Planning and Measuring Performance for Costco Corporation Roger Scmidt MGT/521 February 25, 2012 Roberto Guzman Planning and Measuring Performance for Costco Corporation My week 3 Organizational Plan Assignment was the Costco Wholesale Corporation. I identified its current goals as 1) control costs by reduction of inventory and careful selection of high quality goods and services and careful expansion of its’ domestic market. To elaborate, Costco has been very successful at keeping costs down by minimizing waste and storage expenses with a rapid turnover of its’ inventory. This is at least in part due t0 its’ ability to sell high-demand goods and services for very low prices. Additionally, Costco has a goal of 3) maintaining its employee workforce, as high employee job satisfaction has translated into exceptional customer service and low employee turnover (Costco, 2012).
The higher the ratio the more assurance exists that the retirement of current liabilities can be made. The current ratio measures the margin of safety available to cover any possible shrinkage in the value of current assets. Normally a ratio of 2 to 1 (2.0) or better is considered good. Short-term creditors prefer a high current ratio since it reduces their risk. Shareholders may prefer a lower current ratio so that more of the firm's assets are working to grow the business.
In a highly competitive business world, on a firm’s priority list is the subject of increasing profit and reducing cost. One might than pose the question, has this put them out of business (mom and pop store)? The answer is absolutely not, but rather, they too benefit from cheaper prices as they continue to buy in bulk and continue to operate as the name suggest, convenient
As stated in extract 1, it tells us that the goods we import are not made in the UK and so makes it impossible to replace the imports, therefore meaning that we still have to import goods, despite the high prices due to the low exchange rate of sterling. This is partnered with the fact that some suppliers (shown in extract 1) have agreed long term supply contract with cheaper overseas suppliers before the depreciation of the sterling and so they are now paying high prices. This may mean that these suppliers may have to increase the prices of these goods, therefore leading to cost push inflation due to trying to maintain a decent profit margin in the hope the demand for the good does not drop dramatically. However, it is stated that there still may be a large price differential with countries such as China and India, even after sterling's depreciation. On the other hand however, as stated in extract 1, line 8, volume of good imported has also increased by 16% and inflation has continued well above target.
Cost savings can be computerized accounting programs reduce staff time doing accounts and reduce audit expenses as records are neat, up-to-date and accurate. This system allows them to record business transactions accurately and generate financial reports quickly for management review. However if Rumble carry less transactions this means they won’t need to have computerised accounting system because it is very expensive for them to use. In this case it is best for them to have manual accounting system because it is reliable, cheap and easy to use. They can easily do their transaction without problems.
Model Components and Profit Generation. * Rapid Inventory Turnover-when combined with the operating efficiencies achieved by volume purchasing, efficient distribution, and reduced handling of facilities enabled Costco to operate profitably at significantly lower gross margins than traditional wholesalers, mass merchandisers, super markets, and super centers. * High Sales Volume-Allowed Costco to sell and receive cash for inventory before it had to pay many of its merchandise vendors, even when vendor payments were made in time to take advantage of early payment discounts. This allowed Costco to finance a big percentage of its merchandise inventory through the payment terms provided by vendors rather than by having to maintain a sizeable working capital to facilitate timely payment of suppliers. 2.
International Trade ECO 372 University of Phoenix There are many contributing factors to the stabilization and prosperity of our global market. We, the United States, are living in a time of severe trade deficit, meaning that we are importing many more goods than we are exporting. While it is nice to be able to buy foreign products at a lower price, there is risk in doing so. When we purchase foreign goods over domestic at lower prices it forces our domestic companies to sell their goods at lower prices to remain competitive. These lower prices may lend to making enough profit to sustain the current workforce.
This is a move less risky than corporate owned expansion and will likely produce positive cash flow. Franchised stores will eventually replace whole selling to grocery and convenience stores, a strategy with a negative net present value due to erosion in sales at franchised or company owned stores. Recommendation 1 resolves the problem surrounding high operating leverage in areas with low sales potential. While these markets are profitable, high investments in buildings and equipment provide excess capacity at a high cost. In an attempt to reduce the uncertainty of Krispy Kreme’s stock recommendation 2 suggests that Krispy Kreme make a firm commitment to issue financial statements on a feasible date.
MARKETING 535 Business To Business Marketing Cumberland Metal Industries case QUESTIONS 1 AND 2: Customer Value Model Value Elements Price Elements Value Placeholders • Provides better performance than competition (task accomplished faster) • Lower replacement rate • Faster replacement rate (cools off faster) • Endurance: One pad drives more piles • Less labor hours needed • Less rental fees • List price • Transmit force without creating heat (efficiency) • Remains resilient enough to prevent shock • Availability • Lighter • Less hazardous than asbestos (due to less temperature and type of material) Word Equations The Colerick Test & Fazio Test Renters 1) (Diesel Hammer Cost + Crane Cost + Leeds + Labor Cost + Overhead cost) x working hours Owners 2) (Labor Cost + Overhead cost) x working hours Cost in Use for Colerick Using Asbestos (Renters) = (34+52+8+44+100)*106,666 = 25486,508 Cost in Use for Colerick Using CMI (Renters) = (34 + 52 +8 +44 + 100) * 75,06 = 17864 Cost in Use for Colerick Using Asbestos (Owners) = (44 + 100) x 106, 66 = 15350 Cost in Use for Colerick Using CMI (Owners) = (44 + 100) x 75, 06 = 10809 Cost in Use for Fazio Using Asbestos (Renters) = (34+52+8+44+100)* 75 = 17925 Cost in Use for Fazio Using CMI (Renters) = (34 + 52 +8 +44 + 100) * 60 = 14340 Cost in Use for Fazio Using Asbestos (Owners) = (44 + 100) x 75 = 10800 Cost in Use for Fazio Using CMI (Owners) = (44 + 100) x 60 = 8640 Customer Value Model Colerick RENTERS Asbestos CMI Revenue 75,000 75000 Cost in Use 25486,508 17864 Revenues Enhance 49514 57136 Cost Savings 0 7622 Total Value in Use 49514 64758 Total Value in Use per Feet 3,3333 4,317 Total Value in Use per Pad 104,06 10792 Colerick Owners Asbestos CMI Revenue 75,000 75000 Cost in Use 15350 10809 Revenues
Penetration pricing uses low initial prices to gain market share and slowly increases the price to its normal level. Economy pricing offers basic products that have the lowest customer price possible. Skimming is a price strategy in which companies set high initial product prices that decrease to match lower prices from new competitors. Bundle pricing is a strategy where companies include several different products under one price. This allows a business to provide more products to consumers at a slightly lower price.