Case 01:
Costco Wholesale: “To Continually Provide our Members with Quality Goods and
Services at the Lowest Possible Price.”
Assignment
Questions
1. What is Costco’s business model? Is the company’s
business model appealing? Why or why not?
2. What are the chief elements of Costco’s strategy? How
good is the strategy?
3. Do you think Jim Sinegal is an effective CEO? What grades
would you give him in leading the process of crafting and executing Costco’s
strategy? What support can you offer for these grades? Refer to Figure 2.1 in Chapter 2 in developing your answers.
4. How well is Costco performing from a financial
perspective? Do some number-crunching using the data in case Exhibit 1 to
support your answer. Use the financial ratios presented in Table 4.1 of Chapter
4 (pages 98-99) to help you diagnose Costco’s financial performance.
5. Based on the data in case Exhibits 1 and 3, is Costco’s
financial performance superior to that at Sam’s Club and BJ’s Wholesale?
6. Does the data in case Exhibit 2 indicate that Costco’s
expansion outside the U.S.
is financially successful? Why or why not?
7. How well is Costco performing from a strategic
perspective? Does Costco enjoy a competitive advantage over Sam’s Club? Over
BJ’s Wholesale? If so, what is the nature of its competitive advantage? Does
Costco have a winning strategy? Why or why not?
8. Are Costco’s prices too low? Why or why not?
9. Does Costco pay its employees too much? Does it make
sense for Costco to compensate its employees so much better than the employees
at Wal-Mart/Sam’s Club? Why or why not?
10. What recommendations would you make to Jim Sinegal
regarding the actions that Costco management needs to take to sustain the
company’s growth and improve its financial performance?
