Question

1.What is the brief history of the fortune 500 company Costco. Who is the founder? Where? When?

2. Do an. internal analysis of the company.(SWOT, etc)

Answer 1

1. Costco, in full Costco Wholesale Corporation, American discount store retailer of the sort known as warehouse clubs or wholesale clubs, where bulk amounts of products are sold at deeply discounted rates to members of the club who pay an annual membership fee. It is one of the world's largest retailers. Costco operates in Issaquah, Washington, DC.

Costco traces its roots back to 1976, when San Diego's first Price Club was founded by Sol Price, a leader of warehouse club retailing. In 1983 Jeffrey H. Brotman and James D. Sinegal opened the Seattle First Costco. In 1993 the Price Corporation (Price Club's corporate parent) and Costco combined to form Price / Costco. The corporate name was changed into Costco Corporations, Inc. in 1997, and the new corporate name was introduced in 1999. The business maintained stores in the USA, Canada, Mexico, Europe, the Far East and Australia in the early 21st century.

2. Costco’s Strengths-

Low Prices: a big strength of the retail giant is Costco's low price policy. Costco adopts a policy to store high-quality products, which are sold in warehouses style stores in bulk size at small profit margins. For example, an average markup at Costco is 11 per cent, vs. 24 per cent at Walmart, and 35 per cent at the Home Depot, according to fortune.

Membership Business Model: Costco's business model is distinct from most other retailers; membership dues are paid at $60 per annum. And only the members who are paying will shop at Costco.

Customer savings pass: Costco retains a competitive advantage by keeping the running costs as small as possible. It helps the company to be less reliant on making big profit margins on sales, thereby allowing its consumers to have better savings on purchasing.

Costco’s Weaknesses-

Limited Range of Items: When shopping at Costco, you have a wide variety of products ranging from clothes, furniture, jewelry, toys, TVs and much more. But in comparison to other retail giants your choice for individual items is minimal. You'd find about 3700 product SKUs in an typical Costco store, compared with 150,000 product SKUs in Walmart and 80,000 product SKUs in a Target shop.

Transportation costs: Transportation can become very difficult when you buy products in bulk, particularly for people who live in urban areas or towns. Compared to other online retail giants including Amazon and Walmart's (e-commerce) subsidiary Jet.com which provides free / discounted shipping, you can spend additional costs on transportation with Costco. Costco is a major weakness.

Costco’s Opportunities

Online Presence (E-commerce): The number of people using the internet and shopping through eCommerce sites has increased significantly. That means Costco has a great opportunity to grow its eCommerce shopping platform. In 2019, only 4% of its total revenue is contributed to e-commerce.

Customers of Health Consciousness: Americans and people around the world are becoming more health conscious. It means that Costco should take advantage of its food courts and grocery section to encourage healthier alternatives.
Tax Policy: Costco gains from a tax cut by the US government. That would mean paying a lower amount of tax and using those savings for growth.

Costco’s Threats

Brand Reputation: Product recall can be frightening not only because of potential financial losses, but also because of the lasting reputational harm. When a reputation of an organization gets hurt, getting it back becomes very challenging. Reputation is a crucial factor in the long-term success of the company, for the retail sector. In November 2015 Costco was hit by a product recall. Because of the E outbreak, its rotisserie chicken salad was recalled from all its shops. Coli toxin, and contaminated 19 people. This has greatly affected Costco’s reputation.

Security: Costco gathers and transfers information from its customers and employees to a third party cloud provider for encryption. Which includes cashless banking information from their customers. If those specifics fall in the wrong hands, doom could be spelled.

Political uncertainties: Costco operates globally, which means that the countries they work are vulnerable to political problems.