Costco Wholesale Case (my answers) part 2

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Management

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Feb 20, 2024

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Costco Wholesale Corp. in 2020: Mission, Business Model, and Strategy What are the chief elements of Costco’s strategy? How good is the strategy? YES Correct Costco has steadfastly and successfully pursued a low-cost leader strategy. YES Correct Costco was known for selling top quality na>onal and regional brands at prices consistently below tradi>onal wholesale or retail outlets. YES Correct Costco has steadfastly and successfully pursued a differen>a>on strategy. NO Correct A key element of Costco’s strategy to keep prices low to members was to cap the margins on brand name merchandise at 14 percent. YES Correct While Costco’s product lines consisted of approximately 4000 ac>ve items, some 40 percent of its product offerings were constantly changing. Costco’s merchandise buyers were con>nuously making one->me purchases of items that would appeal to the company’s clientele and that would sell out quickly. NO Correct Almost 100 million cardholders were en>tled to shop at Costco as of June 2020; in fiscal 2019, membership fees generated $3.35 billion in revenues for the company. YES Correct

Costco’s growth strategy was to increase sales at exis>ng stores by 5 percent or more annually and to open addi>onal warehouses, both domes>cally and interna>onally. YES Correct Average annual growth at stores open at least a year was 10 percent in fiscal 2011, 6 percent in both fiscal 2013 and 2014, 7 percent in fiscal 2015, and 4 percent in 2016 and 2017. YES Correct Costco has steadfastly and successfully pursued a best-cost strategy. NO Correct Costco strategy are high-priced items, a limited product line, and a strong emphasis on low opera>ng costs. NO Correct

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