Costco Wholesale Corp.: Mission, Business Model, and Strategy

1225 Words Sep 23rd, 2011 5 Pages
Costco Wholesale Corp.: Mission, Business Model, and Strategy

What is Costco’s business model? Is the company’s business model appealing? Why or why not? Costco’s business model is focused on producing high sales volumes and rapid inventory turnover by offering members low prices on a limited selection of national name brands and select private-label products in a wide range variety. Costco is focused in low-cost strategy is concentrated on a narrow buy segment and out competing rivals by having lower costs, therefore being able serve a niche consumers at a lower price. (Gamble, John and Thompson, Arthur (2009) Costco’s business model is appealing because they are able to continually sell to a niche market. This niche market has
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Jim Sinegal has been able to implement and execute this strategy in all of his stores by personally visiting store and paying attention to detail and discrepancies at various stores. Sinegal has an open door policy for employees, having a two way communication with managers makes it easier to implement and execute strategies.
Sinegal has tested various strategies at specific stores in order to evaluate how these strategies are functioning. Depending on how the strategy is developing they are able to decide on whether to expand operation or initiate corrective adjustments. Overall Costco CEO has been able to implement an effective strategic management process.

How well is Costco performing from a strategic perspective? Does Costco enjoy a competitive advantage over Sam’s Club, Over BJ’s Wholesale? If so, what is the nature of its competitive advantage? Does Costco have a winning strategy? Why or why not? Costco has proven to have a competitive strategy over it competitors, Sam’s Club and BJ’s Wholesale. They have a warehouses club sales share of 55% compared to Sam’s Club has 36% share and BJ’s Wholesale club and other companies have a 9% of the share. These percentages are the shares across the United States and Canada. Costco competitive advantages over their rivals are offering fewer items of top quality and at an

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