1. Strategic Plan
Team 1

2. About Costco
End of 2008
$71 Billion in Sales
550 stores world-wide
54 million members
Avg yearly income $70K
Quality merchandise
Low price
Rapid inventory turnover
3. Business Model
Plus membership fees
4. Huge savings for members
5. I want to retire here.
I love it here.
6. Strategic Vision
7. Vision
Our business is to give the customer the best value we can. Jim Sinegal, Founder of Costco
We're going to be a company thats on a first-name basis with everyone.
8. Strategic Vision
Give customers the best value, at the best price
Treat people right, and with respect
Act ethically
Most importantly never lose sight of what the purpose of your business is
Best value, best price
9. Short- and long-term
Strategic Objectives
10. Employment Objectives
Hire great people
Treat them well
Give them good jobs
Do right by them
11. Management Objectives
Always promote from within
Training happens constantly
Grow our own talent
Model what you want from your employees
12. Business Objectives
Dont try to be too much to too many
Know on what level you compete
Know your customers
why they do business with you
Stay focused on your core business
13. Growth Objectives
Run the business for long-term sustainability
Open new stores
50-60 new locations per year
Keep Internet sales growing
14. Marketing Objectives
Word of mouth only
No PR department, ever?
15. Ethics Objectives
Obey the law
Treat customers right
Treat employees right
Treat suppliers right
16. Biggest Challenge
Stay focused on what we do
Our business model
Focus on our core business
17. Retail industry
The External Environment
18. External Environment
General economic condition
recession recovery
Stronger dollar = weaker foreign sales
Domestic market is maturing
Saturated
At least one store in each major metropolitan area
Often going head-to-head
19. Market size and growth rate
5-yr Growth:
5.73%
5-yr Growth:
13.28%
20. Sales Breakdown
Number of Rivals
Over 1,200 warehouse clubs in North America
only 473 Costcos
Other retailers and wholesalers
groceries
general merchandise chains
Wal-Mart, Target, and Kohls
specialty chains
Barnes & Noble, Lowes, Best Buy, Staples
gas stations
e-commerce
21. Vertical Integration
Partially vertically integrated
Cross-dock distribution
Backward integration
Kirkland Signature brand
Relationships with
Manufacturers
Suppliers
22. Economies of scale
Gigantic sized orders
Bulk packaging
Largest warehouse stores
Membership base (54 mil)
23. Competitive Forces
Substitutes
Strong threat

Good substitutes everywhere

24. Price not significantly higher 25. Comparable product features 26. More variety of features 27. Low switching costSuppliers
Weak bargaining power

Many suppliers

28. Low switching cost 29. Many substitutes exist 30. Large quantities are neededCompeting Sellers
Fierce competition

Costco is on top

31. Quality is slightly better 32. Buyer demand is growing 33. Buyers switching cost is lowBuyers
Weak bargaining power

Some switching costs

34. Large membership base 35. Costco has the best valuePotential New Entrants
Low threat

Small pool of entry candidates

36. High barriers to entry 37. Expanding market 38. Attractive profits