Current Situation:

Strengths Weaknesses
Management Majority of top management officials Simple layout may detract from
are “home grown”. luxury items offered in store.
Section B-1
Only 6% of Costco employees leave
after the first year, compared to 44% of
Wal-Mart’s.
Section B-1
Marketing Increase in comparable store sales 2004- Costco does little to no formal
2005 (8%) and 2005-2006(7%). advertising except in the instance of
a store opening, so they may not be
Internet sales increased 59% from 2005 reaching their full membership
to 2006 and are projected to reach $1 potential.
billion in 2007
Section B-2
Membership increases steadily at 10%
each year and is a constant 2% of
revenue

“Treasure Hunt” aspect makes shopping

fun again;

Costco’s philosophy is to keep overhead

costs low and pass those savings on to
customers in the form of low prices.

Section B-2
Accounting / Costco turns over its inventory nearly
Finance once a month, which is more frequent
than its competitor BJ’s.
Costco has consistent Return on Sales
and Return on Assets.
BJ’s has a stronger Asset Turnover
than Costco.
Costco’s gross profit margin has
declined from 2004-2006, while BJ’s
has increased.

Section B-3
Section B-3
Production & Costco operates stores in the US, Costco’s international sales are only
Operations Canada, Mexico, UK, Japan, South 6% of total net sales
Korea, and Taiwan.
Taiwan stores are losing money

Because of Costco’s high inventory Section B-4

turnover we generally have the
opportunity to sell and be paid for
inventory before we are required to pay
 many of our merchandise vendors.

Section B-4

Information Costco has a separate website for stores
Systems in each of its international reasons.
Costco offers special online deals each
week dubbed “This Week’s Treasure
Hunt”.
Costco’s website showcases the quality
of the products it offers and lets the
customer view products from various
different angles.
Section B-5
Costco only offers an online retail
outlet to customers in Canada and
the US.
Costco’s homepage is overwhelming
due to the conglomeration of
graphics.
Costco’s website focuses on
consumers, leaving out small
businesses.
Section B-5

Opportunities Threats
Economic High GDP per capita means these 12% of the US population is below
people have disposable income: the poverty line and 15.9% of
Canada’s population is below the
US- $40,100 poverty line.
Canada-$31,500
Japan- $29,400

Inflation Rates are relatively low:

US- 2.5%
Canada-1.9%
Japan- -0.1%
Demographic / Approximately 67% of the population in Costco will have to expend energy
Sociocultural the US, Japan, and Canada are between and resources for translation of
the ages of 15-64 company materials and websites as
all of the regions we operate in have
a different primary language.
Political / Legal Canada and Japan’s revenues and The United States’ expenditures far
expenditures are fairly balanced exceed their revenues.
Technological 159 million internet users in America 57.2 million Internet users do not
and 16.11 million in Canada have access to online purchases in
Japan.