Unit 1 Assignment - Written Case Analysis on Mission and Vision

Read Case 03: Costco Wholesale in 2020: Mission, Business Model, and

Strategy (pages C18- C42).

General Description of the Organization:

The instance of Costco Wholesale Corporation demonstrates that the company continuing

to build and improve. The firm currently has activities in several countries, including Taiwan.

The company is currently one of the world's largest retailers. Costco relies on consumer demand

as a retailer. Because the retail sector is so competitive, consumer attitudes play an important

role. Walmart, for example, is a significant competitor. To secure long-term profitability, Costco

must retain a comparative benefit. This company's current capacity to improve and strengthen is

dependent upon the ability to provide inexpensive, high-quality products and services.

Vision and Mission Statements:

Costco's Mission:
Costco's objective is to "continually deliver excellent products and services at the

uniform price rates" to its customers. The company's pricing structure and strategies are

inextricably tied to its core mission. The company's purpose stresses effectiveness and cost

competitiveness, both of which are important criteria for customers in the retail industry. As a

result, the stated mission directs efforts that help Costco maintain its strategic advantage.

Costco's stated goal is to continue to deliver increased items / products to marketplace at the

lowest operational rates nearly every day, while preserving important at all levels of the

organization and recognizing the interests of various parties (Annual Report 2020).

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 Costco's Vision:
Its vision declaration is very well by management staff across the company. Costco

provides cheap pricing on a chosen group of independent label and a small number of globally

known items across a broad variety of consumer sectors. Costco is known for providing elevated

products and services at daily cheap costs to people and businesses as stated under (Chuang,

2020). Fast turnover ratio, high net sales per warehouses, using an effective production design,

decreased item processing, and positioning itself as the low-cost retailer are all significant factors

in the organization's growth.

Costco's Business Model:

It is based on membership-only major retailers. Customers pay an annual fee to obtain

access to the reduced things listed at Costco shops in this model. Non-members are welcome to

attend membership, but only representatives are permitted to shop at these establishments. Non-

members, on the other hand, could use Costco Cash Cards to purchase at the corporation's

locations. Sam's Club and BJ's Wholesale Club are rivals who employ the similar business

strategy (Sheth, 2020).

Costco's Business Strategy:

Cost leadership is Costco's overarching strategy. The goal of this method is to keep prices

as low as feasible. Cost leadership is also used by retail behemoths like Walmart. To set itself

apart from other retailers, Costco's approach incorporates the subscription major supermarket

marketing strategy. According to (Sheth, 2019) Costco's business strategy is a key component in

the corporation's ability to achieve its objective. This business strategy, in reality, is in line with

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 the organizational strategy. Costco's corporate model is compatible with and requires the

generalized approach to pricing.

Core and Non-Core to Costco Company:

A non-core item is an activity that is regarded being outside the company's principal

revenue-generating operations and services. Non-core items are actions that are regarded

ancillary or accidental to activities, whereas core things are tasks that are deemed important to

operational activities. Costco is using a business strategy that offers restricted selection of widely

renowned products in a wide variety of retail sectors to create higher sales growth and rapid

financial leverage. Costco uses a variety of operating techniques or mechanisms to decrease the

value of the dollar, including effective inventory management and Just-in-Time inventories,

increased revenues, minimal goods touching, and bulk procurement.

One of the most significant advantages of high overall sales and quick return on assets is

the ability to sell goods and earn cash, which could be utilized to pay vendors and take advantage

of great incentives. Costco can finance its inventories using capital expenditure since they can

sell their stuff and they'll have to increase their prices or manufacturers for their items.

(Courtemanche & Carden, 2014) Additionally, among the 4000 goods that Costco stores in its

warehouse, it has a unique section dubbed "treasure-hunt merchandise" whereby they keep 1000

things that change often. One significant strategic skill of Costco seems to be that they would not

get their expensive things from elevated makers; instead, they seek for order to access similar

luxury goods lawfully on the grey marketplaces from merchants looking to liquidate their

inventories.

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 According to (Cascio, 2006) Costco's primary approach is to sell a restricted quantity of

pieces in fewer variations in order to keep costs down while relying on large volume sales.

However, despite their counterparts, they compensate their staff generously. One of their main

differentiators and strengths is that they sell memberships to its consumers, which not only create

recurring income but also build consumer branded engagement and exposure of Costco. They

promote relatively little, resulting in a 2% annual cost reduction.

According to (Peterson, 2020) Costco's value proposition is one of the most important

aspects of their business. They have a distinctive method or technique that allows them to

maintain prices cheaper than opponents while yet being able to give their staff 48% greater

compensation than their primary customers, primarily Wal-Mart. Their client base is increasing,

and they are retaining their subscribers. They go to great lengths to keep their clients. Most

essential, in marketing to recruit and keep consumers, they have fantastic returns controls in

place.

To attain organizational pricing leadership, Costco employs a variety of additional

techniques. For obvious reasons, to accomplish cost advantage, they reduce packaging and

processing costs, keep in-stock locations without even being overstaffed and shift seasonal

products, order branded products just-in-time to minimize inventory costs, keep best budget pack

goods to ensure cheap costs through quantity purchasing, additional cost reduced, and low profit

growth, and so on. Furthermore, Costco does not invest heavily in technology and instead relies

on traditional marketing, which is both one of the cheapest but also one of the most successful

methods of promotion.

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 References:
Cascio, W. F. (2006). Decency means more than “Always low prices”: A comparison of Costco

to Wal-Mart’s Sam’s Club. The Academy of Management Perspectives, 20(3), 26-37.

Courtemanche, C., & Carden, A. (2014). Competing with Costco and Sam’s Club: warehouse

club entry and grocery prices. Southern Economic Journal,80(3), 565-585.

Chuang, C.C., (2020). Explore Branding as a Marketing Strategy.

Sheth, J., 2020. The future of retailing: When the artificial becomes real.

Sheth, J., 2019. THE FUTURE RETAILING.

Peterson, M. (2020). Ethical Perspectives on Sustainability in Marketing. The SAGE Handbook

of Marketing Ethics, 196.

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