Case Study MGMT7007. Individual Case Study Analysis. Management

CASE STUDY
Name
Course
Tutor
Institution
Due Date
Case Study
Introduction
Costco Wholesale is a business warehouse club that operates on the discount platform and was established in the year 1983 in Seattle. The owner Brotman and Jim Sinegal had the vision of offering customers discounted merchandise within the global market. The business model that Costco applies within the warehouse club industry guarantees them unprecedented success. The business model is tailored to generate high sales volume alongside rapid inventory turnover by offering customers very low and attractive prices on a limited selection of product brands within a wide range of categories of merchandize (Thompson et al., 2018). The case study focuses on investigating the wholesale club industry as well as the retailing segment within the American market.
Analysis
Strategic management of Costco Wholesale
The concept of analyzing the strategic approach of Costco Wholesale is basically based on the availability of limited product selection, low pricing mechanism, ultra-low markups, high volumes of sales, availability of rapid inventory turnover capable of transforming shopping experiences into valuable activity through perpetual transformation and changing of products. The strategic model of the company ensured that it became one of the first companies in the U.S. history that reached approximately 1 billion sales within less than six years. The key attributes of Costco strategy entail the provision of ultra-low prices, their ability to provide a limited selection of private-label as well as nationally branded products. Moreover, they offer a “treasure hunt” shopping environment, which emphasizes low operating costs as well as the expansion of its geographical network within the global platform (Thompson et al., 2018).
The firm utilizes the business model that emphasizes the provision of restricted categories of the various stock that are trade-marked while projecting high-level proceeds from vending alongside timely stock returns. Evidently, the company’s just-in-time stock, the application of minimal handling of stock, the concept of purchases in volume, and the use of efficient delivery channels enable the generation of higher returns from entire operations. At the same time, the inclination of the corporation’s treasure-hunt merchandise helps in creating a process capable of attracting an expansive client base (Thompson et al., 2018).
Costco Wholesale generic strategy focuses on cost leadership which has basically ensured that they gain competitive advantage within various market segments. The concept of applying low costs strategy on their items ensures that customers feel they experience significant savings for any purchase of Costco products. For the secondary generic strategy, Costco partly utilizes the aspect of broad differentiation that is capable of making the business stand out based on value. For instance, the use of the Kirkland Signature representing the company’s house brand differentiates the company based on value and quality, therefore, making Costco base its competition on quality. Further, the concept of cost minimization through economies of scale presents the company with one of ...