL

Their mission is to provide quality goods and services at the lowest possible price

Satisfying buyer needs and requirements at a price they will consider a good value

The greater the value delivered and the lower the price to get the value the more appealing a companyrsquos value proposition and product offering

Costco Strategy 1 Pricing

2 Product Selection

3 Treasure Hunt Merchandising

4 Low Cost Emphasis

Chief Elements of Costco Strategy

Ultra-low prices Keep the customers going to the shop by wowing them with low prices Low markup on brand-name merchandise at 14 (compared to 20 ndash 50 markups at other discounters and many supermarkets Jim Sinegal - CEO of Costco said ldquoWe understand that our members do not come to us because the window displays or the Santa Claus or the piano player They come and shop with us because we offer great valuesrdquo

Product Selection

Product Selection

The selection within each product category was restricted in some cases to a single offering

Costco stocked only a 325 ndash count bottle of Advil ndash a size that many shoppers might find too large for their needs

Costco had opened ancillary departments within the next to most Costco warehouses see the table on the next slidehellip

Costcorsquo s Strategy - Treasure Hunt Merchandising

Dozens of featured specials came and went very quickly sometimes in several days or a week ndash like Italian ndash made Hathaway shirts priced at $2999 and $800 leather sectional sofas

The strategy was to entice the shoppers and bargain ndash hunting shoppers would go to Costco more frequently than for periodic ldquostock uprdquo trips

The shoppers quickly learned that they need to buy treasure ndash hunt specials that interested them because these items would very likely not available on their next shopping trip

Costcorsquo s StrategyLow cost emphasis

Costco eliminate all the frills and costs historically associated with conventional retailers including salespeople fancy buildings delivery billing and accounts receivable

They locate warehouses on high ndash traffic routes in or near upscale suburbs that were easily accessible by small businesses and residents with above ndash average incomes it avoided prime real estate sites in order to contain land costs

Warehouse building material Metal pre-engineered design concrete floors and minimal interior deacutecor

COSTCOrsquoS WAREHOUSE

Costcorsquo s Strategy Growth Strategy

Costco had opened between 14 and 34 new locations annually (most in the US) In the fiscal year 2011 Costco spent $13 billion to open 20 new locations two newly relocated warehouses and several distribution depots In the fiscal year 2012 4 new warehouses in the US and 2 new warehouses in Japan (first 4 months of fiscal year 2012) and planned to open an additional 12 new warehouses on September 2012

Grade the CEO

Game Name Right Names

By whom you are inspired

Source httpwwwcnbccom20090424Portfolios-Best-American-CEOs-of-All-Timehtmlslide=12

Overall Competitive Landscape

- Competition is based among the following factors price merchandise quality and selection location and customer service (MarketLine 2015)

- Highly competitive industry whereas Costco will have to compete against

(1) other players in wholesale club industry

(2) other forms of retailing businesses such as retail discounters (Walmart and Dollar General) supermarkets general merchandise chains specialty chains gasoline station and Internet retailers (Arthur 2012)

COSTCOrsquoS MISSION amp BUSINESS MODEL

A company mission statement describes its present business scope and purpose (ldquowhere we are what we do and why we are hererdquo)

According to Costcorsquos its mission statement is (ldquoto continually provide our members with quality goods and services at the lowest possible pricerdquo)

BUSINESS MODEL

Overview

The plan implemented by a company to generate revenue and make a profit from operations

The model includes the components and functions of the business as well as the revenues it generates and the

expenses it incurs

COSTCOrsquoS BUSINESS MODEL High sale volume and rapid inventory turnover

Offering fee-paying members attractively low prices on a limited selection of nationally branded and selected private- label products in a wide range of merchandise categories

Allowing it to sell and receive cash for inventory before it had to pay many merchandise vendors even when vendor payments were made in time to take advantage of early payment discount

COSTCOrsquoS BUSINESS MODEL A unique aspect of Costcorsquos business model

Limits marketing advertising and promotional activities to new warehouse openings

Occasional direct mail marketing to prospective new members and regular direct marketing programs (such as The Costco Connection a magazine we publish for our members and coupon mailershellip)

MARKETING AND ADVERTISING

Costco has developed a reputation as a socially responsible company by its actions and not by its marketing

Costco does not have a public relations department or staff

Costco relies primarily on word-of-mouth from its members to spread its brand messages

MARKETING AND ADVERTISING

Using direct marketing to existing customers to promote merchandize

The executive membership program offers additional benefits on member services

Its low prices and reputation for making shopping at Costco something of a treasure-hunt made it unnecessary to engage in extensive advertising or sales campaigns

These practices result in lower marketing expenses as compared to typical retailers

APPEALING BUSINESS MODEL

Their mission is to provide quality goods and services at the lowest possible price

Satisfying buyer needs and requirements at a price they will consider a good value

The greater the value delivered and the lower the price to get the value the more appealing a companyrsquos value proposition and product offering

Costco Strategy 1 Pricing

2 Product Selection

3 Treasure Hunt Merchandising

4 Low Cost Emphasis

Chief Elements of Costco Strategy

Ultra-low prices Keep the customers going to the shop by wowing them with low prices Low markup on brand-name merchandise at 14 (compared to 20 ndash 50 markups at other discounters and many supermarkets Jim Sinegal - CEO of Costco said ldquoWe understand that our members do not come to us because the window displays or the Santa Claus or the piano player They come and shop with us because we offer great valuesrdquo

Product Selection

Product Selection

The selection within each product category was restricted in some cases to a single offering

Costco stocked only a 325 ndash count bottle of Advil ndash a size that many shoppers might find too large for their needs

Costco had opened ancillary departments within the next to most Costco warehouses see the table on the next slidehellip

Costcorsquo s Strategy - Treasure Hunt Merchandising

Dozens of featured specials came and went very quickly sometimes in several days or a week ndash like Italian ndash made Hathaway shirts priced at $2999 and $800 leather sectional sofas

The strategy was to entice the shoppers and bargain ndash hunting shoppers would go to Costco more frequently than for periodic ldquostock uprdquo trips

The shoppers quickly learned that they need to buy treasure ndash hunt specials that interested them because these items would very likely not available on their next shopping trip

Costcorsquo s StrategyLow cost emphasis

Costco eliminate all the frills and costs historically associated with conventional retailers including salespeople fancy buildings delivery billing and accounts receivable

They locate warehouses on high ndash traffic routes in or near upscale suburbs that were easily accessible by small businesses and residents with above ndash average incomes it avoided prime real estate sites in order to contain land costs

Warehouse building material Metal pre-engineered design concrete floors and minimal interior deacutecor

COSTCOrsquoS WAREHOUSE

Costcorsquo s Strategy Growth Strategy

Costco had opened between 14 and 34 new locations annually (most in the US) In the fiscal year 2011 Costco spent $13 billion to open 20 new locations two newly relocated warehouses and several distribution depots In the fiscal year 2012 4 new warehouses in the US and 2 new warehouses in Japan (first 4 months of fiscal year 2012) and planned to open an additional 12 new warehouses on September 2012

Grade the CEO

Game Name Right Names

By whom you are inspired

Source httpwwwcnbccom20090424Portfolios-Best-American-CEOs-of-All-Timehtmlslide=12

COSTCOrsquoS MISSION amp BUSINESS MODEL

A company mission statement describes its present business scope and purpose (ldquowhere we are what we do and why we are hererdquo)

According to Costcorsquos its mission statement is (ldquoto continually provide our members with quality goods and services at the lowest possible pricerdquo)

BUSINESS MODEL

Overview

The plan implemented by a company to generate revenue and make a profit from operations

The model includes the components and functions of the business as well as the revenues it generates and the

expenses it incurs

COSTCOrsquoS BUSINESS MODEL High sale volume and rapid inventory turnover

Offering fee-paying members attractively low prices on a limited selection of nationally branded and selected private- label products in a wide range of merchandise categories

Allowing it to sell and receive cash for inventory before it had to pay many merchandise vendors even when vendor payments were made in time to take advantage of early payment discount

COSTCOrsquoS BUSINESS MODEL A unique aspect of Costcorsquos business model

Limits marketing advertising and promotional activities to new warehouse openings

Occasional direct mail marketing to prospective new members and regular direct marketing programs (such as The Costco Connection a magazine we publish for our members and coupon mailershellip)

MARKETING AND ADVERTISING

Costco has developed a reputation as a socially responsible company by its actions and not by its marketing

Costco does not have a public relations department or staff

Costco relies primarily on word-of-mouth from its members to spread its brand messages

MARKETING AND ADVERTISING

Using direct marketing to existing customers to promote merchandize

The executive membership program offers additional benefits on member services

Its low prices and reputation for making shopping at Costco something of a treasure-hunt made it unnecessary to engage in extensive advertising or sales campaigns

These practices result in lower marketing expenses as compared to typical retailers

APPEALING BUSINESS MODEL

Their mission is to provide quality goods and services at the lowest possible price

Satisfying buyer needs and requirements at a price they will consider a good value

The greater the value delivered and the lower the price to get the value the more appealing a companyrsquos value proposition and product offering

Costco Strategy 1 Pricing

2 Product Selection

3 Treasure Hunt Merchandising

4 Low Cost Emphasis

Chief Elements of Costco Strategy

Ultra-low prices Keep the customers going to the shop by wowing them with low prices Low markup on brand-name merchandise at 14 (compared to 20 ndash 50 markups at other discounters and many supermarkets Jim Sinegal - CEO of Costco said ldquoWe understand that our members do not come to us because the window displays or the Santa Claus or the piano player They come and shop with us because we offer great valuesrdquo

Product Selection

Product Selection

The selection within each product category was restricted in some cases to a single offering

Costco stocked only a 325 ndash count bottle of Advil ndash a size that many shoppers might find too large for their needs

Costco had opened ancillary departments within the next to most Costco warehouses see the table on the next slidehellip

Costcorsquo s Strategy - Treasure Hunt Merchandising

Dozens of featured specials came and went very quickly sometimes in several days or a week ndash like Italian ndash made Hathaway shirts priced at $2999 and $800 leather sectional sofas

The strategy was to entice the shoppers and bargain ndash hunting shoppers would go to Costco more frequently than for periodic ldquostock uprdquo trips

The shoppers quickly learned that they need to buy treasure ndash hunt specials that interested them because these items would very likely not available on their next shopping trip

Costcorsquo s StrategyLow cost emphasis

Costco eliminate all the frills and costs historically associated with conventional retailers including salespeople fancy buildings delivery billing and accounts receivable

They locate warehouses on high ndash traffic routes in or near upscale suburbs that were easily accessible by small businesses and residents with above ndash average incomes it avoided prime real estate sites in order to contain land costs

Warehouse building material Metal pre-engineered design concrete floors and minimal interior deacutecor

COSTCOrsquoS WAREHOUSE

Costcorsquo s Strategy Growth Strategy

Costco had opened between 14 and 34 new locations annually (most in the US) In the fiscal year 2011 Costco spent $13 billion to open 20 new locations two newly relocated warehouses and several distribution depots In the fiscal year 2012 4 new warehouses in the US and 2 new warehouses in Japan (first 4 months of fiscal year 2012) and planned to open an additional 12 new warehouses on September 2012

Grade the CEO

Game Name Right Names

By whom you are inspired

Source httpwwwcnbccom20090424Portfolios-Best-American-CEOs-of-All-Timehtmlslide=12

BUSINESS MODEL

Overview

The plan implemented by a company to generate revenue and make a profit from operations

The model includes the components and functions of the business as well as the revenues it generates and the

expenses it incurs

COSTCOrsquoS BUSINESS MODEL High sale volume and rapid inventory turnover

Offering fee-paying members attractively low prices on a limited selection of nationally branded and selected private- label products in a wide range of merchandise categories

Allowing it to sell and receive cash for inventory before it had to pay many merchandise vendors even when vendor payments were made in time to take advantage of early payment discount

COSTCOrsquoS BUSINESS MODEL A unique aspect of Costcorsquos business model

Limits marketing advertising and promotional activities to new warehouse openings

Occasional direct mail marketing to prospective new members and regular direct marketing programs (such as The Costco Connection a magazine we publish for our members and coupon mailershellip)

MARKETING AND ADVERTISING

Costco has developed a reputation as a socially responsible company by its actions and not by its marketing

Costco does not have a public relations department or staff

Costco relies primarily on word-of-mouth from its members to spread its brand messages

MARKETING AND ADVERTISING

Using direct marketing to existing customers to promote merchandize

The executive membership program offers additional benefits on member services

Its low prices and reputation for making shopping at Costco something of a treasure-hunt made it unnecessary to engage in extensive advertising or sales campaigns

These practices result in lower marketing expenses as compared to typical retailers

APPEALING BUSINESS MODEL

Their mission is to provide quality goods and services at the lowest possible price

Satisfying buyer needs and requirements at a price they will consider a good value

The greater the value delivered and the lower the price to get the value the more appealing a companyrsquos value proposition and product offering

Costco Strategy 1 Pricing

2 Product Selection

3 Treasure Hunt Merchandising

4 Low Cost Emphasis

Chief Elements of Costco Strategy

Ultra-low prices Keep the customers going to the shop by wowing them with low prices Low markup on brand-name merchandise at 14 (compared to 20 ndash 50 markups at other discounters and many supermarkets Jim Sinegal - CEO of Costco said ldquoWe understand that our members do not come to us because the window displays or the Santa Claus or the piano player They come and shop with us because we offer great valuesrdquo

Product Selection

Product Selection

The selection within each product category was restricted in some cases to a single offering

Costco stocked only a 325 ndash count bottle of Advil ndash a size that many shoppers might find too large for their needs

Costco had opened ancillary departments within the next to most Costco warehouses see the table on the next slidehellip

Costcorsquo s Strategy - Treasure Hunt Merchandising

Dozens of featured specials came and went very quickly sometimes in several days or a week ndash like Italian ndash made Hathaway shirts priced at $2999 and $800 leather sectional sofas

The strategy was to entice the shoppers and bargain ndash hunting shoppers would go to Costco more frequently than for periodic ldquostock uprdquo trips

The shoppers quickly learned that they need to buy treasure ndash hunt specials that interested them because these items would very likely not available on their next shopping trip

Costcorsquo s StrategyLow cost emphasis

Costco eliminate all the frills and costs historically associated with conventional retailers including salespeople fancy buildings delivery billing and accounts receivable

They locate warehouses on high ndash traffic routes in or near upscale suburbs that were easily accessible by small businesses and residents with above ndash average incomes it avoided prime real estate sites in order to contain land costs

Warehouse building material Metal pre-engineered design concrete floors and minimal interior deacutecor

COSTCOrsquoS WAREHOUSE

Costcorsquo s Strategy Growth Strategy

Costco had opened between 14 and 34 new locations annually (most in the US) In the fiscal year 2011 Costco spent $13 billion to open 20 new locations two newly relocated warehouses and several distribution depots In the fiscal year 2012 4 new warehouses in the US and 2 new warehouses in Japan (first 4 months of fiscal year 2012) and planned to open an additional 12 new warehouses on September 2012

Grade the CEO

Game Name Right Names

By whom you are inspired

Source httpwwwcnbccom20090424Portfolios-Best-American-CEOs-of-All-Timehtmlslide=12

COSTCOrsquoS BUSINESS MODEL High sale volume and rapid inventory turnover

Offering fee-paying members attractively low prices on a limited selection of nationally branded and selected private- label products in a wide range of merchandise categories

Allowing it to sell and receive cash for inventory before it had to pay many merchandise vendors even when vendor payments were made in time to take advantage of early payment discount

COSTCOrsquoS BUSINESS MODEL A unique aspect of Costcorsquos business model

Limits marketing advertising and promotional activities to new warehouse openings

Occasional direct mail marketing to prospective new members and regular direct marketing programs (such as The Costco Connection a magazine we publish for our members and coupon mailershellip)

MARKETING AND ADVERTISING

Costco has developed a reputation as a socially responsible company by its actions and not by its marketing

Costco does not have a public relations department or staff

Costco relies primarily on word-of-mouth from its members to spread its brand messages

MARKETING AND ADVERTISING

Using direct marketing to existing customers to promote merchandize

The executive membership program offers additional benefits on member services

Its low prices and reputation for making shopping at Costco something of a treasure-hunt made it unnecessary to engage in extensive advertising or sales campaigns

These practices result in lower marketing expenses as compared to typical retailers

APPEALING BUSINESS MODEL

Their mission is to provide quality goods and services at the lowest possible price

Satisfying buyer needs and requirements at a price they will consider a good value

The greater the value delivered and the lower the price to get the value the more appealing a companyrsquos value proposition and product offering

Costco Strategy 1 Pricing

2 Product Selection

3 Treasure Hunt Merchandising

4 Low Cost Emphasis

Chief Elements of Costco Strategy

Ultra-low prices Keep the customers going to the shop by wowing them with low prices Low markup on brand-name merchandise at 14 (compared to 20 ndash 50 markups at other discounters and many supermarkets Jim Sinegal - CEO of Costco said ldquoWe understand that our members do not come to us because the window displays or the Santa Claus or the piano player They come and shop with us because we offer great valuesrdquo

Product Selection

Product Selection

The selection within each product category was restricted in some cases to a single offering

Costco stocked only a 325 ndash count bottle of Advil ndash a size that many shoppers might find too large for their needs

Costco had opened ancillary departments within the next to most Costco warehouses see the table on the next slidehellip

Costcorsquo s Strategy - Treasure Hunt Merchandising

Dozens of featured specials came and went very quickly sometimes in several days or a week ndash like Italian ndash made Hathaway shirts priced at $2999 and $800 leather sectional sofas

The strategy was to entice the shoppers and bargain ndash hunting shoppers would go to Costco more frequently than for periodic ldquostock uprdquo trips

The shoppers quickly learned that they need to buy treasure ndash hunt specials that interested them because these items would very likely not available on their next shopping trip

Costcorsquo s StrategyLow cost emphasis

Costco eliminate all the frills and costs historically associated with conventional retailers including salespeople fancy buildings delivery billing and accounts receivable

They locate warehouses on high ndash traffic routes in or near upscale suburbs that were easily accessible by small businesses and residents with above ndash average incomes it avoided prime real estate sites in order to contain land costs

Warehouse building material Metal pre-engineered design concrete floors and minimal interior deacutecor

COSTCOrsquoS WAREHOUSE

Costcorsquo s Strategy Growth Strategy

Costco had opened between 14 and 34 new locations annually (most in the US) In the fiscal year 2011 Costco spent $13 billion to open 20 new locations two newly relocated warehouses and several distribution depots In the fiscal year 2012 4 new warehouses in the US and 2 new warehouses in Japan (first 4 months of fiscal year 2012) and planned to open an additional 12 new warehouses on September 2012

Grade the CEO

Game Name Right Names

By whom you are inspired

Source httpwwwcnbccom20090424Portfolios-Best-American-CEOs-of-All-Timehtmlslide=12

COSTCOrsquoS BUSINESS MODEL A unique aspect of Costcorsquos business model

Limits marketing advertising and promotional activities to new warehouse openings

Occasional direct mail marketing to prospective new members and regular direct marketing programs (such as The Costco Connection a magazine we publish for our members and coupon mailershellip)

MARKETING AND ADVERTISING

Costco has developed a reputation as a socially responsible company by its actions and not by its marketing

Costco does not have a public relations department or staff

Costco relies primarily on word-of-mouth from its members to spread its brand messages

MARKETING AND ADVERTISING

Using direct marketing to existing customers to promote merchandize

The executive membership program offers additional benefits on member services

Its low prices and reputation for making shopping at Costco something of a treasure-hunt made it unnecessary to engage in extensive advertising or sales campaigns

These practices result in lower marketing expenses as compared to typical retailers

APPEALING BUSINESS MODEL

Their mission is to provide quality goods and services at the lowest possible price

Satisfying buyer needs and requirements at a price they will consider a good value

The greater the value delivered and the lower the price to get the value the more appealing a companyrsquos value proposition and product offering

Costco Strategy 1 Pricing

2 Product Selection

3 Treasure Hunt Merchandising

4 Low Cost Emphasis

Chief Elements of Costco Strategy

Ultra-low prices Keep the customers going to the shop by wowing them with low prices Low markup on brand-name merchandise at 14 (compared to 20 ndash 50 markups at other discounters and many supermarkets Jim Sinegal - CEO of Costco said ldquoWe understand that our members do not come to us because the window displays or the Santa Claus or the piano player They come and shop with us because we offer great valuesrdquo

Product Selection

Product Selection

The selection within each product category was restricted in some cases to a single offering

Costco stocked only a 325 ndash count bottle of Advil ndash a size that many shoppers might find too large for their needs

Costco had opened ancillary departments within the next to most Costco warehouses see the table on the next slidehellip

Costcorsquo s Strategy - Treasure Hunt Merchandising

Dozens of featured specials came and went very quickly sometimes in several days or a week ndash like Italian ndash made Hathaway shirts priced at $2999 and $800 leather sectional sofas

The strategy was to entice the shoppers and bargain ndash hunting shoppers would go to Costco more frequently than for periodic ldquostock uprdquo trips

The shoppers quickly learned that they need to buy treasure ndash hunt specials that interested them because these items would very likely not available on their next shopping trip

Costcorsquo s StrategyLow cost emphasis

Costco eliminate all the frills and costs historically associated with conventional retailers including salespeople fancy buildings delivery billing and accounts receivable

They locate warehouses on high ndash traffic routes in or near upscale suburbs that were easily accessible by small businesses and residents with above ndash average incomes it avoided prime real estate sites in order to contain land costs

Warehouse building material Metal pre-engineered design concrete floors and minimal interior deacutecor

COSTCOrsquoS WAREHOUSE

Costcorsquo s Strategy Growth Strategy

Costco had opened between 14 and 34 new locations annually (most in the US) In the fiscal year 2011 Costco spent $13 billion to open 20 new locations two newly relocated warehouses and several distribution depots In the fiscal year 2012 4 new warehouses in the US and 2 new warehouses in Japan (first 4 months of fiscal year 2012) and planned to open an additional 12 new warehouses on September 2012

Grade the CEO

Game Name Right Names

By whom you are inspired

Source httpwwwcnbccom20090424Portfolios-Best-American-CEOs-of-All-Timehtmlslide=12

MARKETING AND ADVERTISING

Costco has developed a reputation as a socially responsible company by its actions and not by its marketing

Costco does not have a public relations department or staff

Costco relies primarily on word-of-mouth from its members to spread its brand messages

MARKETING AND ADVERTISING

Using direct marketing to existing customers to promote merchandize

The executive membership program offers additional benefits on member services

Its low prices and reputation for making shopping at Costco something of a treasure-hunt made it unnecessary to engage in extensive advertising or sales campaigns

These practices result in lower marketing expenses as compared to typical retailers

APPEALING BUSINESS MODEL

Their mission is to provide quality goods and services at the lowest possible price

Satisfying buyer needs and requirements at a price they will consider a good value

The greater the value delivered and the lower the price to get the value the more appealing a companyrsquos value proposition and product offering

Costco Strategy 1 Pricing

2 Product Selection

3 Treasure Hunt Merchandising

4 Low Cost Emphasis

Chief Elements of Costco Strategy

Ultra-low prices Keep the customers going to the shop by wowing them with low prices Low markup on brand-name merchandise at 14 (compared to 20 ndash 50 markups at other discounters and many supermarkets Jim Sinegal - CEO of Costco said ldquoWe understand that our members do not come to us because the window displays or the Santa Claus or the piano player They come and shop with us because we offer great valuesrdquo

Product Selection

Product Selection

The selection within each product category was restricted in some cases to a single offering

Costco stocked only a 325 ndash count bottle of Advil ndash a size that many shoppers might find too large for their needs

Costco had opened ancillary departments within the next to most Costco warehouses see the table on the next slidehellip

Costcorsquo s Strategy - Treasure Hunt Merchandising

Dozens of featured specials came and went very quickly sometimes in several days or a week ndash like Italian ndash made Hathaway shirts priced at $2999 and $800 leather sectional sofas

The strategy was to entice the shoppers and bargain ndash hunting shoppers would go to Costco more frequently than for periodic ldquostock uprdquo trips

The shoppers quickly learned that they need to buy treasure ndash hunt specials that interested them because these items would very likely not available on their next shopping trip

Costcorsquo s StrategyLow cost emphasis

Costco eliminate all the frills and costs historically associated with conventional retailers including salespeople fancy buildings delivery billing and accounts receivable

They locate warehouses on high ndash traffic routes in or near upscale suburbs that were easily accessible by small businesses and residents with above ndash average incomes it avoided prime real estate sites in order to contain land costs

Warehouse building material Metal pre-engineered design concrete floors and minimal interior deacutecor

COSTCOrsquoS WAREHOUSE

Costcorsquo s Strategy Growth Strategy

Costco had opened between 14 and 34 new locations annually (most in the US) In the fiscal year 2011 Costco spent $13 billion to open 20 new locations two newly relocated warehouses and several distribution depots In the fiscal year 2012 4 new warehouses in the US and 2 new warehouses in Japan (first 4 months of fiscal year 2012) and planned to open an additional 12 new warehouses on September 2012

Grade the CEO

Game Name Right Names

By whom you are inspired

Source httpwwwcnbccom20090424Portfolios-Best-American-CEOs-of-All-Timehtmlslide=12

MARKETING AND ADVERTISING

Using direct marketing to existing customers to promote merchandize

The executive membership program offers additional benefits on member services

Its low prices and reputation for making shopping at Costco something of a treasure-hunt made it unnecessary to engage in extensive advertising or sales campaigns

These practices result in lower marketing expenses as compared to typical retailers

APPEALING BUSINESS MODEL

Their mission is to provide quality goods and services at the lowest possible price

Satisfying buyer needs and requirements at a price they will consider a good value

The greater the value delivered and the lower the price to get the value the more appealing a companyrsquos value proposition and product offering

Costco Strategy 1 Pricing

2 Product Selection

3 Treasure Hunt Merchandising

4 Low Cost Emphasis

Chief Elements of Costco Strategy

Ultra-low prices Keep the customers going to the shop by wowing them with low prices Low markup on brand-name merchandise at 14 (compared to 20 ndash 50 markups at other discounters and many supermarkets Jim Sinegal - CEO of Costco said ldquoWe understand that our members do not come to us because the window displays or the Santa Claus or the piano player They come and shop with us because we offer great valuesrdquo

Product Selection

Product Selection

The selection within each product category was restricted in some cases to a single offering

Costco stocked only a 325 ndash count bottle of Advil ndash a size that many shoppers might find too large for their needs

Costco had opened ancillary departments within the next to most Costco warehouses see the table on the next slidehellip

Costcorsquo s Strategy - Treasure Hunt Merchandising

Dozens of featured specials came and went very quickly sometimes in several days or a week ndash like Italian ndash made Hathaway shirts priced at $2999 and $800 leather sectional sofas

The strategy was to entice the shoppers and bargain ndash hunting shoppers would go to Costco more frequently than for periodic ldquostock uprdquo trips

The shoppers quickly learned that they need to buy treasure ndash hunt specials that interested them because these items would very likely not available on their next shopping trip

Costcorsquo s StrategyLow cost emphasis

Costco eliminate all the frills and costs historically associated with conventional retailers including salespeople fancy buildings delivery billing and accounts receivable

They locate warehouses on high ndash traffic routes in or near upscale suburbs that were easily accessible by small businesses and residents with above ndash average incomes it avoided prime real estate sites in order to contain land costs

Warehouse building material Metal pre-engineered design concrete floors and minimal interior deacutecor

COSTCOrsquoS WAREHOUSE

Costcorsquo s Strategy Growth Strategy

Costco had opened between 14 and 34 new locations annually (most in the US) In the fiscal year 2011 Costco spent $13 billion to open 20 new locations two newly relocated warehouses and several distribution depots In the fiscal year 2012 4 new warehouses in the US and 2 new warehouses in Japan (first 4 months of fiscal year 2012) and planned to open an additional 12 new warehouses on September 2012

Grade the CEO

Game Name Right Names

By whom you are inspired

Source httpwwwcnbccom20090424Portfolios-Best-American-CEOs-of-All-Timehtmlslide=12

APPEALING BUSINESS MODEL

Their mission is to provide quality goods and services at the lowest possible price

Satisfying buyer needs and requirements at a price they will consider a good value

The greater the value delivered and the lower the price to get the value the more appealing a companyrsquos value proposition and product offering

Costco Strategy 1 Pricing

2 Product Selection

3 Treasure Hunt Merchandising

4 Low Cost Emphasis

Chief Elements of Costco Strategy

Ultra-low prices Keep the customers going to the shop by wowing them with low prices Low markup on brand-name merchandise at 14 (compared to 20 ndash 50 markups at other discounters and many supermarkets Jim Sinegal - CEO of Costco said ldquoWe understand that our members do not come to us because the window displays or the Santa Claus or the piano player They come and shop with us because we offer great valuesrdquo

Product Selection

Product Selection

The selection within each product category was restricted in some cases to a single offering

Costco stocked only a 325 ndash count bottle of Advil ndash a size that many shoppers might find too large for their needs

Costco had opened ancillary departments within the next to most Costco warehouses see the table on the next slidehellip

Costcorsquo s Strategy - Treasure Hunt Merchandising

Dozens of featured specials came and went very quickly sometimes in several days or a week ndash like Italian ndash made Hathaway shirts priced at $2999 and $800 leather sectional sofas

The strategy was to entice the shoppers and bargain ndash hunting shoppers would go to Costco more frequently than for periodic ldquostock uprdquo trips

The shoppers quickly learned that they need to buy treasure ndash hunt specials that interested them because these items would very likely not available on their next shopping trip

Costcorsquo s StrategyLow cost emphasis

Costco eliminate all the frills and costs historically associated with conventional retailers including salespeople fancy buildings delivery billing and accounts receivable

They locate warehouses on high ndash traffic routes in or near upscale suburbs that were easily accessible by small businesses and residents with above ndash average incomes it avoided prime real estate sites in order to contain land costs

Warehouse building material Metal pre-engineered design concrete floors and minimal interior deacutecor

COSTCOrsquoS WAREHOUSE

Costcorsquo s Strategy Growth Strategy

Costco had opened between 14 and 34 new locations annually (most in the US) In the fiscal year 2011 Costco spent $13 billion to open 20 new locations two newly relocated warehouses and several distribution depots In the fiscal year 2012 4 new warehouses in the US and 2 new warehouses in Japan (first 4 months of fiscal year 2012) and planned to open an additional 12 new warehouses on September 2012

Grade the CEO

Game Name Right Names

By whom you are inspired

Source httpwwwcnbccom20090424Portfolios-Best-American-CEOs-of-All-Timehtmlslide=12

Costco Strategy 1 Pricing

2 Product Selection

3 Treasure Hunt Merchandising

4 Low Cost Emphasis

Chief Elements of Costco Strategy

Ultra-low prices Keep the customers going to the shop by wowing them with low prices Low markup on brand-name merchandise at 14 (compared to 20 ndash 50 markups at other discounters and many supermarkets Jim Sinegal - CEO of Costco said ldquoWe understand that our members do not come to us because the window displays or the Santa Claus or the piano player They come and shop with us because we offer great valuesrdquo

Product Selection

Product Selection

The selection within each product category was restricted in some cases to a single offering

Costco stocked only a 325 ndash count bottle of Advil ndash a size that many shoppers might find too large for their needs

Costco had opened ancillary departments within the next to most Costco warehouses see the table on the next slidehellip

Costcorsquo s Strategy - Treasure Hunt Merchandising

Dozens of featured specials came and went very quickly sometimes in several days or a week ndash like Italian ndash made Hathaway shirts priced at $2999 and $800 leather sectional sofas

The strategy was to entice the shoppers and bargain ndash hunting shoppers would go to Costco more frequently than for periodic ldquostock uprdquo trips

The shoppers quickly learned that they need to buy treasure ndash hunt specials that interested them because these items would very likely not available on their next shopping trip

Costcorsquo s StrategyLow cost emphasis

Costco eliminate all the frills and costs historically associated with conventional retailers including salespeople fancy buildings delivery billing and accounts receivable

They locate warehouses on high ndash traffic routes in or near upscale suburbs that were easily accessible by small businesses and residents with above ndash average incomes it avoided prime real estate sites in order to contain land costs

Warehouse building material Metal pre-engineered design concrete floors and minimal interior deacutecor

COSTCOrsquoS WAREHOUSE

Costcorsquo s Strategy Growth Strategy

Costco had opened between 14 and 34 new locations annually (most in the US) In the fiscal year 2011 Costco spent $13 billion to open 20 new locations two newly relocated warehouses and several distribution depots In the fiscal year 2012 4 new warehouses in the US and 2 new warehouses in Japan (first 4 months of fiscal year 2012) and planned to open an additional 12 new warehouses on September 2012

Grade the CEO

Game Name Right Names

By whom you are inspired

Source httpwwwcnbccom20090424Portfolios-Best-American-CEOs-of-All-Timehtmlslide=12

Chief Elements of Costco Strategy

Ultra-low prices Keep the customers going to the shop by wowing them with low prices Low markup on brand-name merchandise at 14 (compared to 20 ndash 50 markups at other discounters and many supermarkets Jim Sinegal - CEO of Costco said ldquoWe understand that our members do not come to us because the window displays or the Santa Claus or the piano player They come and shop with us because we offer great valuesrdquo

Product Selection

Product Selection

The selection within each product category was restricted in some cases to a single offering

Costco stocked only a 325 ndash count bottle of Advil ndash a size that many shoppers might find too large for their needs

Costco had opened ancillary departments within the next to most Costco warehouses see the table on the next slidehellip

Costcorsquo s Strategy - Treasure Hunt Merchandising

Dozens of featured specials came and went very quickly sometimes in several days or a week ndash like Italian ndash made Hathaway shirts priced at $2999 and $800 leather sectional sofas

The strategy was to entice the shoppers and bargain ndash hunting shoppers would go to Costco more frequently than for periodic ldquostock uprdquo trips

The shoppers quickly learned that they need to buy treasure ndash hunt specials that interested them because these items would very likely not available on their next shopping trip

Costcorsquo s StrategyLow cost emphasis

Costco eliminate all the frills and costs historically associated with conventional retailers including salespeople fancy buildings delivery billing and accounts receivable

They locate warehouses on high ndash traffic routes in or near upscale suburbs that were easily accessible by small businesses and residents with above ndash average incomes it avoided prime real estate sites in order to contain land costs

Warehouse building material Metal pre-engineered design concrete floors and minimal interior deacutecor

COSTCOrsquoS WAREHOUSE

Costcorsquo s Strategy Growth Strategy

Costco had opened between 14 and 34 new locations annually (most in the US) In the fiscal year 2011 Costco spent $13 billion to open 20 new locations two newly relocated warehouses and several distribution depots In the fiscal year 2012 4 new warehouses in the US and 2 new warehouses in Japan (first 4 months of fiscal year 2012) and planned to open an additional 12 new warehouses on September 2012

Grade the CEO

Game Name Right Names

By whom you are inspired

Source httpwwwcnbccom20090424Portfolios-Best-American-CEOs-of-All-Timehtmlslide=12

Product Selection

Product Selection

The selection within each product category was restricted in some cases to a single offering

Costco stocked only a 325 ndash count bottle of Advil ndash a size that many shoppers might find too large for their needs

Costco had opened ancillary departments within the next to most Costco warehouses see the table on the next slidehellip

Costcorsquo s Strategy - Treasure Hunt Merchandising

Dozens of featured specials came and went very quickly sometimes in several days or a week ndash like Italian ndash made Hathaway shirts priced at $2999 and $800 leather sectional sofas

The strategy was to entice the shoppers and bargain ndash hunting shoppers would go to Costco more frequently than for periodic ldquostock uprdquo trips

The shoppers quickly learned that they need to buy treasure ndash hunt specials that interested them because these items would very likely not available on their next shopping trip

Costcorsquo s StrategyLow cost emphasis

Costco eliminate all the frills and costs historically associated with conventional retailers including salespeople fancy buildings delivery billing and accounts receivable

They locate warehouses on high ndash traffic routes in or near upscale suburbs that were easily accessible by small businesses and residents with above ndash average incomes it avoided prime real estate sites in order to contain land costs

Warehouse building material Metal pre-engineered design concrete floors and minimal interior deacutecor

COSTCOrsquoS WAREHOUSE

Costcorsquo s Strategy Growth Strategy

Costco had opened between 14 and 34 new locations annually (most in the US) In the fiscal year 2011 Costco spent $13 billion to open 20 new locations two newly relocated warehouses and several distribution depots In the fiscal year 2012 4 new warehouses in the US and 2 new warehouses in Japan (first 4 months of fiscal year 2012) and planned to open an additional 12 new warehouses on September 2012

Grade the CEO

Game Name Right Names

By whom you are inspired

Source httpwwwcnbccom20090424Portfolios-Best-American-CEOs-of-All-Timehtmlslide=12

Product Selection

The selection within each product category was restricted in some cases to a single offering

Costco stocked only a 325 ndash count bottle of Advil ndash a size that many shoppers might find too large for their needs

Costco had opened ancillary departments within the next to most Costco warehouses see the table on the next slidehellip

Costcorsquo s Strategy - Treasure Hunt Merchandising

Dozens of featured specials came and went very quickly sometimes in several days or a week ndash like Italian ndash made Hathaway shirts priced at $2999 and $800 leather sectional sofas

The strategy was to entice the shoppers and bargain ndash hunting shoppers would go to Costco more frequently than for periodic ldquostock uprdquo trips

The shoppers quickly learned that they need to buy treasure ndash hunt specials that interested them because these items would very likely not available on their next shopping trip

Costcorsquo s StrategyLow cost emphasis

Costco eliminate all the frills and costs historically associated with conventional retailers including salespeople fancy buildings delivery billing and accounts receivable

They locate warehouses on high ndash traffic routes in or near upscale suburbs that were easily accessible by small businesses and residents with above ndash average incomes it avoided prime real estate sites in order to contain land costs

Warehouse building material Metal pre-engineered design concrete floors and minimal interior deacutecor

COSTCOrsquoS WAREHOUSE

Costcorsquo s Strategy Growth Strategy

Costco had opened between 14 and 34 new locations annually (most in the US) In the fiscal year 2011 Costco spent $13 billion to open 20 new locations two newly relocated warehouses and several distribution depots In the fiscal year 2012 4 new warehouses in the US and 2 new warehouses in Japan (first 4 months of fiscal year 2012) and planned to open an additional 12 new warehouses on September 2012

Grade the CEO

Game Name Right Names

By whom you are inspired

Source httpwwwcnbccom20090424Portfolios-Best-American-CEOs-of-All-Timehtmlslide=12

Costcorsquo s Strategy - Treasure Hunt Merchandising

Dozens of featured specials came and went very quickly sometimes in several days or a week ndash like Italian ndash made Hathaway shirts priced at $2999 and $800 leather sectional sofas

The strategy was to entice the shoppers and bargain ndash hunting shoppers would go to Costco more frequently than for periodic ldquostock uprdquo trips

The shoppers quickly learned that they need to buy treasure ndash hunt specials that interested them because these items would very likely not available on their next shopping trip

Costcorsquo s StrategyLow cost emphasis

Costco eliminate all the frills and costs historically associated with conventional retailers including salespeople fancy buildings delivery billing and accounts receivable

They locate warehouses on high ndash traffic routes in or near upscale suburbs that were easily accessible by small businesses and residents with above ndash average incomes it avoided prime real estate sites in order to contain land costs

Warehouse building material Metal pre-engineered design concrete floors and minimal interior deacutecor

COSTCOrsquoS WAREHOUSE

Costcorsquo s Strategy Growth Strategy

Costco had opened between 14 and 34 new locations annually (most in the US) In the fiscal year 2011 Costco spent $13 billion to open 20 new locations two newly relocated warehouses and several distribution depots In the fiscal year 2012 4 new warehouses in the US and 2 new warehouses in Japan (first 4 months of fiscal year 2012) and planned to open an additional 12 new warehouses on September 2012

Grade the CEO

Game Name Right Names

By whom you are inspired

Source httpwwwcnbccom20090424Portfolios-Best-American-CEOs-of-All-Timehtmlslide=12

Costcorsquo s StrategyLow cost emphasis

Costco eliminate all the frills and costs historically associated with conventional retailers including salespeople fancy buildings delivery billing and accounts receivable

They locate warehouses on high ndash traffic routes in or near upscale suburbs that were easily accessible by small businesses and residents with above ndash average incomes it avoided prime real estate sites in order to contain land costs

Warehouse building material Metal pre-engineered design concrete floors and minimal interior deacutecor

COSTCOrsquoS WAREHOUSE

Costcorsquo s Strategy Growth Strategy

Costco had opened between 14 and 34 new locations annually (most in the US) In the fiscal year 2011 Costco spent $13 billion to open 20 new locations two newly relocated warehouses and several distribution depots In the fiscal year 2012 4 new warehouses in the US and 2 new warehouses in Japan (first 4 months of fiscal year 2012) and planned to open an additional 12 new warehouses on September 2012

Grade the CEO

Game Name Right Names

By whom you are inspired

Source httpwwwcnbccom20090424Portfolios-Best-American-CEOs-of-All-Timehtmlslide=12

COSTCOrsquoS WAREHOUSE

Costcorsquo s Strategy Growth Strategy

Costco had opened between 14 and 34 new locations annually (most in the US) In the fiscal year 2011 Costco spent $13 billion to open 20 new locations two newly relocated warehouses and several distribution depots In the fiscal year 2012 4 new warehouses in the US and 2 new warehouses in Japan (first 4 months of fiscal year 2012) and planned to open an additional 12 new warehouses on September 2012

Grade the CEO

Game Name Right Names

By whom you are inspired

Source httpwwwcnbccom20090424Portfolios-Best-American-CEOs-of-All-Timehtmlslide=12

Costcorsquo s Strategy Growth Strategy

Costco had opened between 14 and 34 new locations annually (most in the US) In the fiscal year 2011 Costco spent $13 billion to open 20 new locations two newly relocated warehouses and several distribution depots In the fiscal year 2012 4 new warehouses in the US and 2 new warehouses in Japan (first 4 months of fiscal year 2012) and planned to open an additional 12 new warehouses on September 2012

Grade the CEO

Game Name Right Names

By whom you are inspired

Source httpwwwcnbccom20090424Portfolios-Best-American-CEOs-of-All-Timehtmlslide=12

Grade the CEO

Game Name Right Names

By whom you are inspired

Source httpwwwcnbccom20090424Portfolios-Best-American-CEOs-of-All-Timehtmlslide=12

Game Name Right Names

By whom you are inspired

Source httpwwwcnbccom20090424Portfolios-Best-American-CEOs-of-All-Timehtmlslide=12

Source httpwwwcnbccom20090424Portfolios-Best-American-CEOs-of-All-Timehtmlslide=12

Source httpwwwcnbccom20090424Portfolios-Best-American-CEOs-of-All-Timehtmlslide=14

If youve got to work for the rest of your life youd better do something youll enjoyrdquo

httpwwwexploringmarketscom201402costco-founder-james-sinegal-might-havehtml

INTELLIGENCE

HONESTCREATIVE

CONFIDENT

DRIVENCOURAGEOUS

What can you see

What can you seeINTELLIGENCEHONESTCREATIVE

CONFIDENTDRIVENCOURAGEOUS

INTELLIGENCEHONESTCREATIVE

CONFIDENTDRIVENCOURAGEOUS

Source Textbook - Strategy Core Concepts and Analytical Approaches ndash Arthur A Thompson The University of Alabama ndash Chapter 2 ndash Page 13

Task 1

Developing Strategic vision mission and core value

bull Strategic vision indicates the paths that company takes in developing and strengthening its

business as preparing for long-term future

bull Key consideration in Deciding Companyrsquos Future Direction External vs Internal

bull What is your Slogan

bull Strategic vision vs Mission Statement

bull Strategic vision sets companyrsquos future direction ldquowhere are we goingrdquo

bull Mission statement describes the present ldquowho we are what we do and why we are hererdquo

Back up

Source Textbook - Strategy Core Concepts and Analytical Approaches ndash Arthur A Thompson The University of Alabama ndash Chapter 2 ndash Page 13

Setting Objectives Task 2

bull WHAT - ldquoObjectives are an organizationrsquos performance

targetrdquo

bull WHO - ldquoObjectives reflects managerial commitment to

deliver results and outcomes

bull WHY

bull Helps organization to be focus on what should be

completed to deliver expected overall outcomes

bull Considered as Benchmark to track company

performance

bull Motivates all members to deliver best possible results

bull WHERE amp WHEN HOW

Setting Objectives Task 2

httpswwwyoutubecomwatchv=biyGxEix5Zs

First introduced by Kaplan and Norton 1992 Havard Business

Review

bull Tracking Financial result while monitoring progress in

building the capabilities for future growth

bull To integrate Long-term strategy with Short-term financial

goals

bull Not as replacement of Financial measures but

complement

bull Four main processes

1 Translating the vision

2 Communicating and linking

3 Business planning

4 Feedback and learning

What can you seeINTELLIGENCEHONESTCREATIVE

CONFIDENTDRIVENCOURAGEOUS

INTELLIGENCEHONESTCREATIVE

CONFIDENTDRIVENCOURAGEOUS

Source Textbook - Strategy Core Concepts and Analytical Approaches ndash Arthur A Thompson The University of Alabama ndash Chapter 2 ndash Page 13

Task 1

Developing Strategic vision mission and core value

bull Strategic vision indicates the paths that company takes in developing and strengthening its

business as preparing for long-term future

bull Key consideration in Deciding Companyrsquos Future Direction External vs Internal

bull What is your Slogan

bull Strategic vision vs Mission Statement

bull Strategic vision sets companyrsquos future direction ldquowhere are we goingrdquo

bull Mission statement describes the present ldquowho we are what we do and why we are hererdquo

Back up

Source Textbook - Strategy Core Concepts and Analytical Approaches ndash Arthur A Thompson The University of Alabama ndash Chapter 2 ndash Page 13

Setting Objectives Task 2

bull WHAT - ldquoObjectives are an organizationrsquos performance

targetrdquo

bull WHO - ldquoObjectives reflects managerial commitment to

deliver results and outcomes

bull WHY

bull Helps organization to be focus on what should be

completed to deliver expected overall outcomes

bull Considered as Benchmark to track company

performance

bull Motivates all members to deliver best possible results

bull WHERE amp WHEN HOW

Setting Objectives Task 2

httpswwwyoutubecomwatchv=biyGxEix5Zs

First introduced by Kaplan and Norton 1992 Havard Business

Review

bull Tracking Financial result while monitoring progress in

building the capabilities for future growth

bull To integrate Long-term strategy with Short-term financial

goals

bull Not as replacement of Financial measures but

complement

bull Four main processes

1 Translating the vision

2 Communicating and linking

3 Business planning

4 Feedback and learning

Source Textbook - Strategy Core Concepts and Analytical Approaches ndash Arthur A Thompson The University of Alabama ndash Chapter 2 ndash Page 13

Task 1

Developing Strategic vision mission and core value

bull Strategic vision indicates the paths that company takes in developing and strengthening its

business as preparing for long-term future

bull Key consideration in Deciding Companyrsquos Future Direction External vs Internal

bull What is your Slogan

bull Strategic vision vs Mission Statement

bull Strategic vision sets companyrsquos future direction ldquowhere are we goingrdquo

bull Mission statement describes the present ldquowho we are what we do and why we are hererdquo

Back up

Source Textbook - Strategy Core Concepts and Analytical Approaches ndash Arthur A Thompson The University of Alabama ndash Chapter 2 ndash Page 13

Setting Objectives Task 2

bull WHAT - ldquoObjectives are an organizationrsquos performance

targetrdquo

bull WHO - ldquoObjectives reflects managerial commitment to

deliver results and outcomes

bull WHY

bull Helps organization to be focus on what should be

completed to deliver expected overall outcomes

bull Considered as Benchmark to track company

performance

bull Motivates all members to deliver best possible results

bull WHERE amp WHEN HOW

Setting Objectives Task 2

httpswwwyoutubecomwatchv=biyGxEix5Zs

First introduced by Kaplan and Norton 1992 Havard Business

Review

bull Tracking Financial result while monitoring progress in

building the capabilities for future growth

bull To integrate Long-term strategy with Short-term financial

goals

bull Not as replacement of Financial measures but

complement

bull Four main processes

1 Translating the vision

2 Communicating and linking

3 Business planning

4 Feedback and learning

Task 1

Developing Strategic vision mission and core value

bull Strategic vision indicates the paths that company takes in developing and strengthening its

business as preparing for long-term future

bull Key consideration in Deciding Companyrsquos Future Direction External vs Internal

bull What is your Slogan

bull Strategic vision vs Mission Statement

bull Strategic vision sets companyrsquos future direction ldquowhere are we goingrdquo

bull Mission statement describes the present ldquowho we are what we do and why we are hererdquo

Back up

Source Textbook - Strategy Core Concepts and Analytical Approaches ndash Arthur A Thompson The University of Alabama ndash Chapter 2 ndash Page 13

Setting Objectives Task 2

bull WHAT - ldquoObjectives are an organizationrsquos performance

targetrdquo

bull WHO - ldquoObjectives reflects managerial commitment to

deliver results and outcomes

bull WHY

bull Helps organization to be focus on what should be

completed to deliver expected overall outcomes

bull Considered as Benchmark to track company

performance

bull Motivates all members to deliver best possible results

bull WHERE amp WHEN HOW

Setting Objectives Task 2

httpswwwyoutubecomwatchv=biyGxEix5Zs

First introduced by Kaplan and Norton 1992 Havard Business

Review

bull Tracking Financial result while monitoring progress in

building the capabilities for future growth

bull To integrate Long-term strategy with Short-term financial

goals

bull Not as replacement of Financial measures but

complement

bull Four main processes

1 Translating the vision

2 Communicating and linking

3 Business planning

4 Feedback and learning

Back up

Source Textbook - Strategy Core Concepts and Analytical Approaches ndash Arthur A Thompson The University of Alabama ndash Chapter 2 ndash Page 13

Setting Objectives Task 2

bull WHAT - ldquoObjectives are an organizationrsquos performance

targetrdquo

bull WHO - ldquoObjectives reflects managerial commitment to

deliver results and outcomes

bull WHY

bull Helps organization to be focus on what should be

completed to deliver expected overall outcomes

bull Considered as Benchmark to track company

performance

bull Motivates all members to deliver best possible results

bull WHERE amp WHEN HOW

Setting Objectives Task 2

httpswwwyoutubecomwatchv=biyGxEix5Zs

First introduced by Kaplan and Norton 1992 Havard Business

Review

bull Tracking Financial result while monitoring progress in

building the capabilities for future growth

bull To integrate Long-term strategy with Short-term financial

goals

bull Not as replacement of Financial measures but

complement

bull Four main processes

1 Translating the vision

2 Communicating and linking

3 Business planning

4 Feedback and learning

Setting Objectives Task 2

bull WHAT - ldquoObjectives are an organizationrsquos performance

targetrdquo

bull WHO - ldquoObjectives reflects managerial commitment to

deliver results and outcomes

bull WHY

bull Helps organization to be focus on what should be

completed to deliver expected overall outcomes

bull Considered as Benchmark to track company

performance

bull Motivates all members to deliver best possible results

bull WHERE amp WHEN HOW

Setting Objectives Task 2

httpswwwyoutubecomwatchv=biyGxEix5Zs

First introduced by Kaplan and Norton 1992 Havard Business

Review

bull Tracking Financial result while monitoring progress in

building the capabilities for future growth

bull To integrate Long-term strategy with Short-term financial

goals

bull Not as replacement of Financial measures but

complement

bull Four main processes

1 Translating the vision

2 Communicating and linking

3 Business planning

4 Feedback and learning

Setting Objectives Task 2

httpswwwyoutubecomwatchv=biyGxEix5Zs

First introduced by Kaplan and Norton 1992 Havard Business

Review

bull Tracking Financial result while monitoring progress in

building the capabilities for future growth

bull To integrate Long-term strategy with Short-term financial

goals

bull Not as replacement of Financial measures but

complement

bull Four main processes

1 Translating the vision

2 Communicating and linking

3 Business planning

4 Feedback and learning

httpswwwyoutubecomwatchv=biyGxEix5Zs

First introduced by Kaplan and Norton 1992 Havard Business

Review

bull Tracking Financial result while monitoring progress in

building the capabilities for future growth

bull To integrate Long-term strategy with Short-term financial

goals

bull Not as replacement of Financial measures but

complement

bull Four main processes

1 Translating the vision

2 Communicating and linking

3 Business planning

4 Feedback and learning

httpswwwyoutubecomwatchv=biyGxEix5Zs

Source Textbook - Strategy Core Concepts and Analytical Approaches ndash Arthur A Thompson The University of Alabama ndash Chapter 2 ndash Page 9

Back up

Crafting Strategy to achieve objectives and vision

Task 3

CORPORATE

STRATEGY

BUSINESS

STRATEGY

FUNCTIONAL

STRATEGY

OPERATIONAL

STRATEGY

CEO and Other Senior Executives

General Managers

Functional Heads

Sub-Functional Heads

Two-way InfluenceTop down vs Bottom Up

Reproduced Textbook - Strategy Core Concepts and Analytical Approaches ndash Arthur A Thompson The University of Alabama ndash Chapter 2 ndash Page 14

Source Textbook - Strategy Core Concepts and Analytical Approaches ndash Arthur A Thompson The University of Alabama ndash Chapter 4 ndash Page 2

Back up

Source Textbook - Strategy Core Concepts and Analytical Approaches ndash Arthur A Thompson The University of Alabama ndash Chapter 2 ndash Page 13

Resources preparation Human resources Physical Resources Financial Resources

Internal process policies and supporting systems

Rewards and Recognition Employee Engagement

Task 1

Developing Strategic vision mission and core value

Setting Objectives

Crafting Strategy to achieve objectives and vision

Implementing and Executing

Task 2

Task 3

Task 4

Task 5

Monitoring developments evaluating performance and initiating corrective actions

Costcorsquos case

Task 1

Developing Strategic vision mission and core value

Setting Objectives

Crafting Strategy to achieve objectives and vision

Implementing and Executing

Task 2

Task 3

Task 4

Overall Grade A-

Task 5

Monitoring developments evaluating performance and initiating corrective actions

Costcorsquos case

Jim Sinegalrsquos core values for Costco Obey the law

Take care of Members

Take care of Employees

Respect Suppliers

Reward shareholders

Jim Sinegalrsquos core values for Costco - ABCD Adhering to a strict code of ethics taking care of our employees and members respecting our

suppliers rewarding our shareholders

Bringing the highest quality goods and services to market at the lowest possible prices

Complying to Law seeking to be responsible corporate citizens and environmental stewards

Delivering excellent customer services

Porterrsquos Five Forces Analysis

Porterrsquo Five Forces

High Rivalry among Existing Competitors

- Fierce competition both from dominant players in wholesale club industry and other forms of retailing businesses (Euromonitor 2015)

- Minimal switching cost involved (Cal State LA nd)

- No notable differentiation between the merchandise offerings of players in the market (Cal State LA nd)

- Competitors compete on pricing and accessibility through frequent new storesrsquo openings (Arthur 2012)

High Threat of Substitute Products

- Various types of retailers are available that can be easily accessible such as online retailers (Euromonitor 2015)

- Products are not differentiated and can be easily purchased at other locations (Cal State LA nd)

- Minimal switching cost especially for members without membership (Cal State LA nd)

Low Supplier Bargaining Power

- No single supplier who accounts for a large proportion of merchandise that the wholesale club stocks (Cal State LA nd)

- Wholesale clubs are big-volume purchasers

- Dominant firms like Costco and Samrsquos Club possess strong bargaining power due to their reputation in the market

Moderate Buyer Bargaining Power

- Many customers are individuals who buy in small quantities

- Minimal switching cost involved whereas customers can easily switch to other alternative forms of retailers without facing any substantial disadvantages (Cal State LA nd)

- Undifferentiated productsrsquo (Cal State LA nd)

Low Threats of New Entrants High entry barriers that are derived from

- Formidable competitors with firm positions in the market that enjoy the benefits of economies of scale that are not easily accessible by new players (Cal State LA nd)

- Effective competition requires sizeable capital (Cal State LA nd)

- Current playersrsquo popularity remain a major obstacle for newcomers to build up trust and customer relationship (MarketLine20 15)

Financial Performance

Costco 2011 2010 2009 2008Net sales 87048 76255 69889 70977 Membership fees 1867 1691 1533 1506 Total Cost 86476 75869 69645 70514 Operating Income 2439 2077 1777 1969

Findings

2011-Strong revenue growth at 141 and a 174

increase in operational profit ndash Flow through

algorithm

2015 ndash Moderate revenue growth at 32

However Operating profit grow at 126 to

maintain the flow through

Membership is the main contributors to Profit

ultra-low pricing mark-up rate

60151

88915

112640 116199

1626

2439

3624

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Operating Income USD Mil Net Income USD Mil

Free Cash Flow USD Mil Revenue USD Mil

Net Revenue (Secondary axis)

COGS NR 877 SGampANR 96

COGS NR 870 SGampA NR 100

Source 2015 Costco Annual Report

Growth rate 2007 2008 2009 2010 2011 2012 2013 2014 2015Revenue Year over Year 706 1255 -146 913 1407 115 607 712 3163-Year Average 1021 1104 589 657 705 1155 105 82 5445-Year Average 1069 1124 822 805 813 901 773 954 831Operating Income Year over Year -105 224 -974 1688 1743 1312 1066 547 12553-Year Average 51 1012 301 889 74 1579 137 97 9525-Year Average 729 1123 51 71 845 1139 917 1262 1178Net Income Year over Year -185 1847 -1534 1998 122 1689 1931 093 1553-Year Average 706 646 -052 637 446 1632 161 1207 11635-Year Average 912 1221 424 415 579 956 971 1364 1278EPS Year over Year 304 2194 -1453 1822 1301 1788 1902 043 15483-Year Average 861 985 241 72 452 1635 1661 1211 11355-Year Average 987 1356 595 602 749 1042 988 1349 1296

Back up

Profitability Market Performance Efficiency

Return on Equity ROE Net Income Earnings per share EPS Net Profit - Minority Interest Asset Turn-over Net RevenueTotal Equity Number of share Total Asset

Return on Asset ROA Net Income Cashflow per share CFPS CFO - Preference dividens Days in Inventories DII InventoriesTotal Asset Number of share COGS

Gross Profit Margin Gross profit Dividen per share DPS Dividens paid Days of Sales Outstanding

DSO AR

Net Revenue Number of share Net Revenue

Profit Margin EBIT Dividen payout ratio Profit distributed as dividens Cash Collecting Cycle DPO

Net Revenue Total Profit

Cashflow to Sales CFO Price Earning ratio PER Current market price Cash Collecting Cycle CCC

Net Revenue EPS

Liquidity Capital Structure

Current ratio Debt ratio LiabilitiesAsset

Quick Asset ratio Debt to Equity LiabilitiesEquity

Cashflow ratio Equity ratio EquityAsset

Cash from Operating ProfitCurrent Liabilities

x 365 days

x 365 days

Current Asset - InventoriesCurrent Liabilities

Current AssetCurrent Liabilities

188

161 160

127116 120

108

140

2015 2014 2013 2012 2011 2010 2009 2008

ROE

6167

6055 55

49

62

2015 2014 2013 2012 2011 2010 2009

ROA130

126 126

124

126

128 127

124

2015 2014 2013 2012 2011 2010 2009 2008

Gross Profit margin

Profitability Ratios

Liquidity Ratios and Capital Structure

Is there any link among these ratios

Profit Margin

Asset Turn-over

Debt ratio

Gross Profit Margin Expense RatioCurrent Asset

Turn-over

DII DSO DPO

CCC Cash Collecting Cycle

ROA Leverage

ROE

Entities Financial Health

Interest Coverage

httpwwwinvestopediacomvideoplaydupont-analysis

DuPont Analysis

Crafting Strategy to achieve objectives and vision

Task 3

CORPORATE

STRATEGY

BUSINESS

STRATEGY

FUNCTIONAL

STRATEGY

OPERATIONAL

STRATEGY

CEO and Other Senior Executives

General Managers

Functional Heads

Sub-Functional Heads

Two-way InfluenceTop down vs Bottom Up

Reproduced Textbook - Strategy Core Concepts and Analytical Approaches ndash Arthur A Thompson The University of Alabama ndash Chapter 2 ndash Page 14

Source Textbook - Strategy Core Concepts and Analytical Approaches ndash Arthur A Thompson The University of Alabama ndash Chapter 4 ndash Page 2

Back up

Source Textbook - Strategy Core Concepts and Analytical Approaches ndash Arthur A Thompson The University of Alabama ndash Chapter 2 ndash Page 13

Resources preparation Human resources Physical Resources Financial Resources

Internal process policies and supporting systems

Rewards and Recognition Employee Engagement

Task 1

Developing Strategic vision mission and core value

Setting Objectives

Crafting Strategy to achieve objectives and vision

Implementing and Executing

Task 2

Task 3

Task 4

Task 5

Monitoring developments evaluating performance and initiating corrective actions

Costcorsquos case

Task 1

Developing Strategic vision mission and core value

Setting Objectives

Crafting Strategy to achieve objectives and vision

Implementing and Executing

Task 2

Task 3

Task 4

Overall Grade A-

Task 5

Monitoring developments evaluating performance and initiating corrective actions

Costcorsquos case

Jim Sinegalrsquos core values for Costco Obey the law

Take care of Members

Take care of Employees

Respect Suppliers

Reward shareholders

Jim Sinegalrsquos core values for Costco - ABCD Adhering to a strict code of ethics taking care of our employees and members respecting our

suppliers rewarding our shareholders

Bringing the highest quality goods and services to market at the lowest possible prices

Complying to Law seeking to be responsible corporate citizens and environmental stewards

Delivering excellent customer services

Porterrsquos Five Forces Analysis

Porterrsquo Five Forces

High Rivalry among Existing Competitors

- Fierce competition both from dominant players in wholesale club industry and other forms of retailing businesses (Euromonitor 2015)

- Minimal switching cost involved (Cal State LA nd)

- No notable differentiation between the merchandise offerings of players in the market (Cal State LA nd)

- Competitors compete on pricing and accessibility through frequent new storesrsquo openings (Arthur 2012)

High Threat of Substitute Products

- Various types of retailers are available that can be easily accessible such as online retailers (Euromonitor 2015)

- Products are not differentiated and can be easily purchased at other locations (Cal State LA nd)

- Minimal switching cost especially for members without membership (Cal State LA nd)

Low Supplier Bargaining Power

- No single supplier who accounts for a large proportion of merchandise that the wholesale club stocks (Cal State LA nd)

- Wholesale clubs are big-volume purchasers

- Dominant firms like Costco and Samrsquos Club possess strong bargaining power due to their reputation in the market

Moderate Buyer Bargaining Power

- Many customers are individuals who buy in small quantities

- Minimal switching cost involved whereas customers can easily switch to other alternative forms of retailers without facing any substantial disadvantages (Cal State LA nd)

- Undifferentiated productsrsquo (Cal State LA nd)

Low Threats of New Entrants High entry barriers that are derived from

- Formidable competitors with firm positions in the market that enjoy the benefits of economies of scale that are not easily accessible by new players (Cal State LA nd)

- Effective competition requires sizeable capital (Cal State LA nd)

- Current playersrsquo popularity remain a major obstacle for newcomers to build up trust and customer relationship (MarketLine20 15)

Financial Performance

Costco 2011 2010 2009 2008Net sales 87048 76255 69889 70977 Membership fees 1867 1691 1533 1506 Total Cost 86476 75869 69645 70514 Operating Income 2439 2077 1777 1969

Findings

2011-Strong revenue growth at 141 and a 174

increase in operational profit ndash Flow through

algorithm

2015 ndash Moderate revenue growth at 32

However Operating profit grow at 126 to

maintain the flow through

Membership is the main contributors to Profit

ultra-low pricing mark-up rate

60151

88915

112640 116199

1626

2439

3624

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Operating Income USD Mil Net Income USD Mil

Free Cash Flow USD Mil Revenue USD Mil

Net Revenue (Secondary axis)

COGS NR 877 SGampANR 96

COGS NR 870 SGampA NR 100

Source 2015 Costco Annual Report

Growth rate 2007 2008 2009 2010 2011 2012 2013 2014 2015Revenue Year over Year 706 1255 -146 913 1407 115 607 712 3163-Year Average 1021 1104 589 657 705 1155 105 82 5445-Year Average 1069 1124 822 805 813 901 773 954 831Operating Income Year over Year -105 224 -974 1688 1743 1312 1066 547 12553-Year Average 51 1012 301 889 74 1579 137 97 9525-Year Average 729 1123 51 71 845 1139 917 1262 1178Net Income Year over Year -185 1847 -1534 1998 122 1689 1931 093 1553-Year Average 706 646 -052 637 446 1632 161 1207 11635-Year Average 912 1221 424 415 579 956 971 1364 1278EPS Year over Year 304 2194 -1453 1822 1301 1788 1902 043 15483-Year Average 861 985 241 72 452 1635 1661 1211 11355-Year Average 987 1356 595 602 749 1042 988 1349 1296

Back up

Profitability Market Performance Efficiency

Return on Equity ROE Net Income Earnings per share EPS Net Profit - Minority Interest Asset Turn-over Net RevenueTotal Equity Number of share Total Asset

Return on Asset ROA Net Income Cashflow per share CFPS CFO - Preference dividens Days in Inventories DII InventoriesTotal Asset Number of share COGS

Gross Profit Margin Gross profit Dividen per share DPS Dividens paid Days of Sales Outstanding

DSO AR

Net Revenue Number of share Net Revenue

Profit Margin EBIT Dividen payout ratio Profit distributed as dividens Cash Collecting Cycle DPO

Net Revenue Total Profit

Cashflow to Sales CFO Price Earning ratio PER Current market price Cash Collecting Cycle CCC

Net Revenue EPS

Liquidity Capital Structure

Current ratio Debt ratio LiabilitiesAsset

Quick Asset ratio Debt to Equity LiabilitiesEquity

Cashflow ratio Equity ratio EquityAsset

Cash from Operating ProfitCurrent Liabilities

x 365 days

x 365 days

Current Asset - InventoriesCurrent Liabilities

Current AssetCurrent Liabilities

188

161 160

127116 120

108

140

2015 2014 2013 2012 2011 2010 2009 2008

ROE

6167

6055 55

49

62

2015 2014 2013 2012 2011 2010 2009

ROA130

126 126

124

126

128 127

124

2015 2014 2013 2012 2011 2010 2009 2008

Gross Profit margin

Profitability Ratios

Liquidity Ratios and Capital Structure

Is there any link among these ratios

Profit Margin

Asset Turn-over

Debt ratio

Gross Profit Margin Expense RatioCurrent Asset

Turn-over

DII DSO DPO

CCC Cash Collecting Cycle

ROA Leverage

ROE

Entities Financial Health

Interest Coverage

httpwwwinvestopediacomvideoplaydupont-analysis

DuPont Analysis

Source Textbook - Strategy Core Concepts and Analytical Approaches ndash Arthur A Thompson The University of Alabama ndash Chapter 4 ndash Page 2

Back up

Source Textbook - Strategy Core Concepts and Analytical Approaches ndash Arthur A Thompson The University of Alabama ndash Chapter 2 ndash Page 13

Resources preparation Human resources Physical Resources Financial Resources

Internal process policies and supporting systems

Rewards and Recognition Employee Engagement

Task 1

Developing Strategic vision mission and core value

Setting Objectives

Crafting Strategy to achieve objectives and vision

Implementing and Executing

Task 2

Task 3

Task 4

Task 5

Monitoring developments evaluating performance and initiating corrective actions

Costcorsquos case

Task 1

Developing Strategic vision mission and core value

Setting Objectives

Crafting Strategy to achieve objectives and vision

Implementing and Executing

Task 2

Task 3

Task 4

Overall Grade A-

Task 5

Monitoring developments evaluating performance and initiating corrective actions

Costcorsquos case

Jim Sinegalrsquos core values for Costco Obey the law

Take care of Members

Take care of Employees

Respect Suppliers

Reward shareholders

Jim Sinegalrsquos core values for Costco - ABCD Adhering to a strict code of ethics taking care of our employees and members respecting our

suppliers rewarding our shareholders

Bringing the highest quality goods and services to market at the lowest possible prices

Complying to Law seeking to be responsible corporate citizens and environmental stewards

Delivering excellent customer services

Porterrsquos Five Forces Analysis

Porterrsquo Five Forces

High Rivalry among Existing Competitors

- Fierce competition both from dominant players in wholesale club industry and other forms of retailing businesses (Euromonitor 2015)

- Minimal switching cost involved (Cal State LA nd)

- No notable differentiation between the merchandise offerings of players in the market (Cal State LA nd)

- Competitors compete on pricing and accessibility through frequent new storesrsquo openings (Arthur 2012)

High Threat of Substitute Products

- Various types of retailers are available that can be easily accessible such as online retailers (Euromonitor 2015)

- Products are not differentiated and can be easily purchased at other locations (Cal State LA nd)

- Minimal switching cost especially for members without membership (Cal State LA nd)

Low Supplier Bargaining Power

- No single supplier who accounts for a large proportion of merchandise that the wholesale club stocks (Cal State LA nd)

- Wholesale clubs are big-volume purchasers

- Dominant firms like Costco and Samrsquos Club possess strong bargaining power due to their reputation in the market

Moderate Buyer Bargaining Power

- Many customers are individuals who buy in small quantities

- Minimal switching cost involved whereas customers can easily switch to other alternative forms of retailers without facing any substantial disadvantages (Cal State LA nd)

- Undifferentiated productsrsquo (Cal State LA nd)

Low Threats of New Entrants High entry barriers that are derived from

- Formidable competitors with firm positions in the market that enjoy the benefits of economies of scale that are not easily accessible by new players (Cal State LA nd)

- Effective competition requires sizeable capital (Cal State LA nd)

- Current playersrsquo popularity remain a major obstacle for newcomers to build up trust and customer relationship (MarketLine20 15)

Financial Performance

Costco 2011 2010 2009 2008Net sales 87048 76255 69889 70977 Membership fees 1867 1691 1533 1506 Total Cost 86476 75869 69645 70514 Operating Income 2439 2077 1777 1969

Findings

2011-Strong revenue growth at 141 and a 174

increase in operational profit ndash Flow through

algorithm

2015 ndash Moderate revenue growth at 32

However Operating profit grow at 126 to

maintain the flow through

Membership is the main contributors to Profit

ultra-low pricing mark-up rate

60151

88915

112640 116199

1626

2439

3624

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Operating Income USD Mil Net Income USD Mil

Free Cash Flow USD Mil Revenue USD Mil

Net Revenue (Secondary axis)

COGS NR 877 SGampANR 96

COGS NR 870 SGampA NR 100

Source 2015 Costco Annual Report

Growth rate 2007 2008 2009 2010 2011 2012 2013 2014 2015Revenue Year over Year 706 1255 -146 913 1407 115 607 712 3163-Year Average 1021 1104 589 657 705 1155 105 82 5445-Year Average 1069 1124 822 805 813 901 773 954 831Operating Income Year over Year -105 224 -974 1688 1743 1312 1066 547 12553-Year Average 51 1012 301 889 74 1579 137 97 9525-Year Average 729 1123 51 71 845 1139 917 1262 1178Net Income Year over Year -185 1847 -1534 1998 122 1689 1931 093 1553-Year Average 706 646 -052 637 446 1632 161 1207 11635-Year Average 912 1221 424 415 579 956 971 1364 1278EPS Year over Year 304 2194 -1453 1822 1301 1788 1902 043 15483-Year Average 861 985 241 72 452 1635 1661 1211 11355-Year Average 987 1356 595 602 749 1042 988 1349 1296

Back up

Profitability Market Performance Efficiency

Return on Equity ROE Net Income Earnings per share EPS Net Profit - Minority Interest Asset Turn-over Net RevenueTotal Equity Number of share Total Asset

Return on Asset ROA Net Income Cashflow per share CFPS CFO - Preference dividens Days in Inventories DII InventoriesTotal Asset Number of share COGS

Gross Profit Margin Gross profit Dividen per share DPS Dividens paid Days of Sales Outstanding

DSO AR

Net Revenue Number of share Net Revenue

Profit Margin EBIT Dividen payout ratio Profit distributed as dividens Cash Collecting Cycle DPO

Net Revenue Total Profit

Cashflow to Sales CFO Price Earning ratio PER Current market price Cash Collecting Cycle CCC

Net Revenue EPS

Liquidity Capital Structure

Current ratio Debt ratio LiabilitiesAsset

Quick Asset ratio Debt to Equity LiabilitiesEquity

Cashflow ratio Equity ratio EquityAsset

Cash from Operating ProfitCurrent Liabilities

x 365 days

x 365 days

Current Asset - InventoriesCurrent Liabilities

Current AssetCurrent Liabilities

188

161 160

127116 120

108

140

2015 2014 2013 2012 2011 2010 2009 2008

ROE

6167

6055 55

49

62

2015 2014 2013 2012 2011 2010 2009

ROA130

126 126

124

126

128 127

124

2015 2014 2013 2012 2011 2010 2009 2008

Gross Profit margin

Profitability Ratios

Liquidity Ratios and Capital Structure

Is there any link among these ratios

Profit Margin

Asset Turn-over

Debt ratio

Gross Profit Margin Expense RatioCurrent Asset

Turn-over

DII DSO DPO

CCC Cash Collecting Cycle

ROA Leverage

ROE

Entities Financial Health

Interest Coverage

httpwwwinvestopediacomvideoplaydupont-analysis

DuPont Analysis

Source Textbook - Strategy Core Concepts and Analytical Approaches ndash Arthur A Thompson The University of Alabama ndash Chapter 2 ndash Page 13

Resources preparation Human resources Physical Resources Financial Resources

Internal process policies and supporting systems

Rewards and Recognition Employee Engagement

Task 1

Developing Strategic vision mission and core value

Setting Objectives

Crafting Strategy to achieve objectives and vision

Implementing and Executing

Task 2

Task 3

Task 4

Task 5

Monitoring developments evaluating performance and initiating corrective actions

Costcorsquos case

Task 1

Developing Strategic vision mission and core value

Setting Objectives

Crafting Strategy to achieve objectives and vision

Implementing and Executing

Task 2

Task 3

Task 4

Overall Grade A-

Task 5

Monitoring developments evaluating performance and initiating corrective actions

Costcorsquos case

Jim Sinegalrsquos core values for Costco Obey the law

Take care of Members

Take care of Employees

Respect Suppliers

Reward shareholders

Jim Sinegalrsquos core values for Costco - ABCD Adhering to a strict code of ethics taking care of our employees and members respecting our

suppliers rewarding our shareholders

Bringing the highest quality goods and services to market at the lowest possible prices

Complying to Law seeking to be responsible corporate citizens and environmental stewards

Delivering excellent customer services

Porterrsquos Five Forces Analysis

Porterrsquo Five Forces

High Rivalry among Existing Competitors

- Fierce competition both from dominant players in wholesale club industry and other forms of retailing businesses (Euromonitor 2015)

- Minimal switching cost involved (Cal State LA nd)

- No notable differentiation between the merchandise offerings of players in the market (Cal State LA nd)

- Competitors compete on pricing and accessibility through frequent new storesrsquo openings (Arthur 2012)

High Threat of Substitute Products

- Various types of retailers are available that can be easily accessible such as online retailers (Euromonitor 2015)

- Products are not differentiated and can be easily purchased at other locations (Cal State LA nd)

- Minimal switching cost especially for members without membership (Cal State LA nd)

Low Supplier Bargaining Power

- No single supplier who accounts for a large proportion of merchandise that the wholesale club stocks (Cal State LA nd)

- Wholesale clubs are big-volume purchasers

- Dominant firms like Costco and Samrsquos Club possess strong bargaining power due to their reputation in the market

Moderate Buyer Bargaining Power

- Many customers are individuals who buy in small quantities

- Minimal switching cost involved whereas customers can easily switch to other alternative forms of retailers without facing any substantial disadvantages (Cal State LA nd)

- Undifferentiated productsrsquo (Cal State LA nd)

Low Threats of New Entrants High entry barriers that are derived from

- Formidable competitors with firm positions in the market that enjoy the benefits of economies of scale that are not easily accessible by new players (Cal State LA nd)

- Effective competition requires sizeable capital (Cal State LA nd)

- Current playersrsquo popularity remain a major obstacle for newcomers to build up trust and customer relationship (MarketLine20 15)

Financial Performance

Costco 2011 2010 2009 2008Net sales 87048 76255 69889 70977 Membership fees 1867 1691 1533 1506 Total Cost 86476 75869 69645 70514 Operating Income 2439 2077 1777 1969

Findings

2011-Strong revenue growth at 141 and a 174

increase in operational profit ndash Flow through

algorithm

2015 ndash Moderate revenue growth at 32

However Operating profit grow at 126 to

maintain the flow through

Membership is the main contributors to Profit

ultra-low pricing mark-up rate

60151

88915

112640 116199

1626

2439

3624

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Operating Income USD Mil Net Income USD Mil

Free Cash Flow USD Mil Revenue USD Mil

Net Revenue (Secondary axis)

COGS NR 877 SGampANR 96

COGS NR 870 SGampA NR 100

Source 2015 Costco Annual Report

Growth rate 2007 2008 2009 2010 2011 2012 2013 2014 2015Revenue Year over Year 706 1255 -146 913 1407 115 607 712 3163-Year Average 1021 1104 589 657 705 1155 105 82 5445-Year Average 1069 1124 822 805 813 901 773 954 831Operating Income Year over Year -105 224 -974 1688 1743 1312 1066 547 12553-Year Average 51 1012 301 889 74 1579 137 97 9525-Year Average 729 1123 51 71 845 1139 917 1262 1178Net Income Year over Year -185 1847 -1534 1998 122 1689 1931 093 1553-Year Average 706 646 -052 637 446 1632 161 1207 11635-Year Average 912 1221 424 415 579 956 971 1364 1278EPS Year over Year 304 2194 -1453 1822 1301 1788 1902 043 15483-Year Average 861 985 241 72 452 1635 1661 1211 11355-Year Average 987 1356 595 602 749 1042 988 1349 1296

Back up

Profitability Market Performance Efficiency

Return on Equity ROE Net Income Earnings per share EPS Net Profit - Minority Interest Asset Turn-over Net RevenueTotal Equity Number of share Total Asset

Return on Asset ROA Net Income Cashflow per share CFPS CFO - Preference dividens Days in Inventories DII InventoriesTotal Asset Number of share COGS

Gross Profit Margin Gross profit Dividen per share DPS Dividens paid Days of Sales Outstanding

DSO AR

Net Revenue Number of share Net Revenue

Profit Margin EBIT Dividen payout ratio Profit distributed as dividens Cash Collecting Cycle DPO

Net Revenue Total Profit

Cashflow to Sales CFO Price Earning ratio PER Current market price Cash Collecting Cycle CCC

Net Revenue EPS

Liquidity Capital Structure

Current ratio Debt ratio LiabilitiesAsset

Quick Asset ratio Debt to Equity LiabilitiesEquity

Cashflow ratio Equity ratio EquityAsset

Cash from Operating ProfitCurrent Liabilities

x 365 days

x 365 days

Current Asset - InventoriesCurrent Liabilities

Current AssetCurrent Liabilities

188

161 160

127116 120

108

140

2015 2014 2013 2012 2011 2010 2009 2008

ROE

6167

6055 55

49

62

2015 2014 2013 2012 2011 2010 2009

ROA130

126 126

124

126

128 127

124

2015 2014 2013 2012 2011 2010 2009 2008

Gross Profit margin

Profitability Ratios

Liquidity Ratios and Capital Structure

Is there any link among these ratios

Profit Margin

Asset Turn-over

Debt ratio

Gross Profit Margin Expense RatioCurrent Asset

Turn-over

DII DSO DPO

CCC Cash Collecting Cycle

ROA Leverage

ROE

Entities Financial Health

Interest Coverage

httpwwwinvestopediacomvideoplaydupont-analysis

DuPont Analysis

Task 1

Developing Strategic vision mission and core value

Setting Objectives

Crafting Strategy to achieve objectives and vision

Implementing and Executing

Task 2

Task 3

Task 4

Task 5

Monitoring developments evaluating performance and initiating corrective actions

Costcorsquos case

Task 1

Developing Strategic vision mission and core value

Setting Objectives

Crafting Strategy to achieve objectives and vision

Implementing and Executing

Task 2

Task 3

Task 4

Overall Grade A-

Task 5

Monitoring developments evaluating performance and initiating corrective actions

Costcorsquos case

Jim Sinegalrsquos core values for Costco Obey the law

Take care of Members

Take care of Employees

Respect Suppliers

Reward shareholders

Jim Sinegalrsquos core values for Costco - ABCD Adhering to a strict code of ethics taking care of our employees and members respecting our

suppliers rewarding our shareholders

Bringing the highest quality goods and services to market at the lowest possible prices

Complying to Law seeking to be responsible corporate citizens and environmental stewards

Delivering excellent customer services

Porterrsquos Five Forces Analysis

Porterrsquo Five Forces

High Rivalry among Existing Competitors

- Fierce competition both from dominant players in wholesale club industry and other forms of retailing businesses (Euromonitor 2015)

- Minimal switching cost involved (Cal State LA nd)

- No notable differentiation between the merchandise offerings of players in the market (Cal State LA nd)

- Competitors compete on pricing and accessibility through frequent new storesrsquo openings (Arthur 2012)

High Threat of Substitute Products

- Various types of retailers are available that can be easily accessible such as online retailers (Euromonitor 2015)

- Products are not differentiated and can be easily purchased at other locations (Cal State LA nd)

- Minimal switching cost especially for members without membership (Cal State LA nd)

Low Supplier Bargaining Power

- No single supplier who accounts for a large proportion of merchandise that the wholesale club stocks (Cal State LA nd)

- Wholesale clubs are big-volume purchasers

- Dominant firms like Costco and Samrsquos Club possess strong bargaining power due to their reputation in the market

Moderate Buyer Bargaining Power

- Many customers are individuals who buy in small quantities

- Minimal switching cost involved whereas customers can easily switch to other alternative forms of retailers without facing any substantial disadvantages (Cal State LA nd)

- Undifferentiated productsrsquo (Cal State LA nd)

Low Threats of New Entrants High entry barriers that are derived from

- Formidable competitors with firm positions in the market that enjoy the benefits of economies of scale that are not easily accessible by new players (Cal State LA nd)

- Effective competition requires sizeable capital (Cal State LA nd)

- Current playersrsquo popularity remain a major obstacle for newcomers to build up trust and customer relationship (MarketLine20 15)

Financial Performance

Costco 2011 2010 2009 2008Net sales 87048 76255 69889 70977 Membership fees 1867 1691 1533 1506 Total Cost 86476 75869 69645 70514 Operating Income 2439 2077 1777 1969

Findings

2011-Strong revenue growth at 141 and a 174

increase in operational profit ndash Flow through

algorithm

2015 ndash Moderate revenue growth at 32

However Operating profit grow at 126 to

maintain the flow through

Membership is the main contributors to Profit

ultra-low pricing mark-up rate

60151

88915

112640 116199

1626

2439

3624

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Operating Income USD Mil Net Income USD Mil

Free Cash Flow USD Mil Revenue USD Mil

Net Revenue (Secondary axis)

COGS NR 877 SGampANR 96

COGS NR 870 SGampA NR 100

Source 2015 Costco Annual Report

Growth rate 2007 2008 2009 2010 2011 2012 2013 2014 2015Revenue Year over Year 706 1255 -146 913 1407 115 607 712 3163-Year Average 1021 1104 589 657 705 1155 105 82 5445-Year Average 1069 1124 822 805 813 901 773 954 831Operating Income Year over Year -105 224 -974 1688 1743 1312 1066 547 12553-Year Average 51 1012 301 889 74 1579 137 97 9525-Year Average 729 1123 51 71 845 1139 917 1262 1178Net Income Year over Year -185 1847 -1534 1998 122 1689 1931 093 1553-Year Average 706 646 -052 637 446 1632 161 1207 11635-Year Average 912 1221 424 415 579 956 971 1364 1278EPS Year over Year 304 2194 -1453 1822 1301 1788 1902 043 15483-Year Average 861 985 241 72 452 1635 1661 1211 11355-Year Average 987 1356 595 602 749 1042 988 1349 1296

Back up

Profitability Market Performance Efficiency

Return on Equity ROE Net Income Earnings per share EPS Net Profit - Minority Interest Asset Turn-over Net RevenueTotal Equity Number of share Total Asset

Return on Asset ROA Net Income Cashflow per share CFPS CFO - Preference dividens Days in Inventories DII InventoriesTotal Asset Number of share COGS

Gross Profit Margin Gross profit Dividen per share DPS Dividens paid Days of Sales Outstanding

DSO AR

Net Revenue Number of share Net Revenue

Profit Margin EBIT Dividen payout ratio Profit distributed as dividens Cash Collecting Cycle DPO

Net Revenue Total Profit

Cashflow to Sales CFO Price Earning ratio PER Current market price Cash Collecting Cycle CCC

Net Revenue EPS

Liquidity Capital Structure

Current ratio Debt ratio LiabilitiesAsset

Quick Asset ratio Debt to Equity LiabilitiesEquity

Cashflow ratio Equity ratio EquityAsset

Cash from Operating ProfitCurrent Liabilities

x 365 days

x 365 days

Current Asset - InventoriesCurrent Liabilities

Current AssetCurrent Liabilities

188

161 160

127116 120

108

140

2015 2014 2013 2012 2011 2010 2009 2008

ROE

6167

6055 55

49

62

2015 2014 2013 2012 2011 2010 2009

ROA130

126 126

124

126

128 127

124

2015 2014 2013 2012 2011 2010 2009 2008

Gross Profit margin

Profitability Ratios

Liquidity Ratios and Capital Structure

Is there any link among these ratios

Profit Margin

Asset Turn-over

Debt ratio

Gross Profit Margin Expense RatioCurrent Asset

Turn-over

DII DSO DPO

CCC Cash Collecting Cycle

ROA Leverage

ROE

Entities Financial Health

Interest Coverage

httpwwwinvestopediacomvideoplaydupont-analysis

DuPont Analysis

Task 1

Developing Strategic vision mission and core value

Setting Objectives

Crafting Strategy to achieve objectives and vision

Implementing and Executing

Task 2

Task 3

Task 4

Overall Grade A-

Task 5

Monitoring developments evaluating performance and initiating corrective actions

Costcorsquos case

Jim Sinegalrsquos core values for Costco Obey the law

Take care of Members

Take care of Employees

Respect Suppliers

Reward shareholders

Jim Sinegalrsquos core values for Costco - ABCD Adhering to a strict code of ethics taking care of our employees and members respecting our

suppliers rewarding our shareholders

Bringing the highest quality goods and services to market at the lowest possible prices

Complying to Law seeking to be responsible corporate citizens and environmental stewards

Delivering excellent customer services

Porterrsquos Five Forces Analysis

Porterrsquo Five Forces

High Rivalry among Existing Competitors

- Fierce competition both from dominant players in wholesale club industry and other forms of retailing businesses (Euromonitor 2015)

- Minimal switching cost involved (Cal State LA nd)

- No notable differentiation between the merchandise offerings of players in the market (Cal State LA nd)

- Competitors compete on pricing and accessibility through frequent new storesrsquo openings (Arthur 2012)

High Threat of Substitute Products

- Various types of retailers are available that can be easily accessible such as online retailers (Euromonitor 2015)

- Products are not differentiated and can be easily purchased at other locations (Cal State LA nd)

- Minimal switching cost especially for members without membership (Cal State LA nd)

Low Supplier Bargaining Power

- No single supplier who accounts for a large proportion of merchandise that the wholesale club stocks (Cal State LA nd)

- Wholesale clubs are big-volume purchasers

- Dominant firms like Costco and Samrsquos Club possess strong bargaining power due to their reputation in the market

Moderate Buyer Bargaining Power

- Many customers are individuals who buy in small quantities

- Minimal switching cost involved whereas customers can easily switch to other alternative forms of retailers without facing any substantial disadvantages (Cal State LA nd)

- Undifferentiated productsrsquo (Cal State LA nd)

Low Threats of New Entrants High entry barriers that are derived from

- Formidable competitors with firm positions in the market that enjoy the benefits of economies of scale that are not easily accessible by new players (Cal State LA nd)

- Effective competition requires sizeable capital (Cal State LA nd)

- Current playersrsquo popularity remain a major obstacle for newcomers to build up trust and customer relationship (MarketLine20 15)

Financial Performance

Costco 2011 2010 2009 2008Net sales 87048 76255 69889 70977 Membership fees 1867 1691 1533 1506 Total Cost 86476 75869 69645 70514 Operating Income 2439 2077 1777 1969

Findings

2011-Strong revenue growth at 141 and a 174

increase in operational profit ndash Flow through

algorithm

2015 ndash Moderate revenue growth at 32

However Operating profit grow at 126 to

maintain the flow through

Membership is the main contributors to Profit

ultra-low pricing mark-up rate

60151

88915

112640 116199

1626

2439

3624

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Operating Income USD Mil Net Income USD Mil

Free Cash Flow USD Mil Revenue USD Mil

Net Revenue (Secondary axis)

COGS NR 877 SGampANR 96

COGS NR 870 SGampA NR 100

Source 2015 Costco Annual Report

Growth rate 2007 2008 2009 2010 2011 2012 2013 2014 2015Revenue Year over Year 706 1255 -146 913 1407 115 607 712 3163-Year Average 1021 1104 589 657 705 1155 105 82 5445-Year Average 1069 1124 822 805 813 901 773 954 831Operating Income Year over Year -105 224 -974 1688 1743 1312 1066 547 12553-Year Average 51 1012 301 889 74 1579 137 97 9525-Year Average 729 1123 51 71 845 1139 917 1262 1178Net Income Year over Year -185 1847 -1534 1998 122 1689 1931 093 1553-Year Average 706 646 -052 637 446 1632 161 1207 11635-Year Average 912 1221 424 415 579 956 971 1364 1278EPS Year over Year 304 2194 -1453 1822 1301 1788 1902 043 15483-Year Average 861 985 241 72 452 1635 1661 1211 11355-Year Average 987 1356 595 602 749 1042 988 1349 1296

Back up

Profitability Market Performance Efficiency

Return on Equity ROE Net Income Earnings per share EPS Net Profit - Minority Interest Asset Turn-over Net RevenueTotal Equity Number of share Total Asset

Return on Asset ROA Net Income Cashflow per share CFPS CFO - Preference dividens Days in Inventories DII InventoriesTotal Asset Number of share COGS

Gross Profit Margin Gross profit Dividen per share DPS Dividens paid Days of Sales Outstanding

DSO AR

Net Revenue Number of share Net Revenue

Profit Margin EBIT Dividen payout ratio Profit distributed as dividens Cash Collecting Cycle DPO

Net Revenue Total Profit

Cashflow to Sales CFO Price Earning ratio PER Current market price Cash Collecting Cycle CCC

Net Revenue EPS

Liquidity Capital Structure

Current ratio Debt ratio LiabilitiesAsset

Quick Asset ratio Debt to Equity LiabilitiesEquity

Cashflow ratio Equity ratio EquityAsset

Cash from Operating ProfitCurrent Liabilities

x 365 days

x 365 days

Current Asset - InventoriesCurrent Liabilities

Current AssetCurrent Liabilities

188

161 160

127116 120

108

140

2015 2014 2013 2012 2011 2010 2009 2008

ROE

6167

6055 55

49

62

2015 2014 2013 2012 2011 2010 2009

ROA130

126 126

124

126

128 127

124

2015 2014 2013 2012 2011 2010 2009 2008

Gross Profit margin

Profitability Ratios

Liquidity Ratios and Capital Structure

Is there any link among these ratios

Profit Margin

Asset Turn-over

Debt ratio

Gross Profit Margin Expense RatioCurrent Asset

Turn-over

DII DSO DPO

CCC Cash Collecting Cycle

ROA Leverage

ROE

Entities Financial Health

Interest Coverage

httpwwwinvestopediacomvideoplaydupont-analysis

DuPont Analysis

Jim Sinegalrsquos core values for Costco Obey the law

Take care of Members

Take care of Employees

Respect Suppliers

Reward shareholders

Jim Sinegalrsquos core values for Costco - ABCD Adhering to a strict code of ethics taking care of our employees and members respecting our

suppliers rewarding our shareholders

Bringing the highest quality goods and services to market at the lowest possible prices

Complying to Law seeking to be responsible corporate citizens and environmental stewards

Delivering excellent customer services

Porterrsquos Five Forces Analysis

Porterrsquo Five Forces

High Rivalry among Existing Competitors

- Fierce competition both from dominant players in wholesale club industry and other forms of retailing businesses (Euromonitor 2015)

- Minimal switching cost involved (Cal State LA nd)

- No notable differentiation between the merchandise offerings of players in the market (Cal State LA nd)

- Competitors compete on pricing and accessibility through frequent new storesrsquo openings (Arthur 2012)

High Threat of Substitute Products

- Various types of retailers are available that can be easily accessible such as online retailers (Euromonitor 2015)

- Products are not differentiated and can be easily purchased at other locations (Cal State LA nd)

- Minimal switching cost especially for members without membership (Cal State LA nd)

Low Supplier Bargaining Power

- No single supplier who accounts for a large proportion of merchandise that the wholesale club stocks (Cal State LA nd)

- Wholesale clubs are big-volume purchasers

- Dominant firms like Costco and Samrsquos Club possess strong bargaining power due to their reputation in the market

Moderate Buyer Bargaining Power

- Many customers are individuals who buy in small quantities

- Minimal switching cost involved whereas customers can easily switch to other alternative forms of retailers without facing any substantial disadvantages (Cal State LA nd)

- Undifferentiated productsrsquo (Cal State LA nd)

Low Threats of New Entrants High entry barriers that are derived from

- Formidable competitors with firm positions in the market that enjoy the benefits of economies of scale that are not easily accessible by new players (Cal State LA nd)

- Effective competition requires sizeable capital (Cal State LA nd)

- Current playersrsquo popularity remain a major obstacle for newcomers to build up trust and customer relationship (MarketLine20 15)

Financial Performance

Costco 2011 2010 2009 2008Net sales 87048 76255 69889 70977 Membership fees 1867 1691 1533 1506 Total Cost 86476 75869 69645 70514 Operating Income 2439 2077 1777 1969

Findings

2011-Strong revenue growth at 141 and a 174

increase in operational profit ndash Flow through

algorithm

2015 ndash Moderate revenue growth at 32

However Operating profit grow at 126 to

maintain the flow through

Membership is the main contributors to Profit

ultra-low pricing mark-up rate

60151

88915

112640 116199

1626

2439

3624

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Operating Income USD Mil Net Income USD Mil

Free Cash Flow USD Mil Revenue USD Mil

Net Revenue (Secondary axis)

COGS NR 877 SGampANR 96

COGS NR 870 SGampA NR 100

Source 2015 Costco Annual Report

Growth rate 2007 2008 2009 2010 2011 2012 2013 2014 2015Revenue Year over Year 706 1255 -146 913 1407 115 607 712 3163-Year Average 1021 1104 589 657 705 1155 105 82 5445-Year Average 1069 1124 822 805 813 901 773 954 831Operating Income Year over Year -105 224 -974 1688 1743 1312 1066 547 12553-Year Average 51 1012 301 889 74 1579 137 97 9525-Year Average 729 1123 51 71 845 1139 917 1262 1178Net Income Year over Year -185 1847 -1534 1998 122 1689 1931 093 1553-Year Average 706 646 -052 637 446 1632 161 1207 11635-Year Average 912 1221 424 415 579 956 971 1364 1278EPS Year over Year 304 2194 -1453 1822 1301 1788 1902 043 15483-Year Average 861 985 241 72 452 1635 1661 1211 11355-Year Average 987 1356 595 602 749 1042 988 1349 1296

Back up

Profitability Market Performance Efficiency

Return on Equity ROE Net Income Earnings per share EPS Net Profit - Minority Interest Asset Turn-over Net RevenueTotal Equity Number of share Total Asset

Return on Asset ROA Net Income Cashflow per share CFPS CFO - Preference dividens Days in Inventories DII InventoriesTotal Asset Number of share COGS

Gross Profit Margin Gross profit Dividen per share DPS Dividens paid Days of Sales Outstanding

DSO AR

Net Revenue Number of share Net Revenue

Profit Margin EBIT Dividen payout ratio Profit distributed as dividens Cash Collecting Cycle DPO

Net Revenue Total Profit

Cashflow to Sales CFO Price Earning ratio PER Current market price Cash Collecting Cycle CCC

Net Revenue EPS

Liquidity Capital Structure

Current ratio Debt ratio LiabilitiesAsset

Quick Asset ratio Debt to Equity LiabilitiesEquity

Cashflow ratio Equity ratio EquityAsset

Cash from Operating ProfitCurrent Liabilities

x 365 days

x 365 days

Current Asset - InventoriesCurrent Liabilities

Current AssetCurrent Liabilities

188

161 160

127116 120

108

140

2015 2014 2013 2012 2011 2010 2009 2008

ROE

6167

6055 55

49

62

2015 2014 2013 2012 2011 2010 2009

ROA130

126 126

124

126

128 127

124

2015 2014 2013 2012 2011 2010 2009 2008

Gross Profit margin

Profitability Ratios

Liquidity Ratios and Capital Structure

Is there any link among these ratios

Profit Margin

Asset Turn-over

Debt ratio

Gross Profit Margin Expense RatioCurrent Asset

Turn-over

DII DSO DPO

CCC Cash Collecting Cycle

ROA Leverage

ROE

Entities Financial Health

Interest Coverage

httpwwwinvestopediacomvideoplaydupont-analysis

DuPont Analysis

Jim Sinegalrsquos core values for Costco - ABCD Adhering to a strict code of ethics taking care of our employees and members respecting our

suppliers rewarding our shareholders

Bringing the highest quality goods and services to market at the lowest possible prices

Complying to Law seeking to be responsible corporate citizens and environmental stewards

Delivering excellent customer services

Porterrsquos Five Forces Analysis

Porterrsquo Five Forces

High Rivalry among Existing Competitors

- Fierce competition both from dominant players in wholesale club industry and other forms of retailing businesses (Euromonitor 2015)

- Minimal switching cost involved (Cal State LA nd)

- No notable differentiation between the merchandise offerings of players in the market (Cal State LA nd)

- Competitors compete on pricing and accessibility through frequent new storesrsquo openings (Arthur 2012)

High Threat of Substitute Products

- Various types of retailers are available that can be easily accessible such as online retailers (Euromonitor 2015)

- Products are not differentiated and can be easily purchased at other locations (Cal State LA nd)

- Minimal switching cost especially for members without membership (Cal State LA nd)

Low Supplier Bargaining Power

- No single supplier who accounts for a large proportion of merchandise that the wholesale club stocks (Cal State LA nd)

- Wholesale clubs are big-volume purchasers

- Dominant firms like Costco and Samrsquos Club possess strong bargaining power due to their reputation in the market

Moderate Buyer Bargaining Power

- Many customers are individuals who buy in small quantities

- Minimal switching cost involved whereas customers can easily switch to other alternative forms of retailers without facing any substantial disadvantages (Cal State LA nd)

- Undifferentiated productsrsquo (Cal State LA nd)

Low Threats of New Entrants High entry barriers that are derived from

- Formidable competitors with firm positions in the market that enjoy the benefits of economies of scale that are not easily accessible by new players (Cal State LA nd)

- Effective competition requires sizeable capital (Cal State LA nd)

- Current playersrsquo popularity remain a major obstacle for newcomers to build up trust and customer relationship (MarketLine20 15)

Financial Performance

Costco 2011 2010 2009 2008Net sales 87048 76255 69889 70977 Membership fees 1867 1691 1533 1506 Total Cost 86476 75869 69645 70514 Operating Income 2439 2077 1777 1969

Findings

2011-Strong revenue growth at 141 and a 174

increase in operational profit ndash Flow through

algorithm

2015 ndash Moderate revenue growth at 32

However Operating profit grow at 126 to

maintain the flow through

Membership is the main contributors to Profit

ultra-low pricing mark-up rate

60151

88915

112640 116199

1626

2439

3624

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Operating Income USD Mil Net Income USD Mil

Free Cash Flow USD Mil Revenue USD Mil

Net Revenue (Secondary axis)

COGS NR 877 SGampANR 96

COGS NR 870 SGampA NR 100

Source 2015 Costco Annual Report

Growth rate 2007 2008 2009 2010 2011 2012 2013 2014 2015Revenue Year over Year 706 1255 -146 913 1407 115 607 712 3163-Year Average 1021 1104 589 657 705 1155 105 82 5445-Year Average 1069 1124 822 805 813 901 773 954 831Operating Income Year over Year -105 224 -974 1688 1743 1312 1066 547 12553-Year Average 51 1012 301 889 74 1579 137 97 9525-Year Average 729 1123 51 71 845 1139 917 1262 1178Net Income Year over Year -185 1847 -1534 1998 122 1689 1931 093 1553-Year Average 706 646 -052 637 446 1632 161 1207 11635-Year Average 912 1221 424 415 579 956 971 1364 1278EPS Year over Year 304 2194 -1453 1822 1301 1788 1902 043 15483-Year Average 861 985 241 72 452 1635 1661 1211 11355-Year Average 987 1356 595 602 749 1042 988 1349 1296

Back up

Profitability Market Performance Efficiency

Return on Equity ROE Net Income Earnings per share EPS Net Profit - Minority Interest Asset Turn-over Net RevenueTotal Equity Number of share Total Asset

Return on Asset ROA Net Income Cashflow per share CFPS CFO - Preference dividens Days in Inventories DII InventoriesTotal Asset Number of share COGS

Gross Profit Margin Gross profit Dividen per share DPS Dividens paid Days of Sales Outstanding

DSO AR

Net Revenue Number of share Net Revenue

Profit Margin EBIT Dividen payout ratio Profit distributed as dividens Cash Collecting Cycle DPO

Net Revenue Total Profit

Cashflow to Sales CFO Price Earning ratio PER Current market price Cash Collecting Cycle CCC

Net Revenue EPS

Liquidity Capital Structure

Current ratio Debt ratio LiabilitiesAsset

Quick Asset ratio Debt to Equity LiabilitiesEquity

Cashflow ratio Equity ratio EquityAsset

Cash from Operating ProfitCurrent Liabilities

x 365 days

x 365 days

Current Asset - InventoriesCurrent Liabilities

Current AssetCurrent Liabilities

188

161 160

127116 120

108

140

2015 2014 2013 2012 2011 2010 2009 2008

ROE

6167

6055 55

49

62

2015 2014 2013 2012 2011 2010 2009

ROA130

126 126

124

126

128 127

124

2015 2014 2013 2012 2011 2010 2009 2008

Gross Profit margin

Profitability Ratios

Liquidity Ratios and Capital Structure

Is there any link among these ratios

Profit Margin

Asset Turn-over

Debt ratio

Gross Profit Margin Expense RatioCurrent Asset

Turn-over

DII DSO DPO

CCC Cash Collecting Cycle

ROA Leverage

ROE

Entities Financial Health

Interest Coverage

httpwwwinvestopediacomvideoplaydupont-analysis

DuPont Analysis

Porterrsquos Five Forces Analysis

Porterrsquo Five Forces

High Rivalry among Existing Competitors

- Fierce competition both from dominant players in wholesale club industry and other forms of retailing businesses (Euromonitor 2015)

- Minimal switching cost involved (Cal State LA nd)

- No notable differentiation between the merchandise offerings of players in the market (Cal State LA nd)

- Competitors compete on pricing and accessibility through frequent new storesrsquo openings (Arthur 2012)

High Threat of Substitute Products

- Various types of retailers are available that can be easily accessible such as online retailers (Euromonitor 2015)

- Products are not differentiated and can be easily purchased at other locations (Cal State LA nd)

- Minimal switching cost especially for members without membership (Cal State LA nd)

Low Supplier Bargaining Power

- No single supplier who accounts for a large proportion of merchandise that the wholesale club stocks (Cal State LA nd)

- Wholesale clubs are big-volume purchasers

- Dominant firms like Costco and Samrsquos Club possess strong bargaining power due to their reputation in the market

Moderate Buyer Bargaining Power

- Many customers are individuals who buy in small quantities

- Minimal switching cost involved whereas customers can easily switch to other alternative forms of retailers without facing any substantial disadvantages (Cal State LA nd)

- Undifferentiated productsrsquo (Cal State LA nd)

Low Threats of New Entrants High entry barriers that are derived from

- Formidable competitors with firm positions in the market that enjoy the benefits of economies of scale that are not easily accessible by new players (Cal State LA nd)

- Effective competition requires sizeable capital (Cal State LA nd)

- Current playersrsquo popularity remain a major obstacle for newcomers to build up trust and customer relationship (MarketLine20 15)

Financial Performance

Costco 2011 2010 2009 2008Net sales 87048 76255 69889 70977 Membership fees 1867 1691 1533 1506 Total Cost 86476 75869 69645 70514 Operating Income 2439 2077 1777 1969

Findings

2011-Strong revenue growth at 141 and a 174

increase in operational profit ndash Flow through

algorithm

2015 ndash Moderate revenue growth at 32

However Operating profit grow at 126 to

maintain the flow through

Membership is the main contributors to Profit

ultra-low pricing mark-up rate

60151

88915

112640 116199

1626

2439

3624

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Operating Income USD Mil Net Income USD Mil

Free Cash Flow USD Mil Revenue USD Mil

Net Revenue (Secondary axis)

COGS NR 877 SGampANR 96

COGS NR 870 SGampA NR 100

Source 2015 Costco Annual Report

Growth rate 2007 2008 2009 2010 2011 2012 2013 2014 2015Revenue Year over Year 706 1255 -146 913 1407 115 607 712 3163-Year Average 1021 1104 589 657 705 1155 105 82 5445-Year Average 1069 1124 822 805 813 901 773 954 831Operating Income Year over Year -105 224 -974 1688 1743 1312 1066 547 12553-Year Average 51 1012 301 889 74 1579 137 97 9525-Year Average 729 1123 51 71 845 1139 917 1262 1178Net Income Year over Year -185 1847 -1534 1998 122 1689 1931 093 1553-Year Average 706 646 -052 637 446 1632 161 1207 11635-Year Average 912 1221 424 415 579 956 971 1364 1278EPS Year over Year 304 2194 -1453 1822 1301 1788 1902 043 15483-Year Average 861 985 241 72 452 1635 1661 1211 11355-Year Average 987 1356 595 602 749 1042 988 1349 1296

Back up

Profitability Market Performance Efficiency

Return on Equity ROE Net Income Earnings per share EPS Net Profit - Minority Interest Asset Turn-over Net RevenueTotal Equity Number of share Total Asset

Return on Asset ROA Net Income Cashflow per share CFPS CFO - Preference dividens Days in Inventories DII InventoriesTotal Asset Number of share COGS

Gross Profit Margin Gross profit Dividen per share DPS Dividens paid Days of Sales Outstanding

DSO AR

Net Revenue Number of share Net Revenue

Profit Margin EBIT Dividen payout ratio Profit distributed as dividens Cash Collecting Cycle DPO

Net Revenue Total Profit

Cashflow to Sales CFO Price Earning ratio PER Current market price Cash Collecting Cycle CCC

Net Revenue EPS

Liquidity Capital Structure

Current ratio Debt ratio LiabilitiesAsset

Quick Asset ratio Debt to Equity LiabilitiesEquity

Cashflow ratio Equity ratio EquityAsset

Cash from Operating ProfitCurrent Liabilities

x 365 days

x 365 days

Current Asset - InventoriesCurrent Liabilities

Current AssetCurrent Liabilities

188

161 160

127116 120

108

140

2015 2014 2013 2012 2011 2010 2009 2008

ROE

6167

6055 55

49

62

2015 2014 2013 2012 2011 2010 2009

ROA130

126 126

124

126

128 127

124

2015 2014 2013 2012 2011 2010 2009 2008

Gross Profit margin

Profitability Ratios

Liquidity Ratios and Capital Structure

Is there any link among these ratios

Profit Margin

Asset Turn-over

Debt ratio

Gross Profit Margin Expense RatioCurrent Asset

Turn-over

DII DSO DPO

CCC Cash Collecting Cycle

ROA Leverage

ROE

Entities Financial Health

Interest Coverage

httpwwwinvestopediacomvideoplaydupont-analysis

DuPont Analysis

Porterrsquo Five Forces

High Rivalry among Existing Competitors

- Fierce competition both from dominant players in wholesale club industry and other forms of retailing businesses (Euromonitor 2015)

- Minimal switching cost involved (Cal State LA nd)

- No notable differentiation between the merchandise offerings of players in the market (Cal State LA nd)

- Competitors compete on pricing and accessibility through frequent new storesrsquo openings (Arthur 2012)

High Threat of Substitute Products

- Various types of retailers are available that can be easily accessible such as online retailers (Euromonitor 2015)

- Products are not differentiated and can be easily purchased at other locations (Cal State LA nd)

- Minimal switching cost especially for members without membership (Cal State LA nd)

Low Supplier Bargaining Power

- No single supplier who accounts for a large proportion of merchandise that the wholesale club stocks (Cal State LA nd)

- Wholesale clubs are big-volume purchasers

- Dominant firms like Costco and Samrsquos Club possess strong bargaining power due to their reputation in the market

Moderate Buyer Bargaining Power

- Many customers are individuals who buy in small quantities

- Minimal switching cost involved whereas customers can easily switch to other alternative forms of retailers without facing any substantial disadvantages (Cal State LA nd)

- Undifferentiated productsrsquo (Cal State LA nd)

Low Threats of New Entrants High entry barriers that are derived from

- Formidable competitors with firm positions in the market that enjoy the benefits of economies of scale that are not easily accessible by new players (Cal State LA nd)

- Effective competition requires sizeable capital (Cal State LA nd)

- Current playersrsquo popularity remain a major obstacle for newcomers to build up trust and customer relationship (MarketLine20 15)

Financial Performance

Costco 2011 2010 2009 2008Net sales 87048 76255 69889 70977 Membership fees 1867 1691 1533 1506 Total Cost 86476 75869 69645 70514 Operating Income 2439 2077 1777 1969

Findings

2011-Strong revenue growth at 141 and a 174

increase in operational profit ndash Flow through

algorithm

2015 ndash Moderate revenue growth at 32

However Operating profit grow at 126 to

maintain the flow through

Membership is the main contributors to Profit

ultra-low pricing mark-up rate

60151

88915

112640 116199

1626

2439

3624

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Operating Income USD Mil Net Income USD Mil

Free Cash Flow USD Mil Revenue USD Mil

Net Revenue (Secondary axis)

COGS NR 877 SGampANR 96

COGS NR 870 SGampA NR 100

Source 2015 Costco Annual Report

Growth rate 2007 2008 2009 2010 2011 2012 2013 2014 2015Revenue Year over Year 706 1255 -146 913 1407 115 607 712 3163-Year Average 1021 1104 589 657 705 1155 105 82 5445-Year Average 1069 1124 822 805 813 901 773 954 831Operating Income Year over Year -105 224 -974 1688 1743 1312 1066 547 12553-Year Average 51 1012 301 889 74 1579 137 97 9525-Year Average 729 1123 51 71 845 1139 917 1262 1178Net Income Year over Year -185 1847 -1534 1998 122 1689 1931 093 1553-Year Average 706 646 -052 637 446 1632 161 1207 11635-Year Average 912 1221 424 415 579 956 971 1364 1278EPS Year over Year 304 2194 -1453 1822 1301 1788 1902 043 15483-Year Average 861 985 241 72 452 1635 1661 1211 11355-Year Average 987 1356 595 602 749 1042 988 1349 1296

Back up

Profitability Market Performance Efficiency

Return on Equity ROE Net Income Earnings per share EPS Net Profit - Minority Interest Asset Turn-over Net RevenueTotal Equity Number of share Total Asset

Return on Asset ROA Net Income Cashflow per share CFPS CFO - Preference dividens Days in Inventories DII InventoriesTotal Asset Number of share COGS

Gross Profit Margin Gross profit Dividen per share DPS Dividens paid Days of Sales Outstanding

DSO AR

Net Revenue Number of share Net Revenue

Profit Margin EBIT Dividen payout ratio Profit distributed as dividens Cash Collecting Cycle DPO

Net Revenue Total Profit

Cashflow to Sales CFO Price Earning ratio PER Current market price Cash Collecting Cycle CCC

Net Revenue EPS

Liquidity Capital Structure

Current ratio Debt ratio LiabilitiesAsset

Quick Asset ratio Debt to Equity LiabilitiesEquity

Cashflow ratio Equity ratio EquityAsset

Cash from Operating ProfitCurrent Liabilities

x 365 days

x 365 days

Current Asset - InventoriesCurrent Liabilities

Current AssetCurrent Liabilities

188

161 160

127116 120

108

140

2015 2014 2013 2012 2011 2010 2009 2008

ROE

6167

6055 55

49

62

2015 2014 2013 2012 2011 2010 2009

ROA130

126 126

124

126

128 127

124

2015 2014 2013 2012 2011 2010 2009 2008

Gross Profit margin

Profitability Ratios

Liquidity Ratios and Capital Structure

Is there any link among these ratios

Profit Margin

Asset Turn-over

Debt ratio

Gross Profit Margin Expense RatioCurrent Asset

Turn-over

DII DSO DPO

CCC Cash Collecting Cycle

ROA Leverage

ROE

Entities Financial Health

Interest Coverage

httpwwwinvestopediacomvideoplaydupont-analysis

DuPont Analysis

High Rivalry among Existing Competitors

- Fierce competition both from dominant players in wholesale club industry and other forms of retailing businesses (Euromonitor 2015)

- Minimal switching cost involved (Cal State LA nd)

- No notable differentiation between the merchandise offerings of players in the market (Cal State LA nd)

- Competitors compete on pricing and accessibility through frequent new storesrsquo openings (Arthur 2012)

High Threat of Substitute Products

- Various types of retailers are available that can be easily accessible such as online retailers (Euromonitor 2015)

- Products are not differentiated and can be easily purchased at other locations (Cal State LA nd)

- Minimal switching cost especially for members without membership (Cal State LA nd)

Low Supplier Bargaining Power

- No single supplier who accounts for a large proportion of merchandise that the wholesale club stocks (Cal State LA nd)

- Wholesale clubs are big-volume purchasers

- Dominant firms like Costco and Samrsquos Club possess strong bargaining power due to their reputation in the market

Moderate Buyer Bargaining Power

- Many customers are individuals who buy in small quantities

- Minimal switching cost involved whereas customers can easily switch to other alternative forms of retailers without facing any substantial disadvantages (Cal State LA nd)

- Undifferentiated productsrsquo (Cal State LA nd)

Low Threats of New Entrants High entry barriers that are derived from

- Formidable competitors with firm positions in the market that enjoy the benefits of economies of scale that are not easily accessible by new players (Cal State LA nd)

- Effective competition requires sizeable capital (Cal State LA nd)

- Current playersrsquo popularity remain a major obstacle for newcomers to build up trust and customer relationship (MarketLine20 15)

Financial Performance

Costco 2011 2010 2009 2008Net sales 87048 76255 69889 70977 Membership fees 1867 1691 1533 1506 Total Cost 86476 75869 69645 70514 Operating Income 2439 2077 1777 1969

Findings

2011-Strong revenue growth at 141 and a 174

increase in operational profit ndash Flow through

algorithm

2015 ndash Moderate revenue growth at 32

However Operating profit grow at 126 to

maintain the flow through

Membership is the main contributors to Profit

ultra-low pricing mark-up rate

60151

88915

112640 116199

1626

2439

3624

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Operating Income USD Mil Net Income USD Mil

Free Cash Flow USD Mil Revenue USD Mil

Net Revenue (Secondary axis)

COGS NR 877 SGampANR 96

COGS NR 870 SGampA NR 100

Source 2015 Costco Annual Report

Growth rate 2007 2008 2009 2010 2011 2012 2013 2014 2015Revenue Year over Year 706 1255 -146 913 1407 115 607 712 3163-Year Average 1021 1104 589 657 705 1155 105 82 5445-Year Average 1069 1124 822 805 813 901 773 954 831Operating Income Year over Year -105 224 -974 1688 1743 1312 1066 547 12553-Year Average 51 1012 301 889 74 1579 137 97 9525-Year Average 729 1123 51 71 845 1139 917 1262 1178Net Income Year over Year -185 1847 -1534 1998 122 1689 1931 093 1553-Year Average 706 646 -052 637 446 1632 161 1207 11635-Year Average 912 1221 424 415 579 956 971 1364 1278EPS Year over Year 304 2194 -1453 1822 1301 1788 1902 043 15483-Year Average 861 985 241 72 452 1635 1661 1211 11355-Year Average 987 1356 595 602 749 1042 988 1349 1296

Back up

Profitability Market Performance Efficiency

Return on Equity ROE Net Income Earnings per share EPS Net Profit - Minority Interest Asset Turn-over Net RevenueTotal Equity Number of share Total Asset

Return on Asset ROA Net Income Cashflow per share CFPS CFO - Preference dividens Days in Inventories DII InventoriesTotal Asset Number of share COGS

Gross Profit Margin Gross profit Dividen per share DPS Dividens paid Days of Sales Outstanding

DSO AR

Net Revenue Number of share Net Revenue

Profit Margin EBIT Dividen payout ratio Profit distributed as dividens Cash Collecting Cycle DPO

Net Revenue Total Profit

Cashflow to Sales CFO Price Earning ratio PER Current market price Cash Collecting Cycle CCC

Net Revenue EPS

Liquidity Capital Structure

Current ratio Debt ratio LiabilitiesAsset

Quick Asset ratio Debt to Equity LiabilitiesEquity

Cashflow ratio Equity ratio EquityAsset

Cash from Operating ProfitCurrent Liabilities

x 365 days

x 365 days

Current Asset - InventoriesCurrent Liabilities

Current AssetCurrent Liabilities

188

161 160

127116 120

108

140

2015 2014 2013 2012 2011 2010 2009 2008

ROE

6167

6055 55

49

62

2015 2014 2013 2012 2011 2010 2009

ROA130

126 126

124

126

128 127

124

2015 2014 2013 2012 2011 2010 2009 2008

Gross Profit margin

Profitability Ratios

Liquidity Ratios and Capital Structure

Is there any link among these ratios

Profit Margin

Asset Turn-over

Debt ratio

Gross Profit Margin Expense RatioCurrent Asset

Turn-over

DII DSO DPO

CCC Cash Collecting Cycle

ROA Leverage

ROE

Entities Financial Health

Interest Coverage

httpwwwinvestopediacomvideoplaydupont-analysis

DuPont Analysis

High Threat of Substitute Products

- Various types of retailers are available that can be easily accessible such as online retailers (Euromonitor 2015)

- Products are not differentiated and can be easily purchased at other locations (Cal State LA nd)

- Minimal switching cost especially for members without membership (Cal State LA nd)

Low Supplier Bargaining Power

- No single supplier who accounts for a large proportion of merchandise that the wholesale club stocks (Cal State LA nd)

- Wholesale clubs are big-volume purchasers

- Dominant firms like Costco and Samrsquos Club possess strong bargaining power due to their reputation in the market

Moderate Buyer Bargaining Power

- Many customers are individuals who buy in small quantities

- Minimal switching cost involved whereas customers can easily switch to other alternative forms of retailers without facing any substantial disadvantages (Cal State LA nd)

- Undifferentiated productsrsquo (Cal State LA nd)

Low Threats of New Entrants High entry barriers that are derived from

- Formidable competitors with firm positions in the market that enjoy the benefits of economies of scale that are not easily accessible by new players (Cal State LA nd)

- Effective competition requires sizeable capital (Cal State LA nd)

- Current playersrsquo popularity remain a major obstacle for newcomers to build up trust and customer relationship (MarketLine20 15)

Financial Performance

Costco 2011 2010 2009 2008Net sales 87048 76255 69889 70977 Membership fees 1867 1691 1533 1506 Total Cost 86476 75869 69645 70514 Operating Income 2439 2077 1777 1969

Findings

2011-Strong revenue growth at 141 and a 174

increase in operational profit ndash Flow through

algorithm

2015 ndash Moderate revenue growth at 32

However Operating profit grow at 126 to

maintain the flow through

Membership is the main contributors to Profit

ultra-low pricing mark-up rate

60151

88915

112640 116199

1626

2439

3624

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Operating Income USD Mil Net Income USD Mil

Free Cash Flow USD Mil Revenue USD Mil

Net Revenue (Secondary axis)

COGS NR 877 SGampANR 96

COGS NR 870 SGampA NR 100

Source 2015 Costco Annual Report

Growth rate 2007 2008 2009 2010 2011 2012 2013 2014 2015Revenue Year over Year 706 1255 -146 913 1407 115 607 712 3163-Year Average 1021 1104 589 657 705 1155 105 82 5445-Year Average 1069 1124 822 805 813 901 773 954 831Operating Income Year over Year -105 224 -974 1688 1743 1312 1066 547 12553-Year Average 51 1012 301 889 74 1579 137 97 9525-Year Average 729 1123 51 71 845 1139 917 1262 1178Net Income Year over Year -185 1847 -1534 1998 122 1689 1931 093 1553-Year Average 706 646 -052 637 446 1632 161 1207 11635-Year Average 912 1221 424 415 579 956 971 1364 1278EPS Year over Year 304 2194 -1453 1822 1301 1788 1902 043 15483-Year Average 861 985 241 72 452 1635 1661 1211 11355-Year Average 987 1356 595 602 749 1042 988 1349 1296

Back up

Profitability Market Performance Efficiency

Return on Equity ROE Net Income Earnings per share EPS Net Profit - Minority Interest Asset Turn-over Net RevenueTotal Equity Number of share Total Asset

Return on Asset ROA Net Income Cashflow per share CFPS CFO - Preference dividens Days in Inventories DII InventoriesTotal Asset Number of share COGS

Gross Profit Margin Gross profit Dividen per share DPS Dividens paid Days of Sales Outstanding

DSO AR

Net Revenue Number of share Net Revenue

Profit Margin EBIT Dividen payout ratio Profit distributed as dividens Cash Collecting Cycle DPO

Net Revenue Total Profit

Cashflow to Sales CFO Price Earning ratio PER Current market price Cash Collecting Cycle CCC

Net Revenue EPS

Liquidity Capital Structure

Current ratio Debt ratio LiabilitiesAsset

Quick Asset ratio Debt to Equity LiabilitiesEquity

Cashflow ratio Equity ratio EquityAsset

Cash from Operating ProfitCurrent Liabilities

x 365 days

x 365 days

Current Asset - InventoriesCurrent Liabilities

Current AssetCurrent Liabilities

188

161 160

127116 120

108

140

2015 2014 2013 2012 2011 2010 2009 2008

ROE

6167

6055 55

49

62

2015 2014 2013 2012 2011 2010 2009

ROA130

126 126

124

126

128 127

124

2015 2014 2013 2012 2011 2010 2009 2008

Gross Profit margin

Profitability Ratios

Liquidity Ratios and Capital Structure

Is there any link among these ratios

Profit Margin

Asset Turn-over

Debt ratio

Gross Profit Margin Expense RatioCurrent Asset

Turn-over

DII DSO DPO

CCC Cash Collecting Cycle

ROA Leverage

ROE

Entities Financial Health

Interest Coverage

httpwwwinvestopediacomvideoplaydupont-analysis

DuPont Analysis

Low Supplier Bargaining Power

- No single supplier who accounts for a large proportion of merchandise that the wholesale club stocks (Cal State LA nd)

- Wholesale clubs are big-volume purchasers

- Dominant firms like Costco and Samrsquos Club possess strong bargaining power due to their reputation in the market

Moderate Buyer Bargaining Power

- Many customers are individuals who buy in small quantities

- Minimal switching cost involved whereas customers can easily switch to other alternative forms of retailers without facing any substantial disadvantages (Cal State LA nd)

- Undifferentiated productsrsquo (Cal State LA nd)

Low Threats of New Entrants High entry barriers that are derived from

- Formidable competitors with firm positions in the market that enjoy the benefits of economies of scale that are not easily accessible by new players (Cal State LA nd)

- Effective competition requires sizeable capital (Cal State LA nd)

- Current playersrsquo popularity remain a major obstacle for newcomers to build up trust and customer relationship (MarketLine20 15)

Financial Performance

Costco 2011 2010 2009 2008Net sales 87048 76255 69889 70977 Membership fees 1867 1691 1533 1506 Total Cost 86476 75869 69645 70514 Operating Income 2439 2077 1777 1969

Findings

2011-Strong revenue growth at 141 and a 174

increase in operational profit ndash Flow through

algorithm

2015 ndash Moderate revenue growth at 32

However Operating profit grow at 126 to

maintain the flow through

Membership is the main contributors to Profit

ultra-low pricing mark-up rate

60151

88915

112640 116199

1626

2439

3624

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Operating Income USD Mil Net Income USD Mil

Free Cash Flow USD Mil Revenue USD Mil

Net Revenue (Secondary axis)

COGS NR 877 SGampANR 96

COGS NR 870 SGampA NR 100

Source 2015 Costco Annual Report

Growth rate 2007 2008 2009 2010 2011 2012 2013 2014 2015Revenue Year over Year 706 1255 -146 913 1407 115 607 712 3163-Year Average 1021 1104 589 657 705 1155 105 82 5445-Year Average 1069 1124 822 805 813 901 773 954 831Operating Income Year over Year -105 224 -974 1688 1743 1312 1066 547 12553-Year Average 51 1012 301 889 74 1579 137 97 9525-Year Average 729 1123 51 71 845 1139 917 1262 1178Net Income Year over Year -185 1847 -1534 1998 122 1689 1931 093 1553-Year Average 706 646 -052 637 446 1632 161 1207 11635-Year Average 912 1221 424 415 579 956 971 1364 1278EPS Year over Year 304 2194 -1453 1822 1301 1788 1902 043 15483-Year Average 861 985 241 72 452 1635 1661 1211 11355-Year Average 987 1356 595 602 749 1042 988 1349 1296

Back up

Profitability Market Performance Efficiency

Return on Equity ROE Net Income Earnings per share EPS Net Profit - Minority Interest Asset Turn-over Net RevenueTotal Equity Number of share Total Asset

Return on Asset ROA Net Income Cashflow per share CFPS CFO - Preference dividens Days in Inventories DII InventoriesTotal Asset Number of share COGS

Gross Profit Margin Gross profit Dividen per share DPS Dividens paid Days of Sales Outstanding

DSO AR

Net Revenue Number of share Net Revenue

Profit Margin EBIT Dividen payout ratio Profit distributed as dividens Cash Collecting Cycle DPO

Net Revenue Total Profit

Cashflow to Sales CFO Price Earning ratio PER Current market price Cash Collecting Cycle CCC

Net Revenue EPS

Liquidity Capital Structure

Current ratio Debt ratio LiabilitiesAsset

Quick Asset ratio Debt to Equity LiabilitiesEquity

Cashflow ratio Equity ratio EquityAsset

Cash from Operating ProfitCurrent Liabilities

x 365 days

x 365 days

Current Asset - InventoriesCurrent Liabilities

Current AssetCurrent Liabilities

188

161 160

127116 120

108

140

2015 2014 2013 2012 2011 2010 2009 2008

ROE

6167

6055 55

49

62

2015 2014 2013 2012 2011 2010 2009

ROA130

126 126

124

126

128 127

124

2015 2014 2013 2012 2011 2010 2009 2008

Gross Profit margin

Profitability Ratios

Liquidity Ratios and Capital Structure

Is there any link among these ratios

Profit Margin

Asset Turn-over

Debt ratio

Gross Profit Margin Expense RatioCurrent Asset

Turn-over

DII DSO DPO

CCC Cash Collecting Cycle

ROA Leverage

ROE

Entities Financial Health

Interest Coverage

httpwwwinvestopediacomvideoplaydupont-analysis

DuPont Analysis

Moderate Buyer Bargaining Power

- Many customers are individuals who buy in small quantities

- Minimal switching cost involved whereas customers can easily switch to other alternative forms of retailers without facing any substantial disadvantages (Cal State LA nd)

- Undifferentiated productsrsquo (Cal State LA nd)

Low Threats of New Entrants High entry barriers that are derived from

- Formidable competitors with firm positions in the market that enjoy the benefits of economies of scale that are not easily accessible by new players (Cal State LA nd)

- Effective competition requires sizeable capital (Cal State LA nd)

- Current playersrsquo popularity remain a major obstacle for newcomers to build up trust and customer relationship (MarketLine20 15)

Financial Performance

Costco 2011 2010 2009 2008Net sales 87048 76255 69889 70977 Membership fees 1867 1691 1533 1506 Total Cost 86476 75869 69645 70514 Operating Income 2439 2077 1777 1969

Findings

2011-Strong revenue growth at 141 and a 174

increase in operational profit ndash Flow through

algorithm

2015 ndash Moderate revenue growth at 32

However Operating profit grow at 126 to

maintain the flow through

Membership is the main contributors to Profit

ultra-low pricing mark-up rate

60151

88915

112640 116199

1626

2439

3624

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Operating Income USD Mil Net Income USD Mil

Free Cash Flow USD Mil Revenue USD Mil

Net Revenue (Secondary axis)

COGS NR 877 SGampANR 96

COGS NR 870 SGampA NR 100

Source 2015 Costco Annual Report

Growth rate 2007 2008 2009 2010 2011 2012 2013 2014 2015Revenue Year over Year 706 1255 -146 913 1407 115 607 712 3163-Year Average 1021 1104 589 657 705 1155 105 82 5445-Year Average 1069 1124 822 805 813 901 773 954 831Operating Income Year over Year -105 224 -974 1688 1743 1312 1066 547 12553-Year Average 51 1012 301 889 74 1579 137 97 9525-Year Average 729 1123 51 71 845 1139 917 1262 1178Net Income Year over Year -185 1847 -1534 1998 122 1689 1931 093 1553-Year Average 706 646 -052 637 446 1632 161 1207 11635-Year Average 912 1221 424 415 579 956 971 1364 1278EPS Year over Year 304 2194 -1453 1822 1301 1788 1902 043 15483-Year Average 861 985 241 72 452 1635 1661 1211 11355-Year Average 987 1356 595 602 749 1042 988 1349 1296

Back up

Profitability Market Performance Efficiency

Return on Equity ROE Net Income Earnings per share EPS Net Profit - Minority Interest Asset Turn-over Net RevenueTotal Equity Number of share Total Asset

Return on Asset ROA Net Income Cashflow per share CFPS CFO - Preference dividens Days in Inventories DII InventoriesTotal Asset Number of share COGS

Gross Profit Margin Gross profit Dividen per share DPS Dividens paid Days of Sales Outstanding

DSO AR

Net Revenue Number of share Net Revenue

Profit Margin EBIT Dividen payout ratio Profit distributed as dividens Cash Collecting Cycle DPO

Net Revenue Total Profit

Cashflow to Sales CFO Price Earning ratio PER Current market price Cash Collecting Cycle CCC

Net Revenue EPS

Liquidity Capital Structure

Current ratio Debt ratio LiabilitiesAsset

Quick Asset ratio Debt to Equity LiabilitiesEquity

Cashflow ratio Equity ratio EquityAsset

Cash from Operating ProfitCurrent Liabilities

x 365 days

x 365 days

Current Asset - InventoriesCurrent Liabilities

Current AssetCurrent Liabilities

188

161 160

127116 120

108

140

2015 2014 2013 2012 2011 2010 2009 2008

ROE

6167

6055 55

49

62

2015 2014 2013 2012 2011 2010 2009

ROA130

126 126

124

126

128 127

124

2015 2014 2013 2012 2011 2010 2009 2008

Gross Profit margin

Profitability Ratios

Liquidity Ratios and Capital Structure

Is there any link among these ratios

Profit Margin

Asset Turn-over

Debt ratio

Gross Profit Margin Expense RatioCurrent Asset

Turn-over

DII DSO DPO

CCC Cash Collecting Cycle

ROA Leverage

ROE

Entities Financial Health

Interest Coverage

httpwwwinvestopediacomvideoplaydupont-analysis

DuPont Analysis

Low Threats of New Entrants High entry barriers that are derived from

- Formidable competitors with firm positions in the market that enjoy the benefits of economies of scale that are not easily accessible by new players (Cal State LA nd)

- Effective competition requires sizeable capital (Cal State LA nd)

- Current playersrsquo popularity remain a major obstacle for newcomers to build up trust and customer relationship (MarketLine20 15)

Financial Performance

Costco 2011 2010 2009 2008Net sales 87048 76255 69889 70977 Membership fees 1867 1691 1533 1506 Total Cost 86476 75869 69645 70514 Operating Income 2439 2077 1777 1969

Findings

2011-Strong revenue growth at 141 and a 174

increase in operational profit ndash Flow through

algorithm

2015 ndash Moderate revenue growth at 32

However Operating profit grow at 126 to

maintain the flow through

Membership is the main contributors to Profit

ultra-low pricing mark-up rate

60151

88915

112640 116199

1626

2439

3624

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Operating Income USD Mil Net Income USD Mil

Free Cash Flow USD Mil Revenue USD Mil

Net Revenue (Secondary axis)

COGS NR 877 SGampANR 96

COGS NR 870 SGampA NR 100

Source 2015 Costco Annual Report

Growth rate 2007 2008 2009 2010 2011 2012 2013 2014 2015Revenue Year over Year 706 1255 -146 913 1407 115 607 712 3163-Year Average 1021 1104 589 657 705 1155 105 82 5445-Year Average 1069 1124 822 805 813 901 773 954 831Operating Income Year over Year -105 224 -974 1688 1743 1312 1066 547 12553-Year Average 51 1012 301 889 74 1579 137 97 9525-Year Average 729 1123 51 71 845 1139 917 1262 1178Net Income Year over Year -185 1847 -1534 1998 122 1689 1931 093 1553-Year Average 706 646 -052 637 446 1632 161 1207 11635-Year Average 912 1221 424 415 579 956 971 1364 1278EPS Year over Year 304 2194 -1453 1822 1301 1788 1902 043 15483-Year Average 861 985 241 72 452 1635 1661 1211 11355-Year Average 987 1356 595 602 749 1042 988 1349 1296

Back up

Profitability Market Performance Efficiency

Return on Equity ROE Net Income Earnings per share EPS Net Profit - Minority Interest Asset Turn-over Net RevenueTotal Equity Number of share Total Asset

Return on Asset ROA Net Income Cashflow per share CFPS CFO - Preference dividens Days in Inventories DII InventoriesTotal Asset Number of share COGS

Gross Profit Margin Gross profit Dividen per share DPS Dividens paid Days of Sales Outstanding

DSO AR

Net Revenue Number of share Net Revenue

Profit Margin EBIT Dividen payout ratio Profit distributed as dividens Cash Collecting Cycle DPO

Net Revenue Total Profit

Cashflow to Sales CFO Price Earning ratio PER Current market price Cash Collecting Cycle CCC

Net Revenue EPS

Liquidity Capital Structure

Current ratio Debt ratio LiabilitiesAsset

Quick Asset ratio Debt to Equity LiabilitiesEquity

Cashflow ratio Equity ratio EquityAsset

Cash from Operating ProfitCurrent Liabilities

x 365 days

x 365 days

Current Asset - InventoriesCurrent Liabilities

Current AssetCurrent Liabilities

188

161 160

127116 120

108

140

2015 2014 2013 2012 2011 2010 2009 2008

ROE

6167

6055 55

49

62

2015 2014 2013 2012 2011 2010 2009

ROA130

126 126

124

126

128 127

124

2015 2014 2013 2012 2011 2010 2009 2008

Gross Profit margin

Profitability Ratios

Liquidity Ratios and Capital Structure

Is there any link among these ratios

Profit Margin

Asset Turn-over

Debt ratio

Gross Profit Margin Expense RatioCurrent Asset

Turn-over

DII DSO DPO

CCC Cash Collecting Cycle

ROA Leverage

ROE

Entities Financial Health

Interest Coverage

httpwwwinvestopediacomvideoplaydupont-analysis

DuPont Analysis

Financial Performance

Costco 2011 2010 2009 2008Net sales 87048 76255 69889 70977 Membership fees 1867 1691 1533 1506 Total Cost 86476 75869 69645 70514 Operating Income 2439 2077 1777 1969

Findings

2011-Strong revenue growth at 141 and a 174

increase in operational profit ndash Flow through

algorithm

2015 ndash Moderate revenue growth at 32

However Operating profit grow at 126 to

maintain the flow through

Membership is the main contributors to Profit

ultra-low pricing mark-up rate

60151

88915

112640 116199

1626

2439

3624

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Operating Income USD Mil Net Income USD Mil

Free Cash Flow USD Mil Revenue USD Mil

Net Revenue (Secondary axis)

COGS NR 877 SGampANR 96

COGS NR 870 SGampA NR 100

Source 2015 Costco Annual Report

Growth rate 2007 2008 2009 2010 2011 2012 2013 2014 2015Revenue Year over Year 706 1255 -146 913 1407 115 607 712 3163-Year Average 1021 1104 589 657 705 1155 105 82 5445-Year Average 1069 1124 822 805 813 901 773 954 831Operating Income Year over Year -105 224 -974 1688 1743 1312 1066 547 12553-Year Average 51 1012 301 889 74 1579 137 97 9525-Year Average 729 1123 51 71 845 1139 917 1262 1178Net Income Year over Year -185 1847 -1534 1998 122 1689 1931 093 1553-Year Average 706 646 -052 637 446 1632 161 1207 11635-Year Average 912 1221 424 415 579 956 971 1364 1278EPS Year over Year 304 2194 -1453 1822 1301 1788 1902 043 15483-Year Average 861 985 241 72 452 1635 1661 1211 11355-Year Average 987 1356 595 602 749 1042 988 1349 1296

Back up

Profitability Market Performance Efficiency

Return on Equity ROE Net Income Earnings per share EPS Net Profit - Minority Interest Asset Turn-over Net RevenueTotal Equity Number of share Total Asset

Return on Asset ROA Net Income Cashflow per share CFPS CFO - Preference dividens Days in Inventories DII InventoriesTotal Asset Number of share COGS

Gross Profit Margin Gross profit Dividen per share DPS Dividens paid Days of Sales Outstanding

DSO AR

Net Revenue Number of share Net Revenue

Profit Margin EBIT Dividen payout ratio Profit distributed as dividens Cash Collecting Cycle DPO

Net Revenue Total Profit

Cashflow to Sales CFO Price Earning ratio PER Current market price Cash Collecting Cycle CCC

Net Revenue EPS

Liquidity Capital Structure

Current ratio Debt ratio LiabilitiesAsset

Quick Asset ratio Debt to Equity LiabilitiesEquity

Cashflow ratio Equity ratio EquityAsset

Cash from Operating ProfitCurrent Liabilities

x 365 days

x 365 days

Current Asset - InventoriesCurrent Liabilities

Current AssetCurrent Liabilities

188

161 160

127116 120

108

140

2015 2014 2013 2012 2011 2010 2009 2008

ROE

6167

6055 55

49

62

2015 2014 2013 2012 2011 2010 2009

ROA130

126 126

124

126

128 127

124

2015 2014 2013 2012 2011 2010 2009 2008

Gross Profit margin

Profitability Ratios

Liquidity Ratios and Capital Structure

Is there any link among these ratios

Profit Margin

Asset Turn-over

Debt ratio

Gross Profit Margin Expense RatioCurrent Asset

Turn-over

DII DSO DPO

CCC Cash Collecting Cycle

ROA Leverage

ROE

Entities Financial Health

Interest Coverage

httpwwwinvestopediacomvideoplaydupont-analysis

DuPont Analysis

Costco 2011 2010 2009 2008Net sales 87048 76255 69889 70977 Membership fees 1867 1691 1533 1506 Total Cost 86476 75869 69645 70514 Operating Income 2439 2077 1777 1969

Findings

2011-Strong revenue growth at 141 and a 174

increase in operational profit ndash Flow through

algorithm

2015 ndash Moderate revenue growth at 32

However Operating profit grow at 126 to

maintain the flow through

Membership is the main contributors to Profit

ultra-low pricing mark-up rate

60151

88915

112640 116199

1626

2439

3624

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Operating Income USD Mil Net Income USD Mil

Free Cash Flow USD Mil Revenue USD Mil

Net Revenue (Secondary axis)

COGS NR 877 SGampANR 96

COGS NR 870 SGampA NR 100

Source 2015 Costco Annual Report

Growth rate 2007 2008 2009 2010 2011 2012 2013 2014 2015Revenue Year over Year 706 1255 -146 913 1407 115 607 712 3163-Year Average 1021 1104 589 657 705 1155 105 82 5445-Year Average 1069 1124 822 805 813 901 773 954 831Operating Income Year over Year -105 224 -974 1688 1743 1312 1066 547 12553-Year Average 51 1012 301 889 74 1579 137 97 9525-Year Average 729 1123 51 71 845 1139 917 1262 1178Net Income Year over Year -185 1847 -1534 1998 122 1689 1931 093 1553-Year Average 706 646 -052 637 446 1632 161 1207 11635-Year Average 912 1221 424 415 579 956 971 1364 1278EPS Year over Year 304 2194 -1453 1822 1301 1788 1902 043 15483-Year Average 861 985 241 72 452 1635 1661 1211 11355-Year Average 987 1356 595 602 749 1042 988 1349 1296

Back up

Profitability Market Performance Efficiency

Return on Equity ROE Net Income Earnings per share EPS Net Profit - Minority Interest Asset Turn-over Net RevenueTotal Equity Number of share Total Asset

Return on Asset ROA Net Income Cashflow per share CFPS CFO - Preference dividens Days in Inventories DII InventoriesTotal Asset Number of share COGS

Gross Profit Margin Gross profit Dividen per share DPS Dividens paid Days of Sales Outstanding

DSO AR

Net Revenue Number of share Net Revenue

Profit Margin EBIT Dividen payout ratio Profit distributed as dividens Cash Collecting Cycle DPO

Net Revenue Total Profit

Cashflow to Sales CFO Price Earning ratio PER Current market price Cash Collecting Cycle CCC

Net Revenue EPS

Liquidity Capital Structure

Current ratio Debt ratio LiabilitiesAsset

Quick Asset ratio Debt to Equity LiabilitiesEquity

Cashflow ratio Equity ratio EquityAsset

Cash from Operating ProfitCurrent Liabilities

x 365 days

x 365 days

Current Asset - InventoriesCurrent Liabilities

Current AssetCurrent Liabilities

188

161 160

127116 120

108

140

2015 2014 2013 2012 2011 2010 2009 2008

ROE

6167

6055 55

49

62

2015 2014 2013 2012 2011 2010 2009

ROA130

126 126

124

126

128 127

124

2015 2014 2013 2012 2011 2010 2009 2008

Gross Profit margin

Profitability Ratios

Liquidity Ratios and Capital Structure

Is there any link among these ratios

Profit Margin

Asset Turn-over

Debt ratio

Gross Profit Margin Expense RatioCurrent Asset

Turn-over

DII DSO DPO

CCC Cash Collecting Cycle

ROA Leverage

ROE

Entities Financial Health

Interest Coverage

httpwwwinvestopediacomvideoplaydupont-analysis

DuPont Analysis

Source 2015 Costco Annual Report

Growth rate 2007 2008 2009 2010 2011 2012 2013 2014 2015Revenue Year over Year 706 1255 -146 913 1407 115 607 712 3163-Year Average 1021 1104 589 657 705 1155 105 82 5445-Year Average 1069 1124 822 805 813 901 773 954 831Operating Income Year over Year -105 224 -974 1688 1743 1312 1066 547 12553-Year Average 51 1012 301 889 74 1579 137 97 9525-Year Average 729 1123 51 71 845 1139 917 1262 1178Net Income Year over Year -185 1847 -1534 1998 122 1689 1931 093 1553-Year Average 706 646 -052 637 446 1632 161 1207 11635-Year Average 912 1221 424 415 579 956 971 1364 1278EPS Year over Year 304 2194 -1453 1822 1301 1788 1902 043 15483-Year Average 861 985 241 72 452 1635 1661 1211 11355-Year Average 987 1356 595 602 749 1042 988 1349 1296

Back up

Profitability Market Performance Efficiency

Return on Equity ROE Net Income Earnings per share EPS Net Profit - Minority Interest Asset Turn-over Net RevenueTotal Equity Number of share Total Asset

Return on Asset ROA Net Income Cashflow per share CFPS CFO - Preference dividens Days in Inventories DII InventoriesTotal Asset Number of share COGS

Gross Profit Margin Gross profit Dividen per share DPS Dividens paid Days of Sales Outstanding

DSO AR

Net Revenue Number of share Net Revenue

Profit Margin EBIT Dividen payout ratio Profit distributed as dividens Cash Collecting Cycle DPO

Net Revenue Total Profit

Cashflow to Sales CFO Price Earning ratio PER Current market price Cash Collecting Cycle CCC

Net Revenue EPS

Liquidity Capital Structure

Current ratio Debt ratio LiabilitiesAsset

Quick Asset ratio Debt to Equity LiabilitiesEquity

Cashflow ratio Equity ratio EquityAsset

Cash from Operating ProfitCurrent Liabilities

x 365 days

x 365 days

Current Asset - InventoriesCurrent Liabilities

Current AssetCurrent Liabilities

188

161 160

127116 120

108

140

2015 2014 2013 2012 2011 2010 2009 2008

ROE

6167

6055 55

49

62

2015 2014 2013 2012 2011 2010 2009

ROA130

126 126

124

126

128 127

124

2015 2014 2013 2012 2011 2010 2009 2008

Gross Profit margin

Profitability Ratios

Liquidity Ratios and Capital Structure

Is there any link among these ratios

Profit Margin

Asset Turn-over

Debt ratio

Gross Profit Margin Expense RatioCurrent Asset

Turn-over

DII DSO DPO

CCC Cash Collecting Cycle

ROA Leverage

ROE

Entities Financial Health

Interest Coverage

httpwwwinvestopediacomvideoplaydupont-analysis

DuPont Analysis

Growth rate 2007 2008 2009 2010 2011 2012 2013 2014 2015Revenue Year over Year 706 1255 -146 913 1407 115 607 712 3163-Year Average 1021 1104 589 657 705 1155 105 82 5445-Year Average 1069 1124 822 805 813 901 773 954 831Operating Income Year over Year -105 224 -974 1688 1743 1312 1066 547 12553-Year Average 51 1012 301 889 74 1579 137 97 9525-Year Average 729 1123 51 71 845 1139 917 1262 1178Net Income Year over Year -185 1847 -1534 1998 122 1689 1931 093 1553-Year Average 706 646 -052 637 446 1632 161 1207 11635-Year Average 912 1221 424 415 579 956 971 1364 1278EPS Year over Year 304 2194 -1453 1822 1301 1788 1902 043 15483-Year Average 861 985 241 72 452 1635 1661 1211 11355-Year Average 987 1356 595 602 749 1042 988 1349 1296

Back up

Profitability Market Performance Efficiency

Return on Equity ROE Net Income Earnings per share EPS Net Profit - Minority Interest Asset Turn-over Net RevenueTotal Equity Number of share Total Asset

Return on Asset ROA Net Income Cashflow per share CFPS CFO - Preference dividens Days in Inventories DII InventoriesTotal Asset Number of share COGS

Gross Profit Margin Gross profit Dividen per share DPS Dividens paid Days of Sales Outstanding

DSO AR

Net Revenue Number of share Net Revenue

Profit Margin EBIT Dividen payout ratio Profit distributed as dividens Cash Collecting Cycle DPO

Net Revenue Total Profit

Cashflow to Sales CFO Price Earning ratio PER Current market price Cash Collecting Cycle CCC

Net Revenue EPS

Liquidity Capital Structure

Current ratio Debt ratio LiabilitiesAsset

Quick Asset ratio Debt to Equity LiabilitiesEquity

Cashflow ratio Equity ratio EquityAsset

Cash from Operating ProfitCurrent Liabilities

x 365 days

x 365 days

Current Asset - InventoriesCurrent Liabilities

Current AssetCurrent Liabilities

188

161 160

127116 120

108

140

2015 2014 2013 2012 2011 2010 2009 2008

ROE

6167

6055 55

49

62

2015 2014 2013 2012 2011 2010 2009

ROA130

126 126

124

126

128 127

124

2015 2014 2013 2012 2011 2010 2009 2008

Gross Profit margin

Profitability Ratios

Liquidity Ratios and Capital Structure

Is there any link among these ratios

Profit Margin

Asset Turn-over

Debt ratio

Gross Profit Margin Expense RatioCurrent Asset

Turn-over

DII DSO DPO

CCC Cash Collecting Cycle

ROA Leverage

ROE

Entities Financial Health

Interest Coverage

httpwwwinvestopediacomvideoplaydupont-analysis

DuPont Analysis

Profitability Market Performance Efficiency

Return on Equity ROE Net Income Earnings per share EPS Net Profit - Minority Interest Asset Turn-over Net RevenueTotal Equity Number of share Total Asset

Return on Asset ROA Net Income Cashflow per share CFPS CFO - Preference dividens Days in Inventories DII InventoriesTotal Asset Number of share COGS

Gross Profit Margin Gross profit Dividen per share DPS Dividens paid Days of Sales Outstanding

DSO AR

Net Revenue Number of share Net Revenue

Profit Margin EBIT Dividen payout ratio Profit distributed as dividens Cash Collecting Cycle DPO

Net Revenue Total Profit

Cashflow to Sales CFO Price Earning ratio PER Current market price Cash Collecting Cycle CCC

Net Revenue EPS

Liquidity Capital Structure

Current ratio Debt ratio LiabilitiesAsset

Quick Asset ratio Debt to Equity LiabilitiesEquity

Cashflow ratio Equity ratio EquityAsset

Cash from Operating ProfitCurrent Liabilities

x 365 days

x 365 days

Current Asset - InventoriesCurrent Liabilities

Current AssetCurrent Liabilities

188

161 160

127116 120

108

140

2015 2014 2013 2012 2011 2010 2009 2008

ROE

6167

6055 55

49

62

2015 2014 2013 2012 2011 2010 2009

ROA130

126 126

124

126

128 127

124

2015 2014 2013 2012 2011 2010 2009 2008

Gross Profit margin

Profitability Ratios

Liquidity Ratios and Capital Structure

Is there any link among these ratios

Profit Margin

Asset Turn-over

Debt ratio

Gross Profit Margin Expense RatioCurrent Asset

Turn-over

DII DSO DPO

CCC Cash Collecting Cycle

ROA Leverage

ROE

Entities Financial Health

Interest Coverage

httpwwwinvestopediacomvideoplaydupont-analysis

DuPont Analysis

188

161 160

127116 120

108

140

2015 2014 2013 2012 2011 2010 2009 2008

ROE

6167

6055 55

49

62

2015 2014 2013 2012 2011 2010 2009

ROA130

126 126

124

126

128 127

124

2015 2014 2013 2012 2011 2010 2009 2008

Gross Profit margin

Profitability Ratios

Liquidity Ratios and Capital Structure

Is there any link among these ratios

Profit Margin

Asset Turn-over

Debt ratio

Gross Profit Margin Expense RatioCurrent Asset

Turn-over

DII DSO DPO

CCC Cash Collecting Cycle

ROA Leverage

ROE

Entities Financial Health

Interest Coverage

httpwwwinvestopediacomvideoplaydupont-analysis

DuPont Analysis

Liquidity Ratios and Capital Structure

Is there any link among these ratios

Profit Margin

Asset Turn-over

Debt ratio

Gross Profit Margin Expense RatioCurrent Asset

Turn-over

DII DSO DPO

CCC Cash Collecting Cycle

ROA Leverage

ROE

Entities Financial Health

Interest Coverage

httpwwwinvestopediacomvideoplaydupont-analysis

DuPont Analysis

Is there any link among these ratios

Profit Margin

Asset Turn-over

Debt ratio

Gross Profit Margin Expense RatioCurrent Asset

Turn-over

DII DSO DPO

CCC Cash Collecting Cycle

ROA Leverage

ROE

Entities Financial Health

Interest Coverage

httpwwwinvestopediacomvideoplaydupont-analysis

DuPont Analysis

Profit Margin

Asset Turn-over

Debt ratio

Gross Profit Margin Expense RatioCurrent Asset

Turn-over

DII DSO DPO

CCC Cash Collecting Cycle

ROA Leverage

ROE

Entities Financial Health

Interest Coverage

httpwwwinvestopediacomvideoplaydupont-analysis

DuPont Analysis

>

2009 2010 2011 2011Costco -15 91 141 125Sams Club 82 -04 35 129BJ 112 16 68 -71

201055-8114

200910701133

7248 7142 7795

8892

4434 4798 4781 4946

901 1003 1019 1088

2008 2009 2010 2011

Net Revenue - Bil US$Costco Sams Club BJ

7248 7142 7795

8892

4434 4798 4781 4946

901 1003 1019 1088

2008 2009 2010 2011

Operating Profit - Bil US$Costco Sams Club BJ

Costco ndash Samrsquos Club - BJ

Costco Wholesale Competition

Costco has not only wholesale competitors but also retailers

Two main wholesale competitors are Samrsquos Club BJrsquos Wholesale Club

What make they are different competitors

Costco Samrsquos Club BJrsquos Wholesale Club

Position High-traffic routes in or near upscale suburb

Near Wal-Mart Near Costco or Samrsquos Club (within 10 miles)

Items 3600 4000 7000

Treasure - hunt Treasure - hunt items are upscale

Treasure - hunt items are less upscale but cheaper than Costcorsquos

Price Lowest price Low price Low price

Costco Samrsquos Club BJrsquos Wholesale Club

Added service (pharmacy optic gasoline)

Beside BJ also has some special services such as vacation and travel package garden and storage sheds patio and sun rooms

Social Media Website Facebook Twitter

Blogs which be operated by customers to share their experience

Website Facebook Twitter

Website Facebook Twitter

Costco Samrsquos Club BJrsquos Wholesale Club Customer Care Service(Returns Refunds amp Exchange Policy)

Payment method approve

Store quality

90 days from the purchase date to return your order for a full refund

All of payment cards which include both Bill Me Later and American Express be approved in Costco

Many customers feel Costco is much cleaner than BJrsquos and prefer to shop at Costco for bulk items

Electronic device (90 days) other goods (30 days)

American Express Card not be approved

Clear

Electronic device (90 days) other goods (30 days)

One of the payment methods that is not accepted at BJs Wholesale Club at this time is Bill Me Later

Less Clean

Costco Samrsquos Club BJrsquos Wholesale Club

Website Security amp Safety Transfer Money

Delivery method

Use security and safety transfer money by third party ndashMcAfee

Only tires can be shipped to Costco stores for collections and not any others

The rates vary with service required using UPS for its delivery services ensures smooth and timely delivery of products ordered

Use security and safety transfer money by themselves

Depend on size and weight of good they will choose shipment method by themselves

Use security and safety transfer money by themselves

BJrsquos Wholesale Club cannot ship packages to PO Boxes

Costco Samrsquos Club BJrsquos Wholesale Club

Membership bull Business members fee of $55 (include a supplemental card) bull Individual members fee of $55 (include a supplemental card) bull Executive members fee of $100 Save 2 on purchases save on various service offered by Costco and third-party company such as insurance loan real estate and mortgage servicebull Accept goods returns

bullBusiness members fee of $35 (include a supplemental card) bull Individual members fee of $40 (include a supplemental card) bull Premium members fee of $100 (including health care insurance personal and financial service recreational vehicle program) Cash back 2

bullBusiness members fee of $50(include a supplemental card) bull Individual members fee of $50 (include a supplemental card) bullRebate 2bullAccept goods returns

Competitive Advantages

Costcorsquos wholesale is better than Samrsquos Club amp BJrsquos Wholesale

1 Low Price2 Good customer service3 Good Customer care4 Effective Social network

Costco have winning strategy to focus on customer need (Lowest price) and try to satisfy them (customer care amp service)

Costcorsquos Prices

Costco Prices are Lowest

(they always try to make try to make price is lower than their rivals)

1 Focusing on customer need (Business strategy)

(Buy quality product with the best price to save money)

2 Try to improve customer care amp service better than other rival ndash payment delivery methodshellip)

Compensation Policies

Overview - In 2015 Costco employs about 205000 employees (88000 are part-time employees and 117000 full-time employees) (Statista 2015)

-Ranked as second best employer in the US (Clare 2015)

-The companyrsquos turnover rate is kept at 5 for employees who have worked at Costco for more than a year (Aaron 2014)

Overview- Craig Jelinek ndash the CEO of Costco believes that a more rewarding workplace will eventually lower employee turnover rate boost their productivity and on-job performance (Aaron 2014)

Compensation Practices Comparison

Costco Samrsquos Club BJrsquos

Pay rate Average of $20hour (Aaron 2014) $9 ndash 13hour (PayScale nd) $9 ndash 13hour (PayScale nd)

Health-based benefits

Medical Dental Mental health and substance abuse Pharmacy Vision and hearing aid coverage Personal wellness tools care network behavioral health (Costco 2016)

Consumer-directed health plans Vision Dental Counseling services Illness protection (Walmart Careers 2016)

Medical Dental Employee assistance program (BJrsquos Careers 2016)

Financial-based benefits

401(k) retirement plan Stock purchase plan Money management information employee self-service (Costco 2016)

401(k) retirement plan Stock purchase plan Discount cards when buying at Walmart and Samrsquos club (Walmart Careers 2016)

401(k) retirement plan (BJrsquos Careers 2016)

Other benefits Reimbursement account Various forms of insurance(Costco 2016)

Various forms of insurance (Walmart Careers 2016)

Flexible spending account Various forms of insurance (BJrsquos Careers 2016)

COSTCO VS SAMrsquoS CLUB VS BJrsquoS

SWOT Analysis

STRENGTHS WEAKNESSES- Well-perceived private label brand (Kirkland

Signature) (Euromonitor 2015)

- Available gasoline and other additional services encourage more frequent shopping (MartketLine 2015)

- Higher market coverage (9 markets) compared to Samrsquos Club (only 4) (Euromonitor 2015)

- Low cost operating model (MarketLine 2015)

- Healthy financial position (Euromonitor 2015)

- Dependence on North America markets (MarketLine 2015)

- Limited product choice (only 3700 products) (MartketLine 2015)

SWOT AnalysisOPPORTUNITIES THREATS- International expansion enable Costco to access to a

large customer base(Euromonitor 2015)

- Multichannel retailing enables Costco to widen its reach (Euromonitor 2015)

- Face fierce competition from various types of retailers (Euromonitor 2015)

- Catered to middle-high income class but faces challenges in US as such class proportion continues to decrease (Euromonitor 2015)

- Low customersrsquo loyalty

Recommendations Recommendation 1 Focus in developing internet retailing and multi-channel strategies

- Capitalize on its strong financial position to invest in creating new retailing channels

- Allow to minimize threats posed by other retailing channels

- Stronger online presence enables Costco to reach a wider customer base

Recommendations Recommendation 2 Global expansions into untapped markets

- Reduce Costcorsquos dependence on North America market

- Partnerships with other Internet retailers can allow Costco to enter untapped markets without physical presence

Revision

1 The process of crafting and executing a companyrsquos strategy consists ofA Developing a Strategic missionB Setting ObjectivesC Monitoring and corrective action to short-term fix issuesD All are correct

Revision2 To improve Cash Collection Cycle the company should

A Extend DSO Shorter DPOB Extend DSO Extend DPOC Shorter DSO Shorter DPOD Shorter DSO Extend DPO

Revision

3 Four main process in developing Balanced Scorecard

A Translating the vision Communicating and linking Business planning Feedback and learning

B Translating the vision Business planning Communicating and linkingF eedback and learning

C Develop mission Business planning Communicating and linking Feedback and learning

D Develop mission Communicating and linking Business planning Feedback and learning

Revision4 Which statement is TRUE

A A company achieves competitive advantage when an attractive number of Buyers are drawn to purchase its products or services rather than those of competitors

B A company achieves sustainable advantage when the basis for buyer references for its product offering relative to the offerings of its rivals is durable despite competitorsrsquo efforts to nullify or overcome the appeal of its product offering

C Both are TRUED Both are FALSE

References Euromonitor International 2015 Costco Wholesale Corp in Retailing (World) Retrieved January 25 2016 from httpwwweuromonitorcom

Euromonitor International 2016 Costco Wholesale Canada Ltd in Retailing (Canada) Retrieved January 25 2016 from httpwwweuromonitorcom

MarketLine 2015 Costco Wholesale Corporation Retrieved January 24 2016 from httpwwwmarketlinecom

Statista 2015 Number of Costco employees worldwide from 2011 ndash 2015 (in 1000s) Statista ndash The Statistics Portal Retrieved from httpwwwstatistacomstatistics284430costco-number-of-employees-worldwide-2011-2013

Aaron T (2014 October 23) Why Costco Pays Its Retail Employees $20 An Hour Business Insider Retrieved from httpwwwbusinessinsidercomcostco-pays-retail-employees-20-an-hour-2014-10

2009 2010 2011 2011Costco -15 91 141 125Sams Club 82 -04 35 129BJ 112 16 68 -71

201055-8114

200910701133

7248 7142 7795

8892

4434 4798 4781 4946

901 1003 1019 1088

2008 2009 2010 2011

Net Revenue - Bil US$Costco Sams Club BJ

7248 7142 7795

8892

4434 4798 4781 4946

901 1003 1019 1088

2008 2009 2010 2011

Operating Profit - Bil US$Costco Sams Club BJ

Costco ndash Samrsquos Club - BJ

Costco Wholesale Competition

Costco has not only wholesale competitors but also retailers

Two main wholesale competitors are Samrsquos Club BJrsquos Wholesale Club

What make they are different competitors

Costco Samrsquos Club BJrsquos Wholesale Club

Position High-traffic routes in or near upscale suburb

Near Wal-Mart Near Costco or Samrsquos Club (within 10 miles)

Items 3600 4000 7000

Treasure - hunt Treasure - hunt items are upscale

Treasure - hunt items are less upscale but cheaper than Costcorsquos

Price Lowest price Low price Low price

Costco Samrsquos Club BJrsquos Wholesale Club

Added service (pharmacy optic gasoline)

Beside BJ also has some special services such as vacation and travel package garden and storage sheds patio and sun rooms

Social Media Website Facebook Twitter

Blogs which be operated by customers to share their experience

Website Facebook Twitter

Website Facebook Twitter

Costco Samrsquos Club BJrsquos Wholesale Club Customer Care Service(Returns Refunds amp Exchange Policy)

Payment method approve

Store quality

90 days from the purchase date to return your order for a full refund

All of payment cards which include both Bill Me Later and American Express be approved in Costco

Many customers feel Costco is much cleaner than BJrsquos and prefer to shop at Costco for bulk items

Electronic device (90 days) other goods (30 days)

American Express Card not be approved

Clear

Electronic device (90 days) other goods (30 days)

One of the payment methods that is not accepted at BJs Wholesale Club at this time is Bill Me Later

Less Clean

Costco Samrsquos Club BJrsquos Wholesale Club

Website Security amp Safety Transfer Money

Delivery method

Use security and safety transfer money by third party ndashMcAfee

Only tires can be shipped to Costco stores for collections and not any others

The rates vary with service required using UPS for its delivery services ensures smooth and timely delivery of products ordered

Use security and safety transfer money by themselves

Depend on size and weight of good they will choose shipment method by themselves

Use security and safety transfer money by themselves

BJrsquos Wholesale Club cannot ship packages to PO Boxes

Costco Samrsquos Club BJrsquos Wholesale Club

Membership bull Business members fee of $55 (include a supplemental card) bull Individual members fee of $55 (include a supplemental card) bull Executive members fee of $100 Save 2 on purchases save on various service offered by Costco and third-party company such as insurance loan real estate and mortgage servicebull Accept goods returns

bullBusiness members fee of $35 (include a supplemental card) bull Individual members fee of $40 (include a supplemental card) bull Premium members fee of $100 (including health care insurance personal and financial service recreational vehicle program) Cash back 2

bullBusiness members fee of $50(include a supplemental card) bull Individual members fee of $50 (include a supplemental card) bullRebate 2bullAccept goods returns

Competitive Advantages

Costcorsquos wholesale is better than Samrsquos Club amp BJrsquos Wholesale

1 Low Price2 Good customer service3 Good Customer care4 Effective Social network

Costco have winning strategy to focus on customer need (Lowest price) and try to satisfy them (customer care amp service)

Costcorsquos Prices

Costco Prices are Lowest

(they always try to make try to make price is lower than their rivals)

1 Focusing on customer need (Business strategy)

(Buy quality product with the best price to save money)

2 Try to improve customer care amp service better than other rival ndash payment delivery methodshellip)

Compensation Policies

Overview - In 2015 Costco employs about 205000 employees (88000 are part-time employees and 117000 full-time employees) (Statista 2015)

-Ranked as second best employer in the US (Clare 2015)

-The companyrsquos turnover rate is kept at 5 for employees who have worked at Costco for more than a year (Aaron 2014)

Overview- Craig Jelinek ndash the CEO of Costco believes that a more rewarding workplace will eventually lower employee turnover rate boost their productivity and on-job performance (Aaron 2014)

Compensation Practices Comparison

Costco Samrsquos Club BJrsquos

Pay rate Average of $20hour (Aaron 2014) $9 ndash 13hour (PayScale nd) $9 ndash 13hour (PayScale nd)

Health-based benefits

Medical Dental Mental health and substance abuse Pharmacy Vision and hearing aid coverage Personal wellness tools care network behavioral health (Costco 2016)

Consumer-directed health plans Vision Dental Counseling services Illness protection (Walmart Careers 2016)

Medical Dental Employee assistance program (BJrsquos Careers 2016)

Financial-based benefits

401(k) retirement plan Stock purchase plan Money management information employee self-service (Costco 2016)

401(k) retirement plan Stock purchase plan Discount cards when buying at Walmart and Samrsquos club (Walmart Careers 2016)

401(k) retirement plan (BJrsquos Careers 2016)

Other benefits Reimbursement account Various forms of insurance(Costco 2016)

Various forms of insurance (Walmart Careers 2016)

Flexible spending account Various forms of insurance (BJrsquos Careers 2016)

COSTCO VS SAMrsquoS CLUB VS BJrsquoS

SWOT Analysis

STRENGTHS WEAKNESSES- Well-perceived private label brand (Kirkland

Signature) (Euromonitor 2015)

- Available gasoline and other additional services encourage more frequent shopping (MartketLine 2015)

- Higher market coverage (9 markets) compared to Samrsquos Club (only 4) (Euromonitor 2015)

- Low cost operating model (MarketLine 2015)

- Healthy financial position (Euromonitor 2015)

- Dependence on North America markets (MarketLine 2015)

- Limited product choice (only 3700 products) (MartketLine 2015)

SWOT AnalysisOPPORTUNITIES THREATS- International expansion enable Costco to access to a

large customer base(Euromonitor 2015)

- Multichannel retailing enables Costco to widen its reach (Euromonitor 2015)

- Face fierce competition from various types of retailers (Euromonitor 2015)

- Catered to middle-high income class but faces challenges in US as such class proportion continues to decrease (Euromonitor 2015)

- Low customersrsquo loyalty

Recommendations Recommendation 1 Focus in developing internet retailing and multi-channel strategies

- Capitalize on its strong financial position to invest in creating new retailing channels

- Allow to minimize threats posed by other retailing channels

- Stronger online presence enables Costco to reach a wider customer base

Recommendations Recommendation 2 Global expansions into untapped markets

- Reduce Costcorsquos dependence on North America market

- Partnerships with other Internet retailers can allow Costco to enter untapped markets without physical presence

Revision

1 The process of crafting and executing a companyrsquos strategy consists ofA Developing a Strategic missionB Setting ObjectivesC Monitoring and corrective action to short-term fix issuesD All are correct

Revision2 To improve Cash Collection Cycle the company should

A Extend DSO Shorter DPOB Extend DSO Extend DPOC Shorter DSO Shorter DPOD Shorter DSO Extend DPO

Revision

3 Four main process in developing Balanced Scorecard

A Translating the vision Communicating and linking Business planning Feedback and learning

B Translating the vision Business planning Communicating and linkingF eedback and learning

C Develop mission Business planning Communicating and linking Feedback and learning

D Develop mission Communicating and linking Business planning Feedback and learning

Revision4 Which statement is TRUE

A A company achieves competitive advantage when an attractive number of Buyers are drawn to purchase its products or services rather than those of competitors

B A company achieves sustainable advantage when the basis for buyer references for its product offering relative to the offerings of its rivals is durable despite competitorsrsquo efforts to nullify or overcome the appeal of its product offering

C Both are TRUED Both are FALSE

References Euromonitor International 2015 Costco Wholesale Corp in Retailing (World) Retrieved January 25 2016 from httpwwweuromonitorcom

Euromonitor International 2016 Costco Wholesale Canada Ltd in Retailing (Canada) Retrieved January 25 2016 from httpwwweuromonitorcom

MarketLine 2015 Costco Wholesale Corporation Retrieved January 24 2016 from httpwwwmarketlinecom

Statista 2015 Number of Costco employees worldwide from 2011 ndash 2015 (in 1000s) Statista ndash The Statistics Portal Retrieved from httpwwwstatistacomstatistics284430costco-number-of-employees-worldwide-2011-2013

Aaron T (2014 October 23) Why Costco Pays Its Retail Employees $20 An Hour Business Insider Retrieved from httpwwwbusinessinsidercomcostco-pays-retail-employees-20-an-hour-2014-10

Costco Wholesale Competition

Costco has not only wholesale competitors but also retailers

Two main wholesale competitors are Samrsquos Club BJrsquos Wholesale Club

What make they are different competitors

Costco Samrsquos Club BJrsquos Wholesale Club

Position High-traffic routes in or near upscale suburb

Near Wal-Mart Near Costco or Samrsquos Club (within 10 miles)

Items 3600 4000 7000

Treasure - hunt Treasure - hunt items are upscale

Treasure - hunt items are less upscale but cheaper than Costcorsquos

Price Lowest price Low price Low price

Costco Samrsquos Club BJrsquos Wholesale Club

Added service (pharmacy optic gasoline)

Beside BJ also has some special services such as vacation and travel package garden and storage sheds patio and sun rooms

Social Media Website Facebook Twitter

Blogs which be operated by customers to share their experience

Website Facebook Twitter

Website Facebook Twitter

Costco Samrsquos Club BJrsquos Wholesale Club Customer Care Service(Returns Refunds amp Exchange Policy)

Payment method approve

Store quality

90 days from the purchase date to return your order for a full refund

All of payment cards which include both Bill Me Later and American Express be approved in Costco

Many customers feel Costco is much cleaner than BJrsquos and prefer to shop at Costco for bulk items

Electronic device (90 days) other goods (30 days)

American Express Card not be approved

Clear

Electronic device (90 days) other goods (30 days)

One of the payment methods that is not accepted at BJs Wholesale Club at this time is Bill Me Later

Less Clean

Costco Samrsquos Club BJrsquos Wholesale Club

Website Security amp Safety Transfer Money

Delivery method

Use security and safety transfer money by third party ndashMcAfee

Only tires can be shipped to Costco stores for collections and not any others

The rates vary with service required using UPS for its delivery services ensures smooth and timely delivery of products ordered

Use security and safety transfer money by themselves

Depend on size and weight of good they will choose shipment method by themselves

Use security and safety transfer money by themselves

BJrsquos Wholesale Club cannot ship packages to PO Boxes

Costco Samrsquos Club BJrsquos Wholesale Club

Membership bull Business members fee of $55 (include a supplemental card) bull Individual members fee of $55 (include a supplemental card) bull Executive members fee of $100 Save 2 on purchases save on various service offered by Costco and third-party company such as insurance loan real estate and mortgage servicebull Accept goods returns

bullBusiness members fee of $35 (include a supplemental card) bull Individual members fee of $40 (include a supplemental card) bull Premium members fee of $100 (including health care insurance personal and financial service recreational vehicle program) Cash back 2

bullBusiness members fee of $50(include a supplemental card) bull Individual members fee of $50 (include a supplemental card) bullRebate 2bullAccept goods returns

Competitive Advantages

Costcorsquos wholesale is better than Samrsquos Club amp BJrsquos Wholesale

1 Low Price2 Good customer service3 Good Customer care4 Effective Social network

Costco have winning strategy to focus on customer need (Lowest price) and try to satisfy them (customer care amp service)

Costcorsquos Prices

Costco Prices are Lowest

(they always try to make try to make price is lower than their rivals)

1 Focusing on customer need (Business strategy)

(Buy quality product with the best price to save money)

2 Try to improve customer care amp service better than other rival ndash payment delivery methodshellip)

Compensation Policies

Overview - In 2015 Costco employs about 205000 employees (88000 are part-time employees and 117000 full-time employees) (Statista 2015)

-Ranked as second best employer in the US (Clare 2015)

-The companyrsquos turnover rate is kept at 5 for employees who have worked at Costco for more than a year (Aaron 2014)

Overview- Craig Jelinek ndash the CEO of Costco believes that a more rewarding workplace will eventually lower employee turnover rate boost their productivity and on-job performance (Aaron 2014)

Compensation Practices Comparison

Costco Samrsquos Club BJrsquos

Pay rate Average of $20hour (Aaron 2014) $9 ndash 13hour (PayScale nd) $9 ndash 13hour (PayScale nd)

Health-based benefits

Medical Dental Mental health and substance abuse Pharmacy Vision and hearing aid coverage Personal wellness tools care network behavioral health (Costco 2016)

Consumer-directed health plans Vision Dental Counseling services Illness protection (Walmart Careers 2016)

Medical Dental Employee assistance program (BJrsquos Careers 2016)

Financial-based benefits

401(k) retirement plan Stock purchase plan Money management information employee self-service (Costco 2016)

401(k) retirement plan Stock purchase plan Discount cards when buying at Walmart and Samrsquos club (Walmart Careers 2016)

401(k) retirement plan (BJrsquos Careers 2016)

Other benefits Reimbursement account Various forms of insurance(Costco 2016)

Various forms of insurance (Walmart Careers 2016)

Flexible spending account Various forms of insurance (BJrsquos Careers 2016)

COSTCO VS SAMrsquoS CLUB VS BJrsquoS

SWOT Analysis

STRENGTHS WEAKNESSES- Well-perceived private label brand (Kirkland

Signature) (Euromonitor 2015)

- Available gasoline and other additional services encourage more frequent shopping (MartketLine 2015)

- Higher market coverage (9 markets) compared to Samrsquos Club (only 4) (Euromonitor 2015)

- Low cost operating model (MarketLine 2015)

- Healthy financial position (Euromonitor 2015)

- Dependence on North America markets (MarketLine 2015)

- Limited product choice (only 3700 products) (MartketLine 2015)

SWOT AnalysisOPPORTUNITIES THREATS- International expansion enable Costco to access to a

large customer base(Euromonitor 2015)

- Multichannel retailing enables Costco to widen its reach (Euromonitor 2015)

- Face fierce competition from various types of retailers (Euromonitor 2015)

- Catered to middle-high income class but faces challenges in US as such class proportion continues to decrease (Euromonitor 2015)

- Low customersrsquo loyalty

Recommendations Recommendation 1 Focus in developing internet retailing and multi-channel strategies

- Capitalize on its strong financial position to invest in creating new retailing channels

- Allow to minimize threats posed by other retailing channels

- Stronger online presence enables Costco to reach a wider customer base

Recommendations Recommendation 2 Global expansions into untapped markets

- Reduce Costcorsquos dependence on North America market

- Partnerships with other Internet retailers can allow Costco to enter untapped markets without physical presence

Revision

1 The process of crafting and executing a companyrsquos strategy consists ofA Developing a Strategic missionB Setting ObjectivesC Monitoring and corrective action to short-term fix issuesD All are correct

Revision2 To improve Cash Collection Cycle the company should

A Extend DSO Shorter DPOB Extend DSO Extend DPOC Shorter DSO Shorter DPOD Shorter DSO Extend DPO

Revision

3 Four main process in developing Balanced Scorecard

A Translating the vision Communicating and linking Business planning Feedback and learning

B Translating the vision Business planning Communicating and linkingF eedback and learning

C Develop mission Business planning Communicating and linking Feedback and learning

D Develop mission Communicating and linking Business planning Feedback and learning

Revision4 Which statement is TRUE

A A company achieves competitive advantage when an attractive number of Buyers are drawn to purchase its products or services rather than those of competitors

B A company achieves sustainable advantage when the basis for buyer references for its product offering relative to the offerings of its rivals is durable despite competitorsrsquo efforts to nullify or overcome the appeal of its product offering

C Both are TRUED Both are FALSE

References Euromonitor International 2015 Costco Wholesale Corp in Retailing (World) Retrieved January 25 2016 from httpwwweuromonitorcom

Euromonitor International 2016 Costco Wholesale Canada Ltd in Retailing (Canada) Retrieved January 25 2016 from httpwwweuromonitorcom

MarketLine 2015 Costco Wholesale Corporation Retrieved January 24 2016 from httpwwwmarketlinecom

Statista 2015 Number of Costco employees worldwide from 2011 ndash 2015 (in 1000s) Statista ndash The Statistics Portal Retrieved from httpwwwstatistacomstatistics284430costco-number-of-employees-worldwide-2011-2013

Aaron T (2014 October 23) Why Costco Pays Its Retail Employees $20 An Hour Business Insider Retrieved from httpwwwbusinessinsidercomcostco-pays-retail-employees-20-an-hour-2014-10

What make they are different competitors

Costco Samrsquos Club BJrsquos Wholesale Club

Position High-traffic routes in or near upscale suburb

Near Wal-Mart Near Costco or Samrsquos Club (within 10 miles)

Items 3600 4000 7000

Treasure - hunt Treasure - hunt items are upscale

Treasure - hunt items are less upscale but cheaper than Costcorsquos

Price Lowest price Low price Low price

Costco Samrsquos Club BJrsquos Wholesale Club

Added service (pharmacy optic gasoline)

Beside BJ also has some special services such as vacation and travel package garden and storage sheds patio and sun rooms

Social Media Website Facebook Twitter

Blogs which be operated by customers to share their experience

Website Facebook Twitter

Website Facebook Twitter

Costco Samrsquos Club BJrsquos Wholesale Club Customer Care Service(Returns Refunds amp Exchange Policy)

Payment method approve

Store quality

90 days from the purchase date to return your order for a full refund

All of payment cards which include both Bill Me Later and American Express be approved in Costco

Many customers feel Costco is much cleaner than BJrsquos and prefer to shop at Costco for bulk items

Electronic device (90 days) other goods (30 days)

American Express Card not be approved

Clear

Electronic device (90 days) other goods (30 days)

One of the payment methods that is not accepted at BJs Wholesale Club at this time is Bill Me Later

Less Clean

Costco Samrsquos Club BJrsquos Wholesale Club

Website Security amp Safety Transfer Money

Delivery method

Use security and safety transfer money by third party ndashMcAfee

Only tires can be shipped to Costco stores for collections and not any others

The rates vary with service required using UPS for its delivery services ensures smooth and timely delivery of products ordered

Use security and safety transfer money by themselves

Depend on size and weight of good they will choose shipment method by themselves

Use security and safety transfer money by themselves

BJrsquos Wholesale Club cannot ship packages to PO Boxes

Costco Samrsquos Club BJrsquos Wholesale Club

Membership bull Business members fee of $55 (include a supplemental card) bull Individual members fee of $55 (include a supplemental card) bull Executive members fee of $100 Save 2 on purchases save on various service offered by Costco and third-party company such as insurance loan real estate and mortgage servicebull Accept goods returns

bullBusiness members fee of $35 (include a supplemental card) bull Individual members fee of $40 (include a supplemental card) bull Premium members fee of $100 (including health care insurance personal and financial service recreational vehicle program) Cash back 2

bullBusiness members fee of $50(include a supplemental card) bull Individual members fee of $50 (include a supplemental card) bullRebate 2bullAccept goods returns

Competitive Advantages

Costcorsquos wholesale is better than Samrsquos Club amp BJrsquos Wholesale

1 Low Price2 Good customer service3 Good Customer care4 Effective Social network

Costco have winning strategy to focus on customer need (Lowest price) and try to satisfy them (customer care amp service)

Costcorsquos Prices

Costco Prices are Lowest

(they always try to make try to make price is lower than their rivals)

1 Focusing on customer need (Business strategy)

(Buy quality product with the best price to save money)

2 Try to improve customer care amp service better than other rival ndash payment delivery methodshellip)

Compensation Policies

Overview - In 2015 Costco employs about 205000 employees (88000 are part-time employees and 117000 full-time employees) (Statista 2015)

-Ranked as second best employer in the US (Clare 2015)

-The companyrsquos turnover rate is kept at 5 for employees who have worked at Costco for more than a year (Aaron 2014)

Overview- Craig Jelinek ndash the CEO of Costco believes that a more rewarding workplace will eventually lower employee turnover rate boost their productivity and on-job performance (Aaron 2014)

Compensation Practices Comparison

Costco Samrsquos Club BJrsquos

Pay rate Average of $20hour (Aaron 2014) $9 ndash 13hour (PayScale nd) $9 ndash 13hour (PayScale nd)

Health-based benefits

Medical Dental Mental health and substance abuse Pharmacy Vision and hearing aid coverage Personal wellness tools care network behavioral health (Costco 2016)

Consumer-directed health plans Vision Dental Counseling services Illness protection (Walmart Careers 2016)

Medical Dental Employee assistance program (BJrsquos Careers 2016)

Financial-based benefits

401(k) retirement plan Stock purchase plan Money management information employee self-service (Costco 2016)

401(k) retirement plan Stock purchase plan Discount cards when buying at Walmart and Samrsquos club (Walmart Careers 2016)

401(k) retirement plan (BJrsquos Careers 2016)

Other benefits Reimbursement account Various forms of insurance(Costco 2016)

Various forms of insurance (Walmart Careers 2016)

Flexible spending account Various forms of insurance (BJrsquos Careers 2016)

COSTCO VS SAMrsquoS CLUB VS BJrsquoS

SWOT Analysis

STRENGTHS WEAKNESSES- Well-perceived private label brand (Kirkland

Signature) (Euromonitor 2015)

- Available gasoline and other additional services encourage more frequent shopping (MartketLine 2015)

- Higher market coverage (9 markets) compared to Samrsquos Club (only 4) (Euromonitor 2015)

- Low cost operating model (MarketLine 2015)

- Healthy financial position (Euromonitor 2015)

- Dependence on North America markets (MarketLine 2015)

- Limited product choice (only 3700 products) (MartketLine 2015)

SWOT AnalysisOPPORTUNITIES THREATS- International expansion enable Costco to access to a

large customer base(Euromonitor 2015)

- Multichannel retailing enables Costco to widen its reach (Euromonitor 2015)

- Face fierce competition from various types of retailers (Euromonitor 2015)

- Catered to middle-high income class but faces challenges in US as such class proportion continues to decrease (Euromonitor 2015)

- Low customersrsquo loyalty

Recommendations Recommendation 1 Focus in developing internet retailing and multi-channel strategies

- Capitalize on its strong financial position to invest in creating new retailing channels

- Allow to minimize threats posed by other retailing channels

- Stronger online presence enables Costco to reach a wider customer base

Recommendations Recommendation 2 Global expansions into untapped markets

- Reduce Costcorsquos dependence on North America market

- Partnerships with other Internet retailers can allow Costco to enter untapped markets without physical presence

Revision

1 The process of crafting and executing a companyrsquos strategy consists ofA Developing a Strategic missionB Setting ObjectivesC Monitoring and corrective action to short-term fix issuesD All are correct

Revision2 To improve Cash Collection Cycle the company should

A Extend DSO Shorter DPOB Extend DSO Extend DPOC Shorter DSO Shorter DPOD Shorter DSO Extend DPO

Revision

3 Four main process in developing Balanced Scorecard

A Translating the vision Communicating and linking Business planning Feedback and learning

B Translating the vision Business planning Communicating and linkingF eedback and learning

C Develop mission Business planning Communicating and linking Feedback and learning

D Develop mission Communicating and linking Business planning Feedback and learning

Revision4 Which statement is TRUE

A A company achieves competitive advantage when an attractive number of Buyers are drawn to purchase its products or services rather than those of competitors

B A company achieves sustainable advantage when the basis for buyer references for its product offering relative to the offerings of its rivals is durable despite competitorsrsquo efforts to nullify or overcome the appeal of its product offering

C Both are TRUED Both are FALSE

References Euromonitor International 2015 Costco Wholesale Corp in Retailing (World) Retrieved January 25 2016 from httpwwweuromonitorcom

Euromonitor International 2016 Costco Wholesale Canada Ltd in Retailing (Canada) Retrieved January 25 2016 from httpwwweuromonitorcom

MarketLine 2015 Costco Wholesale Corporation Retrieved January 24 2016 from httpwwwmarketlinecom

Statista 2015 Number of Costco employees worldwide from 2011 ndash 2015 (in 1000s) Statista ndash The Statistics Portal Retrieved from httpwwwstatistacomstatistics284430costco-number-of-employees-worldwide-2011-2013

Aaron T (2014 October 23) Why Costco Pays Its Retail Employees $20 An Hour Business Insider Retrieved from httpwwwbusinessinsidercomcostco-pays-retail-employees-20-an-hour-2014-10

Costco Samrsquos Club BJrsquos Wholesale Club

Added service (pharmacy optic gasoline)

Beside BJ also has some special services such as vacation and travel package garden and storage sheds patio and sun rooms

Social Media Website Facebook Twitter

Blogs which be operated by customers to share their experience

Website Facebook Twitter

Website Facebook Twitter

Costco Samrsquos Club BJrsquos Wholesale Club Customer Care Service(Returns Refunds amp Exchange Policy)

Payment method approve

Store quality

90 days from the purchase date to return your order for a full refund

All of payment cards which include both Bill Me Later and American Express be approved in Costco

Many customers feel Costco is much cleaner than BJrsquos and prefer to shop at Costco for bulk items

Electronic device (90 days) other goods (30 days)

American Express Card not be approved

Clear

Electronic device (90 days) other goods (30 days)

One of the payment methods that is not accepted at BJs Wholesale Club at this time is Bill Me Later

Less Clean

Costco Samrsquos Club BJrsquos Wholesale Club

Website Security amp Safety Transfer Money

Delivery method

Use security and safety transfer money by third party ndashMcAfee

Only tires can be shipped to Costco stores for collections and not any others

The rates vary with service required using UPS for its delivery services ensures smooth and timely delivery of products ordered

Use security and safety transfer money by themselves

Depend on size and weight of good they will choose shipment method by themselves

Use security and safety transfer money by themselves

BJrsquos Wholesale Club cannot ship packages to PO Boxes

Costco Samrsquos Club BJrsquos Wholesale Club

Membership bull Business members fee of $55 (include a supplemental card) bull Individual members fee of $55 (include a supplemental card) bull Executive members fee of $100 Save 2 on purchases save on various service offered by Costco and third-party company such as insurance loan real estate and mortgage servicebull Accept goods returns

bullBusiness members fee of $35 (include a supplemental card) bull Individual members fee of $40 (include a supplemental card) bull Premium members fee of $100 (including health care insurance personal and financial service recreational vehicle program) Cash back 2

bullBusiness members fee of $50(include a supplemental card) bull Individual members fee of $50 (include a supplemental card) bullRebate 2bullAccept goods returns

Competitive Advantages

Costcorsquos wholesale is better than Samrsquos Club amp BJrsquos Wholesale

1 Low Price2 Good customer service3 Good Customer care4 Effective Social network

Costco have winning strategy to focus on customer need (Lowest price) and try to satisfy them (customer care amp service)

Costcorsquos Prices

Costco Prices are Lowest

(they always try to make try to make price is lower than their rivals)

1 Focusing on customer need (Business strategy)

(Buy quality product with the best price to save money)

2 Try to improve customer care amp service better than other rival ndash payment delivery methodshellip)

Compensation Policies

Overview - In 2015 Costco employs about 205000 employees (88000 are part-time employees and 117000 full-time employees) (Statista 2015)

-Ranked as second best employer in the US (Clare 2015)

-The companyrsquos turnover rate is kept at 5 for employees who have worked at Costco for more than a year (Aaron 2014)

Overview- Craig Jelinek ndash the CEO of Costco believes that a more rewarding workplace will eventually lower employee turnover rate boost their productivity and on-job performance (Aaron 2014)

Compensation Practices Comparison

Costco Samrsquos Club BJrsquos

Pay rate Average of $20hour (Aaron 2014) $9 ndash 13hour (PayScale nd) $9 ndash 13hour (PayScale nd)

Health-based benefits

Medical Dental Mental health and substance abuse Pharmacy Vision and hearing aid coverage Personal wellness tools care network behavioral health (Costco 2016)

Consumer-directed health plans Vision Dental Counseling services Illness protection (Walmart Careers 2016)

Medical Dental Employee assistance program (BJrsquos Careers 2016)

Financial-based benefits

401(k) retirement plan Stock purchase plan Money management information employee self-service (Costco 2016)

401(k) retirement plan Stock purchase plan Discount cards when buying at Walmart and Samrsquos club (Walmart Careers 2016)

401(k) retirement plan (BJrsquos Careers 2016)

Other benefits Reimbursement account Various forms of insurance(Costco 2016)

Various forms of insurance (Walmart Careers 2016)

Flexible spending account Various forms of insurance (BJrsquos Careers 2016)

COSTCO VS SAMrsquoS CLUB VS BJrsquoS

SWOT Analysis

STRENGTHS WEAKNESSES- Well-perceived private label brand (Kirkland

Signature) (Euromonitor 2015)

- Available gasoline and other additional services encourage more frequent shopping (MartketLine 2015)

- Higher market coverage (9 markets) compared to Samrsquos Club (only 4) (Euromonitor 2015)

- Low cost operating model (MarketLine 2015)

- Healthy financial position (Euromonitor 2015)

- Dependence on North America markets (MarketLine 2015)

- Limited product choice (only 3700 products) (MartketLine 2015)

SWOT AnalysisOPPORTUNITIES THREATS- International expansion enable Costco to access to a

large customer base(Euromonitor 2015)

- Multichannel retailing enables Costco to widen its reach (Euromonitor 2015)

- Face fierce competition from various types of retailers (Euromonitor 2015)

- Catered to middle-high income class but faces challenges in US as such class proportion continues to decrease (Euromonitor 2015)

- Low customersrsquo loyalty

Recommendations Recommendation 1 Focus in developing internet retailing and multi-channel strategies

- Capitalize on its strong financial position to invest in creating new retailing channels

- Allow to minimize threats posed by other retailing channels

- Stronger online presence enables Costco to reach a wider customer base

Recommendations Recommendation 2 Global expansions into untapped markets

- Reduce Costcorsquos dependence on North America market

- Partnerships with other Internet retailers can allow Costco to enter untapped markets without physical presence

Revision

1 The process of crafting and executing a companyrsquos strategy consists ofA Developing a Strategic missionB Setting ObjectivesC Monitoring and corrective action to short-term fix issuesD All are correct

Revision2 To improve Cash Collection Cycle the company should

A Extend DSO Shorter DPOB Extend DSO Extend DPOC Shorter DSO Shorter DPOD Shorter DSO Extend DPO

Revision

3 Four main process in developing Balanced Scorecard

A Translating the vision Communicating and linking Business planning Feedback and learning

B Translating the vision Business planning Communicating and linkingF eedback and learning

C Develop mission Business planning Communicating and linking Feedback and learning

D Develop mission Communicating and linking Business planning Feedback and learning

Revision4 Which statement is TRUE

A A company achieves competitive advantage when an attractive number of Buyers are drawn to purchase its products or services rather than those of competitors

B A company achieves sustainable advantage when the basis for buyer references for its product offering relative to the offerings of its rivals is durable despite competitorsrsquo efforts to nullify or overcome the appeal of its product offering

C Both are TRUED Both are FALSE

References Euromonitor International 2015 Costco Wholesale Corp in Retailing (World) Retrieved January 25 2016 from httpwwweuromonitorcom

Euromonitor International 2016 Costco Wholesale Canada Ltd in Retailing (Canada) Retrieved January 25 2016 from httpwwweuromonitorcom

MarketLine 2015 Costco Wholesale Corporation Retrieved January 24 2016 from httpwwwmarketlinecom

Statista 2015 Number of Costco employees worldwide from 2011 ndash 2015 (in 1000s) Statista ndash The Statistics Portal Retrieved from httpwwwstatistacomstatistics284430costco-number-of-employees-worldwide-2011-2013

Aaron T (2014 October 23) Why Costco Pays Its Retail Employees $20 An Hour Business Insider Retrieved from httpwwwbusinessinsidercomcostco-pays-retail-employees-20-an-hour-2014-10

Costco Samrsquos Club BJrsquos Wholesale Club Customer Care Service(Returns Refunds amp Exchange Policy)

Payment method approve

Store quality

90 days from the purchase date to return your order for a full refund

All of payment cards which include both Bill Me Later and American Express be approved in Costco

Many customers feel Costco is much cleaner than BJrsquos and prefer to shop at Costco for bulk items

Electronic device (90 days) other goods (30 days)

American Express Card not be approved

Clear

Electronic device (90 days) other goods (30 days)

One of the payment methods that is not accepted at BJs Wholesale Club at this time is Bill Me Later

Less Clean

Costco Samrsquos Club BJrsquos Wholesale Club

Website Security amp Safety Transfer Money

Delivery method

Use security and safety transfer money by third party ndashMcAfee

Only tires can be shipped to Costco stores for collections and not any others

The rates vary with service required using UPS for its delivery services ensures smooth and timely delivery of products ordered

Use security and safety transfer money by themselves

Depend on size and weight of good they will choose shipment method by themselves

Use security and safety transfer money by themselves

BJrsquos Wholesale Club cannot ship packages to PO Boxes

Costco Samrsquos Club BJrsquos Wholesale Club

Membership bull Business members fee of $55 (include a supplemental card) bull Individual members fee of $55 (include a supplemental card) bull Executive members fee of $100 Save 2 on purchases save on various service offered by Costco and third-party company such as insurance loan real estate and mortgage servicebull Accept goods returns

bullBusiness members fee of $35 (include a supplemental card) bull Individual members fee of $40 (include a supplemental card) bull Premium members fee of $100 (including health care insurance personal and financial service recreational vehicle program) Cash back 2

bullBusiness members fee of $50(include a supplemental card) bull Individual members fee of $50 (include a supplemental card) bullRebate 2bullAccept goods returns

Competitive Advantages

Costcorsquos wholesale is better than Samrsquos Club amp BJrsquos Wholesale

1 Low Price2 Good customer service3 Good Customer care4 Effective Social network

Costco have winning strategy to focus on customer need (Lowest price) and try to satisfy them (customer care amp service)

Costcorsquos Prices

Costco Prices are Lowest

(they always try to make try to make price is lower than their rivals)

1 Focusing on customer need (Business strategy)

(Buy quality product with the best price to save money)

2 Try to improve customer care amp service better than other rival ndash payment delivery methodshellip)

Compensation Policies

Overview - In 2015 Costco employs about 205000 employees (88000 are part-time employees and 117000 full-time employees) (Statista 2015)

-Ranked as second best employer in the US (Clare 2015)

-The companyrsquos turnover rate is kept at 5 for employees who have worked at Costco for more than a year (Aaron 2014)

Overview- Craig Jelinek ndash the CEO of Costco believes that a more rewarding workplace will eventually lower employee turnover rate boost their productivity and on-job performance (Aaron 2014)

Compensation Practices Comparison

Costco Samrsquos Club BJrsquos

Pay rate Average of $20hour (Aaron 2014) $9 ndash 13hour (PayScale nd) $9 ndash 13hour (PayScale nd)

Health-based benefits

Medical Dental Mental health and substance abuse Pharmacy Vision and hearing aid coverage Personal wellness tools care network behavioral health (Costco 2016)

Consumer-directed health plans Vision Dental Counseling services Illness protection (Walmart Careers 2016)

Medical Dental Employee assistance program (BJrsquos Careers 2016)

Financial-based benefits

401(k) retirement plan Stock purchase plan Money management information employee self-service (Costco 2016)

401(k) retirement plan Stock purchase plan Discount cards when buying at Walmart and Samrsquos club (Walmart Careers 2016)

401(k) retirement plan (BJrsquos Careers 2016)

Other benefits Reimbursement account Various forms of insurance(Costco 2016)

Various forms of insurance (Walmart Careers 2016)

Flexible spending account Various forms of insurance (BJrsquos Careers 2016)

COSTCO VS SAMrsquoS CLUB VS BJrsquoS

SWOT Analysis

STRENGTHS WEAKNESSES- Well-perceived private label brand (Kirkland

Signature) (Euromonitor 2015)

- Available gasoline and other additional services encourage more frequent shopping (MartketLine 2015)

- Higher market coverage (9 markets) compared to Samrsquos Club (only 4) (Euromonitor 2015)

- Low cost operating model (MarketLine 2015)

- Healthy financial position (Euromonitor 2015)

- Dependence on North America markets (MarketLine 2015)

- Limited product choice (only 3700 products) (MartketLine 2015)

SWOT AnalysisOPPORTUNITIES THREATS- International expansion enable Costco to access to a

large customer base(Euromonitor 2015)

- Multichannel retailing enables Costco to widen its reach (Euromonitor 2015)

- Face fierce competition from various types of retailers (Euromonitor 2015)

- Catered to middle-high income class but faces challenges in US as such class proportion continues to decrease (Euromonitor 2015)

- Low customersrsquo loyalty

Recommendations Recommendation 1 Focus in developing internet retailing and multi-channel strategies

- Capitalize on its strong financial position to invest in creating new retailing channels

- Allow to minimize threats posed by other retailing channels

- Stronger online presence enables Costco to reach a wider customer base

Recommendations Recommendation 2 Global expansions into untapped markets

- Reduce Costcorsquos dependence on North America market

- Partnerships with other Internet retailers can allow Costco to enter untapped markets without physical presence

Revision

1 The process of crafting and executing a companyrsquos strategy consists ofA Developing a Strategic missionB Setting ObjectivesC Monitoring and corrective action to short-term fix issuesD All are correct

Revision2 To improve Cash Collection Cycle the company should

A Extend DSO Shorter DPOB Extend DSO Extend DPOC Shorter DSO Shorter DPOD Shorter DSO Extend DPO

Revision

3 Four main process in developing Balanced Scorecard

A Translating the vision Communicating and linking Business planning Feedback and learning

B Translating the vision Business planning Communicating and linkingF eedback and learning

C Develop mission Business planning Communicating and linking Feedback and learning

D Develop mission Communicating and linking Business planning Feedback and learning

Revision4 Which statement is TRUE

A A company achieves competitive advantage when an attractive number of Buyers are drawn to purchase its products or services rather than those of competitors

B A company achieves sustainable advantage when the basis for buyer references for its product offering relative to the offerings of its rivals is durable despite competitorsrsquo efforts to nullify or overcome the appeal of its product offering

C Both are TRUED Both are FALSE

References Euromonitor International 2015 Costco Wholesale Corp in Retailing (World) Retrieved January 25 2016 from httpwwweuromonitorcom

Euromonitor International 2016 Costco Wholesale Canada Ltd in Retailing (Canada) Retrieved January 25 2016 from httpwwweuromonitorcom

MarketLine 2015 Costco Wholesale Corporation Retrieved January 24 2016 from httpwwwmarketlinecom

Statista 2015 Number of Costco employees worldwide from 2011 ndash 2015 (in 1000s) Statista ndash The Statistics Portal Retrieved from httpwwwstatistacomstatistics284430costco-number-of-employees-worldwide-2011-2013

Aaron T (2014 October 23) Why Costco Pays Its Retail Employees $20 An Hour Business Insider Retrieved from httpwwwbusinessinsidercomcostco-pays-retail-employees-20-an-hour-2014-10

Costco Samrsquos Club BJrsquos Wholesale Club

Website Security amp Safety Transfer Money

Delivery method

Use security and safety transfer money by third party ndashMcAfee

Only tires can be shipped to Costco stores for collections and not any others

The rates vary with service required using UPS for its delivery services ensures smooth and timely delivery of products ordered

Use security and safety transfer money by themselves

Depend on size and weight of good they will choose shipment method by themselves

Use security and safety transfer money by themselves

BJrsquos Wholesale Club cannot ship packages to PO Boxes

Costco Samrsquos Club BJrsquos Wholesale Club

Membership bull Business members fee of $55 (include a supplemental card) bull Individual members fee of $55 (include a supplemental card) bull Executive members fee of $100 Save 2 on purchases save on various service offered by Costco and third-party company such as insurance loan real estate and mortgage servicebull Accept goods returns

bullBusiness members fee of $35 (include a supplemental card) bull Individual members fee of $40 (include a supplemental card) bull Premium members fee of $100 (including health care insurance personal and financial service recreational vehicle program) Cash back 2

bullBusiness members fee of $50(include a supplemental card) bull Individual members fee of $50 (include a supplemental card) bullRebate 2bullAccept goods returns

Competitive Advantages

Costcorsquos wholesale is better than Samrsquos Club amp BJrsquos Wholesale

1 Low Price2 Good customer service3 Good Customer care4 Effective Social network

Costco have winning strategy to focus on customer need (Lowest price) and try to satisfy them (customer care amp service)

Costcorsquos Prices

Costco Prices are Lowest

(they always try to make try to make price is lower than their rivals)

1 Focusing on customer need (Business strategy)

(Buy quality product with the best price to save money)

2 Try to improve customer care amp service better than other rival ndash payment delivery methodshellip)

Compensation Policies

Overview - In 2015 Costco employs about 205000 employees (88000 are part-time employees and 117000 full-time employees) (Statista 2015)

-Ranked as second best employer in the US (Clare 2015)

-The companyrsquos turnover rate is kept at 5 for employees who have worked at Costco for more than a year (Aaron 2014)

Overview- Craig Jelinek ndash the CEO of Costco believes that a more rewarding workplace will eventually lower employee turnover rate boost their productivity and on-job performance (Aaron 2014)

Compensation Practices Comparison

Costco Samrsquos Club BJrsquos

Pay rate Average of $20hour (Aaron 2014) $9 ndash 13hour (PayScale nd) $9 ndash 13hour (PayScale nd)

Health-based benefits

Medical Dental Mental health and substance abuse Pharmacy Vision and hearing aid coverage Personal wellness tools care network behavioral health (Costco 2016)

Consumer-directed health plans Vision Dental Counseling services Illness protection (Walmart Careers 2016)

Medical Dental Employee assistance program (BJrsquos Careers 2016)

Financial-based benefits

401(k) retirement plan Stock purchase plan Money management information employee self-service (Costco 2016)

401(k) retirement plan Stock purchase plan Discount cards when buying at Walmart and Samrsquos club (Walmart Careers 2016)

401(k) retirement plan (BJrsquos Careers 2016)

Other benefits Reimbursement account Various forms of insurance(Costco 2016)

Various forms of insurance (Walmart Careers 2016)

Flexible spending account Various forms of insurance (BJrsquos Careers 2016)

COSTCO VS SAMrsquoS CLUB VS BJrsquoS

SWOT Analysis

STRENGTHS WEAKNESSES- Well-perceived private label brand (Kirkland

Signature) (Euromonitor 2015)

- Available gasoline and other additional services encourage more frequent shopping (MartketLine 2015)

- Higher market coverage (9 markets) compared to Samrsquos Club (only 4) (Euromonitor 2015)

- Low cost operating model (MarketLine 2015)

- Healthy financial position (Euromonitor 2015)

- Dependence on North America markets (MarketLine 2015)

- Limited product choice (only 3700 products) (MartketLine 2015)

SWOT AnalysisOPPORTUNITIES THREATS- International expansion enable Costco to access to a

large customer base(Euromonitor 2015)

- Multichannel retailing enables Costco to widen its reach (Euromonitor 2015)

- Face fierce competition from various types of retailers (Euromonitor 2015)

- Catered to middle-high income class but faces challenges in US as such class proportion continues to decrease (Euromonitor 2015)

- Low customersrsquo loyalty

Recommendations Recommendation 1 Focus in developing internet retailing and multi-channel strategies

- Capitalize on its strong financial position to invest in creating new retailing channels

- Allow to minimize threats posed by other retailing channels

- Stronger online presence enables Costco to reach a wider customer base

Recommendations Recommendation 2 Global expansions into untapped markets

- Reduce Costcorsquos dependence on North America market

- Partnerships with other Internet retailers can allow Costco to enter untapped markets without physical presence

Revision

1 The process of crafting and executing a companyrsquos strategy consists ofA Developing a Strategic missionB Setting ObjectivesC Monitoring and corrective action to short-term fix issuesD All are correct

Revision2 To improve Cash Collection Cycle the company should

A Extend DSO Shorter DPOB Extend DSO Extend DPOC Shorter DSO Shorter DPOD Shorter DSO Extend DPO

Revision

3 Four main process in developing Balanced Scorecard

A Translating the vision Communicating and linking Business planning Feedback and learning

B Translating the vision Business planning Communicating and linkingF eedback and learning

C Develop mission Business planning Communicating and linking Feedback and learning

D Develop mission Communicating and linking Business planning Feedback and learning

Revision4 Which statement is TRUE

A A company achieves competitive advantage when an attractive number of Buyers are drawn to purchase its products or services rather than those of competitors

B A company achieves sustainable advantage when the basis for buyer references for its product offering relative to the offerings of its rivals is durable despite competitorsrsquo efforts to nullify or overcome the appeal of its product offering

C Both are TRUED Both are FALSE

References Euromonitor International 2015 Costco Wholesale Corp in Retailing (World) Retrieved January 25 2016 from httpwwweuromonitorcom

Euromonitor International 2016 Costco Wholesale Canada Ltd in Retailing (Canada) Retrieved January 25 2016 from httpwwweuromonitorcom

MarketLine 2015 Costco Wholesale Corporation Retrieved January 24 2016 from httpwwwmarketlinecom

Statista 2015 Number of Costco employees worldwide from 2011 ndash 2015 (in 1000s) Statista ndash The Statistics Portal Retrieved from httpwwwstatistacomstatistics284430costco-number-of-employees-worldwide-2011-2013

Aaron T (2014 October 23) Why Costco Pays Its Retail Employees $20 An Hour Business Insider Retrieved from httpwwwbusinessinsidercomcostco-pays-retail-employees-20-an-hour-2014-10

Costco Samrsquos Club BJrsquos Wholesale Club

Membership bull Business members fee of $55 (include a supplemental card) bull Individual members fee of $55 (include a supplemental card) bull Executive members fee of $100 Save 2 on purchases save on various service offered by Costco and third-party company such as insurance loan real estate and mortgage servicebull Accept goods returns

bullBusiness members fee of $35 (include a supplemental card) bull Individual members fee of $40 (include a supplemental card) bull Premium members fee of $100 (including health care insurance personal and financial service recreational vehicle program) Cash back 2

bullBusiness members fee of $50(include a supplemental card) bull Individual members fee of $50 (include a supplemental card) bullRebate 2bullAccept goods returns

Competitive Advantages

Costcorsquos wholesale is better than Samrsquos Club amp BJrsquos Wholesale

1 Low Price2 Good customer service3 Good Customer care4 Effective Social network

Costco have winning strategy to focus on customer need (Lowest price) and try to satisfy them (customer care amp service)

Costcorsquos Prices

Costco Prices are Lowest

(they always try to make try to make price is lower than their rivals)

1 Focusing on customer need (Business strategy)

(Buy quality product with the best price to save money)

2 Try to improve customer care amp service better than other rival ndash payment delivery methodshellip)

Compensation Policies

Overview - In 2015 Costco employs about 205000 employees (88000 are part-time employees and 117000 full-time employees) (Statista 2015)

-Ranked as second best employer in the US (Clare 2015)

-The companyrsquos turnover rate is kept at 5 for employees who have worked at Costco for more than a year (Aaron 2014)

Overview- Craig Jelinek ndash the CEO of Costco believes that a more rewarding workplace will eventually lower employee turnover rate boost their productivity and on-job performance (Aaron 2014)

Compensation Practices Comparison

Costco Samrsquos Club BJrsquos

Pay rate Average of $20hour (Aaron 2014) $9 ndash 13hour (PayScale nd) $9 ndash 13hour (PayScale nd)

Health-based benefits

Medical Dental Mental health and substance abuse Pharmacy Vision and hearing aid coverage Personal wellness tools care network behavioral health (Costco 2016)

Consumer-directed health plans Vision Dental Counseling services Illness protection (Walmart Careers 2016)

Medical Dental Employee assistance program (BJrsquos Careers 2016)

Financial-based benefits

401(k) retirement plan Stock purchase plan Money management information employee self-service (Costco 2016)

401(k) retirement plan Stock purchase plan Discount cards when buying at Walmart and Samrsquos club (Walmart Careers 2016)

401(k) retirement plan (BJrsquos Careers 2016)

Other benefits Reimbursement account Various forms of insurance(Costco 2016)

Various forms of insurance (Walmart Careers 2016)

Flexible spending account Various forms of insurance (BJrsquos Careers 2016)

COSTCO VS SAMrsquoS CLUB VS BJrsquoS

SWOT Analysis

STRENGTHS WEAKNESSES- Well-perceived private label brand (Kirkland

Signature) (Euromonitor 2015)

- Available gasoline and other additional services encourage more frequent shopping (MartketLine 2015)

- Higher market coverage (9 markets) compared to Samrsquos Club (only 4) (Euromonitor 2015)

- Low cost operating model (MarketLine 2015)

- Healthy financial position (Euromonitor 2015)

- Dependence on North America markets (MarketLine 2015)

- Limited product choice (only 3700 products) (MartketLine 2015)

SWOT AnalysisOPPORTUNITIES THREATS- International expansion enable Costco to access to a

large customer base(Euromonitor 2015)

- Multichannel retailing enables Costco to widen its reach (Euromonitor 2015)

- Face fierce competition from various types of retailers (Euromonitor 2015)

- Catered to middle-high income class but faces challenges in US as such class proportion continues to decrease (Euromonitor 2015)

- Low customersrsquo loyalty

Recommendations Recommendation 1 Focus in developing internet retailing and multi-channel strategies

- Capitalize on its strong financial position to invest in creating new retailing channels

- Allow to minimize threats posed by other retailing channels

- Stronger online presence enables Costco to reach a wider customer base

Recommendations Recommendation 2 Global expansions into untapped markets

- Reduce Costcorsquos dependence on North America market

- Partnerships with other Internet retailers can allow Costco to enter untapped markets without physical presence

Revision

1 The process of crafting and executing a companyrsquos strategy consists ofA Developing a Strategic missionB Setting ObjectivesC Monitoring and corrective action to short-term fix issuesD All are correct

Revision2 To improve Cash Collection Cycle the company should

A Extend DSO Shorter DPOB Extend DSO Extend DPOC Shorter DSO Shorter DPOD Shorter DSO Extend DPO

Revision

3 Four main process in developing Balanced Scorecard

A Translating the vision Communicating and linking Business planning Feedback and learning

B Translating the vision Business planning Communicating and linkingF eedback and learning

C Develop mission Business planning Communicating and linking Feedback and learning

D Develop mission Communicating and linking Business planning Feedback and learning

Revision4 Which statement is TRUE

A A company achieves competitive advantage when an attractive number of Buyers are drawn to purchase its products or services rather than those of competitors

B A company achieves sustainable advantage when the basis for buyer references for its product offering relative to the offerings of its rivals is durable despite competitorsrsquo efforts to nullify or overcome the appeal of its product offering

C Both are TRUED Both are FALSE

References Euromonitor International 2015 Costco Wholesale Corp in Retailing (World) Retrieved January 25 2016 from httpwwweuromonitorcom

Euromonitor International 2016 Costco Wholesale Canada Ltd in Retailing (Canada) Retrieved January 25 2016 from httpwwweuromonitorcom

MarketLine 2015 Costco Wholesale Corporation Retrieved January 24 2016 from httpwwwmarketlinecom

Statista 2015 Number of Costco employees worldwide from 2011 ndash 2015 (in 1000s) Statista ndash The Statistics Portal Retrieved from httpwwwstatistacomstatistics284430costco-number-of-employees-worldwide-2011-2013

Aaron T (2014 October 23) Why Costco Pays Its Retail Employees $20 An Hour Business Insider Retrieved from httpwwwbusinessinsidercomcostco-pays-retail-employees-20-an-hour-2014-10

Competitive Advantages

Costcorsquos wholesale is better than Samrsquos Club amp BJrsquos Wholesale

1 Low Price2 Good customer service3 Good Customer care4 Effective Social network

Costco have winning strategy to focus on customer need (Lowest price) and try to satisfy them (customer care amp service)

Costcorsquos Prices

Costco Prices are Lowest

(they always try to make try to make price is lower than their rivals)

1 Focusing on customer need (Business strategy)

(Buy quality product with the best price to save money)

2 Try to improve customer care amp service better than other rival ndash payment delivery methodshellip)

Compensation Policies

Overview - In 2015 Costco employs about 205000 employees (88000 are part-time employees and 117000 full-time employees) (Statista 2015)

-Ranked as second best employer in the US (Clare 2015)

-The companyrsquos turnover rate is kept at 5 for employees who have worked at Costco for more than a year (Aaron 2014)

Overview- Craig Jelinek ndash the CEO of Costco believes that a more rewarding workplace will eventually lower employee turnover rate boost their productivity and on-job performance (Aaron 2014)

Compensation Practices Comparison

Costco Samrsquos Club BJrsquos

Pay rate Average of $20hour (Aaron 2014) $9 ndash 13hour (PayScale nd) $9 ndash 13hour (PayScale nd)

Health-based benefits

Medical Dental Mental health and substance abuse Pharmacy Vision and hearing aid coverage Personal wellness tools care network behavioral health (Costco 2016)

Consumer-directed health plans Vision Dental Counseling services Illness protection (Walmart Careers 2016)

Medical Dental Employee assistance program (BJrsquos Careers 2016)

Financial-based benefits

401(k) retirement plan Stock purchase plan Money management information employee self-service (Costco 2016)

401(k) retirement plan Stock purchase plan Discount cards when buying at Walmart and Samrsquos club (Walmart Careers 2016)

401(k) retirement plan (BJrsquos Careers 2016)

Other benefits Reimbursement account Various forms of insurance(Costco 2016)

Various forms of insurance (Walmart Careers 2016)

Flexible spending account Various forms of insurance (BJrsquos Careers 2016)

COSTCO VS SAMrsquoS CLUB VS BJrsquoS

SWOT Analysis

STRENGTHS WEAKNESSES- Well-perceived private label brand (Kirkland

Signature) (Euromonitor 2015)

- Available gasoline and other additional services encourage more frequent shopping (MartketLine 2015)

- Higher market coverage (9 markets) compared to Samrsquos Club (only 4) (Euromonitor 2015)

- Low cost operating model (MarketLine 2015)

- Healthy financial position (Euromonitor 2015)

- Dependence on North America markets (MarketLine 2015)

- Limited product choice (only 3700 products) (MartketLine 2015)

SWOT AnalysisOPPORTUNITIES THREATS- International expansion enable Costco to access to a

large customer base(Euromonitor 2015)

- Multichannel retailing enables Costco to widen its reach (Euromonitor 2015)

- Face fierce competition from various types of retailers (Euromonitor 2015)

- Catered to middle-high income class but faces challenges in US as such class proportion continues to decrease (Euromonitor 2015)

- Low customersrsquo loyalty

Recommendations Recommendation 1 Focus in developing internet retailing and multi-channel strategies

- Capitalize on its strong financial position to invest in creating new retailing channels

- Allow to minimize threats posed by other retailing channels

- Stronger online presence enables Costco to reach a wider customer base

Recommendations Recommendation 2 Global expansions into untapped markets

- Reduce Costcorsquos dependence on North America market

- Partnerships with other Internet retailers can allow Costco to enter untapped markets without physical presence

Revision

1 The process of crafting and executing a companyrsquos strategy consists ofA Developing a Strategic missionB Setting ObjectivesC Monitoring and corrective action to short-term fix issuesD All are correct

Revision2 To improve Cash Collection Cycle the company should

A Extend DSO Shorter DPOB Extend DSO Extend DPOC Shorter DSO Shorter DPOD Shorter DSO Extend DPO

Revision

3 Four main process in developing Balanced Scorecard

A Translating the vision Communicating and linking Business planning Feedback and learning

B Translating the vision Business planning Communicating and linkingF eedback and learning

C Develop mission Business planning Communicating and linking Feedback and learning

D Develop mission Communicating and linking Business planning Feedback and learning

Revision4 Which statement is TRUE

A A company achieves competitive advantage when an attractive number of Buyers are drawn to purchase its products or services rather than those of competitors

B A company achieves sustainable advantage when the basis for buyer references for its product offering relative to the offerings of its rivals is durable despite competitorsrsquo efforts to nullify or overcome the appeal of its product offering

C Both are TRUED Both are FALSE

References Euromonitor International 2015 Costco Wholesale Corp in Retailing (World) Retrieved January 25 2016 from httpwwweuromonitorcom

Euromonitor International 2016 Costco Wholesale Canada Ltd in Retailing (Canada) Retrieved January 25 2016 from httpwwweuromonitorcom

MarketLine 2015 Costco Wholesale Corporation Retrieved January 24 2016 from httpwwwmarketlinecom

Statista 2015 Number of Costco employees worldwide from 2011 ndash 2015 (in 1000s) Statista ndash The Statistics Portal Retrieved from httpwwwstatistacomstatistics284430costco-number-of-employees-worldwide-2011-2013

Aaron T (2014 October 23) Why Costco Pays Its Retail Employees $20 An Hour Business Insider Retrieved from httpwwwbusinessinsidercomcostco-pays-retail-employees-20-an-hour-2014-10

Costcorsquos Prices

Costco Prices are Lowest

(they always try to make try to make price is lower than their rivals)

1 Focusing on customer need (Business strategy)

(Buy quality product with the best price to save money)

2 Try to improve customer care amp service better than other rival ndash payment delivery methodshellip)

Compensation Policies

Overview - In 2015 Costco employs about 205000 employees (88000 are part-time employees and 117000 full-time employees) (Statista 2015)

-Ranked as second best employer in the US (Clare 2015)

-The companyrsquos turnover rate is kept at 5 for employees who have worked at Costco for more than a year (Aaron 2014)

Overview- Craig Jelinek ndash the CEO of Costco believes that a more rewarding workplace will eventually lower employee turnover rate boost their productivity and on-job performance (Aaron 2014)

Compensation Practices Comparison

Costco Samrsquos Club BJrsquos

Pay rate Average of $20hour (Aaron 2014) $9 ndash 13hour (PayScale nd) $9 ndash 13hour (PayScale nd)

Health-based benefits

Medical Dental Mental health and substance abuse Pharmacy Vision and hearing aid coverage Personal wellness tools care network behavioral health (Costco 2016)

Consumer-directed health plans Vision Dental Counseling services Illness protection (Walmart Careers 2016)

Medical Dental Employee assistance program (BJrsquos Careers 2016)

Financial-based benefits

401(k) retirement plan Stock purchase plan Money management information employee self-service (Costco 2016)

401(k) retirement plan Stock purchase plan Discount cards when buying at Walmart and Samrsquos club (Walmart Careers 2016)

401(k) retirement plan (BJrsquos Careers 2016)

Other benefits Reimbursement account Various forms of insurance(Costco 2016)

Various forms of insurance (Walmart Careers 2016)

Flexible spending account Various forms of insurance (BJrsquos Careers 2016)

COSTCO VS SAMrsquoS CLUB VS BJrsquoS

SWOT Analysis

STRENGTHS WEAKNESSES- Well-perceived private label brand (Kirkland

Signature) (Euromonitor 2015)

- Available gasoline and other additional services encourage more frequent shopping (MartketLine 2015)

- Higher market coverage (9 markets) compared to Samrsquos Club (only 4) (Euromonitor 2015)

- Low cost operating model (MarketLine 2015)

- Healthy financial position (Euromonitor 2015)

- Dependence on North America markets (MarketLine 2015)

- Limited product choice (only 3700 products) (MartketLine 2015)

SWOT AnalysisOPPORTUNITIES THREATS- International expansion enable Costco to access to a

large customer base(Euromonitor 2015)

- Multichannel retailing enables Costco to widen its reach (Euromonitor 2015)

- Face fierce competition from various types of retailers (Euromonitor 2015)

- Catered to middle-high income class but faces challenges in US as such class proportion continues to decrease (Euromonitor 2015)

- Low customersrsquo loyalty

Recommendations Recommendation 1 Focus in developing internet retailing and multi-channel strategies

- Capitalize on its strong financial position to invest in creating new retailing channels

- Allow to minimize threats posed by other retailing channels

- Stronger online presence enables Costco to reach a wider customer base

Recommendations Recommendation 2 Global expansions into untapped markets

- Reduce Costcorsquos dependence on North America market

- Partnerships with other Internet retailers can allow Costco to enter untapped markets without physical presence

Revision

1 The process of crafting and executing a companyrsquos strategy consists ofA Developing a Strategic missionB Setting ObjectivesC Monitoring and corrective action to short-term fix issuesD All are correct

Revision2 To improve Cash Collection Cycle the company should

A Extend DSO Shorter DPOB Extend DSO Extend DPOC Shorter DSO Shorter DPOD Shorter DSO Extend DPO

Revision

3 Four main process in developing Balanced Scorecard

A Translating the vision Communicating and linking Business planning Feedback and learning

B Translating the vision Business planning Communicating and linkingF eedback and learning

C Develop mission Business planning Communicating and linking Feedback and learning

D Develop mission Communicating and linking Business planning Feedback and learning

Revision4 Which statement is TRUE

A A company achieves competitive advantage when an attractive number of Buyers are drawn to purchase its products or services rather than those of competitors

B A company achieves sustainable advantage when the basis for buyer references for its product offering relative to the offerings of its rivals is durable despite competitorsrsquo efforts to nullify or overcome the appeal of its product offering

C Both are TRUED Both are FALSE

References Euromonitor International 2015 Costco Wholesale Corp in Retailing (World) Retrieved January 25 2016 from httpwwweuromonitorcom

Euromonitor International 2016 Costco Wholesale Canada Ltd in Retailing (Canada) Retrieved January 25 2016 from httpwwweuromonitorcom

MarketLine 2015 Costco Wholesale Corporation Retrieved January 24 2016 from httpwwwmarketlinecom

Statista 2015 Number of Costco employees worldwide from 2011 ndash 2015 (in 1000s) Statista ndash The Statistics Portal Retrieved from httpwwwstatistacomstatistics284430costco-number-of-employees-worldwide-2011-2013

Aaron T (2014 October 23) Why Costco Pays Its Retail Employees $20 An Hour Business Insider Retrieved from httpwwwbusinessinsidercomcostco-pays-retail-employees-20-an-hour-2014-10

Compensation Policies

Overview - In 2015 Costco employs about 205000 employees (88000 are part-time employees and 117000 full-time employees) (Statista 2015)

-Ranked as second best employer in the US (Clare 2015)

-The companyrsquos turnover rate is kept at 5 for employees who have worked at Costco for more than a year (Aaron 2014)

Overview- Craig Jelinek ndash the CEO of Costco believes that a more rewarding workplace will eventually lower employee turnover rate boost their productivity and on-job performance (Aaron 2014)

Compensation Practices Comparison

Costco Samrsquos Club BJrsquos

Pay rate Average of $20hour (Aaron 2014) $9 ndash 13hour (PayScale nd) $9 ndash 13hour (PayScale nd)

Health-based benefits

Medical Dental Mental health and substance abuse Pharmacy Vision and hearing aid coverage Personal wellness tools care network behavioral health (Costco 2016)

Consumer-directed health plans Vision Dental Counseling services Illness protection (Walmart Careers 2016)

Medical Dental Employee assistance program (BJrsquos Careers 2016)

Financial-based benefits

401(k) retirement plan Stock purchase plan Money management information employee self-service (Costco 2016)

401(k) retirement plan Stock purchase plan Discount cards when buying at Walmart and Samrsquos club (Walmart Careers 2016)

401(k) retirement plan (BJrsquos Careers 2016)

Other benefits Reimbursement account Various forms of insurance(Costco 2016)

Various forms of insurance (Walmart Careers 2016)

Flexible spending account Various forms of insurance (BJrsquos Careers 2016)

COSTCO VS SAMrsquoS CLUB VS BJrsquoS

SWOT Analysis

STRENGTHS WEAKNESSES- Well-perceived private label brand (Kirkland

Signature) (Euromonitor 2015)

- Available gasoline and other additional services encourage more frequent shopping (MartketLine 2015)

- Higher market coverage (9 markets) compared to Samrsquos Club (only 4) (Euromonitor 2015)

- Low cost operating model (MarketLine 2015)

- Healthy financial position (Euromonitor 2015)

- Dependence on North America markets (MarketLine 2015)

- Limited product choice (only 3700 products) (MartketLine 2015)

SWOT AnalysisOPPORTUNITIES THREATS- International expansion enable Costco to access to a

large customer base(Euromonitor 2015)

- Multichannel retailing enables Costco to widen its reach (Euromonitor 2015)

- Face fierce competition from various types of retailers (Euromonitor 2015)

- Catered to middle-high income class but faces challenges in US as such class proportion continues to decrease (Euromonitor 2015)

- Low customersrsquo loyalty

Recommendations Recommendation 1 Focus in developing internet retailing and multi-channel strategies

- Capitalize on its strong financial position to invest in creating new retailing channels

- Allow to minimize threats posed by other retailing channels

- Stronger online presence enables Costco to reach a wider customer base

Recommendations Recommendation 2 Global expansions into untapped markets

- Reduce Costcorsquos dependence on North America market

- Partnerships with other Internet retailers can allow Costco to enter untapped markets without physical presence

Revision

1 The process of crafting and executing a companyrsquos strategy consists ofA Developing a Strategic missionB Setting ObjectivesC Monitoring and corrective action to short-term fix issuesD All are correct

Revision2 To improve Cash Collection Cycle the company should

A Extend DSO Shorter DPOB Extend DSO Extend DPOC Shorter DSO Shorter DPOD Shorter DSO Extend DPO

Revision

3 Four main process in developing Balanced Scorecard

A Translating the vision Communicating and linking Business planning Feedback and learning

B Translating the vision Business planning Communicating and linkingF eedback and learning

C Develop mission Business planning Communicating and linking Feedback and learning

D Develop mission Communicating and linking Business planning Feedback and learning

Revision4 Which statement is TRUE

A A company achieves competitive advantage when an attractive number of Buyers are drawn to purchase its products or services rather than those of competitors

B A company achieves sustainable advantage when the basis for buyer references for its product offering relative to the offerings of its rivals is durable despite competitorsrsquo efforts to nullify or overcome the appeal of its product offering

C Both are TRUED Both are FALSE

References Euromonitor International 2015 Costco Wholesale Corp in Retailing (World) Retrieved January 25 2016 from httpwwweuromonitorcom

Euromonitor International 2016 Costco Wholesale Canada Ltd in Retailing (Canada) Retrieved January 25 2016 from httpwwweuromonitorcom

MarketLine 2015 Costco Wholesale Corporation Retrieved January 24 2016 from httpwwwmarketlinecom

Statista 2015 Number of Costco employees worldwide from 2011 ndash 2015 (in 1000s) Statista ndash The Statistics Portal Retrieved from httpwwwstatistacomstatistics284430costco-number-of-employees-worldwide-2011-2013

Aaron T (2014 October 23) Why Costco Pays Its Retail Employees $20 An Hour Business Insider Retrieved from httpwwwbusinessinsidercomcostco-pays-retail-employees-20-an-hour-2014-10

Overview - In 2015 Costco employs about 205000 employees (88000 are part-time employees and 117000 full-time employees) (Statista 2015)

-Ranked as second best employer in the US (Clare 2015)

-The companyrsquos turnover rate is kept at 5 for employees who have worked at Costco for more than a year (Aaron 2014)

Overview- Craig Jelinek ndash the CEO of Costco believes that a more rewarding workplace will eventually lower employee turnover rate boost their productivity and on-job performance (Aaron 2014)

Compensation Practices Comparison

Costco Samrsquos Club BJrsquos

Pay rate Average of $20hour (Aaron 2014) $9 ndash 13hour (PayScale nd) $9 ndash 13hour (PayScale nd)

Health-based benefits

Medical Dental Mental health and substance abuse Pharmacy Vision and hearing aid coverage Personal wellness tools care network behavioral health (Costco 2016)

Consumer-directed health plans Vision Dental Counseling services Illness protection (Walmart Careers 2016)

Medical Dental Employee assistance program (BJrsquos Careers 2016)

Financial-based benefits

401(k) retirement plan Stock purchase plan Money management information employee self-service (Costco 2016)

401(k) retirement plan Stock purchase plan Discount cards when buying at Walmart and Samrsquos club (Walmart Careers 2016)

401(k) retirement plan (BJrsquos Careers 2016)

Other benefits Reimbursement account Various forms of insurance(Costco 2016)

Various forms of insurance (Walmart Careers 2016)

Flexible spending account Various forms of insurance (BJrsquos Careers 2016)

COSTCO VS SAMrsquoS CLUB VS BJrsquoS

SWOT Analysis

STRENGTHS WEAKNESSES- Well-perceived private label brand (Kirkland

Signature) (Euromonitor 2015)

- Available gasoline and other additional services encourage more frequent shopping (MartketLine 2015)

- Higher market coverage (9 markets) compared to Samrsquos Club (only 4) (Euromonitor 2015)

- Low cost operating model (MarketLine 2015)

- Healthy financial position (Euromonitor 2015)

- Dependence on North America markets (MarketLine 2015)

- Limited product choice (only 3700 products) (MartketLine 2015)

SWOT AnalysisOPPORTUNITIES THREATS- International expansion enable Costco to access to a

large customer base(Euromonitor 2015)

- Multichannel retailing enables Costco to widen its reach (Euromonitor 2015)

- Face fierce competition from various types of retailers (Euromonitor 2015)

- Catered to middle-high income class but faces challenges in US as such class proportion continues to decrease (Euromonitor 2015)

- Low customersrsquo loyalty

Recommendations Recommendation 1 Focus in developing internet retailing and multi-channel strategies

- Capitalize on its strong financial position to invest in creating new retailing channels

- Allow to minimize threats posed by other retailing channels

- Stronger online presence enables Costco to reach a wider customer base

Recommendations Recommendation 2 Global expansions into untapped markets

- Reduce Costcorsquos dependence on North America market

- Partnerships with other Internet retailers can allow Costco to enter untapped markets without physical presence

Revision

1 The process of crafting and executing a companyrsquos strategy consists ofA Developing a Strategic missionB Setting ObjectivesC Monitoring and corrective action to short-term fix issuesD All are correct

Revision2 To improve Cash Collection Cycle the company should

A Extend DSO Shorter DPOB Extend DSO Extend DPOC Shorter DSO Shorter DPOD Shorter DSO Extend DPO

Revision

3 Four main process in developing Balanced Scorecard

A Translating the vision Communicating and linking Business planning Feedback and learning

B Translating the vision Business planning Communicating and linkingF eedback and learning

C Develop mission Business planning Communicating and linking Feedback and learning

D Develop mission Communicating and linking Business planning Feedback and learning

Revision4 Which statement is TRUE

A A company achieves competitive advantage when an attractive number of Buyers are drawn to purchase its products or services rather than those of competitors

B A company achieves sustainable advantage when the basis for buyer references for its product offering relative to the offerings of its rivals is durable despite competitorsrsquo efforts to nullify or overcome the appeal of its product offering

C Both are TRUED Both are FALSE

References Euromonitor International 2015 Costco Wholesale Corp in Retailing (World) Retrieved January 25 2016 from httpwwweuromonitorcom

Euromonitor International 2016 Costco Wholesale Canada Ltd in Retailing (Canada) Retrieved January 25 2016 from httpwwweuromonitorcom

MarketLine 2015 Costco Wholesale Corporation Retrieved January 24 2016 from httpwwwmarketlinecom

Statista 2015 Number of Costco employees worldwide from 2011 ndash 2015 (in 1000s) Statista ndash The Statistics Portal Retrieved from httpwwwstatistacomstatistics284430costco-number-of-employees-worldwide-2011-2013

Aaron T (2014 October 23) Why Costco Pays Its Retail Employees $20 An Hour Business Insider Retrieved from httpwwwbusinessinsidercomcostco-pays-retail-employees-20-an-hour-2014-10

Overview- Craig Jelinek ndash the CEO of Costco believes that a more rewarding workplace will eventually lower employee turnover rate boost their productivity and on-job performance (Aaron 2014)

Compensation Practices Comparison

Costco Samrsquos Club BJrsquos

Pay rate Average of $20hour (Aaron 2014) $9 ndash 13hour (PayScale nd) $9 ndash 13hour (PayScale nd)

Health-based benefits

Medical Dental Mental health and substance abuse Pharmacy Vision and hearing aid coverage Personal wellness tools care network behavioral health (Costco 2016)

Consumer-directed health plans Vision Dental Counseling services Illness protection (Walmart Careers 2016)

Medical Dental Employee assistance program (BJrsquos Careers 2016)

Financial-based benefits

401(k) retirement plan Stock purchase plan Money management information employee self-service (Costco 2016)

401(k) retirement plan Stock purchase plan Discount cards when buying at Walmart and Samrsquos club (Walmart Careers 2016)

401(k) retirement plan (BJrsquos Careers 2016)

Other benefits Reimbursement account Various forms of insurance(Costco 2016)

Various forms of insurance (Walmart Careers 2016)

Flexible spending account Various forms of insurance (BJrsquos Careers 2016)

COSTCO VS SAMrsquoS CLUB VS BJrsquoS

SWOT Analysis

STRENGTHS WEAKNESSES- Well-perceived private label brand (Kirkland

Signature) (Euromonitor 2015)

- Available gasoline and other additional services encourage more frequent shopping (MartketLine 2015)

- Higher market coverage (9 markets) compared to Samrsquos Club (only 4) (Euromonitor 2015)

- Low cost operating model (MarketLine 2015)

- Healthy financial position (Euromonitor 2015)

- Dependence on North America markets (MarketLine 2015)

- Limited product choice (only 3700 products) (MartketLine 2015)

SWOT AnalysisOPPORTUNITIES THREATS- International expansion enable Costco to access to a

large customer base(Euromonitor 2015)

- Multichannel retailing enables Costco to widen its reach (Euromonitor 2015)

- Face fierce competition from various types of retailers (Euromonitor 2015)

- Catered to middle-high income class but faces challenges in US as such class proportion continues to decrease (Euromonitor 2015)

- Low customersrsquo loyalty

Recommendations Recommendation 1 Focus in developing internet retailing and multi-channel strategies

- Capitalize on its strong financial position to invest in creating new retailing channels

- Allow to minimize threats posed by other retailing channels

- Stronger online presence enables Costco to reach a wider customer base

Recommendations Recommendation 2 Global expansions into untapped markets

- Reduce Costcorsquos dependence on North America market

- Partnerships with other Internet retailers can allow Costco to enter untapped markets without physical presence

Revision

1 The process of crafting and executing a companyrsquos strategy consists ofA Developing a Strategic missionB Setting ObjectivesC Monitoring and corrective action to short-term fix issuesD All are correct

Revision2 To improve Cash Collection Cycle the company should

A Extend DSO Shorter DPOB Extend DSO Extend DPOC Shorter DSO Shorter DPOD Shorter DSO Extend DPO

Revision

3 Four main process in developing Balanced Scorecard

A Translating the vision Communicating and linking Business planning Feedback and learning

B Translating the vision Business planning Communicating and linkingF eedback and learning

C Develop mission Business planning Communicating and linking Feedback and learning

D Develop mission Communicating and linking Business planning Feedback and learning

Revision4 Which statement is TRUE

A A company achieves competitive advantage when an attractive number of Buyers are drawn to purchase its products or services rather than those of competitors

B A company achieves sustainable advantage when the basis for buyer references for its product offering relative to the offerings of its rivals is durable despite competitorsrsquo efforts to nullify or overcome the appeal of its product offering

C Both are TRUED Both are FALSE

References Euromonitor International 2015 Costco Wholesale Corp in Retailing (World) Retrieved January 25 2016 from httpwwweuromonitorcom

Euromonitor International 2016 Costco Wholesale Canada Ltd in Retailing (Canada) Retrieved January 25 2016 from httpwwweuromonitorcom

MarketLine 2015 Costco Wholesale Corporation Retrieved January 24 2016 from httpwwwmarketlinecom

Statista 2015 Number of Costco employees worldwide from 2011 ndash 2015 (in 1000s) Statista ndash The Statistics Portal Retrieved from httpwwwstatistacomstatistics284430costco-number-of-employees-worldwide-2011-2013

Aaron T (2014 October 23) Why Costco Pays Its Retail Employees $20 An Hour Business Insider Retrieved from httpwwwbusinessinsidercomcostco-pays-retail-employees-20-an-hour-2014-10

Compensation Practices Comparison

Costco Samrsquos Club BJrsquos

Pay rate Average of $20hour (Aaron 2014) $9 ndash 13hour (PayScale nd) $9 ndash 13hour (PayScale nd)

Health-based benefits

Medical Dental Mental health and substance abuse Pharmacy Vision and hearing aid coverage Personal wellness tools care network behavioral health (Costco 2016)

Consumer-directed health plans Vision Dental Counseling services Illness protection (Walmart Careers 2016)

Medical Dental Employee assistance program (BJrsquos Careers 2016)

Financial-based benefits

401(k) retirement plan Stock purchase plan Money management information employee self-service (Costco 2016)

401(k) retirement plan Stock purchase plan Discount cards when buying at Walmart and Samrsquos club (Walmart Careers 2016)

401(k) retirement plan (BJrsquos Careers 2016)

Other benefits Reimbursement account Various forms of insurance(Costco 2016)

Various forms of insurance (Walmart Careers 2016)

Flexible spending account Various forms of insurance (BJrsquos Careers 2016)

COSTCO VS SAMrsquoS CLUB VS BJrsquoS

SWOT Analysis

STRENGTHS WEAKNESSES- Well-perceived private label brand (Kirkland

Signature) (Euromonitor 2015)

- Available gasoline and other additional services encourage more frequent shopping (MartketLine 2015)

- Higher market coverage (9 markets) compared to Samrsquos Club (only 4) (Euromonitor 2015)

- Low cost operating model (MarketLine 2015)

- Healthy financial position (Euromonitor 2015)

- Dependence on North America markets (MarketLine 2015)

- Limited product choice (only 3700 products) (MartketLine 2015)

SWOT AnalysisOPPORTUNITIES THREATS- International expansion enable Costco to access to a

large customer base(Euromonitor 2015)

- Multichannel retailing enables Costco to widen its reach (Euromonitor 2015)

- Face fierce competition from various types of retailers (Euromonitor 2015)

- Catered to middle-high income class but faces challenges in US as such class proportion continues to decrease (Euromonitor 2015)

- Low customersrsquo loyalty

Recommendations Recommendation 1 Focus in developing internet retailing and multi-channel strategies

- Capitalize on its strong financial position to invest in creating new retailing channels

- Allow to minimize threats posed by other retailing channels

- Stronger online presence enables Costco to reach a wider customer base

Recommendations Recommendation 2 Global expansions into untapped markets

- Reduce Costcorsquos dependence on North America market

- Partnerships with other Internet retailers can allow Costco to enter untapped markets without physical presence

Revision

1 The process of crafting and executing a companyrsquos strategy consists ofA Developing a Strategic missionB Setting ObjectivesC Monitoring and corrective action to short-term fix issuesD All are correct

Revision2 To improve Cash Collection Cycle the company should

A Extend DSO Shorter DPOB Extend DSO Extend DPOC Shorter DSO Shorter DPOD Shorter DSO Extend DPO

Revision

3 Four main process in developing Balanced Scorecard

A Translating the vision Communicating and linking Business planning Feedback and learning

B Translating the vision Business planning Communicating and linkingF eedback and learning

C Develop mission Business planning Communicating and linking Feedback and learning

D Develop mission Communicating and linking Business planning Feedback and learning

Revision4 Which statement is TRUE

A A company achieves competitive advantage when an attractive number of Buyers are drawn to purchase its products or services rather than those of competitors

B A company achieves sustainable advantage when the basis for buyer references for its product offering relative to the offerings of its rivals is durable despite competitorsrsquo efforts to nullify or overcome the appeal of its product offering

C Both are TRUED Both are FALSE

References Euromonitor International 2015 Costco Wholesale Corp in Retailing (World) Retrieved January 25 2016 from httpwwweuromonitorcom

Euromonitor International 2016 Costco Wholesale Canada Ltd in Retailing (Canada) Retrieved January 25 2016 from httpwwweuromonitorcom

MarketLine 2015 Costco Wholesale Corporation Retrieved January 24 2016 from httpwwwmarketlinecom

Statista 2015 Number of Costco employees worldwide from 2011 ndash 2015 (in 1000s) Statista ndash The Statistics Portal Retrieved from httpwwwstatistacomstatistics284430costco-number-of-employees-worldwide-2011-2013

Aaron T (2014 October 23) Why Costco Pays Its Retail Employees $20 An Hour Business Insider Retrieved from httpwwwbusinessinsidercomcostco-pays-retail-employees-20-an-hour-2014-10

COSTCO VS SAMrsquoS CLUB VS BJrsquoS

SWOT Analysis

STRENGTHS WEAKNESSES- Well-perceived private label brand (Kirkland

Signature) (Euromonitor 2015)

- Available gasoline and other additional services encourage more frequent shopping (MartketLine 2015)

- Higher market coverage (9 markets) compared to Samrsquos Club (only 4) (Euromonitor 2015)

- Low cost operating model (MarketLine 2015)

- Healthy financial position (Euromonitor 2015)

- Dependence on North America markets (MarketLine 2015)

- Limited product choice (only 3700 products) (MartketLine 2015)

SWOT AnalysisOPPORTUNITIES THREATS- International expansion enable Costco to access to a

large customer base(Euromonitor 2015)

- Multichannel retailing enables Costco to widen its reach (Euromonitor 2015)

- Face fierce competition from various types of retailers (Euromonitor 2015)

- Catered to middle-high income class but faces challenges in US as such class proportion continues to decrease (Euromonitor 2015)

- Low customersrsquo loyalty

Recommendations Recommendation 1 Focus in developing internet retailing and multi-channel strategies

- Capitalize on its strong financial position to invest in creating new retailing channels

- Allow to minimize threats posed by other retailing channels

- Stronger online presence enables Costco to reach a wider customer base

Recommendations Recommendation 2 Global expansions into untapped markets

- Reduce Costcorsquos dependence on North America market

- Partnerships with other Internet retailers can allow Costco to enter untapped markets without physical presence

Revision

1 The process of crafting and executing a companyrsquos strategy consists ofA Developing a Strategic missionB Setting ObjectivesC Monitoring and corrective action to short-term fix issuesD All are correct

Revision2 To improve Cash Collection Cycle the company should

A Extend DSO Shorter DPOB Extend DSO Extend DPOC Shorter DSO Shorter DPOD Shorter DSO Extend DPO

Revision

3 Four main process in developing Balanced Scorecard

A Translating the vision Communicating and linking Business planning Feedback and learning

B Translating the vision Business planning Communicating and linkingF eedback and learning

C Develop mission Business planning Communicating and linking Feedback and learning

D Develop mission Communicating and linking Business planning Feedback and learning

Revision4 Which statement is TRUE

A A company achieves competitive advantage when an attractive number of Buyers are drawn to purchase its products or services rather than those of competitors

B A company achieves sustainable advantage when the basis for buyer references for its product offering relative to the offerings of its rivals is durable despite competitorsrsquo efforts to nullify or overcome the appeal of its product offering

C Both are TRUED Both are FALSE

References Euromonitor International 2015 Costco Wholesale Corp in Retailing (World) Retrieved January 25 2016 from httpwwweuromonitorcom

Euromonitor International 2016 Costco Wholesale Canada Ltd in Retailing (Canada) Retrieved January 25 2016 from httpwwweuromonitorcom

MarketLine 2015 Costco Wholesale Corporation Retrieved January 24 2016 from httpwwwmarketlinecom

Statista 2015 Number of Costco employees worldwide from 2011 ndash 2015 (in 1000s) Statista ndash The Statistics Portal Retrieved from httpwwwstatistacomstatistics284430costco-number-of-employees-worldwide-2011-2013

Aaron T (2014 October 23) Why Costco Pays Its Retail Employees $20 An Hour Business Insider Retrieved from httpwwwbusinessinsidercomcostco-pays-retail-employees-20-an-hour-2014-10

SWOT Analysis

STRENGTHS WEAKNESSES- Well-perceived private label brand (Kirkland

Signature) (Euromonitor 2015)

- Available gasoline and other additional services encourage more frequent shopping (MartketLine 2015)

- Higher market coverage (9 markets) compared to Samrsquos Club (only 4) (Euromonitor 2015)

- Low cost operating model (MarketLine 2015)

- Healthy financial position (Euromonitor 2015)

- Dependence on North America markets (MarketLine 2015)

- Limited product choice (only 3700 products) (MartketLine 2015)

SWOT AnalysisOPPORTUNITIES THREATS- International expansion enable Costco to access to a

large customer base(Euromonitor 2015)

- Multichannel retailing enables Costco to widen its reach (Euromonitor 2015)

- Face fierce competition from various types of retailers (Euromonitor 2015)

- Catered to middle-high income class but faces challenges in US as such class proportion continues to decrease (Euromonitor 2015)

- Low customersrsquo loyalty

Recommendations Recommendation 1 Focus in developing internet retailing and multi-channel strategies

- Capitalize on its strong financial position to invest in creating new retailing channels

- Allow to minimize threats posed by other retailing channels

- Stronger online presence enables Costco to reach a wider customer base

Recommendations Recommendation 2 Global expansions into untapped markets

- Reduce Costcorsquos dependence on North America market

- Partnerships with other Internet retailers can allow Costco to enter untapped markets without physical presence

Revision

1 The process of crafting and executing a companyrsquos strategy consists ofA Developing a Strategic missionB Setting ObjectivesC Monitoring and corrective action to short-term fix issuesD All are correct

Revision2 To improve Cash Collection Cycle the company should

A Extend DSO Shorter DPOB Extend DSO Extend DPOC Shorter DSO Shorter DPOD Shorter DSO Extend DPO

Revision

3 Four main process in developing Balanced Scorecard

A Translating the vision Communicating and linking Business planning Feedback and learning

B Translating the vision Business planning Communicating and linkingF eedback and learning

C Develop mission Business planning Communicating and linking Feedback and learning

D Develop mission Communicating and linking Business planning Feedback and learning

Revision4 Which statement is TRUE

A A company achieves competitive advantage when an attractive number of Buyers are drawn to purchase its products or services rather than those of competitors

B A company achieves sustainable advantage when the basis for buyer references for its product offering relative to the offerings of its rivals is durable despite competitorsrsquo efforts to nullify or overcome the appeal of its product offering

C Both are TRUED Both are FALSE

References Euromonitor International 2015 Costco Wholesale Corp in Retailing (World) Retrieved January 25 2016 from httpwwweuromonitorcom

Euromonitor International 2016 Costco Wholesale Canada Ltd in Retailing (Canada) Retrieved January 25 2016 from httpwwweuromonitorcom

MarketLine 2015 Costco Wholesale Corporation Retrieved January 24 2016 from httpwwwmarketlinecom

Statista 2015 Number of Costco employees worldwide from 2011 ndash 2015 (in 1000s) Statista ndash The Statistics Portal Retrieved from httpwwwstatistacomstatistics284430costco-number-of-employees-worldwide-2011-2013

Aaron T (2014 October 23) Why Costco Pays Its Retail Employees $20 An Hour Business Insider Retrieved from httpwwwbusinessinsidercomcostco-pays-retail-employees-20-an-hour-2014-10

SWOT AnalysisOPPORTUNITIES THREATS- International expansion enable Costco to access to a

large customer base(Euromonitor 2015)

- Multichannel retailing enables Costco to widen its reach (Euromonitor 2015)

- Face fierce competition from various types of retailers (Euromonitor 2015)

- Catered to middle-high income class but faces challenges in US as such class proportion continues to decrease (Euromonitor 2015)

- Low customersrsquo loyalty

Recommendations Recommendation 1 Focus in developing internet retailing and multi-channel strategies

- Capitalize on its strong financial position to invest in creating new retailing channels

- Allow to minimize threats posed by other retailing channels

- Stronger online presence enables Costco to reach a wider customer base

Recommendations Recommendation 2 Global expansions into untapped markets

- Reduce Costcorsquos dependence on North America market

- Partnerships with other Internet retailers can allow Costco to enter untapped markets without physical presence

Revision

1 The process of crafting and executing a companyrsquos strategy consists ofA Developing a Strategic missionB Setting ObjectivesC Monitoring and corrective action to short-term fix issuesD All are correct

Revision2 To improve Cash Collection Cycle the company should

A Extend DSO Shorter DPOB Extend DSO Extend DPOC Shorter DSO Shorter DPOD Shorter DSO Extend DPO

Revision

3 Four main process in developing Balanced Scorecard

A Translating the vision Communicating and linking Business planning Feedback and learning

B Translating the vision Business planning Communicating and linkingF eedback and learning

C Develop mission Business planning Communicating and linking Feedback and learning

D Develop mission Communicating and linking Business planning Feedback and learning

Revision4 Which statement is TRUE

A A company achieves competitive advantage when an attractive number of Buyers are drawn to purchase its products or services rather than those of competitors

B A company achieves sustainable advantage when the basis for buyer references for its product offering relative to the offerings of its rivals is durable despite competitorsrsquo efforts to nullify or overcome the appeal of its product offering

C Both are TRUED Both are FALSE

References Euromonitor International 2015 Costco Wholesale Corp in Retailing (World) Retrieved January 25 2016 from httpwwweuromonitorcom

Euromonitor International 2016 Costco Wholesale Canada Ltd in Retailing (Canada) Retrieved January 25 2016 from httpwwweuromonitorcom

MarketLine 2015 Costco Wholesale Corporation Retrieved January 24 2016 from httpwwwmarketlinecom

Statista 2015 Number of Costco employees worldwide from 2011 ndash 2015 (in 1000s) Statista ndash The Statistics Portal Retrieved from httpwwwstatistacomstatistics284430costco-number-of-employees-worldwide-2011-2013

Aaron T (2014 October 23) Why Costco Pays Its Retail Employees $20 An Hour Business Insider Retrieved from httpwwwbusinessinsidercomcostco-pays-retail-employees-20-an-hour-2014-10

Recommendations Recommendation 1 Focus in developing internet retailing and multi-channel strategies

- Capitalize on its strong financial position to invest in creating new retailing channels

- Allow to minimize threats posed by other retailing channels

- Stronger online presence enables Costco to reach a wider customer base

Recommendations Recommendation 2 Global expansions into untapped markets

- Reduce Costcorsquos dependence on North America market

- Partnerships with other Internet retailers can allow Costco to enter untapped markets without physical presence

Revision

1 The process of crafting and executing a companyrsquos strategy consists ofA Developing a Strategic missionB Setting ObjectivesC Monitoring and corrective action to short-term fix issuesD All are correct

Revision2 To improve Cash Collection Cycle the company should

A Extend DSO Shorter DPOB Extend DSO Extend DPOC Shorter DSO Shorter DPOD Shorter DSO Extend DPO

Revision

3 Four main process in developing Balanced Scorecard

A Translating the vision Communicating and linking Business planning Feedback and learning

B Translating the vision Business planning Communicating and linkingF eedback and learning

C Develop mission Business planning Communicating and linking Feedback and learning

D Develop mission Communicating and linking Business planning Feedback and learning

Revision4 Which statement is TRUE

A A company achieves competitive advantage when an attractive number of Buyers are drawn to purchase its products or services rather than those of competitors

B A company achieves sustainable advantage when the basis for buyer references for its product offering relative to the offerings of its rivals is durable despite competitorsrsquo efforts to nullify or overcome the appeal of its product offering

C Both are TRUED Both are FALSE

References Euromonitor International 2015 Costco Wholesale Corp in Retailing (World) Retrieved January 25 2016 from httpwwweuromonitorcom

Euromonitor International 2016 Costco Wholesale Canada Ltd in Retailing (Canada) Retrieved January 25 2016 from httpwwweuromonitorcom

MarketLine 2015 Costco Wholesale Corporation Retrieved January 24 2016 from httpwwwmarketlinecom

Statista 2015 Number of Costco employees worldwide from 2011 ndash 2015 (in 1000s) Statista ndash The Statistics Portal Retrieved from httpwwwstatistacomstatistics284430costco-number-of-employees-worldwide-2011-2013

Aaron T (2014 October 23) Why Costco Pays Its Retail Employees $20 An Hour Business Insider Retrieved from httpwwwbusinessinsidercomcostco-pays-retail-employees-20-an-hour-2014-10

Recommendations Recommendation 2 Global expansions into untapped markets

- Reduce Costcorsquos dependence on North America market

- Partnerships with other Internet retailers can allow Costco to enter untapped markets without physical presence

Revision

1 The process of crafting and executing a companyrsquos strategy consists ofA Developing a Strategic missionB Setting ObjectivesC Monitoring and corrective action to short-term fix issuesD All are correct

Revision2 To improve Cash Collection Cycle the company should

A Extend DSO Shorter DPOB Extend DSO Extend DPOC Shorter DSO Shorter DPOD Shorter DSO Extend DPO

Revision

3 Four main process in developing Balanced Scorecard

A Translating the vision Communicating and linking Business planning Feedback and learning

B Translating the vision Business planning Communicating and linkingF eedback and learning

C Develop mission Business planning Communicating and linking Feedback and learning

D Develop mission Communicating and linking Business planning Feedback and learning

Revision4 Which statement is TRUE

A A company achieves competitive advantage when an attractive number of Buyers are drawn to purchase its products or services rather than those of competitors

B A company achieves sustainable advantage when the basis for buyer references for its product offering relative to the offerings of its rivals is durable despite competitorsrsquo efforts to nullify or overcome the appeal of its product offering

C Both are TRUED Both are FALSE

References Euromonitor International 2015 Costco Wholesale Corp in Retailing (World) Retrieved January 25 2016 from httpwwweuromonitorcom

Euromonitor International 2016 Costco Wholesale Canada Ltd in Retailing (Canada) Retrieved January 25 2016 from httpwwweuromonitorcom

MarketLine 2015 Costco Wholesale Corporation Retrieved January 24 2016 from httpwwwmarketlinecom

Statista 2015 Number of Costco employees worldwide from 2011 ndash 2015 (in 1000s) Statista ndash The Statistics Portal Retrieved from httpwwwstatistacomstatistics284430costco-number-of-employees-worldwide-2011-2013

Aaron T (2014 October 23) Why Costco Pays Its Retail Employees $20 An Hour Business Insider Retrieved from httpwwwbusinessinsidercomcostco-pays-retail-employees-20-an-hour-2014-10

Revision

1 The process of crafting and executing a companyrsquos strategy consists ofA Developing a Strategic missionB Setting ObjectivesC Monitoring and corrective action to short-term fix issuesD All are correct

Revision2 To improve Cash Collection Cycle the company should

A Extend DSO Shorter DPOB Extend DSO Extend DPOC Shorter DSO Shorter DPOD Shorter DSO Extend DPO

Revision

3 Four main process in developing Balanced Scorecard

A Translating the vision Communicating and linking Business planning Feedback and learning

B Translating the vision Business planning Communicating and linkingF eedback and learning

C Develop mission Business planning Communicating and linking Feedback and learning

D Develop mission Communicating and linking Business planning Feedback and learning

Revision4 Which statement is TRUE

A A company achieves competitive advantage when an attractive number of Buyers are drawn to purchase its products or services rather than those of competitors

B A company achieves sustainable advantage when the basis for buyer references for its product offering relative to the offerings of its rivals is durable despite competitorsrsquo efforts to nullify or overcome the appeal of its product offering

C Both are TRUED Both are FALSE

References Euromonitor International 2015 Costco Wholesale Corp in Retailing (World) Retrieved January 25 2016 from httpwwweuromonitorcom

Euromonitor International 2016 Costco Wholesale Canada Ltd in Retailing (Canada) Retrieved January 25 2016 from httpwwweuromonitorcom

MarketLine 2015 Costco Wholesale Corporation Retrieved January 24 2016 from httpwwwmarketlinecom

Statista 2015 Number of Costco employees worldwide from 2011 ndash 2015 (in 1000s) Statista ndash The Statistics Portal Retrieved from httpwwwstatistacomstatistics284430costco-number-of-employees-worldwide-2011-2013

Aaron T (2014 October 23) Why Costco Pays Its Retail Employees $20 An Hour Business Insider Retrieved from httpwwwbusinessinsidercomcostco-pays-retail-employees-20-an-hour-2014-10

Revision2 To improve Cash Collection Cycle the company should

A Extend DSO Shorter DPOB Extend DSO Extend DPOC Shorter DSO Shorter DPOD Shorter DSO Extend DPO

Revision

3 Four main process in developing Balanced Scorecard

A Translating the vision Communicating and linking Business planning Feedback and learning

B Translating the vision Business planning Communicating and linkingF eedback and learning

C Develop mission Business planning Communicating and linking Feedback and learning

D Develop mission Communicating and linking Business planning Feedback and learning

Revision4 Which statement is TRUE

A A company achieves competitive advantage when an attractive number of Buyers are drawn to purchase its products or services rather than those of competitors

B A company achieves sustainable advantage when the basis for buyer references for its product offering relative to the offerings of its rivals is durable despite competitorsrsquo efforts to nullify or overcome the appeal of its product offering

C Both are TRUED Both are FALSE

References Euromonitor International 2015 Costco Wholesale Corp in Retailing (World) Retrieved January 25 2016 from httpwwweuromonitorcom

Euromonitor International 2016 Costco Wholesale Canada Ltd in Retailing (Canada) Retrieved January 25 2016 from httpwwweuromonitorcom

MarketLine 2015 Costco Wholesale Corporation Retrieved January 24 2016 from httpwwwmarketlinecom

Statista 2015 Number of Costco employees worldwide from 2011 ndash 2015 (in 1000s) Statista ndash The Statistics Portal Retrieved from httpwwwstatistacomstatistics284430costco-number-of-employees-worldwide-2011-2013

Aaron T (2014 October 23) Why Costco Pays Its Retail Employees $20 An Hour Business Insider Retrieved from httpwwwbusinessinsidercomcostco-pays-retail-employees-20-an-hour-2014-10

Revision

3 Four main process in developing Balanced Scorecard

A Translating the vision Communicating and linking Business planning Feedback and learning

B Translating the vision Business planning Communicating and linkingF eedback and learning

C Develop mission Business planning Communicating and linking Feedback and learning

D Develop mission Communicating and linking Business planning Feedback and learning

Revision4 Which statement is TRUE

A A company achieves competitive advantage when an attractive number of Buyers are drawn to purchase its products or services rather than those of competitors

B A company achieves sustainable advantage when the basis for buyer references for its product offering relative to the offerings of its rivals is durable despite competitorsrsquo efforts to nullify or overcome the appeal of its product offering

C Both are TRUED Both are FALSE

References Euromonitor International 2015 Costco Wholesale Corp in Retailing (World) Retrieved January 25 2016 from httpwwweuromonitorcom

Euromonitor International 2016 Costco Wholesale Canada Ltd in Retailing (Canada) Retrieved January 25 2016 from httpwwweuromonitorcom

MarketLine 2015 Costco Wholesale Corporation Retrieved January 24 2016 from httpwwwmarketlinecom

Statista 2015 Number of Costco employees worldwide from 2011 ndash 2015 (in 1000s) Statista ndash The Statistics Portal Retrieved from httpwwwstatistacomstatistics284430costco-number-of-employees-worldwide-2011-2013

Aaron T (2014 October 23) Why Costco Pays Its Retail Employees $20 An Hour Business Insider Retrieved from httpwwwbusinessinsidercomcostco-pays-retail-employees-20-an-hour-2014-10

Revision4 Which statement is TRUE

A A company achieves competitive advantage when an attractive number of Buyers are drawn to purchase its products or services rather than those of competitors

B A company achieves sustainable advantage when the basis for buyer references for its product offering relative to the offerings of its rivals is durable despite competitorsrsquo efforts to nullify or overcome the appeal of its product offering

C Both are TRUED Both are FALSE

References Euromonitor International 2015 Costco Wholesale Corp in Retailing (World) Retrieved January 25 2016 from httpwwweuromonitorcom

Euromonitor International 2016 Costco Wholesale Canada Ltd in Retailing (Canada) Retrieved January 25 2016 from httpwwweuromonitorcom

MarketLine 2015 Costco Wholesale Corporation Retrieved January 24 2016 from httpwwwmarketlinecom

Statista 2015 Number of Costco employees worldwide from 2011 ndash 2015 (in 1000s) Statista ndash The Statistics Portal Retrieved from httpwwwstatistacomstatistics284430costco-number-of-employees-worldwide-2011-2013

Aaron T (2014 October 23) Why Costco Pays Its Retail Employees $20 An Hour Business Insider Retrieved from httpwwwbusinessinsidercomcostco-pays-retail-employees-20-an-hour-2014-10

References Euromonitor International 2015 Costco Wholesale Corp in Retailing (World) Retrieved January 25 2016 from httpwwweuromonitorcom

Euromonitor International 2016 Costco Wholesale Canada Ltd in Retailing (Canada) Retrieved January 25 2016 from httpwwweuromonitorcom

MarketLine 2015 Costco Wholesale Corporation Retrieved January 24 2016 from httpwwwmarketlinecom

Statista 2015 Number of Costco employees worldwide from 2011 ndash 2015 (in 1000s) Statista ndash The Statistics Portal Retrieved from httpwwwstatistacomstatistics284430costco-number-of-employees-worldwide-2011-2013

Aaron T (2014 October 23) Why Costco Pays Its Retail Employees $20 An Hour Business Insider Retrieved from httpwwwbusinessinsidercomcostco-pays-retail-employees-20-an-hour-2014-10

References Cal State LA nd Sample Case Study Costco Retrieved January 23 2016 from httpwebcalstatelaedufacultyklaiCourse497Costcopdf

Clare C (2015 March 25) Americarsquos Best Employers 2015 Forbes Retrieved from httpwwwforbescomsitesclareoconnor20150325americas-best-employers- 20152351e9e76ceb

Costco 2016 Costco Wholesale Corp in Retailing (World) Retrieved January 25 2016 from httpwwweuromonitorcom

Payscale nd Average Hourly Rate for Sams Club Employees PayScale Retrieved from httpwwwstatistacomstatistics284430costco-number-of-employees-worldwide-2011-2013

Payscale nd Average Hourly Rate for Sams Club Employees PayScale Retrieved from httpwwwpayscalecomresearchUSEmployer=BJs_Wholesale_ClubHourly_Rate

Arthur A T Strategy Core Concepts and Analytical Approaches The University of Alabama Chapter 2 Page 13