Costco Wholesale Corporation Is One of the Essay
- Length: 5 pages
- Sources: 5
- Subject: Business
- Type: Essay
- Paper: #10192777
Excerpt from Essay :
Costco Wholesale Corporation is one of the membership warehouse chain operators across the globe. Costco Wholesale Corporation operates under the influence of the standards and regulations of the Wholesale Club Industry. The organization focuses on the distribution of the products with reference to fresh food, soft-lines, and ancillary as well as hard-line products. Costco implements various elements of marketing model with the aim of addressing the needs and preferences of the consumers as well as stakeholders and shareholders in the market of operation. Costco focuses on the provision of quality products and services at lower costs of procurement in comparison to other competitors in the market such as Wal-Mart. This research product will focus on the identification of the two segments of the general environment and the forces of competition affecting Costco Wholesale Corporation. It will also address issues in relation to improvement in tackling the forces in the near future as well as external and internal strengths and weaknesses of the organization as it seeks to achieve competitive advantage. Finally the research will address the issues of resources, capabilities, and core competencies with the aim of determining the company's value chain.
Two (2) segments of the general environment
There are six critical segments of the general environment: economic, political, technological, demographic, socio-cultural, and global segments (Jobber, 2001). In the case of Costco Wholesale Corporation, two segments would rank highly in relation to the influence on the operations of the organization in the context of the relevant industry. One of the essential segments of the general environment in the case of Costco Wholesale Corporation is demographic environment segment. It is the most important segment of the general environmental analysis of the corporation as some of the crucial bases include age structure, income distribution, gender, family size, occupation, social class, nationality, and race.
Operation at global level as in the case of Costco makes it ideal to focus on a critical examination of the population of the nations of interest. The organization has a very large population size because of its location in all the major countries with expression of large population mass. The corporation has to deal with diversity of languages and cultures in the development of policies and regulations as well as organizational culture. Costco operates in the context of developed and developing nations thus the ability to integrate elements of population growth in the decision-making process towards the achievement of competitive advantage. Legislations and ethical responsibility are essential in the ability of the corporation to address any discrimination that might arise from the demographic changes.
Another essential segment of the general environment is the political/legal segment. The political environment of the host nations of Costco Wholesale Corporation affects the business processes of the company. This has led to the increase in the wage rates as the organization focuses on raising the bar of the union contracts and new standards for the employees despite the existence of the political policies of the governments. The organization has the ability to enjoy high performance of the employees for realizing greater productivity levels for the fiscal year. Globalization indicates that the organization operates under the influence of diverse political systems (Jobber, 2001). In various circumstances, the organization adheres to the rules of the United States political parties. In other cases, the corporation has to face several risks under the influence of the political policies of the native country.
Two (2) forces of competition
There are five forces of competition: threat of new entrants, threats of substitute, bargaining power of the buyer, bargaining power of the supplier, and rivalry among existing players. One of the essential forces of competition affecting the organization towards the achievement of its goals and objectives is the rivalry among existing players in the industry and market of operation. It is essential to recognize the tendency by the major players like the case of Costco to provide products and services at lower prices (Kozloff et al., 2004). This has contributed to the generation of a strong competitive force in the industry. There is a vigorous competition or rivalry among the players in the market thus the need to adopt measures in relation to withstand stiff competition in the market. Competition within the industry is essential in determining the policies and culture of Costco in the market and industry of operation.
Another force of competition in the industry with reference to the case of Costco Corporation is the threat of substitute products and services in the market thus generation of a strong competitive force. The wholesale club industry has the ability to offer diverse modes of transaction hence enhancing the tendency of the consumers to procure products and services at convenient locations (Kozloff et al., 2004). The options for the acquisition of the desired products and services integrate the operations of online retail outlets and shops thus limiting the ability of the organization to maximize its opportunities.
What the company might do to improve its ability to address these forces in the near future
In order to address these forces, the organization should focus on differentiation of its products and pricing mechanisms with the aim of attracting new consumers while maintaining the existing bunch. It is also essential to adopt new product lines in order to achieve competitive advantage in the market and industry of operation. Finally, the organization should focus on the integration of technology with the aim of addressing the effectiveness and efficiency in the service and product delivery. This relates to automation of the processes with reference to the ability of the organization to address the needs and preferences of the consumers in the market and industry of operation (Kozloff et al., 2004).
External threats affecting this corporation and the opportunities available to the corporation
The organization has three relevant opportunities across the globe under the influence of globalization and technology. These objectives include
Online sales opportunities
Growth in demand in relation to private label brands
Strong growth expectations with reference to the Asian market
Towards the achievement of the above opportunities, Costco faces various external threats. One of the essential threats is the highest exposure to the low growth mature markets thus inability to maximize or exploit the available opportunities. Another external threat is the fluctuations in the foreign exchange rates thus affecting the profit levels as well as revenues at the end of the fiscal year (Costco Wholesale Corporation SWOT Analysis, 2012). Another external threat is the increasing costs in relation to labor and health care thus reduction in the profit levels and revenues at the end of the financial year.
Corporation's greatest strengths and most significant weaknesses
Costco Wholesale Corporation has diverse strengths and weaknesses. One of the major strengths of the organization is the ability to position its pricing mechanisms thus increase in the consumer loyalty. This is enhanced through the ability of the organization to integrate and incorporate low cost business model with the aim of achieving its competitive advantage in the market and industry of operation. The third critical strength is the ability of the organization to realize improved levels of revenues and debt position. These strengths suffer under the influence of the major weakness of Costco Wholesale Corporation in the form of limited product choice. The organization needs to introduce new product lines in order to maximize the available opportunities in the market and industry of operation (Costco Wholesale Corporation SWOT Analysis, 2012).
Company's resources, capabilities, and core competencies
The competencies of Costco Wholesale Corporation are in the form of high-value and high-quality products and services with the ability to integrate effective and attractive prices in order to attract new consumers while maintaining the existing ones. The organization has the ability to operate on large economies of scale thus an opportunity to reduce the cost of operations while maximizing the…