CBRA Report Harvard Case Solution & Analysis

Introduction and Overview

Costco Wholesale Corporation has been a United States based retailer. It is the third largest retailer in the country. As per the current research conducted in 2015, the company ranked number two in the world after Walmart. It is the largest membership warehouse chain in the country.

The headquarter of the company is in Issaquah, Washington, USA. The company opened its first ware house in the year 1983 in Seattle. The total number of warehouses for the company is 672 which are spread through United States, Australia, United Kingdom, Mexico, Taiwan, South Korea, Japan, Spain and Canada.

Products and market share

Costco managed total revenues of $105.156 billion in the year 2013. The company has been constantly improving upon its market share and revenues.Costco over the years has gradually expanded itself and it has also looked to introduce new services and products within its profile.

The company has preferred selling boxed products which are quite easy to handle. The company in the recent past has introduced new products such as the seafood items, dairy, meat, bakery items, books, computer software, clothing, home electronics, jewelry, caskets, etc. The company has looked to expand itself and the scope quite consistently where the management has been aligned with the idea of introducing new items regularly.

The core strategy of the company is cost leadership. The company offers low cost products to gauge in more customers. It also offers membership warehouse club business model that differentiates it from other retail firms. It has been competing with the rivals in the market by offering low priced and high quality goods.

Company History

Sol and Robert in 1976 raised around $2.5 million from family and friends to open up the Price Club. The ware was located in the remodeled airplanehangar on the Moreno Boulevard in San Diego, California. The club faced a loss of $750,000 in the first year. However, today it has two locations and more than 900 employees (Cogg, 1992).

The company became public in 1982. In the year 1993, Price Club and Costco merged together where Price even declined an offer from Sam Walton the owner of Walmart. The reason for merging with Costco was simple, two were similarly placed firms and has similar business model.

Size, structure, current international operations

The size of Costco is quite large. As per the research of 2014, the company has more than691 warehouses. Along with this, the total number of employees for the company as per the research conducted in 2014 indicates that it has more than 189,000 employees. The company also has a brand called Kirkland Signature. The services of the company Costco are called the merchandise, the cash & carry and the Warehouse clubs.

The total number of warehouses for the company is 672 which are spread through United States, Australia, United Kingdom, Mexico, Taiwan, South Korea, Japan, Spain and Canada. Out of the all the warehouses, in Canada the total number of warehouses are 89, in United States 474, in United Kingdom 26, Australia 7, Mexico 34, Taiwan 10, South Korea 11, Japan 20 and Spain has 2 stores. The company as the research indicates has been quite keen to bring in new operations and expanding its scope by entering new markets.

Industry profile

The competitive environment in the retail industry is quite stiff and intense. The reason is quite simple actually; Wal-Mart poses the biggest threat to all the retailer industry players, especially Target Corporation, which stands second after Wal-Mart in the industry. Wal-Mart holds a market cap of $188 billion, while Costco has a market cap of $35 billion, whereas the Target Corporation has a market cap of $34 billion.

These three are the main competitors in the retail industry. However, the sales growth in the 2010 was 3.11 % were Costco made a move to 9.15 % increase. However, the gross margin for Target Corporation during the same period was 30.02 % than Wal-Mart, which had a share of 25.09 % and Costco, had a market share of 12.64 %.

The Rate of Return for Wal-Mart was between 23%, 19% of the Target Corporation and for Costco it had been 10 %. Costco took the lead in same store sales with the total of 7%, Target had only 2.1% and Wal-Mart had a growth rate of 0.6%. The main or the direct competitors for Target or Wal-Mart and Costco have been in the market for a long time.................

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