Costco Case Study

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| Costco Wholesale | Competition among the North American Warehouse Clubs | | | Andrey Degen 500 332 851 Jasmit Dhillon 500 347 246 Amanda Gonsalves 500 271 266 Taylor Moskalyk 500 296 291 | BUS 800 – Strategic Management | 10/23/2012 | Professor Anthony Power | Strategy Since its creation, Costco and discount Club Warehouses alike have been a stable profitable business. The business model it employs has shown to be rock solid, remaining lucrative through periods of economic drought. Unfortunately, this seemingly well-off company does have its fair share of issues that stem from its aggressive presence the US market, and the change in the consumer segment. Costco’s financials at first glance appear to be sturdy, but in the long run certain issues may pose a threat to its bottom line. Rationale In the United States, the deep-discount warehouse industry has seen 25 years of rapid growth. However, domestic sales growth finally peaked in 2008 and ensued on a downwards trend in 2009, suggesting that perhaps the American market has been exhausted. Domestic market fatigue has been particularly tasking for Costco, resulting in the greatest sales percentage decline among the big 3 warehouse retailers. Costco’s sales plummeted over 1.5% in 2009 from its pinnacle in 2008. If historic trends are any indication of future performance, Costco must react proactively and remedy this matter immediately. Conversely, the foreign markets are heading in the opposite direction. Costco’s sales data indicates positive sales growth outside of North America. The company’s most profitable stores are in Korea and Taiwan. Between 2004 and 2009, Costco’s sales in Taiwan’s $72 billion retailing market have tripled. Unfortunately, despite an indication of tremendous financial potential in the global markets - specifically in Asia - only 10% of Costco’s operating
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