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Strategic Plan<br />Team 1<br />
About Costco<br />End of 2008 <br />$71 Billion in Sales<br />550 stores world-wide<br />54 million members<br />Avg yearl...
Business Model<br />Plus membership fees<br />
Huge savings for members<br />
“I want to retire here. <br />I love it here.”<br />
Strategic Vision<br />
Vision<br />“Our business is to give the customer the best value we can.” – Jim Sinegal, Founder of Costco<br />“We&apos;r...
Strategic Vision<br />Give customers the best value, at the best price<br />Treat people right, and with respect<br />Act ...
Short- and long-term<br />Strategic Objectives<br />
Employment Objectives<br />Hire great people<br />Treat them well<br />Give them good jobs<br />Do right by them<br />
Management Objectives<br />Always promote from within<br />Training happens constantly <br />Grow our own talent <br />Mod...
Business Objectives<br />Don’t try to be too much to too many<br />Know on what level you compete<br />Know your customers...
Growth Objectives<br />Run the business for long-term sustainability<br />Open new stores<br />50-60 new locations per yea...
Marketing Objectives<br />Word of mouth only<br />No PR department, ever?<br />
Ethics Objectives<br />Obey the law<br />Treat customers right<br />Treat employees right<br />Treat suppliers right<br />
Biggest Challenge<br />Stay focused on what we do<br />Our business model<br />Focus on our core business<br />
Retail industry<br />The External Environment<br />
External Environment<br />General economic condition<br />recession recovery<br />Stronger dollar = weaker foreign sales<b...
Market size and growth rate<br />5-yr Growth: <br />5.73%<br />5-yr Growth: <br />13.28%<br />
Sales Breakdown<br />Number of Rivals<br />Over 1,200 warehouse clubs in North America<br />only 473 Costco’s<br />Other r...
Vertical Integration<br />Partially vertically integrated<br />Cross-dock distribution <br />Backward integration<br />Kir...
Economies of scale<br />Gigantic sized orders<br />Bulk packaging<br />Largest warehouse stores<br />Membership base (54 m...
Competitive Forces<br />Substitutes<br />Strong threat<br /><ul><li>Good substitutes everywhere
Price not significantly higher
Comparable product features
More variety of features
Low switching cost</li></ul>Suppliers<br />Weak bargaining power<br /><ul><li>Many suppliers
Low switching cost
Many substitutes exist
Large quantities are needed</li></ul>Competing Sellers<br />Fierce competition<br /><ul><li>Costco is on top
Quality is slightly better
Buyer demand is growing
Buyer’s switching cost is low</li></ul>Buyers<br />Weak bargaining power<br /><ul><li>Some switching costs
Large membership base
Costco has the best value</li></ul>Potential New Entrants<br />Low threat<br /><ul><li>Small pool of entry candidates
High barriers to entry
Expanding market
Attractive profits</li></li></ul><li>Driving Forces<br />Internet<br />Market saturation<br />Rising costs<br />
Driving Forces<br />Legislation<br />proposed tax on big-box stores <br />Recession <br />Technology <br />green technolog...
Market Positions of Rivals<br />Pricesmart Inc.<br />P<br />Higher<br />Sam’sClub<br />Costco<br />Operating Margin<br />B...
Rivals’ Next Strategic Moves?<br />More stores in foreign markets<br />facing market saturation in U.S.<br />cannibalizati...
Key Success Factors<br />Internet sales<br />Vast network of retail locations<br />cross-docking <br />No-frills warehouse...
Industry Outlook<br />http://finance.yahoo.com/q/ae?s=COST<br />
World-wide retail<br />The Competitive Environment<br />
Industries Costco Competes In<br />Retail <br />Consumer Services<br />Financial Services<br />Insurance<br />
Competitive Analysis<br />Costco&apos;s main competitors<br />Sam&apos;s Club<br />BJ’s Wholesale Club<br />Other retailer...
SWOT – Strengths<br />Low price<br />Strong brand<br />Excellent merchandise<br />Exceptional employees<br />54 million me...
SWOT – Weaknesses<br />James Sinegal is 79<br />Maintain high wages<br />42% higher than Sam&apos;s Club <br />Maintain lo...
SWOT – Opportunities<br />Recession<br />Easier to find bargain luxury-items<br />Increased popularity of Costco<br />Expa...
SWOT – Threats<br />Fierce competition<br />Other retailers<br />Cannibalization<br />Political problems in other countrie...
Conclusions from SWOT<br />Overall, Costco is doing great!<br />
Front-burner Issue<br />Who will replace the CEO?<br />Gender discrimination lawsuit<br />Improper accounting<br />Ethics ...
Identifying Current Strategy<br />
Strategy Identification Overview<br />Generic Competitive Strategy<br />Complementary Strategic Options<br />Functional Ar...
Generic Competitive Strategy<br />Best-Cost Provider<br />Top-quality merchandise<br />Lowest price<br />Treasure-hunt ite...
Complementary Strategic Options<br />Strategic alliances<br />Bulk packages for Costco<br />Kirkland brand<br />Website st...
Functional Area Strategies<br />Distribution<br />Cross-dock<br />Marketing<br />No marketing<br />HR<br />Promote from wi...
Timing – First Mover<br />Costco Business Centers<br />Greening of Costco warehouses<br />Energy conservation<br />No-fril...
Alliances and Partnerships<br />Partnerships<br />Mexico 31 warehouses a <br />50%-owned joint venture<br />access to <br ...
Outsourcing<br />IT Support<br />US Technology Resources LLC<br />75 out 100 jobs are in India <br />Shipping from Costco....
Competing in Foreign Markets<br />Think global, act local<br />Same basic strategy<br />Low price<br />Tailor product offe...
Specific Industry and Company Situations<br />Address these macro situations<br />Competing in Maturing Industries<br />Co...
Related Diversification<br />Costco Wholesale<br />Warehouse Clubs and Superstores<br />Costco Business Centers<br />Cross...
Unrelated Diversification<br />Consumer Services<br />Travel<br />Optical<br />Automotive<br />Financial Services<br />401...
Unrelated Diversification<br />
Ethics and Social Responsibility<br />
Ethical?<br />Is diversion buying ethical?<br />Diversion Buying<br />Crocs only sell at full price to protect its brand n...
Deceptive Pricing?<br />April 2009, Costco announces <br />Kirkland tuna can size increases <br />6oz to 7oz, yeah!<br />F...
Recent Lawsuits<br />April 2008<br />National class action gender bias suit<br />December 3, 2008<br />Costco Employee Awa...
Costco’s Code of Ethics<br />Obey the law<br />Take care of our members<br />Take care of our employees<br />Respect our s...
Corporate Social Responsibility<br />More than a figure of speech <br />Donating money and time is good for<br />membershi...
community service activities, charitable causes, better quality of life<br />Last 10 years<br />more than $140 million<br ...
Chat<br />Sell<br />
Protect the Environment<br />Green packaging<br />Renewable paper and cardboard<br />Not plastic clamshells<br />Green cle...
Energy Management and Conservation<br />Skylights<br />Timed lighting<br />More efficient lighting<br />High-efficiency he...
Solar Power<br />2006 Costco&apos;s first 580 kW prototype system a success<br />Lancaster, CA <br />Four more systems add...
Solar Innovation at Costco<br />Hazlet, New Jersey<br />500kW system<br />new Solyndra panels <br />cylindrical modules <b...
Excessive Packaging<br />environment-unfriendly packaging of small items <br />huge plastic blister packs <br />can’t alwa...
Employee Well-being <br />Best pay<br />Best benefits<br />spouses<br />children<br />domestic partners<br />Pays a larger...
Workforce Diversity<br />Costco is diverse with respect to<br />Gender<br />Race<br />National origin<br />Disabled, etc.<...
Strategy Execution<br />
Building an Organization Capable of Good Strategy Execution<br />Staffing the organization<br />Recruit the best<br />All ...
Building an Organization Capable of Good Strategy Execution<br />Buildingcore competencies and competitive capabilities<br...
Building an Organization Capable of Good Strategy Execution<br />Organizing the work effort<br />Decentralized decision ma...
Enterprise Facility Information Management (EFIM) system<br />Each Costco is connected to corporate HQ<br />EFIM provides ...
EFIM<br />Reduce operating costs related to <br />energy consumption<br />maintenance<br />contracted services<br />
Rewards and Incentives<br />Non-monetary rewards<br />Making the team<br />Employee contests<br />Fun and exciting workpla...
Culture and Leadership<br />High-Performance Culture<br />Fun and exciting<br />Continuous training<br />Teamwork<br />Div...
Corporate Culture<br />Honesty and frugality<br />“Value and low price”<br />Lead by example<br />Hire from within<br />Cu...
Evaluating Strategy<br />
Achieving Strategic Objectives<br />
Achieving Financial Objectives<br />
Acquiring New Customers<br />7.3% increase 1999 & Before<br />5.1% increase overall<br />
e-commerce<br />Build on success <br />Costco.com<br />Costco.ca<br />No online shopping<br />Mexico<br />UK<br />Taiwan<b...
Quarterly Profits Fell 29%<br />Foreign Sales<br />Litigation<br />Slump in luxury items<br />Increased health care costs<...
Geographic Coverage<br />
International Market<br />Greater international expansion<br />International sales are high<br />21.5%<br />U.S. Sales are...
Key Ratios<br />
Stock Performance<br />Last 5 years<br />Compared to Nasdaq (yellow)<br />
Image and Reputation<br />
Moving forward<br />Recommendations<br />
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Costco Strategic Plan

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All about Costco and their Kirkland brand. From beginning to present day.

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Costco Strategic Plan

  1. 1. Strategic Plan<br />Team 1<br />
  2. 2. About Costco<br />End of 2008 <br />$71 Billion in Sales<br />550 stores world-wide<br />54 million members<br />Avg yearly income $70K<br />Quality merchandise<br />Low price<br />Rapid inventory turnover<br />
  3. 3. Business Model<br />Plus membership fees<br />
  4. 4. Huge savings for members<br />
  5. 5. “I want to retire here. <br />I love it here.”<br />
  6. 6. Strategic Vision<br />
  7. 7. Vision<br />“Our business is to give the customer the best value we can.” – Jim Sinegal, Founder of Costco<br />“We&apos;re going to be a company that’s on a first-name basis with everyone.”<br />
  8. 8. Strategic Vision<br />Give customers the best value, at the best price<br />Treat people right, and with respect<br />Act ethically<br />Most importantly never lose sight of what the purpose of your business is<br />Best value, best price<br />
  9. 9. Short- and long-term<br />Strategic Objectives<br />
  10. 10. Employment Objectives<br />Hire great people<br />Treat them well<br />Give them good jobs<br />Do right by them<br />
  11. 11. Management Objectives<br />Always promote from within<br />Training happens constantly <br />Grow our own talent <br />Model what you want from your employees<br />
  12. 12. Business Objectives<br />Don’t try to be too much to too many<br />Know on what level you compete<br />Know your customers<br />why they do business with you<br />Stay focused on your core business<br />
  13. 13. Growth Objectives<br />Run the business for long-term sustainability<br />Open new stores<br />50-60 new locations per year<br />Keep Internet sales growing<br />
  14. 14. Marketing Objectives<br />Word of mouth only<br />No PR department, ever?<br />
  15. 15. Ethics Objectives<br />Obey the law<br />Treat customers right<br />Treat employees right<br />Treat suppliers right<br />
  16. 16. Biggest Challenge<br />Stay focused on what we do<br />Our business model<br />Focus on our core business<br />
  17. 17. Retail industry<br />The External Environment<br />
  18. 18. External Environment<br />General economic condition<br />recession recovery<br />Stronger dollar = weaker foreign sales<br />Domestic market is maturing<br />Saturated<br />At least one store in each major metropolitan area<br />Often going head-to-head<br />
  19. 19. Market size and growth rate<br />5-yr Growth: <br />5.73%<br />5-yr Growth: <br />13.28%<br />
  20. 20. Sales Breakdown<br />Number of Rivals<br />Over 1,200 warehouse clubs in North America<br />only 473 Costco’s<br />Other retailers and wholesalers<br />groceries<br />general merchandise chains <br />Wal-Mart, Target, and Kohl’s <br />specialty chains<br />Barnes & Noble, Lowe’s, Best Buy, Staples<br />gas stations<br />e-commerce<br />
  21. 21. Vertical Integration<br />Partially vertically integrated<br />Cross-dock distribution <br />Backward integration<br />Kirkland Signature brand<br />Relationships with <br />Manufacturers<br />Suppliers<br />
  22. 22. Economies of scale<br />Gigantic sized orders<br />Bulk packaging<br />Largest warehouse stores<br />Membership base (54 mil)<br />
  23. 23. Competitive Forces<br />Substitutes<br />Strong threat<br /><ul><li>Good substitutes everywhere
  24. 24. Price not significantly higher
  25. 25. Comparable product features
  26. 26. More variety of features
  27. 27. Low switching cost</li></ul>Suppliers<br />Weak bargaining power<br /><ul><li>Many suppliers
  28. 28. Low switching cost
  29. 29. Many substitutes exist
  30. 30. Large quantities are needed</li></ul>Competing Sellers<br />Fierce competition<br /><ul><li>Costco is on top
  31. 31. Quality is slightly better
  32. 32. Buyer demand is growing
  33. 33. Buyer’s switching cost is low</li></ul>Buyers<br />Weak bargaining power<br /><ul><li>Some switching costs
  34. 34. Large membership base
  35. 35. Costco has the best value</li></ul>Potential New Entrants<br />Low threat<br /><ul><li>Small pool of entry candidates
  36. 36. High barriers to entry
  37. 37. Expanding market
  38. 38. Attractive profits</li></li></ul><li>Driving Forces<br />Internet<br />Market saturation<br />Rising costs<br />
  39. 39. Driving Forces<br />Legislation<br />proposed tax on big-box stores <br />Recession <br />Technology <br />green technology is a concern<br />
  40. 40. Market Positions of Rivals<br />Pricesmart Inc.<br />P<br />Higher<br />Sam’sClub<br />Costco<br />Operating Margin<br />BJ’s<br />Lower<br />Few<br />Many<br />Number of Locations<br />Note: Circles are drawn roughly proportional to the sizes of the club chains based on revenue<br />
  41. 41. Rivals’ Next Strategic Moves?<br />More stores in foreign markets<br />facing market saturation in U.S.<br />cannibalization<br />Copy Costco<br />Sam’s Club opens first Business Centers<br />July 22, 2008<br />
  42. 42. Key Success Factors<br />Internet sales<br />Vast network of retail locations<br />cross-docking <br />No-frills warehouse<br />Ongoing effort to cut costs <br />Only stock bargains<br />Treasure-hunt merchandise<br />No-hassle return policy<br />Word of mouth advertising<br />
  43. 43. Industry Outlook<br />http://finance.yahoo.com/q/ae?s=COST<br />
  44. 44.
  45. 45. World-wide retail<br />The Competitive Environment<br />
  46. 46. Industries Costco Competes In<br />Retail <br />Consumer Services<br />Financial Services<br />Insurance<br />
  47. 47. Competitive Analysis<br />Costco&apos;s main competitors<br />Sam&apos;s Club<br />BJ’s Wholesale Club<br />Other retailers<br />
  48. 48. SWOT – Strengths<br />Low price<br />Strong brand<br />Excellent merchandise<br />Exceptional employees<br />54 million members<br />Economies of scale<br />Efficiency<br />
  49. 49. SWOT – Weaknesses<br />James Sinegal is 79<br />Maintain high wages<br />42% higher than Sam&apos;s Club <br />Maintain low margins<br />
  50. 50. SWOT – Opportunities<br />Recession<br />Easier to find bargain luxury-items<br />Increased popularity of Costco<br />Expanding foreign markets<br />Europe<br />China<br />India<br />
  51. 51. SWOT – Threats<br />Fierce competition<br />Other retailers<br />Cannibalization<br />Political problems in other countries<br />
  52. 52. Conclusions from SWOT<br />Overall, Costco is doing great!<br />
  53. 53. Front-burner Issue<br />Who will replace the CEO?<br />Gender discrimination lawsuit<br />Improper accounting<br />Ethics and compliance program<br />
  54. 54. Identifying Current Strategy<br />
  55. 55. Strategy Identification Overview<br />Generic Competitive Strategy<br />Complementary Strategic Options<br />Functional Area Strategy<br />Timing<br />
  56. 56. Generic Competitive Strategy<br />Best-Cost Provider<br />Top-quality merchandise<br />Lowest price<br />Treasure-hunt items<br />Kirkland Signature<br />Top-quality in-house brand<br />
  57. 57. Complementary Strategic Options<br />Strategic alliances<br />Bulk packages for Costco<br />Kirkland brand<br />Website strategy<br />Brick-and-click<br />
  58. 58. Functional Area Strategies<br />Distribution<br />Cross-dock<br />Marketing<br />No marketing<br />HR<br />Promote from within<br />Finance<br />Own 80% of real-estate and buildings<br />
  59. 59. Timing – First Mover<br />Costco Business Centers<br />Greening of Costco warehouses<br />Energy conservation<br />No-frills<br />Energy conservation<br />Finding new ways to repackage <br />Products<br />Services<br />
  60. 60. Alliances and Partnerships<br />Partnerships<br />Mexico 31 warehouses a <br />50%-owned joint venture<br />access to <br />Foreign market<br />Key officials<br />Taiwan 5 locations<br />through a 55%-owned subsidiary<br />Alliances<br />Kirkland Signature is a strategic alliance with<br />Suppliers<br />Manufactures<br />Martha Stewart<br />Bumble Bee<br />Service Providers<br />Payroll Services<br />Prepaid Express Shipping<br />Web Sites<br />Etc.<br />
  61. 61. Outsourcing<br />IT Support<br />US Technology Resources LLC<br />75 out 100 jobs are in India <br />Shipping from Costco.com<br />UPS<br />FedEx<br />
  62. 62. Competing in Foreign Markets<br />Think global, act local<br />Same basic strategy<br />Low price<br />Tailor product offerings by<br />Cultural difference<br />Local managers decide<br />More foreign markets<br />Europe<br />China<br />India<br />
  63. 63. Specific Industry and Company Situations<br />Address these macro situations<br />Competing in Maturing Industries<br />Competing in Fragmented Industries<br />Strategy for Industry Leaders<br />
  64. 64. Related Diversification<br />Costco Wholesale<br />Warehouse Clubs and Superstores<br />Costco Business Centers<br />Cross-business strategic fit<br />1 + 1 = 3<br />
  65. 65. Unrelated Diversification<br />Consumer Services<br />Travel<br />Optical<br />Automotive<br />Financial Services<br />401(K)<br />Loans<br />Insurance<br />Pharmacy<br />Recycle electronics<br />
  66. 66. Unrelated Diversification<br />
  67. 67. Ethics and Social Responsibility<br />
  68. 68. Ethical?<br />Is diversion buying ethical?<br />Diversion Buying<br />Crocs only sell at full price to protect its brand name and price structure<br />Crocs did not sell to Costco, nor has it authorized any of its customers to sell to Costco.<br />Improper accounting practices<br />Ethics and compliance program<br />One of the conditions for dropping case<br />
  69. 69. Deceptive Pricing?<br />April 2009, Costco announces <br />Kirkland tuna can size increases <br />6oz to 7oz, yeah!<br />Failed to mention the price increase<br />Price per ounce increased!!!<br />How can all the prices end in .99<br />If the margin is capped at 14%<br />Is $10.25 just rounded up?<br />
  70. 70. Recent Lawsuits<br />April 2008<br />National class action gender bias suit<br />December 3, 2008<br />Costco Employee Awarded $420K<br />March 9, 2009<br />Gay Employee Sues Costco for Retaliation<br />May 1, 2009<br />Costco Settles Membership Class Action<br />
  71. 71. Costco’s Code of Ethics<br />Obey the law<br />Take care of our members<br />Take care of our employees<br />Respect our suppliers<br />Reward our shareholders<br />The ultimate goal<br />+<br />Code of Ethics (full version)<br />
  72. 72. Corporate Social Responsibility<br />More than a figure of speech <br />Donating money and time is good for<br />memberships<br />patronage<br />
  73. 73. community service activities, charitable causes, better quality of life<br />Last 10 years<br />more than $140 million<br />Actively involved in community<br />reading programs in schools<br />scholarship programs for the disadvantaged<br />Contributing and raising money<br />children’s hospitals <br />
  74. 74.
  75. 75. Chat<br />Sell<br />
  76. 76. Protect the Environment<br />Green packaging<br />Renewable paper and cardboard<br />Not plastic clamshells<br />Green cleaning products<br />
  77. 77. Energy Management and Conservation<br />Skylights<br />Timed lighting<br />More efficient lighting<br />High-efficiency heat and AC<br />Hybrid delivery trucks<br />Solar panels<br />Pay employees to <br />Carpool<br />Ride bus<br />
  78. 78. Solar Power<br />2006 Costco&apos;s first 580 kW prototype system a success<br />Lancaster, CA <br />Four more systems added<br />600 kW (DC) per location<br />Largest commercial PV systems in the U.S.<br />17 PV systems in 2008<br />
  79. 79. Solar Innovation at Costco<br />Hazlet, New Jersey<br />500kW system<br />new Solyndra panels <br />cylindrical modules <br />Largest Solyndra system<br />
  80. 80. Excessive Packaging<br />environment-unfriendly packaging of small items <br />huge plastic blister packs <br />can’t always be recycled<br />plastic and cardboard blister packs<br />terribly excessive packaging <br />a crime against the planet<br />
  81. 81. Employee Well-being <br />Best pay<br />Best benefits<br />spouses<br />children<br />domestic partners<br />Pays a larger percentage of premiums<br />withheld pre-tax<br />
  82. 82.
  83. 83. Workforce Diversity<br />Costco is diverse with respect to<br />Gender<br />Race<br />National origin<br />Disabled, etc.<br />International companies benefit from having a diverse workforce<br />Better communication<br />
  84. 84. Strategy Execution<br />
  85. 85. Building an Organization Capable of Good Strategy Execution<br />Staffing the organization<br />Recruit the best<br />All managers are hired internally<br />Continuous training<br />High pay and great benefits<br />Fun work environment<br />
  86. 86. Building an Organization Capable of Good Strategy Execution<br />Buildingcore competencies and competitive capabilities<br />Finding and negotiating bargains<br />On quality merchandise<br />Building relationships with <br />Manufacturers<br />Suppliers <br />Ingenuity <br />Cost cutting<br />Conservation <br />
  87. 87. Building an Organization Capable of Good Strategy Execution<br />Organizing the work effort<br />Decentralized decision making<br />Peer pressure<br />Honesty<br />Good Health<br />
  88. 88. Enterprise Facility Information Management (EFIM) system<br />Each Costco is connected to corporate HQ<br />EFIM provides <br />real-time information<br />manage control systems<br />Inventory management system<br />
  89. 89. EFIM<br />Reduce operating costs related to <br />energy consumption<br />maintenance<br />contracted services<br />
  90. 90. Rewards and Incentives<br />Non-monetary rewards<br />Making the team<br />Employee contests<br />Fun and exciting workplace<br />Monetary rewards<br />The best pay<br />Best benefits<br />Free membership<br />
  91. 91. Culture and Leadership<br />High-Performance Culture<br />Fun and exciting<br />Continuous training<br />Teamwork<br />Diversity<br />Customer first<br />
  92. 92. Corporate Culture<br />Honesty and frugality<br />“Value and low price”<br />Lead by example<br />Hire from within<br />Culture of inclusion<br />generous pay<br />first name basis<br />fun and energetic<br />
  93. 93. Evaluating Strategy<br />
  94. 94. Achieving Strategic Objectives<br />
  95. 95. Achieving Financial Objectives<br />
  96. 96. Acquiring New Customers<br />7.3% increase 1999 & Before<br />5.1% increase overall<br />
  97. 97. e-commerce<br />Build on success <br />Costco.com<br />Costco.ca<br />No online shopping<br />Mexico<br />UK<br />Taiwan<br />Japan<br />Korea<br />
  98. 98. Quarterly Profits Fell 29%<br />Foreign Sales<br />Litigation<br />Slump in luxury items<br />Increased health care costs<br />
  99. 99. Geographic Coverage<br />
  100. 100. International Market<br />Greater international expansion<br />International sales are high<br />21.5%<br />U.S. Sales are down<br />78.5%<br />
  101. 101. Key Ratios<br />
  102. 102. Stock Performance<br />Last 5 years<br />Compared to Nasdaq (yellow)<br />
  103. 103. Image and Reputation<br />
  104. 104. Moving forward<br />Recommendations<br />
  105. 105. Recommendations Overview<br />Accept food stamps<br />Acquire BJ’s Wholesale Club <br />Keep expanding overseas<br />Be more ethical<br />Continue to add services<br />Industry Leader strategy<br />Better promotions<br />Improve e-commerce<br />A little good PR better than no PR<br />
  106. 106. Food Stamps<br />Educate consumers about food stamps<br />Accept food stamps<br />Only 67% of eligible people get food stamps<br />Missouri at 98%<br />California at 50% <br />New York where 63%<br />
  107. 107. Huge savings for members<br />
  108. 108. Acquire BJ’s<br />BJ’s may soon be up for sale<br />BJ’s is beating Costco<br />Distribution network is in place<br />Employees get <br />higher pay and <br />better benefits<br />
  109. 109. Go Global<br />50% from international sales<br />First-mover benefits<br />Partnerships <br />More profit sanctuaries<br />Costco is not yet in<br />Europe<br />China<br />India<br />
  110. 110. Obey the law<br />Take care of our members<br />Take care of our employees<br />Respect our suppliers<br />Reward our shareholders<br />The ultimate goal<br />Be More Ethical<br />Legal Proceedings and Audits<br />Improper accounting practices<br />Illegally backdating memberships<br />Hostile work environment<br />Gender Discrimination<br />Hire more women managers<br />Grand jury investigations<br />Tort and other litigation<br />Forced to raise prices<br />Code of Ethics<br />
  111. 111. Change Ethics<br />From<br />Ethical universalism<br />One size fits all<br />To<br />Integrative social contracts theory<br />Universal + Local<br />Retrain<br />Unintentionally amoral managers<br />Weed out<br />Intentionally amoral managers<br />
  112. 112. Continue to Add Services<br />Partner with services providers<br />Offer new services<br />Money orders<br />Money transfers<br />Current market conditions<br />Maturing market<br />cannibalism<br />Fragmented market<br />Industry Leader<br />
  113. 113. Strategy for Industry Leader<br />Stay-on-the-offensive strategy<br />First-mover<br />Costco Business Centers<br />Promotions<br />Copy BJ’s<br />
  114. 114. Offer Shared Memberships<br />10-20% loss of all shoppers<br />“Intelligent loss of sale”<br />Consumer Reports said<br />“Everyone saves at Costco”<br />Shared memberships promotion<br />Any two families<br />
  115. 115. Efficient e-commerce<br />Currently 7 websites<br />Two e-commerce sites<br />U.S. and Canada<br />No shipping outside <br />U.S. or Canada<br />Make one website<br />Multiple languages<br />Ship to all locations<br />
  116. 116. A Little Good PR is Better No PR<br />Cut visits in half<br />Use savings to buy PR<br />Greening of Costco<br />Children’s hospitals<br />Reading programs<br />Etc.<br />Find the PR bargains<br />
  117. 117. Preserve Corporate Culture<br />Jim is 79<br />Loss of intellectual capital<br />With the next CEO<br />Things could change<br />Adhere to core values<br />Obey the law<br />Respect our <br />Members <br />Employees <br />Suppliers <br />
  118. 118. Questions?<br />

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