Costco Case: Swot Analysis Essay

Provide a rich and insightful listing SWOT analysis (with brief explanation where needed) that clearly and accurately reflects thinking through relevant general environment trends, basic industry facts, and five forces of competition, value chain (including financial) analysis.

  1. Does Costco successfully carry out one of the five basic business-level strategies?   Clearly explain, considering value chain activities and evaluation of criteria of valuable, rare, and hard to imitate attributes.

5 basic business-level strategies:
  1. New Entrants:
  - can increase competition by adding new capacity and aggressively pursuing (stealing) market share.
  - are discouraged by “entry barriers”, or obstacles to enter the industry, such as . . .

  - current players prefer ______entry barriers.
  - new/large entrants (from other industries) be able to hurdle even high entry barriers!

  2. Substitutes
  - are products offering a different way of satisfying a similar need or want.
  - often are provided by firms in a different industry.
  - are NOT THE SAME as rivals:
  Burger King vs. McDonald’s = rivals;
  Burger King vs. grocery store = substitutes

  - consider the price-performance tradeoff of switching to the substitute.

  - consider consumer switching costs.

  - consider relevant environmental trends.

  - can be insidious and very powerful

  3. Supplier power is high when
      • supplies are crucial to product success and hard to get.
      • very few suppliers exist.
      • one supplier is relied upon.
      • switching costs for the purchasing firm are high.
      • suppliers might integrate forward.

  4. Buyer power increases with
  - consumer bargaining leverage, from
        - institutional buyers
        - informed buyers
        - many choices
        - low switching costs
        - backward integration
  - high levels of price sensitivity
  - low levels of...