The presentation about Costco Case study in the link below http://www.slideshare.net/TranThang6/costco-case-costco-mission-business-model-and-strategy

1. INTEGRATED BUSINESS
EXPERIENCE 2
-
CASE STUDY ANALYSIS
TRAN TRUNG HIEU - MBA29152271
NGUYEN HY MINH HOANG – MBA 29152195
NGUYEN MINH HOANG – MBA29152299

3. Rules:
 Same as Chiec non ky dieu Gameshow
 You will have 04 Hints to guess
 Point to be counted for correct answer at Hints:
 Hint 1: 5 points
 Hint 2: 4 points
 Hint 3: 3 points
 Hint 4: 2 points

4. Sample Question
1 2 3 4 5 6 7 8
1 2 3 4 5 6 7 8
1 2 3 4
 Hint 1: 30% Total

5. Sample Question
1 2 3 4 5 6 7 8
1 2 3 4 5 6 7 8
1 2 3 4
 Hint 2:

6. Sample Question
1 2 3 4 5 6 7 8
1 2 3 4 5 6 7 8
1 2 3 4
 Hint 3:

7. Sample Question
1 2 3 4 5 6 7 8
1 2 3 4 5 6 7 8
1 2 3 4
 Hint 4:
11:59

8. 1 2 3 4 5 6 7 8
B U S I N E S S
1 2 3 4 5 6 7 8
S T R A T E G Y
1 2 3 4
G A M E
Sample Question

9. Question 1
 Hint 1:
1 2 3 4 5 6

10.  Hint 2:
Question 1
1 2 3 4 5 6

11.  Hint 3:
Question 1
1 2 3 4 5 6

12.  Hint 4: Start with letter “R”
Question 1
1 2 3 4 5 6

13. Question 1
1 2 3 4 5 6
R E T A I L

14. Question 2
1 2 3 4 5 6 7 8 9 10 11 12 13
 Hint 1:

15. Question 2
1 2 3 4 5 6 7 8 9 10 11 12 13
 Hint 2:

16. Question 2
1 2 3 4 5 6 7 8 9 10 11 12 13
 Hint 3:

17. Question 2
1 2 3 4 5 6 7 8 9 10 11 12 13
 Hint 4:

18. Question 2
1 2 3 4 5 6 7 8 9 10 11 12 13
M U L T I N A T I O N A L

19. 1 2 3 4 5 6 7 8 9 10
Question 3
 Hint 1:

20. 1 2 3 4 5 6 7 8 9 10
Question 3
 Hint 2:

21. Question 3
 Hint 3:
1 2 3 4 5 6 7 8 9 10

22. 1 2 3 4 5 6 7 8 9 10
Question 3
 Hint 4:

23. Question 3
1 2 3 4 5 6 7 8 9 10
M E M B E R S H I P

25. Savings Too Big To Get Home

26. Costco Today

27. Costco Facts
- 2nd largest global retailer (National Retail
Federation, 2015).
- 18th largest in Fortune 500 (Costco, 2015).
- $71 billion market cap (Costco, 2016).
- 698 locations worldwide (568 in North
America) (Costco, 2016).

28. Costco Stores

29. Overall Competitive Landscape
- Costco dominated Canada wholesale club
industry with a 72% share of value sales and
60% of the total number of outlets
(Euromonitor, 2016).
- In the US, Costco outperformed both
Sam’s Club and BJ’s Wholesale club over the
2009 – 2014 period (Euromonitor, 2015).
- In 2014, Costco accounted for 52% of the
total US market share (Euromonitor, 2015).

30. Overall Competitive Landscape
- Competition is based among the following factors: price, merchandise quality and selection,
location and customer service (MarketLine, 2015).
- Highly competitive industry whereas Costco will have to compete against:
(1) other players in wholesale club industry
(2) other forms of retailing businesses such as retail discounters (Walmart and Dollar General),
supermarkets, general merchandise chains, specialty chains, gasoline station and Internet
retailers (Arthur, 2012)

31. COSTCO’S
MISSION & BUSINESS MODEL
A company mission statement describes its present business scope
and purpose (“where we are, what we do, and why we are here”).
According to Costco’s, its mission statement is (“to continually
provide our members with quality goods and services at the lowest
possible price”)

32. BUSINESS MODEL
Overview:
The plan implemented by a company to generate revenue
and make a profit from operations.
The model includes the components and functions of the
business, as well as the revenues it generates and the
expenses it incurs.

33. COSTCO’S BUSINESS MODEL
High sale volume and rapid inventory turnover.
 Offering fee-paying members attractively low prices on a
limited selection of nationally branded and selected
private- label products in a wide range of merchandise
categories.
 Allowing it to sell and receive cash for inventory before it
had to pay many merchandise vendors, even when vendor
payments were made in time to take advantage of early
payment discount.

34. COSTCO’S BUSINESS MODEL
A unique aspect of Costco’s business model:
 Limits marketing, advertising and promotional activities
to new warehouse openings.
 Occasional direct mail marketing to prospective new
members and regular direct marketing programs (such as The
Costco Connection, a magazine we publish for our members,
and coupon mailers…)

35. MARKETING AND ADVERTISING
 Costco has developed a reputation as a socially
responsible company by its actions and not by its
marketing.
 Costco does not have a public relations
department or staff.
 Costco relies primarily on word-of-mouth from its
members to spread its brand messages.

36. MARKETING AND ADVERTISING
 Using direct marketing to existing customers to promote
merchandize.
 The executive membership program offers additional benefits on member services.
 Its low prices and reputation for making shopping at Costco
something of a treasure-hunt made it unnecessary to engage in
extensive advertising or sales campaigns.
These practices result in lower marketing expenses as compared to typical retailers.

37. APPEALING BUSINESS MODEL
 Their mission is to provide quality goods and services at the lowest
possible price.
 Satisfying buyer needs and requirements at a price they will
consider a good value.
 The greater the value delivered and the lower the price to get the
value, the more appealing a company’s value proposition and
product offering.

38. Costco Strategy
1. Pricing:
2. Product Selection:
3. Treasure Hunt Merchandising:
4. Low Cost Emphasis:

39. Chief Elements of Costco Strategy
 Ultra-low prices: Keep the customers going to the
shop by wowing them with low prices
 Low markup on brand-name merchandise at 14%
(compared to 20 – 50% markups at other discounters
and many supermarkets
 Jim Sinegal - CEO of Costco said: “We understand
that our members do not come to us because the
window displays or the Santa Claus or the piano
player. They come and shop with us because we offer
great values”.

40. Product Selection

41. Product Selection
 The selection within each product category was restricted, in some
cases to a single offering.
 Costco stocked only a 325 – count bottle of Advil – a size that many
shoppers might find too large for their needs .
Costco had opened ancillary departments within the next to most
Costco warehouses , see the table on the next slide…

42. Costco’ s Strategy -
Treasure Hunt Merchandising
Dozens of featured specials came and went very quickly, sometimes in several
days or a week – like Italian – made Hathaway shirts priced at $29.99 and $800
leather sectional sofas.
The strategy was to entice the shoppers and bargain – hunting shoppers would
go to Costco more frequently than for periodic “stock up” trips.
The shoppers quickly learned that they need to buy treasure – hunt specials
that interested them because these items would very likely not available on
their next shopping trip.

43. Costco’ s Strategy
Low cost emphasis
 Costco eliminate all the frills and costs historically associated with conventional
retailers, including salespeople, fancy buildings, delivery, billing, and accounts
receivable.
 They locate warehouses on high – traffic routes in or near upscale suburbs that
were easily accessible by small businesses and residents with above – average
incomes, it avoided prime real estate sites in order to contain land costs.
Warehouse building material: Metal pre-engineered design, concrete floors and
minimal interior décor

44. COSTCO’S WAREHOUSE

45. Costco’ s Strategy
Growth Strategy
 Costco had opened between 14 and 34 new locations
annually (most in the US).
 In the fiscal year 2011, Costco spent $1.3 billion to
open 20 new locations, two newly relocated
warehouses, and several distribution depots.
 In the fiscal year 2012: 4 new warehouses in the US
and 2 new warehouses in Japan (first 4 months of fiscal
year 2012) and planned to open an additional 12 new
warehouses on September, 2012.

46. Grade the CEO

47. Game: Name
Right Names
By whom you
are inspired?

49. Source: http://www.cnbc.com/2009/04/24/Portfolios-Best-American-CEOs-of-All-Time.html?slide=12

53. Source: http://www.cnbc.com/2009/04/24/Portfolios-Best-American-CEOs-of-All-Time.html?slide=14

56. "If you've got to work for the rest of your life,
you'd better do something you'll enjoy”
http://www.exploringmarkets.com/2014/02/costco-founder-james-sinegal-might-have.html

58. What can you see?

59. What can you see?

61. Source: Textbook - Strategy: Core Concepts and Analytical Approaches – Arthur A. Thompson, The University of Alabama –
Chapter 2 – Page 13

62. Task 1 Developing Strategic, vision, mission and core value
• Strategic vision indicates the paths that company takes in developing and strengthening its
business as preparing for long-term future
• Key consideration in Deciding Company’s Future Direction: External vs. Internal
• What is your Slogan?
• Strategic vision vs. Mission Statement?
• Strategic vision sets company’s future direction “where are we going”
• Mission statement describes the present “who we are, what we do, and why we are here”

63. Back up
Source: Textbook - Strategy: Core Concepts and Analytical Approaches – Arthur A. Thompson, The University of Alabama –

64. Setting ObjectivesTask 2
• WHAT - “Objectives are an organization’s performance
target”
• WHO - “Objectives reflects managerial commitment to
deliver results and outcomes.
• WHY:
• Helps organization to be focus on what should be
completed to deliver expected overall outcomes
• Considered as Benchmark to track company
performance
• Motivates all members to deliver best possible results
• WHERE & WHEN? HOW???

65. Setting ObjectivesTask 2

66. https://www.youtube.com/watch?v=biyGxEix5Zs
First introduced by Kaplan and Norton, 1992, Havard Business
Review
• Tracking Financial result while monitoring progress in
building the capabilities for future growth.
• To integrate Long-term strategy with Short-term financial
goals
• Not as replacement of Financial measures, but
complement.
• Four main processes:
1. Translating the vision
2. Communicating and linking
3. Business planning
4. Feedback and learning

67. https://www.youtube.com/watch?v=biyGxEix5Zs

68. Source: Textbook - Strategy: Core Concepts and Analytical Approaches – Arthur A. Thompson, The University of Alabama –
Chapter 2 – Page 9
Back up

69. Crafting Strategy to achieve objectives and visionTask 3
CORPORATE
STRATEGY
BUSINESS
STRATEGY
FUNCTIONAL
STRATEGY
OPERATIONAL
STRATEGY
CEO and Other
Senior Executives
General Managers
Functional Heads
Sub-Functional
Heads
Two-way Influence
Top down vs. Bottom Up
Reproduced: Textbook - Strategy: Core Concepts and Analytical Approaches – Arthur A. Thompson, The University of Alabama –
Chapter 2 – Page 14

70. Source: Textbook - Strategy: Core Concepts and Analytical Approaches – Arthur A. Thompson, The University of Alabama –
Chapter 4 – Page 2
Back up

71. Source: Textbook - Strategy: Core Concepts and Analytical Approaches – Arthur A. Thompson, The University of Alabama –
Chapter 2 – Page 13
 Resources preparation: Human resources, Physical Resources, Financial Resources
 Internal process, policies and supporting systems
 Rewards and Recognition, Employee Engagement

72. Task 1 Developing Strategic, vision, mission and core value
Setting Objectives
Crafting Strategy to achieve objectives and vision
Implementing and Executing
Task 2
Task 3
Task 4
Task 5
Monitoring developments, evaluating performance,
and initiating corrective actions
Costco’s case

74. Task 1 Developing Strategic, vision, mission and core value
Setting Objectives
Crafting Strategy to achieve objectives and vision
Implementing and Executing
Task 2
Task 3
Task 4
Overall Grade: A-
Task 5
Monitoring developments, evaluating performance,
and initiating corrective actions
Costco’s case

75. Jim Sinegal’s core values for Costco
 Obey the law
 Take care of Members
 Take care of Employees
 Respect Suppliers
 Reward shareholders

76. Jim Sinegal’s core values for Costco -
ABCD
 Adhering to a strict code of ethics: taking care of our employees and members, respecting our
suppliers, rewarding our shareholders
 Bringing the highest quality goods and services to market at the lowest possible prices
 Complying to Law, seeking to be responsible corporate citizens and environmental stewards
 Delivering excellent customer services.

77. Porter’s Five Forces
Analysis

78. Porter’ Five Forces

79. High Rivalry among Existing Competitors
- Fierce competition both from dominant players in wholesale club industry and other forms of
retailing businesses (Euromonitor, 2015).
- Minimal switching cost involved (Cal State LA, n.d.)
- No notable differentiation between the merchandise offerings of players in the market (Cal
State LA, n.d.)
- Competitors compete on pricing and accessibility through frequent new stores’ openings
(Arthur, 2012).

80. High Threat of Substitute Products
- Various types of retailers are available that can be easily accessible, such as online retailers
(Euromonitor, 2015).
- Products are not differentiated and can be easily purchased at other locations (Cal State LA,
n.d.).
- Minimal switching cost, especially for members without membership (Cal State LA, n.d.).

81. Low Supplier Bargaining Power
- No single supplier who accounts for a large
proportion of merchandise that the wholesale club
stocks (Cal State LA, n.d.).
- Wholesale clubs are big-volume purchasers.
- Dominant firms like Costco and Sam’s Club possess
strong bargaining power due to their reputation in
the market.

82. Moderate Buyer Bargaining Power
- Many customers are individuals who buy in
small quantities.
- Minimal switching cost involved whereas
customers can easily switch to other
alternative forms of retailers without facing any
substantial disadvantages (Cal State LA, n.d.).
- Undifferentiated products’ (Cal State LA, n.d.).

83. Low Threats of New Entrants
High entry barriers that are derived from:
- Formidable competitors with firm positions
in the market that enjoy the benefits of
economies of scale that are not easily
accessible by new players (Cal State LA, n.d.).
- Effective competition requires sizeable
capital (Cal State LA, n.d.).
- Current players’ popularity remain a major
obstacle for newcomers to build up trust and
customer relationship (MarketLine,20 15).

84. Financial Performance

85. Costco 2011 2010 2009 2008
Netsales 87,048 76,255 69,889 70,977
Membershipfees 1,867 1,691 1,533 1,506
TotalCost 86,476 75,869 69,645 70,514
OperatingIncome 2,439 2,077 1,777 1,969
Findings:
 2011-Strong revenue growth at 14.1% and a 17.4%
increase in operational profit – Flow through
algorithm
 2015 – Moderate revenue growth at 3.2%.
However, Operating profit grow at 12.6% to
maintain the flow through.
 Membership is the main contributors to Profit,
ultra-low pricing mark-up rate
60,151
88,915
112,640
116,199
1,626
2,439
3,624
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Operating Income USD Mil Net Income USD Mil
Free Cash Flow USD Mil Revenue USD Mil
Net Revenue
(Secondary axis)
% COGS/NR: 87.7%
% SG&A/NR:9.6%
% COGS/NR: 87.0%
% SG&A/NR:10.0%

86. Source: 2015 Costco Annual Report

87. Growth rate 2007 2008 2009 2010 2011 2012 2013 2014 2015
Revenue %
Year over Year 7.06 12.55 -1.46 9.13 14.07 11.5 6.07 7.12 3.16
3-Year Average 10.21 11.04 5.89 6.57 7.05 11.55 10.5 8.2 5.44
5-Year Average 10.69 11.24 8.22 8.05 8.13 9.01 7.73 9.54 8.31
Operating Income %
Year over Year -1.05 22.4 -9.74 16.88 17.43 13.12 10.66 5.47 12.55
3-Year Average 5.1 10.12 3.01 8.89 7.4 15.79 13.7 9.7 9.52
5-Year Average 7.29 11.23 5.1 7.1 8.45 11.39 9.17 12.62 11.78
Net Income %
Year over Year -1.85 18.47 -15.34 19.98 12.2 16.89 19.31 0.93 15.5
3-Year Average 7.06 6.46 -0.52 6.37 4.46 16.32 16.1 12.07 11.63
5-Year Average 9.12 12.21 4.24 4.15 5.79 9.56 9.71 13.64 12.78
EPS %
Year over Year 3.04 21.94 -14.53 18.22 13.01 17.88 19.02 0.43 15.48
3-Year Average 8.61 9.85 2.41 7.2 4.52 16.35 16.61 12.11 11.35
5-Year Average 9.87 13.56 5.95 6.02 7.49 10.42 9.88 13.49 12.96
Back up

88. Profitability Market Performance Efficiency
Return on Equity: ROE Net Income Earnings per share EPS Net Profit - Minority Interest Asset Turn-over Net Revenue
Total Equity Number of share Total Asset
Return on Asset: ROA Net Income Cashflow per share CFPS CFO - Preference dividens Days in Inventories DII Inventories
Total Asset Number of share COGS
Gross Profit Margin Gross profit Dividen per share DPS Dividens paid
Days of Sales
Outstanding
DSO AR
Net Revenue Number of share Net Revenue
Profit Margin EBIT Dividen payout ratio Profit distributed as dividens Cash Collecting Cycle DPO
Net Revenue Total Profit
Cashflow to Sales CFO Price Earning ratio PER Current market price Cash Collecting Cycle
CC
C
Net Revenue EPS
Liquidity Capital Structure
Current ratio Debt ratio Liabilities
Asset
Quick Asset ratio Debt to Equity Liabilities
Equity
Cashflow ratio Equity ratio Equity
Asset
Cash from Operating Profit
Current Liabilities
x 365
days
x 365
days
Current Asset - Inventories
Current Liabilities
Current Asset
Current Liabilities

89. 18.8%
16.1% 16.0%
12.7%
11.6% 12.0%
10.8%
14.0%
2015 2014 2013 2012 2011 2010 2009 2008
ROE
6.1%
6.7%
6.0%
5.5% 5.5%
4.9%
6.2%
2015 2014 2013 2012 2011 2010 2009
ROA
13.0%
12.6% 12.6%
12.4%
12.6%
12.8%
12.7%
12.4%
2015 2014 2013 2012 2011 2010 2009 2008
Gross Profit margin
Profitability Ratios

90. Liquidity Ratios and Capital Structure

91. Is there any link among these ratios?

92. Profit
Margin
Asset
Turn-over
Debt ratio
Gross Profit Margin Expense Ratio
Current Asset
Turn-over
DII DSO DPO
CCC
Cash Collecting Cycle
ROA Leverage
ROE
Entities Financial Health
Interest Coverage
http://www.investopedia.com/video/play/dupont-analysis/
DuPont Analysis

94. 2009 2010 2011 2011
Costco -1.5% 9.1% 14.1% 12.5%
Sam's Club 8.2% -0.4% 3.5% 12.9%
BJ 11.2% 1.6% 6.8% -7.1%
2010
5.5%
-8.1%
1.4%
2009
10.7%
0.1%
13.3%
72.48 71.42
77.95
88.92
44.34 47.98 47.81 49.46
9.01 10.03 10.19 10.88
2008 2009 2010 2011
Net Revenue - Bil US$
Costco Sam's Club BJ
72.48 71.42
77.95
88.92
44.34 47.98 47.81 49.46
9.01 10.03 10.19 10.88
2008 2009 2010 2011
Operating Profit - Bil US$
Costco Sam's Club BJ
Costco – Sam’s Club - BJ

95. Costco Wholesale Competition
Costco has not only wholesale competitors but also retailers.
Two main wholesale competitors are Sam’s Club, BJ’s Wholesale Club.

96. What make they are different?/ competitors?
Costco Sam’s Club BJ’s Wholesale Club
Position High-traffic routes in or
near upscale suburb
Near Wal-Mart Near Costco or Sam’s
Club (within 10 miles)
Items 3600 4000 7000
Treasure - hunt Treasure - hunt items are
upscale
Treasure - hunt items are
less upscale but cheaper
than Costco’s
Price Lowest price Low price Low price

97. Costco Sam’s Club BJ’s Wholesale Club
Added service
(pharmacy, optic,
gasoline...)
   Beside, BJ also has
some special services such
as vacation and travel
package, garden and
storage sheds, patio and
sun rooms....
Social Media Website, Facebook, Twitter
Blogs which be operated
by customers to share their
experience.
Website, Facebook,
Twitter
Website, Facebook,
Twitter

98. Costco Sam’s Club BJ’s Wholesale Club
Customer Care Service
(Returns, Refunds &
Exchange Policy)
Payment method approve
Store quality
90 days from the
purchase date to return
your order for a full
refund.
All of payment cards
which include both Bill
Me Later and American
Express be approved in
Costco
Many customers feel
Costco is much cleaner
than BJ’s and prefer to
shop at Costco for bulk
items.
Electronic device (90 days)
other goods (30 days).
American Express Card not
be approved
Clear
Electronic device (90 days)
other goods (30 days).
One of the payment
methods that is not
accepted at BJ's
Wholesale Club at this
time is Bill Me Later.
Less Clean

99. Costco Sam’s Club BJ’s Wholesale Club
Website Security & Safety
Transfer Money
Delivery method.
Use security and safety
transfer money by third
party –McAfee
Only tires can be shipped
to Costco stores for
collections and not any
others.
The rates vary with
service required, using
UPS for its delivery
services ensures smooth
and timely delivery of
products ordered.
Use security and safety
transfer money by
themselves.
Depend on size and weight
of good, they will choose
shipment method by
themselves.
Use security and safety
transfer money by
themselves.
BJ’s Wholesale Club
cannot ship packages to
P.O. Boxes.

100. Costco Sam’s Club BJ’s Wholesale Club
Membership • Business members: fee of $55
(include a supplemental card).
• Individual members: fee of $55
(include a supplemental card).
• Executive members : fee of
$100. Save 2% on purchases, save
on various service offered by
Costco and third-party company
such as insurance, loan, real
estate and mortgage service...
• Accept goods returns
•Business members: fee of
$35 (include a
supplemental card).
• Individual members: fee
of $40 (include a
supplemental card).
• Premium members : fee
of $100 (including health
care insurance, personal
and financial service,
recreational vehicle
program). Cash back 2%
•Business members: fee of
$50(include a
supplemental card).
• Individual members: fee
of $50 (include a
supplemental card).
•Rebate 2%
•Accept goods returns

101. Competitive Advantages
Costco’s wholesale is better than Sam’s Club & BJ’s Wholesale:
1. Low Price
2. Good customer service.
3. Good Customer care.
4. Effective Social network.
Costco have winning strategy to focus on customer need (Lowest
price) and try to satisfy them (customer care & service).

102. Costco’s Prices
Costco Prices are Lowest.
(they always try to make try to make price is lower than their rivals)
1. Focusing on customer need. (Business strategy)
(Buy quality product with the best price to save money).
2. Try to improve customer care & service better than other rival – payment, delivery methods…)

103. Compensation Policies

104. Overview
- In 2015, Costco employs about 205,000
employees (88,000 are part-time employees and
117,000 full-time employees) (Statista ,2015).
-Ranked as second best employer in the US (Clare,
2015).
-The company’s turnover rate is kept at 5% for
employees who have worked at Costco for more
than a year (Aaron, 2014).

105. Overview
- Craig Jelinek – the CEO of Costco believes that a more rewarding workplace will eventually
lower employee turnover rate, boost their productivity and on-job performance (Aaron, 2014).

106. Compensation Practices Comparison
Costco Sam’s Club BJ’s
Pay rate Average of $20/hour (Aaron, 2014) $9 – 13/hour (PayScale, n.d.) $9 – 13/hour (PayScale, n.d.)
Health-based
benefits
Medical, Dental, Mental health and
substance abuse, Pharmacy, Vision
and hearing aid coverage, Personal
wellness tools, care network,
behavioral health (Costco, 2016)
Consumer-directed health plans,
Vision, Dental, Counseling services,
Illness protection (Walmart Careers,
2016)
Medical, Dental, Employee
assistance program (BJ’s Careers,
2016)
Financial-based
benefits
401(k) retirement plan, Stock
purchase plan, Money management
information, employee self-service
(Costco, 2016)
401(k) retirement plan, Stock purchase
plan, Discount cards when buying at
Walmart and Sam’s club (Walmart
Careers, 2016)
401(k) retirement plan (BJ’s
Careers, 2016)
Other benefits Reimbursement account, Various
forms of insurance(Costco, 2016)
Various forms of insurance (Walmart
Careers, 2016)
Flexible spending account, Various
forms of insurance (BJ’s Careers,
2016)

107. COSTCO VS SAM’S CLUB VS BJ’S

108. SWOT Analysis
STRENGTHS WEAKNESSES
- Well-perceived private label brand (Kirkland
Signature) (Euromonitor, 2015).
- Available gasoline and other additional services
encourage more frequent shopping (MartketLine,
2015).
- Higher market coverage (9 markets) compared to
Sam’s Club (only 4) (Euromonitor, 2015).
- Low cost operating model (MarketLine, 2015).
- Healthy financial position (Euromonitor, 2015).
- Dependence on North America markets (MarketLine,
2015).
- Limited product choice (only 3,700 products)
(MartketLine, 2015).

109. SWOT Analysis
OPPORTUNITIES THREATS
- International expansion enable Costco to access to a
large customer base(Euromonitor, 2015).
- Multichannel retailing enables Costco to widen its
reach (Euromonitor, 2015).
- Face fierce competition from various types of
retailers (Euromonitor, 2015).
- Catered to middle-high income class but faces
challenges in US as such class proportion continues
to decrease (Euromonitor, 2015).
- Low customers’ loyalty.

110. Recommendations
Recommendation 1: Focus in developing internet retailing and multi-channel strategies
- Capitalize on its strong financial position to invest in creating new retailing channels.
- Allow to minimize threats posed by other retailing channels.
- Stronger online presence enables Costco to reach a wider customer base.

111. Recommendations
Recommendation 2: Global expansions into untapped markets
- Reduce Costco’s dependence on North America market.
- Partnerships with other Internet retailers can allow Costco to enter untapped markets without physical
presence.

112. Revision
1. The process of crafting and executing a company’s strategy consists of:
A. Developing a Strategic mission
B. Setting Objectives
C. Monitoring and corrective action to short-term fix issues.
D. All are correct

113. Revision
2. To improve Cash Collection Cycle, the company should:
A. Extend DSO, Shorter DPO
B. Extend DSO, Extend DPO
C. Shorter DSO, Shorter DPO
D. Shorter DSO, Extend DPO

114. Revision
3. Four main process in developingBalanced Scorecard:
A. Translating the vision, Communicating and linking, Business planning, Feedback and learning
B. Translating the vision, Business planning, Communicating and linking,F eedback and learning
C. Develop mission, Business planning, Communicating and linking, Feedback and learning
D. Develop mission, Communicating and linking, Business planning, Feedback and learning

115. Revision
4. Which statement is TRUE:
A. A company achieves competitive advantagewhen an attractive number of Buyers are drawn
to purchase its products or services rather than those of competitors
B. A company achieves sustainable advantage when the basis for buyer references for its
product offering relative to the offerings of its rivals is durable, despite competitors’ efforts to
nullify or overcome the appeal of its product offering
C. Both are TRUE
D. Both are FALSE

116. References
Euromonitor International 2015, Costco Wholesale Corp in Retailing (World). Retrieved January 25, 2016,
from http://www.euromonitor.com/
Euromonitor International 2016, Costco Wholesale Canada Ltd in Retailing (Canada). Retrieved January
25, 2016, from http://www.euromonitor.com/
MarketLine 2015, Costco Wholesale Corporation. Retrieved January 24, 2016, from
http://www.marketline.com/
Statista 2015. Number of Costco employees worldwide from 2011 – 2015 (in 1,000s). Statista – The
Statistics Portal. Retrieved from
http://www.statista.com/statistics/284430/costco-number-of-employees-worldwide-2011-2013/
Aaron, T (2014, October 23) . Why Costco Pays Its Retail Employees $20 An Hour. Business Insider.
Retrieved from http://www.businessinsider.com/costco-pays-retail-employees-20-an-hour-2014-10

117. References
Cal State LA n.d., Sample Case Study: Costco. Retrieved January 23, 2016, from
http://web.calstatela.edu/faculty/klai/Course/497Costco.pdf
Clare, C (2015, March 25). America’s Best Employers 2015. Forbes. Retrieved from
http://www.forbes.com/sites/clareoconnor/2015/03/25/americas-best-employers-
2015/#2351e9e76ceb
Costco 2016, Costco Wholesale Corp in Retailing (World). Retrieved January 25, 2016, from
http://www.euromonitor.com/
Payscale n.d. Average Hourly Rate for Sam's Club Employees. PayScale. Retrieved from
http://www.statista.com/statistics/284430/costco-number-of-employees-worldwide-2011-2013/
Payscale n.d. Average Hourly Rate for Sam's Club Employees. PayScale. Retrieved from
http://www.payscale.com/research/US/Employer=BJ's_Wholesale_Club/Hourly_Rate
Arthur A. T. Strategy: Core Concepts and Analytical Approaches. The University of Alabama, Chapter 2 ,
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