Question

a.      What is Costco’s business model? Is the company’s business model appealing? Why or why not?

b.     What core values or business principles did Jim Sinegal stress at Costco?

c.      What recommendations would you make to Costco top management regarding how best to sustain the company’s growth and improve its financial performance?

Answer 1

Answer:- The business model of Costco is based on the rapid inventory turnover and high sales volume. His model was implemented by the company by offering some national and private brands to the customers at relatively low prices. In my opinion, the business model of Costco is quite appealing in the sense that it combines the low prices with fast inventory turnover. Due to high inventory turnover selling the inventory is not an issue for Costco and the payment is usually made once the inventory is sold out. This saves a lot of money to the company as the company pays the manufacturers before the due date and thus receiving discounts for early payments.

Answer: -the values which were given utmost significance by Jim Sinegal stress at Costco are valuing the law, taking care of members, employees, show respect to vendors and suppliers and provide rewards to shareholders.

Examples of pledges are as below:-

Obey the law:- the company should comply all the laws and regulations respect public officials and their position and follow all the laws related to wages, working hours and working conditions

Take care of members and employees:- making the shopping experience better, welcome the customers, providing best customer services, offering competitive wages to employees, greater benefits and so on.

Answer:- Majorly, the management is performing quite well. But in my opinion, the management can think on opening more number of new stores to improve coverage. The management should also look in the social media to contact and interact with the young and new customers.