Lauren Ryan
Professor Buckingham
GEOG 123, Section AN
8 December 2014
Costco: A Cut Above the Rest
Introduction
Costco Wholesale Corporation, in terms of their business practices and ethical standards, stands out above the rest. From the beginning, the owners, James Sinegal and Jeffrey Brotman, decided they wanted to avoid the corrupt practices associated with globalizing. No company is completely free from or unaffected by globalization; but Costco has done a pretty good job being fair in all of its transactions and affairs. From when it started to where it globalized, Costco’s process for globalizing and the reasoning behind it have made them not only a great company but also an incredibly successful company. Furthermore, many company’s
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All of its products are made by other companies in their factories all over the world. Granted, Costco has a lot of say in how these products turn out and can usually get an incredibly low price for them. The surrounding community benefits from wherever Costco stores are located. Not only do consumers get the opportunity to enjoy Costco’s low prices but they also will see products from local businesses stocked on Costco’s shelves. Costco looks to buy from local suppliers in order to cut down on distribution costs and appeal to the local tastes. This also benefits the local economy by supporting local businesses which in turn benefits Costco.
Another reason why Costco globalizes is to stay ahead of its competitors, which prevents them from being a threat in the future. By expanding its market reach far and wide, Costco is safer from shifts in the market related to prices and products. It has many inflows of profit from all of its stores that it can rely on. Currently, Costco is way ahead of its competitors globally. BJ 's Wholesale and Sam’s Club are its two main competitors. However, BJ 's Wholesale does not operate any stores outside of the United States; and Sam 's Club, which is owned by Wal-Mart, only has stores in three foreign countries (Costco’s
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Costco builds new warehouses and offices in other countries. There are many incentives associated with building new retail outlets in other countries such as access to more consumers and products. Costco applies new infrastructure and business laws in accordance with whichever country it is located in (Costco’s Global). By doing so, they gain access to new markets and new consumers while also avoiding economic and trade barriers. Costco also makes a point of tailoring each of its stores to the local culture by seeking out local retailers and providing local cuisine (The Costco Craze).
Furthermore, Costco learns to tackle socio-cultural issues such as culture, language, attitudes, and values by globalizing (Costco’s Global). This will make their company more successful in the long run because they will have various business models on how to conduct themselves in other countries. They are also able to reduce transaction costs such as product and shipping costs by gaining access to more products and by searching locally for suppliers (The Costco
There are always employees available in the aisles and food sample stands around every corner. Sam's Club is a little smaller than Costco but it's the same concept. From my experience at Sam's Club you usually just go for what you're going for and know Sam's Club only distributes it. Both Sams and Costco make you feel welcome and have useful resources for their
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Sam Walton was selling supplies cheaper than other companies that way people who were less fortunate could afford it. However people did not stop to notice he is putting companies around his out of business. Other local business are selling supplies normal priced or high end prices because of the quality. The quality from the retailer stores around Walmart is more reliable and durable. Also Sam Walton is receiving his merchandise from overseas which causes his products to be cheaper.
In Costco’s macro-environment, a variety of factors could affect the company’s economic viability. External factors such as inflation, foreign currency exchange rates, levels of unemployment, reduced consumer confidence, and changes in tax policies could unfavorably affect the demand for Costco’s products and services. Prices of some goods and services including food products, are often variant and subject to fluctuations deriving from changes in domestic and foreign supply and demand, competition, taxes, labor costs, or delays in delivery which could significantly affect Costco’s sales. Therefore, the product’s costs and selling could also increase affecting financial results. Other important economic factors include the increasing international
Cutco has targeted the high end of that market and created a corporate culture based on maintaining the highest quality standards. In the marketing strategy employed by Vector marketing, the company that manages the sales force for Cutco, customers have the ability to share their personal stories of family and times when their Cutco product has helped or served them. Thousands of customers have written stories to the company to express how their products have affected their lives, it is these stories that create lifetime customers and appeal to other consumers when looking for what they want. Vector calls this the friends of friends approach to marketing and it is very successful in this case as annual sales are over $200 million. I believe that there is more money to be had if they mass produce and used either retailer or wholesaler channels, but Cutco isn’t willing to sacrifice the quality for the
Key Trends – Globalisation One of the main opportunities Costco has is more global expansion to specific targeted countries. Although operating in many countries, Costco is heavily dependent on the U.S. and Canadian markets. It still has the opportunity to expand into the Asian and Australian markets where it has a limited presence. Costco has the capability to operate about 100 stores in Taiwan, Korea and Japan combined and about 20 stores in Australia. It currently has 41 stores in Taiwan, Korea and Japan combined and 6 stores in Australia.
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Furthermore, research has shown that there is a high percentage of overlap between Amazon Prime and Costco membership holders. Should Amazon take over the grocery marketplace, Costco could see a serious decline in
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By cutting these costs you are able to produce a product for maybe a few dollars and be able to mark it up to almost 200%. This scenario also plays out in major industries such as; Wal-Mart, Nike, Adidas, Ralph Lauren, and Tommy Hilfiger. Today major clothing, shoes, and cosmetic businesses are discovering that, if they relocate the factories in South and East Asia, it is resulting as an advantage by not partake in paying allot of expenses (wages, taxes, and other bills) that would alternatively cost more in countries such as U.S.A., United Kingdom, Canada, France, and so forth. Which permits the head of companies such as; CEO, owners, and Stockholders are able to have
Global strategy is an international strategy that implements by a company which they doing their business in different countries. Internationalization is a process for IKEA expand its business and it was quite important because through the internationalization process, IKEA was able to gain a broader area of marketplace to sales their products, which will lead to profit and revenue increased and new market places existed mean new opportunity for IKEA to improve their product in order to meet the customers’ needs. The first reason that IKEA should go to international level is because the Swedish market is small and no enough for IKEA to expand itself. This is important for IKEA because the small market mean low opportunity, lower profit and
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