Costco Case Study

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Case 2 Analysis of the Competition Among the North American Warehouse Clubs Alex R. Hey University of Sioux Falls Author Note Alex Hey, University of Sioux Falls. This case analysis partially fulfills the course requirements for BUS427 Strategic Management. Correspondence concerning this analysis should be addressed to Alex R. Hey. Contact: alexander.hey@usiouxfalls.edu. Introduction and Background of the Case All across the nation the company names Costco and Wal-Mart are well known. Wal-Mart competes in the warehouse club market with its subsidiary, Sam’s Club. Also competing with these two giant is the smaller but fast growing BJ’s Wholesale. Costco is the industry leader, but faces stiff competition from Sam’s Club. Furthermore, BJ’s Wholesale is quickly growing into a competitor that should not be ignored. Analysis and Evaluation Costco is widely considered the industry leader in the warehouse club market. However, the financial data presented in Figure 1 provides little proof of whether or not that is true. The only data that is available for Sam’s Club is their operating margin, which is higher than Costco. While Sam’s club does have 183 more stores, Costco leads Sam’s Club in the number of member of members at their stores. Costco has 58.8 million members, and Sam’s Club only has 47 million (Thompson, 2011, p. 244). As far as Costco’s and Sam’s Club’s strategies are quite similar. They are both focused on providing quality products at the lowest possible price. BJ’s takes a different direction and offers products in lower quantities. This differentiates them with the competition. However, Costco and Sam’s Club have more stories and do not have to worry about them, at least not yet. BJ’s is growing quickly, but is still distanced from Costco and Sam’s Club. Recommendations In order to continue its leading position in the

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