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Putri Amandhari

64 INT B | Strategic Management


Chapter 2 and Case 2 of Costco Wholesale

Charting Companys Direction: Vision, Mission, Objective and


Strategy
Costco Wholesale was one of the third largest retailer in the United
States, the seventh largest retailer in the world, and the clear leader
of the discount warehouse and wholesale club segment of the North
American retailing industry. With the total 598 warehouses in total.
Jim Sinegal is the co-founder and CEO that are the person in-chafe in
every situation happened in practices. Defining the Companys
Direction first started with strategic vision as the first task.

First task

Second
task
Setting
objecti
ves

Third
task
Craftin
ga
strateg
y

Forth
task
Executi
ng
strateg
y

Fifth task

Evaluating
performan
ce and
initiating
corrective
adjustmen
t
Costco focusing generating their business model as high generated
sales volume and rapid inventory turnover by attractive low price
offering fee-paying members.

Strateg
ic
Vision

were going to be a company thats on a first-name basis with


everyone1
Costco crafted their strategy into: Pricing, they emphasize on low
pricing. Product Selection, stocked about 40,000 items.
Treasure-Hunt Merchandising, opportunities of the Costcos
members to get the cheap-deal in between. Low-cost emphasis.
and for Growth strategy they have 12 regional cross-docking
depots. And about the membership, they have two types of
Business and Gold Star (annual fee $55) and could upgrade into
Executive Membership for an annual fee of $110. Had 92,000 fulltime employee and 72,000 part-time employees with health and
dental care plans, health care, convenient prescription, dependent
care reimbursement, insurance, ESOP.
Corporate cultures and manner are one of the bottom line of the
companys. Its shows hows their company as a corporate and the
employees should behave. From the Costcos wholesale Case as it
mention on the books they have five corporate cultures and
manners that applied on their atmosphere: 1) Obey the law 2) Take
care of our member 3) Take care of our employees 4) Respect our
suppliers 5) Reward our shareholder.
1 Jim Sinegal c-6

Putri Amandhari
64 INT B | Strategic Management
Chapter 2 and Case 2 of Costco Wholesale

Evaluation
Overall, Costco sounds like a perfect of company with great demand
and opportunities through their internal and external practices. They
do take care about they customers, their stores, and one things that
almost valuable their employees. Their CEO, Mr. Jim Sinegal also
playing a huge part into to show their employee if he really care and
always planned to have company visit through the Costco store that
spread all over Europe.
Costco company not only make their corporates culture to be seen
in a wall. good business need somebody to act, experience and
implement what is really written on their vision and mission. In this
case, Jim Sinegal try to prove this good business practice and jump
into it. Through this kind of CEO, their top level management can
learn what really happening and what really the situation up in
the air. Beside the efficiency of business control, they can also learn
from their mistakes and fix it immediately without any third-partyside involved.
BASIC COMPETITOR ANALYSIS
Though we already understand if Costco if implement the good
business practices, they also need to adjust with their dynamic
situation of competition. As mentioned one the case that Costco has
two other main competitors who also operate almost in the similar
focused and target.
And yes, there is no comfort zone when once youre in into the
market. Costco need to face and learn from their competitor. First,
Sams Clubhouse is a wholesale opened in 1984. In early 2012 there
were 611 Sams Club locations in the United States with 49 million
members and record-high fiscal 2012 sales of $53.8 billion. 2 Stocked
about 4000 items, and also have a supporting departments like
photo processing, pharmacy, optical department and self-service
gasoline pumps. Sams Clubhouse membership worth $40 and has a
premium member club that cost $100. Shipped almost 65% of non
fuel-merchandise from some 25 distribution facilities. They also
have more than 100,000 people across all aspects of its operation in
the United States.
Meanwhile, BJs wholesale started on the mid-1980s and had a total
of 195 stores. Merchandise almost 7,000 items and about 70%
percent of BJs product line can be found in the supermarket. But
they have different style on reaching their consumer: 1) More
focusing on individual consumer 2) clustering club locations to
achieve the benefit of name recognition and maximize the
efficiencies of management support, distribution and marketing
2 c-21

Putri Amandhari
64 INT B | Strategic Management
Chapter 2 and Case 2 of Costco Wholesale

activities 3) more creation on mixing food and general merchandise


4) open longer (10 hours)
SUGGESTIONS
Costcos should aware about the competitors movement because
Sams Clubhouse and BJs are competing in the almost same area as
a warehouse. Competition among warehouse clubs was based on
such factors as price, merchandise, quality and selection, location,
and member service and its all almost the same.
For companys strategies, Costco should think about extend their
business into some level of variance that not only focusing on the
wholesale. Learn from the BJs for example, focusing on the
groceries and individual market could brought different experiences
on their business practices. and by that, its to extend into some
type of markets and play into the supermarket or even hyper mart.
Their main income still comes from their member. Members are the
interesting part of any good and especially customers to be treat not
as any regular customers who just came by and out. Costco should
learn about their market and psychographic aspects really well to
prevent the saturated market that might happen. Treating the
member are by learning by their behavior, their trends and
maximizing on the engagement. Because we are not talking
about the small numbers of members at one place, because Costco
it spread almost in all over United States and some Europes also
Asias markets. From those three key aspects, if Costco really care
bout their members, I guarantee its a 100% of increasing number of
new members might come on the prosperous opportunity .

Putri Amandhari
64 INT B | Strategic Management
Chapter 2 and Case 2 of Costco Wholesale

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