1a. Describe Costco’s business model? 1b. What is your assessment of the value p

Question

1a. Describe Costco’s business model?

1b. What is your assessment of the value proposition?

1c. What is your assessment of the profit formula?

2. What is Costco’s strategy? Is it a winning strategy?

3. How well is Costco performing from a strategic perspective? The main elements of Costco’s business strategy are:

4. Does Costco enjoy a competitive advantage over Sam’s Club? If so, what is the nature of its competitive advantage? If not, explain.

5. Does Costco enjoy a competitive advantage over BJ’s Wholesale? If so, what is the nature of its competitive advantage? If not, explain.

Explanation / Answer

Costco's has a basic structure of operation with high sales volumes as well as very quick inventory turnover. As company works on the basis of cost differentiation for Limited national and private label products availability of business opportunities for Costco in their operating structure is relatively big.
That business model is a totally built on customer memberships in which customer joins the organisation through a subscription and renew subscription annually. Costco has a business model where customer find good quality products at a good bargain. This type of approach enables Costco to maintain competitive advantage as there are relatively very less competitors operating in similar way.

There main strategy is built on low price where company offers a limited selection at a very affordable price. It can be described as a Treasure hunting shopping environment where Costco uses Kirkland, their own brand which is specifically designed to meet the better quality then the national standards set for the specific industry. Treasure hunting merchandising offers consistently changing luxury items on the floor prices. This type of approach offers people or customer to pay more for buying more cost-effective products directly enabling Costco to maintain better profits in their operating environment with using irresistible deals. Buyers also buy items from wholesalers which directly provides an opportunity of providing an offer for the specific condition.

At this specific condition we can see that the overall performance strategy is implemented in a very well manner. As they are adequately providing products that the customer need, company is extensively generating better revenues from the same operating market environment. We have earned more than 75 % more revenue from Sam's Club which is a fine example of their strategic success.
Demon competitive advantage is coming from the location of operation as they have a very large operational structure. BJ's have no competition from Costco as we have relatively very small operating a structure as compared to Costco. BJ's only has 177 stones as compared to Costco where Costco has 713 stores for operation which directly increases the adaptability in different locations as well as posing better opportunities in the specific market reducing the impact of any other specific brand for competition.

Costco does have a competitive advantage over Sam's Club and BJ's as availability of loyal customers and their unique business model has increased the quality of service provision to the customers which is providing Edward support to their operations capabilities in their very widespread operational structure. At the specific movement winning strategy for Costco is declining where even after morning 59 % of market share there is consistent decline in growth which is sign of losing in the specific competitive environment.

P.S.- Please leave a comment if any explanation is needed.

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