North American wholesale club industry and Costco's overall situation, case analysis assignment help

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Craig Jelinek, CEO of Costco, has employed you as a consultant to assess the attractiveness of the North American wholesale club industry and Costco’s overall situation and to provide a set of recommendations that will help the company grow. Please prepare a report to Mr.Jelinek that assesses the long-run profitability of the North American wholesale club industry, the quality of Costco’s internal situation and that makes specific recommendations on how they can attain their goals. In analyzing the situation be sure to perform a thorough Industry and Competitive Analysis (e.g., PESTEL, Porter’s 5 –forces, Driving Forces, KSF’s, competitor analysis, etc. from Chapter 3) as well as an analysis of Costco’s internal situation including its business level strategy, their resources and competitive capabilities (e.g., SWOT from Chapter 4), a Competitor Analysis (A discussion of key competitors and a group map) and a Performance Analysis (financial and strategic). Your recommendations should be specific, actionable and should logically flow from your analysis.

Your report should be no more than 15 pages inclusive of an executive summary, a recommendation section that is no more than 4 pages in length (double spaced), and appendices (single spaced) that should include analyses and may be presented in charts, tables, or any other format you deem useful and appropriate. The cover page is not included in this page limit. All pages must have 1 inch margins and you must use Times New Roman 12 font.

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Tutor Answer

paula9
School: University of Virginia

Attached.

Running head: CASE ANALYSIS

1

Case Analysis: North American wholesale club industry and Costco's overall situation
Student's Name
Institutional Affiliation
Date of Submission

2

CASE ANALYSIS
Table of Contents

CASE ANALYSIS

3

Executive summary
The competition in the North America wholesale club industry is high since the clubs strives for
the low cost. Many wholesale clubs are able to offer discounts directly on their items. Basically,
the low prices are the driving force of the industry and therefore for any company to thrive in the
industry it must create advantages over its competitors by differentiating itself. After the
industrial and competitor analysis alongside the assessment of the Costco internal situation, the
report makes recommendations that will increase the long run profitability in the North America
wholesale club industry.one is that the company should increase its geographical coverage and
secondly it should invest heavily in technology. Therefore, in this context, the paper presents an
evaluation report and long recommendation which is intended to enhance the profitability and
the sustainability of North America wholesale club industry. The evaluation and the
recommendation are aimed at achieving the main goals of ensuring that the Costco is capable of
ensuring that it serves interstate effectively. The plan is also aimed at ensuring the sustainability
and the capability of Costco to continue to serve the North America wholesale club industry. The
plan is to improve Costco in the state industry's culpability to compete effectively in the greater
North America wholesale club industry. The industry assessment pursued a comprehensive
analysis of the structure of the market and performance of the whole industry.

Recommendations
Recommendation 1: Costco Company should broaden further its economic characteristics (Ex.
1) by improving products and the services which it offers so that it can be able to thrive in the
competitive market. This is because the Competitor Overview (Ex. 5) and Strategic group map
(Ex. 6) indicate that Sam's Club and BJs wholesale club are the leading competitors in the
warehouse industry, especially in the brand loyalty. In this regard, the company should strive to
be able to come up with a Business level strategy (Ex. 9) which will enable the company to
differentiate itself better while at the same time leaving technology and research to be the key
focus. It is worth noting that indeed Costco Company has invested heavily in innovation and
technology. The technology in which the company is distinguishing itself is very easy for the
competitors to adopt an almost similar technology. The technology should now be focused on
the new products and the marketing innovations and changing the internet capabilities depending
on the focus of the company. Focus on the key success drives (Ex. 4) and the research and
development with the constantly changing trends in the branding and advertising could give
Costco competitive strength and profitability in the North America wholesale club industry. As
evidenced in the SWOT analysis (Ex. 10), the company is facing the threat of the competitors
adopting an almost similar technology. So as to avoid this threat, the company must invest
heavily in the adoption of the most advanced and effective technology and ensure that its
systems are ever updated. Further, the investment in technology will help the company to
differentiate itself from its competitors.
Recommendation 2: The company should increase its warehouses in different geographical
locations especially those with high population and those areas where the residents have stable
income, this is because as noted earlier on in the report most of the company's customers and
members are those who live in well off areas and majority have a stable income. The Financial
and performance evaluation (Ex. 7) in the year 2011 shows that the financial performance of

CASE ANALYSIS

4

Costco was higher compared to its two main competitors. This can be associated with the large
geographic coverage of Costco company operations compared to its competitors. One of the
reasons why Sam's Club and BJs wholesale club Weighed Competitive Strength Assessment (Ex.
8) is because Costco is lacking a wide geographical coverage. When driven by the Driving forces
(Ex. 2), Costco expanding its shops in the areas with high population and again diversifying in
different parts of the world will help it to achieve one of its ultimate goals of achieving
profitability. By expanding its presence in the world, the company will be taking advantage of
the dominant economic features such as increasing the size of its market and the growth rate as
well as increasing its customers. In order for the company to have a long run profitability of the
wholesale business, Costco needs to take up a giant's geographical strategy. This long-run
profitability will be easily achieved if the company has a large and diverse global presence. One
of the factors through which the company can expand its geographical presence is through its
distribution networks. Costco distribution networks are very specific and specialized in the
countries in which they do the distribution. This is one of the factors which can allow the
company to effectively increase their presence in different countries. In reference to the five
forces analysis (Ex. 2), the industry seems an attractive one, and therefore Costco being the
strongest in the industry should take the challenge to expand in other areas.
In addition, by the company expanding its operations to other areas will ensure that in the
case of the entry of a new competitor in the market it will not feel a big impact on the sales.
Further, this will help to mitigate the threat of the competitors because the company will have
conquered a new market.
In conclusion, if the above recommendations are fully implemented, they will allow
Costco Company to have a long run profitability in the North America wholesale c...

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