Brief SWOT (emphasizes internal market--Strengths, Weakness, Opportunities, Threats)

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Business Finance

Description

Understanding the various phases of a product or service life-cycle is critical when addressing a market. If your product is in decline and the competitor's product is in growth, your strategy for the product or service will be different. This exercise will enable students to demonstrate an understanding of both their product/service life cycle stage and a competitor's product. It is designed to help students explore product mix strategies in the various phases of a product or service life cycle. This tool is critical when addressing a market penetration, market saturation or product/service decline

Include the following:

  • Brief SWOT (emphasizes internal market--Strengths, Weakness, Opportunities, Threats) and/or TOWS (emphasizes the external market--Threats, Opportunities, Weakness, Strength).
  • A graph or chart if the team deems it necessary.

Prepare a SWOT Analysis of the company COSTCO WHOLESALE CORPORATION

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Explanation & Answer

Attached.

Costco Wholesale Corporation

1

Costco Wholesale Corporation
SWOT analysis
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September 2017

Costco Wholesale Corporation

2
Costco Wholesale Corporation

In recent financial periods, Costco Wholesale Corporation has been experiencing good business
results due to the company being a beneficiary of not only the U.S but also the international
business community. The most outstanding products among its variety were majorly the fresh
foods which exhibited double-digit growth in the financial period of 2015.We will analyze not
only the long-term concerns but also the short-term ones to which the company’s stock has to
offer. Therefore, performing a SWOT Analysis of Costco will ensure we evaluate the Strengths’,
weakness, available opportunities and threats of the company.
Strengths
Pricing Power
The company aims to provide customers with high-value commodities (Strong brand) at
affordable prices in order to expand its membership in the global market. The company
maintains a high level of efficiency and avoids the desire for short-term maximization of prices.
The company takes into account the views of its members on how to improve on their pricing
authority and therefore able to be in a position to maintain competitive prices. Giving customers
a strong brand experience ensures loyalty and the fact that Costco wholesale runs a gasoline
enterprise is a sure way to pull customers to the site which in turn increases the margin of the
other products thus increasing the customer base and consistently expand its market.
Weaknesses
Geographic Dependence

The overall performance of this company is entirely dependent upon the North American market
for business. In the year 2014, the sales for Costco wholesale in both U.S and Canada stood at

Costco Wholesale Corporation

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eighty-seven percent implying that the company is highly dependent on the market in California
which stood at thirty-two percent as per last year sales. Therefore any significant slowdown in
demand in a given country could negatively impact on Costco causing low price margins.
Older Customer Base
Costco has a wide market base, but due to a small marketing budget compared to the other
wholesalers and retail stores makes the company be more inclined towards the older baby
boomers. As age catches up with such customers, they basically spend less costing the company
due to low sales and a high burden of wages being paid to its workers.
Low E-Commerce activities
The wholesale needs to double its e-commerce activities in order to take advantage of the
younger customer base since they are the generation that is E-commerce savvy.
Opportunities
Attracting Younger Customers
The company has recently taken steps to take advantage of the existing younger customer base
across its stores. These younger customer bases create a long-term market and a guaranteed
source of earnings for the wholesale. Costco has laid down strategies to attract these customers
which have involved making it convenient for these customers to access company products and
services via search engines such as Insta carts and Google express. The company has
strengthened its brands in the apparel segment. A wide range of promotions is underway
including the creation of more organic foods that will appeal to customers. These activities have
seen the wholesale expand its customer base, especially from new logins to their respective sites.

International Expansion

Costco Wholesale Corporation

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Costco has future plans of expanding the company not only on a domestic level but also in a
global setting. This involves the creation of mergers and acquisitions and the creation of a
massive supplier pool. The wholesale targets to create 1200 warehouses in the long run
compared to the 670 stores already in operation. Over the next year, at least thirty or thirty-five
stores will be opened in other countries where the markets are stable for business. Given 10 years
the company would have achieved a s...


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