Costco is among the wholesale corporation that is a membership club that was founded in
1983. The corporation has its head office situated in Issaquah in the U.S. The corporation
operates by dealing with various merchandise that comprise of television, phones, camcorders,
and computers. Besides, Costco Company offers different services in its operations. Costco is
among the leading retail brands based within the U.S 1 . This firm's services include mortgage
purchase, online solutions, financing services, business prescription insurance, alongside payroll
services. The company was founded to offer quality products along with services to its associates
at attainable economical prices 2 . Therefore, this descriptive research paperwork's major
objective is to analyze the business model and strategy of Costco Corporation. The other area of
focus on this study is to examine how well the strategy of Costco is operating and describing
some of the recommendations that can be made to the management of Costco to sustain the
advancement and improve the company's financial performance.
Assessment of Costco’s business model and strategy
Business strategy
Cost leadership is the major generic strategy that Costco uses in its operations. The
strategy comprises of maintaining the lowest prices of commodities and other services as
possible. As stated by Kim, different companies that are retail giants such as Walmart often use
the cost leadership strategy to improve their operations 3 . However, Costco’s cost leadership
1 "Analysis Of Costco's Business Strategy". 2020. Businessteacher.Org. https://businessteacher.org/reports/analysis-
of-costcos-business-strategy.php.
2 "Costco Wholesale’S Generic And Intensive Growth Strategies – Panmore Institute". 2020. Panmore Institute.
4
strategy often merges the membership warehouse club strategy of business to distinguish its
operations from extra retail firms. Costco's business strategy is the foundation aspect that allows
it to track its set operations during operations. Besides, this kind of business method is always
aligned with the goal of the corporation 4 . The broad policy of price leadership also concurs with
and is required to maintain Costco's business representation.
Membership program
Costco Corporation operates by getting most of its income from membership fees. As
reported by Gudlaugsson, the majority of the net income of Costco comes from its membership
fees 5 . The company operates by ensuring that its membership program enjoys extreme customer
loyalty levels over different years. Such an idea has been essential in allowing the retailer to
offer small product margins and pass through price hikes without protest. Hence, Costco operates
by running on a ‘subscription business model.’ The model allows the customers that desire to
shop at the store must purchase the association to have the opportunity of doing so. Most of
Costco's customers are required to subscribe to the service as it allows the management to
employ economies of balance to bulk purchase large masses of goods at lower values 6 .
Collection of such membership fees has enabled Costco to be the pioneer in implementing
customer lifetime value through the adoption of return policy with no questions asked that also
assist in generating extra impulse buying.
3 Kim, Jae-Jin. 2019. "The Entry And Growth Strategy Of Multinational Retail Warehouse In Korea Market: The
Case Of Costco Wholesale". INTERNATIONAL BUSINESS REVIEW 23 (1): 53-79.
doi:10.21739/ibr.2019.03.23.1.53.
4 Thompson, Arthur A, Margaret A Peteraf, John E Gamble, and Alonzo J Strickland. 2020. Crafting And Executing
Strategy: The Quest For Competitive Advantage: Concepts And Cases, Mcgraw-Hill Education. 22nd ed. New
York: 2018. Case 4 Teaching Note Costco Wholesale Corp. in 2018: Mission, Business Model, and Strategy, p.302.
5 Gudlaugsson, Thorhallur. 2018. "The Image Of Costco In Iceland And Its Impact On The Grocery Store Market".
Journal Of Academy Of Business And Economics 18 (3): 93-103. doi:10.18374/jabe-18-3.10.
6 "Costco Wholesale Corporation | Company Profile | Vault.Com". 2020. Vault. https://www.vault.com/company-
profiles/retail/costco-wholesale-corporation.
5
Costco comprises an effective business strategy and a model, particularly because of the
competitive edge that the corporation enjoys with such kind of policy. The company has
strategies on ultra-low pricing of services and products, low cost of operations, and keenness on
geographic expansion. All these strategies are greatly adding to its daily success. Costco’s
business representation alongside strategy's major idea is to attain a great volume of sales by
enticing clients with their reduced prices on services and products 7 . Costco uses different
business strategies to demonstrate the ways with techniques that it uses to produce planned
profits. Besides, Costco’s trade model is always to create high transactions volume along with
fast inventory turnover. The turner is attained by providing low costs on a limited assortment of
restricted choices of national identified and select private-tag products in a wide choice of
merchandise kinds. Furthermore, Costco’s provide different yield to their affiliates who are of
two different kinds 8 . Such types of affiliates that the company offers its products include
business members and gold star members.
Limited selection
Costco's business model is tempting as it tests the management of the corporation to
continue to devise various methods and strategies in their operations. The idea of devising such
techniques is always essential in Costco's operations as they help management maintain existing
associates and catch the interest of new associates 9 . Without appropriate attention to the
strategies, the company's management can always undergo failure as there can exists a danger
7 "Costco's Mission, Business Model, Strategy & SWOT – Panmore Institute". 2020. Panmore Institute.
8 Haaker, Timber, Harry Bouwman, Wil Janssen, and Mark de Reuver. 2017. "Business Model Stress Testing: A
Practical Approach To Test The Robustness Of A Business Model". Futures 89: 14-25.
doi:10.1016/j.futures.2017.04.003.
9 Thompson, Arthur A, Margaret A Peteraf, John E Gamble, and Alonzo J Strickland. 2020. Crafting and Executing
Strategy: The Quest for Competitive Advantage: Concepts and Cases, McGraw-Hill Education, New York, 22nd
edition. CA 1 – CA 12.
6
that tends to unhappy members will be unwilling to renew their attachment. Hence, business
strategy is taken by Costco always takes it towards total quality management. Besides, Costco
has a business model that is appealing to most customers. The strategy concentrates on
producing high sales volume and quick inventory incomes by gifting fee-paying members’ low
costs on nationally recognized and privately labeled products. The strategy allow fee paid by
different members to allow for sufficient supplemental revenues 10 . Besides, turnover rates
permit the corporation to obtain cash for catalog before it had to disburse most of its merchandise
sellers.
Costco utilizes inventory practices to lower costs of products and limit selection by the
management and members during operations. The corporation employs the federal hub-with-
spoke scheme of delivery between supplies to decrease the cost of supply 11 . The limitation of
selection has been an effective strategy in improving the operations of Costco. It has helped the
company be positioned strategically to resolve the key resistance for retail customers between
the wish for high excellence together with aversion to high prices. Besides, this strategy has
allowed the company to select markets and countries that can act as its engine for growth 12 . The
strategy has been effective in ensuring that the management can understand the markets that
make the international expansion of the firm risky because of different behaviors of the customer
and geopolitical dangers like the intervention of authorities.
Lowering prices than grocery stories
10 Hilliard, Rachel, and Don Goldstein. 2018. "Identifying And Measuring Dynamic Capability Using Search
Routines". Strategic Organization 17 (2): 210-240. doi:10.1177/1476127018755001.
11 Baek, Jung-Yim, and Shuguang Wang. 2018. "The Localization Strategies And Success Of Costco : Focusing On
A Japanese Mature Retail Market". Journal Of Industrial Distribution & Business 9 (2): 7-16.
doi:10.13106/ijidb.2018.vol9.no2.7.
12 Gudlaugsson, Thorhallur. 2018. "The Image Of Costco In Iceland And Its Impact On The Grocery Store Market".
Journal Of Academy Of Business And Economics 18 (3): 93-103. doi:10.18374/jabe-18-3.10.
7
Costco’s strategy's main elements include, but are not limited to, pricing, selection of
products, together with treasure-hunt merchandise. For pricing, the company applies low-cost
prominence that offers the lowest price for their association clients. By maintaining the costs
way beneath their rivals help Costco draw new membership clients and preserve the clients that
have the contribution. For product collection, Costco presents over 3700 products priced at
negotiation levels granting their clients with an important saving of price. Such items differ from
rotisserie chickens to drying machines that comprise of washer. Hence, provision of such a wide
range of items aids in conserving cost of purchase to members of Costco.
Costco affiliates understand that this store comprise of steadily lower values than a
customary store dealing with groceries. Besides, Costco has enduringly caped its limits to
guarantee that associates can validate paying for their attachment fees. In most cases, this retail
firm does not put out its margin limits. However, by looking throughout the corporation's
financial reports, Costco has been able to attain an operating margin of 11.4 percent 13 .
Additionally, this company operates by focusing on maintaining its product, Kirkland Signature
that produces its higher income margin as there are fewer middlemen concerned in the creation.
Treasure-hunt merchandise
For Costco Retail Corporation to compete in the market successfully, it introduces
treasure-hunt merchandise to its business strategy. The strategy forms the innovative technique
useful in attracting new customers and making existing members shop more often during their
operations 14 . The company, through top management, Jim Sinegal, created this kind of strategy
13 Teece, David J. 2018. "Business Models And Dynamic Capabilities". Long Range Planning 51 (1): 40-49.
doi:10.1016/j.lrp.2017.06.007.
14 Thompson, Arthur A, Margaret A Peteraf, John E Gamble, and Alonzo J Strickland. 2020. Crafting And
Executing Strategy: The Quest For Competitive Advantage: Concepts And Cases, Mcgraw-Hill Education. 22nd ed.
8
by offering premium along with seasoned items. These items comprise of fine gemstone, famous
tag handbags, and the newest in customer electronics, epicure cheese, leather jackets, imported
wines, and lobster among different items. The strategy enabled the company’s regular products
to be sold to different consumers with a short duration. Hence, treasure-hunt merchandise as a
business strategy of Costco retail has to do more with the context as well as impulse buying
persuasion 15 . Such persuasion emphasized on the situation that the company place on the
product. The merchandise technique enabled the company to increase the number of products,
leading to increased purchases.
Business model
Costco utilizes the model of membership-only warehouse club business to enhance its
operations. In this kind of model, consumers must pay the fee for membership to allow them to
examine the low-cost yields present at Costco warehouse. Besides, non-affiliates might
accompany associates, but not merely members are permissible to buy in these stores. Besides,
non-associated can be able to utilize Costco Cash Cards to do their shopping at the corporation's
stores 16 . The business model also allows Costco's different rivals, like Sam’s Club along with
BJ’s Wholesale Club, to utilize a similar business model. The use of a business model that aims
to increase its retail brands' growth, Costco has focused on investing in digital technology 17 . It
has also been focusing on digital commerce that seems to have started paying off. Besides,
New York: 2018. Case 4 Teaching Note Costco Wholesale Corp. in 2018: Mission, Business Model, and Strategy,
p.302.
15 Kim, Jae-Jin. 2019. "The Entry And Growth Strategy Of Multinational Retail Warehouse In Korea Market: The
Case Of Costco Wholesale". INTERNATIONAL BUSINESS REVIEW 23 (1): 53-79.
doi:10.21739/ibr.2019.03.23.1.53.
16 Wiener-Bronner, Danielle. 2020. "Costco Owes Tiffany More Than $19 Million For Selling Counterfeit Rings".
Cnnmoney. https://money.cnn.com/2017/08/14/news/tiffany-costco-lawsuit/index.html.
17 Teece, David J. 2018. "Business Models And Dynamic Capabilities". Long Range Planning 51 (1): 40-49.
doi:10.1016/j.lrp.2017.06.007.
9
Costco also operates by selling premium products under its private label brand Kirkland
Signature. The company's brand is considered to be the strong driver of sales and popularity for
Costco.
Creating an impressive presence
There are several other retailers within the U.S. that possess several private label brands
exclusive to Costco's operations. Besides, Costco has been able to remain competitive by being a
famous retail brand with a strong presence crosswise the U.S, leading the market through the use
of an effective business model. For instance, Costco has built an impressive presence outside the
U.S. in many different markets 18 . The increase in business operations has been effective due to
the effective business structure by the top management. Costco has been able to invest in
strengthening its competitive advantage to retain its growth momentum. The idea has aided
Costco to establish its presence within the market.
Membership-only warehouse
Costco operates as the membership-only warehouse, which is different from its chief
rivals, such as Walmart or Target Company. Such a strategy has effectively allowed Costco to
adopt a very different business model than other rival retailers. The retail always functions by
focusing on offering its customers a seamless shopping experience and creating the
organizational culture 19 . Such a culture is always effective in fostering workers' motivation and
placing a heavy concentration on customer service.
18 Thompson, Arthur A, Margaret A Peteraf, John E Gamble, and Alonzo J Strickland. 2020. Crafting and
Executing Strategy: The Quest for Competitive Advantage: Concepts and Cases, McGraw-Hill Education, New
York, 22nd edition. C17 – C40.
19 Thompson, Arthur A, Margaret A Peteraf, John E Gamble, and Alonzo J Strickland. 2020. Crafting And
Executing Strategy: The Quest For Competitive Advantage: Concepts And Cases, Mcgraw-Hill Education. 22nd ed.
New York: 2018. Case 4 Teaching Note Costco Wholesale Corp. in 2018: Mission, Business Model, and Strategy,
p.302.
10
Unique organizational culture
The unique culture of operations has enabled Costco to create an outstanding image. It
has also enabled the retail firm to achieve the place among the leading ad most popular
employers of the U.S. Besides, Costco has been successful in its operations through techniques
of expanding its presence to different other geographical marketplaces that lie away from the
U.S 20 . Unique organizational culture is vital in operations of the organization as it has been the
major factor that allowed Costco to generate a substantial part of its revenue from retail sales.
Merchandising operations
Like different retail firms such as Walmart, Costco also depends on direct sourcing
operations to maintain prices low for its clients. The idea of merchandising operations has
enabled the operations of Costco to eliminate intermediaries in its operations. It has also been
able to reduce the prices of merchandise for its customers on different retail products. Reducing
the prices has aided the Costco Corporation to gain cost efficiency, which is further bolstered
through the utilization of effective techniques of managing inventory 21 . Additionally, Costco
always sources its products for retailing right from the manufacturers and sends the merchandise
to cross-docking units to reduce the cost linked to warehousing and inventory management.
Away from quality merchandise, Costco also operates with the business model that maintains the
consistently lower prices to attract a huge customer base. The company uses the retail brand
strategy as a way of offering its esteemed customers with high-quality merchandise at values
consistently lower than its rivals 22 . Costco offers its clients stock in diverse groupings such as
20 Teece, David J. 2018. "Business Models And Dynamic Capabilities". Long Range Planning 51 (1): 40-49.
doi:10.1016/j.lrp.2017.06.007.
21 Shih, Shiau Pei, Szuchiang Yu, and Feng Ju Yen. 2015. "How Does Costco Win Customer Satisfaction: A Case
Study Of The South Of Taiwan". Journal Of Economics, Business And Management 3 (3): 360-363.
doi:10.7763/joebm.2015.v3.210.
11
food alongside sundries, fresh foods, hardliners, soft lines, auxiliary to remain dominant in the
retail business.
Improving E-commerce operations
Costco Retail Corporation always uses digital technology in the generation of new
opportunities within the market. Apart from being the disruptor of operations, Costco uses digital
technology to grow its operations and aim at being a leading retailer within the U.S. The
company is always investing more in technology to increase its sales and competitive position
within e-commerce. According to Hilliard and Don Goldstein, Costco Company has always
continued to grow its investment in technology to enhance the Costco app and adding new
features for higher client convenience 23 . Besides, Costco has been launching e-commerce
operations in different countries such as in Japan and Australia in 2020 to improve its saves and
revenue. By the end of 2019, Costco was operating different e-commercial websites within the
U.K., Canada, the U.S., Mexico, Taiwan, and Korea. Hence, e-commerce in Costco's business
operations and sales account for four percent of its net sales in 2019.
How well is Costco’s Strategy Working?
Business strategy of Costco works well, as depicted from the performance of the firm.
For an extended duration, the corporation has capped its markup at fourteen percent for brand-
name merchandise. Conversely, its chief rivals have set their markups between twenty to fifty
percent. Such a scenario indicates the significant disparity between Costco products and services'
prices and its rivals in the marketplace 24 . Although the profit obtained is low and can barely
22 Loftsdóttir, Kristín, and Már Wolfgang Mixa. 2017. "The Opening Of Costco In Iceland: Unexpected Meanings
Of Globalized Phenomenon". Veftímaritið Stjórnmál Og Stjórnsýsla 13 (2): 189. doi:10.13177/irpa.a.2017.13.2.2.
23 Hilliard, Rachel, and Don Goldstein. 2018. "Identifying And Measuring Dynamic Capability Using Search
Routines". Strategic Organization 17 (2): 210-240. doi:10.1177/1476127018755001.
12
cover entire operations expenses, several clients are always attracted and retained within
operations of the corporation. Costco Wholesale Corporation benefits from the membership
subscriptions paid, given that it accounts for over seventy percent of the company's operating
revenue 25 . For instance, Costco's merchandise plan has established very effective by making a
huge sum of dollars for every square foot on standard annually associated with the value
generated by chief rivals of the retail in the U.S. markets.
Costco's different business strategies and models have been vital in its operations of
dealing with retail services. The business replica of generation of soaring sales volume as well as
quick inventory earnings has a great impact on improving Costco's operations. Effective strategy
and model in the business operation has made the company effective in dealing with sales of
products and services to its members 26 . Cost leadership is the major business strategy of Costco
that offers an effective competitive advantage over its rivals. All the strategies and models set by
top management of Costco aim to minimize the cost of its operations through economies of
scale. Besides, Costco operates by ensuring focusing on maintaining superior quality to
differentiate the company’s generic strategy, particularly the Kirkland Signature brand.
Narrowing selection
Costco’s strategy works well because they have narrowed their selection of products to
about 3,600 active items. Such strategy is quite different from the one practiced by other
different wholesales who are probably to deal in forty thousand items and amid 125,000 to
150,000 for the Wal-Mart Supercenter 27 . Besides, Costco’s strategy of restricting their items to
24 Gaille, Brandon. 2020. "Costco Business Model And Their Strategy". Brandongaille.Com.
https://brandongaille.com/costco-business-model-and-their-strategy/.
25 Fischer, Peer. 2020. "Vision Statement: Interactive Materials—Drivers Of Future Robotic Systems". Advanced
Materials 32 (20): 1905953. doi:10.1002/adma.201905953.
26 Courtemanche, Charles, and Art Carden. 2014. "Competing With Costco And Sam's Club: Warehouse Club
Entry And Grocery Prices". Southern Economic Journal 80 (3): 565-585. doi:10.4284/0038-4038-2012.135.
13
the sales of active products means that they can avoid different incidences of merchandise
turning out to be obsolete. Therefore, such a policy helps in minimizing cases of losses during
operations of Costco Corporation. Moreover, Costco’s strategy is working effectively as the
company can quickly recover their money because management can always provide fast-moving
goods such as dairy products, seafood, cookware, cheese, and apparel. Additionally, Costco's
growth strategy is working well as it makes the corporation have a big advantage to its
operations because it allows the company to be capable of reaching different new
marketplaces 28 . For example, Costco has been able to open four additional warehouses within
the U.S and two other in Japan. Such expansion improved the firm's operations by providing it
with the best opportunity to explore new marketplaces while increasing its clientele.
Effective membership
The strategy used by Costco is considered to be working well as more members are
keeping coming back. Such members are also continuing with buying items in mass as they have
in the past, but different concerns can influence the trend if not addressed effectively. The
strategy works effectively as customers can always choose to move their membership to the
rivals like Wal-Mart’s Sam’s Club 29 . The discount provided by the membership fee is always
fair, making the strategy set in operations to be effective. Hence, Costco's business strategy is
effective as it uses the subscription technique of business where clients turn out to be associates
or subscribers of the merchant club through buying the association. As associates, clients can
27 Thompson, Arthur A, Margaret A Peteraf, John E Gamble, and Alonzo J Strickland. 2020. Crafting And
Executing Strategy: The Quest For Competitive Advantage: Concepts And Cases, Mcgraw-Hill Education. 22nd ed.
New York: 2018. Case 4 Teaching Note Costco Wholesale Corp. in 2018: Mission, Business Model, and Strategy,
p.302.
28 "Analysis Of Costco's Business Strategy". 2020. Businessteacher.Org.
https://businessteacher.org/reports/analysis-of-costcos-business-strategy.php.
29 Courtemanche, Charles, and Art Carden. 2014. "Competing With Costco And Sam's Club: Warehouse Club
Entry And Grocery Prices". Southern Economic Journal 80 (3): 565-585. doi:10.4284/0038-4038-2012.135.
14
always obtain low costs on limited high superior state together with personal branded
merchandise. Additionally, Costco's business strategy is working effectively as it enables the
wholesale to create high sales quantity alongside rapid record turnover. The generated turnover
often permits the firm to sell as well as receive money for inventory and attain payment
discounts. Hence, the business strategy of Costco is very appealing to its operations. Some of the
critiques that make the strategy work effectively include the idea that the model focuses on
Costco’s first component 30 . Therefore, Costco's adopted business strategy is working
effectively. It allows the corporation to compete against specialty retailers, making customers
prefer their products and services over other competitors within the market.
Engaging in a low-cost leadership
The company has focused on pursuing a low-cost leader strategy that effectively
improves the number of members who subscribe to the firm. The low-cost leadership strategy is
working well. It has enabled the company to continue selling finest national together with
regional products at prices constantly below customary retail outlets or wholesale 31 . Besides,
this plan has been effective in Costco's operations as it allows the company to sell its products at
heavily discounted prices, making the firm remain on the growth trajectory. Low cost on
products has made the company capable of differentiating its product range that is essential in
providing the upscale shopping experience for registered members. Hence, the company's
engagement in low-cost leadership has enabled the company to work to be competitive. It works
with a model that focuses on selling restricted selection o products at affordable prices, making
30 Lee, Sang-Man, and Yong-Jae Shim. 2019. "Legislative Trend And Developmental Direction On
‘Designation·Re-Designation’ Of Wholesale Market Corporation". The Journal Of Legal Studies 27 (3): 141-174.
doi:10.35223/gnulaw.27.3.7.
31 Thompson, Arthur A, Margaret A Peteraf, John E Gamble, and Alonzo J Strickland. 2020. Crafting and
Executing Strategy: The Quest for Competitive Advantage: Concepts and Cases, McGraw-Hill Education, New
York, 22nd edition. CA 1 – CA 12.
15
leaders save a very high volume of products 32 . Moreover, this strategy is effective in Costco's
operations as it provides members with the selection of different affordable products. The
business strategy is working as it helps in encouraging members to shop at Costco more
frequently.
Recommendations to Make to Costco Management to Sustain the Company’s Growth and
Improve the Company’s Financial Performance
The company's management has done well by arriving at the decision of limiting their
products to 3,600 that are active. There is a need to encourage the management to focus on
maintaining such a decision as it is great in aiding the company to sustain its growth by being
active in different markets 33 . Moreover, there is a need for management to focus on engaging in
treasure-hunt merchandise. The move can help Costco help more consumers by providing
attractive offers or deals on big-ticket items. The top management can also conduct an
appropriate survey to understand what the clients desire to purchase. Therefore, the idea of
having a small range of services and items might be risky to operations of Costco, as they might
not be attaining the needs of some of their esteemed and targeted customers within the market 34 .
Therefore, management can improve the growth and financial performance of Costco by
conducting a market survey. The idea of conducting market research can form a vital step for the
top management as it can help the top management of Costco to improve and sustain its growth,
32 Kim, Jae-Jin. 2019. "The Entry And Growth Strategy Of Multinational Retail Warehouse In Korea Market: The
Case Of Costco Wholesale". INTERNATIONAL BUSINESS REVIEW 23 (1): 53-79.
doi:10.21739/ibr.2019.03.23.1.53.
33 "Five Ways You Can Improve Your Company’S Performance Today – Cascade Business News". 2020. Cascade
Business News. http://cascadebusnews.com/five-ways-can-improve-companys-performance-today/.
34 Findik, Esra. 2020. "How Board Diversity Impact On Company’S Financial Performance?". Bussecon Review Of
Finance & Banking (2687-2501) 2 (1): 01-09. doi:10.36096/brfb.v2i1.169.
16
enhance its profitability through the determination of different needs of customers and possibly
even identify the gap that exists within the market in the process of the survey.
Improving retail display
The company’s management can improve the operations by improving its retail displays
apart from using a low pricing strategy. The focus display might have a considerable influence
on the corporation's financial performance as more customers will be attracted to purchase
Costco’s products. Effective displays that give different products the attractive together with a
well-organized outlook can be essential in luring customers to make the purchase 35 . Besides,
retail displays can effectively enhance Costco Corporations' growth and profitability because of
the increased sales volume that the management will be able to get in return.
Training workers
Top management of Costco needs to create different programs that focus on offering
timely training to staff. Different training will help in offering a continuous improvement of
workers' skills that will ensure the appropriate acquisition of service delivery and improve skills
of handling customers 36 . Given the advancement in Costco’s strategy, the top management
needs to ensure that the workers have the appropriate expertise to handle new challenges. As
such, training various workers will allow the top management of Costco Corporation to maintain
the advancement of the firm because workers have much-needed skills necessary to serve new
markets.
Expanding market share
35 "8 Ways To Improve Your Company's Efficiency". 2020. Lifehack. https://www.lifehack.org/articles/work/8-
ways-improve-your-companys-efficiency.html.
36 Salvato, Carlo, and Roberto Vassolo. 2017. "The Sources Of Dynamism In Dynamic Capabilities". Strategic
Management Journal 39 (6): 1728-1752. doi:10.1002/smj.2703.
17
Top management of Costco needs to focus on taking different steps to expand the
corporation’s market share. The management can attain such through exploring different
untapped markets within different regions such as within the U.S. and other regions away from
the U.S 37 . The management can improve company growth by expanding market share only if
they can preserve their excellent reputation of offering better value to its targeted clients. Such
approaches of expansion of market share can be improved by the ability of top management to
provide online shopping opportunities to their targeted and esteemed clients who are outside
from Canada and the U.S. Hence, management of Costco needs to continue with their valuable
strategies like soaring compensation to workers, low cost, and dependable quality yields in the
areas where they expand their operations 38 . The idea of maintaining such strategies during the
operations of Costco can be effective in ensuring that the company improves its financial
performance.
Conclusion
From the above examination, it can be concluded that some of the business models used
by Costco comprise of creation of an impressive presence of products and forming unique
organizational culture. Other models used by Costco to meet its set mission include
merchandising operations and developing a membership-only warehouse. Besides, Costco's
business strategies comprise a membership program, limited selection o items and operations,
treasure-hunt merchandise, and lower prices than grocer’s stories. Furthermore, the business
37 Shepherd, Neil Gareth, and John Maynard Rudd. 2014. "The Influence Of Context On The Strategic Decision-
Making Process: A Review Of The Literature". International Journal Of Management Reviews 16 (3): 340-364.
doi:10.1111/ijmr.12023.
38 Thompson, Arthur A, Margaret A Peteraf, John E Gamble, and Alonzo J Strickland. 2020. Crafting And
Executing Strategy: The Quest For Competitive Advantage: Concepts And Cases, Mcgraw-Hill Education. 22nd ed.
New York: 2018. Case 4 Teaching Note Costco Wholesale Corp. in 2018: Mission, Business Model, and Strategy,
p.302.
18
strategy used by Costco is working appropriately in improving the firm’s operations. For
instance, the strategy is working well as it helps in depicting Costco's performance and it also
narrows the selection of products that the company deals within different markets. The strategy
also works well as it helps the company engage in low-cost leadership policy essential in
improving the number of associates during operations. Moreover, different recommendations can
be proposed to the top management to improve the growth and improve the performance of
Costco Corporation. The top management needs t to improve the retail display, improvise
different training workers, and expand market share.
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