Compettive Analysis Costco Wholesale Company
It has undergone expansion and is now represented in many countries around the world. Limited product offerings (usually only 10% of typical retail establishments) create a “treasure hunt” atmosphere for Costco customers. Costco members are very loyal, with renewal rates consistently between 85 and 90 percent. Weaknesses Its limited range of products in stores may not allow it much flexibility compared to competitors that are less specialized. Costco’s “discount” business plan is typically immune to economic downturn, however, an extended recession or the rising value of the dollar may pinch margins.
Opportunities Expanding product offering in individual stores may provide greater prospects. Costco should also enter new domestic markets and international markets. Costco should also enter unexploited markets such as automobiles, entertainment, or furniture. Threats Costco Wholesale Co. is under the threat of worldwide competition from other stores, including up-and-coming or unknown retail concepts. Other threats include inflation and the general slow-down of the world economy. Cross-implication matrix for Costco Wholesale Company |Strength |Weaknesses | |Opportunities |Enter unexploited markets |More focus on particular products | |Threats |Make use of economies of scale |Maintain high value products | Competitors Brand Competitors: Wal-Mart (Sam’s Club), BJ’s Wholesale Club Industry Competitors: Wal-Mart, Kroger, Supervalu Form competitors: Safeway, Target
Generic competitors: Best Buy, local grocery/market, Chevron SWOT Analysis of Sam’s Club/Wal-Mart Stores, Inc. Sam’s Club is the membership warehouse outlet of Wal-Mart Stores, Inc. Wal-Mart is the world’s largest retailer, with nearly $400 billion in sales in the fiscal year ending Jan. 31, 2007. The company employs more than 2 million associates worldwide through more than 7,400 stores around the world. (www. finance. yahoo. com) Strengths Wal-Mart is the most powerful retail brand. It has a reputation for value, convenience and a wide range of products all in one store.
Wal-Mart has grown substantially in recent years and has experienced global expansion (for example, its purchase of the United Kingdom based retailer ASDA). The company’s key to success is its use of information technology to support its international logistics system. For example, on-demand reports are available to track the performance of individual products world-wide, store-by-store at a glance. IT also supports Wal-Mart’s efficient procurement system. A focused strategy is in place for human resource management and development.
People are key to Wal-Mart’s business and it invests time and money in training people, and retaining a developing them. Weaknesses Wal-Mart is the world’s largest grocery retailer and control of its empire, despite its IT advantages, could leave it weak in some areas due to the huge span of control. Since Wal-Mart sells products across many sectors (such as clothing, food, or household items), it may not have the flexibility of some of its more focused competitors. Wal-Mart is a global brand; however, its presence is limited to a few countries world wide. Opportunities
The most significant opportunity for Wal-Mart is to acquire, merge with, or form strategic alliances with other global retailers, focusing on specific markets such as Europe or the Greater China Region. Global expansion has been limited in size and success. There are tremendous opportunities for future business in expanding consumer markets, such as China and India. Previous attempts by Wal-Mart were independent of existing retailers, so joint efforts may provide greater opportunity for success. In addition, new locations and store types offer Wal-Mart opportunities to exploit market development.