1464002
Strategic Management : Case Assignment 1
Costco
Sam's Club
BJ's Wholesale Club
Business
Member
$ 55,00
$ 35,00
$ 50,00
Individual
Member
$ 55,00
$ 40,00
$ 50,00
Premium
Member
$ 110,00
$ 100,00
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Analysis
In this case, the analysis would be related to the theory on chapter 2 on the texbook,
Charting a Companys Direction : Vision, Mission, Objectives, and Strategy. Coscto still
doesnt state the vision of the company yet. So for the first step, Costcos management should
make vision first for the company. The vision should be forward-looking, focused, sure the
journey is feasible, memorable and also indicate the directional path makes good business
sense.
Regarding to the Costcos Mission, to continually provide our members with the
quality goods and services at the lowest possible prices, the mission statement has been very
effective. The Costcos mission statement has been describe the firms current business and
purpose. It has been answered the question of who are we, what we do, and why are we
here.
The business model of Costco has high relation with their strategies especially in
providing low prices for their customer. The second business model, which is using account
receivable to finance the working capital it means that Costco doesnt need to borrow capital
from the bank to provide their inventory so Costco doesnt need to pay interest. Moreover
Costco can get cash before they pay to supllier so they can get revenue from interest for it. It
influence price for the mercandhise. Because the price is most important variable to win the
competition in retailing industry.
In term of membership fee, we can conclude that the higher amount of the fee doesnt
influence a lot to customers. So the main factor of the customers join the membership is all
about the benefit that the customer will get by having the member card. And from the exhibit
1, we can see that the membership fee revenue is higher than it net income. So the
membership fee is one of the main reason for the company to get positive net income.
Recommendation
There are severel recommendation for Costco management to mantain and also
increase the firm performance,
1. Develop a strategic vision for the company and communicate it with the employees,
management, customers and shareholders.
2. Costco still focus on individual members which is in 2011 business cardholder has
6.300.000 members and individual cardholder has 57.700.000 members (See Exhibit
1). The management should make a strategy to increase the business members.
3. The management should mantain the benefit for membership cardholder related to the
highest fee among the competitors.