Running Head Busn 470 Week 3 Minor Project

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Running Head Busn 470 Week 3 Minor Project

Minor Project

Minor Project (Individual)

Instructions: This project requires you to apply the concepts and methods learned so far in the course. This is an individual project.

You are to write the research paper in accordance with APA standards and cite a minimum of five (5) scholarly peer reviewed journal sources and three (3) entire scripture verses.

Your paper submission should follow the below stated composition and formatting guidelines; and be composed unto a “Word Document.”

  • Title page with a “Running head:” page number (top right), your name, course, date, and an appropriate title.
  • Use double space, Times New Roman, and 12pt font.
  • Support your position.
  • When all is done, give a brief conclusion.
  • Upon citing works, add a separate reference page.

These APA additions are NOT a part of the word count that should approximate 1500 words

MINOR PROJECT CASE: COSTCO

The first Price Club Warehouse was opened in San Diego in 1975 by Sol Price, Robert Price (Sol’s son), Rick Libenson, and Giles Bateman. The firm originally sought to sell merchandise in volume at deep discounts only to small businesses, but later expanded the concept to include government, utility, and hospital employees. By 1980, the company had four stores in Arizona and California and went public.

During the 1980s, the company expanded to the eastern United States and Canada. In 1988, Price Club acquired grocery distributor A. M. Lewis and launched Price Club Furnishings. In the early 1990s, however, competition intensified from Sam’s Club and Pace. In 1992 and 1993, Price Club’s joint venture with retailer Controladora Comercial Mexicana led to the opening of two Price Clubs in Mexico City.

Later in 1993, Price Club merged with Costco Wholesale. During the 1990s, the firm expanded its international interests, launching outlets in Great Britain, Japan, and South Korea. Price Club changed its corporate name to Costco Companies in 1997 and again to Costco Wholesale in 1999.

Today, Costco is the largest wholesale club operator in the United States, operating 672 membership warehouses—each amassing about $150 million in sales—and serving about 65 million members. Most of its outlets are located in the United States and Canada, but additional stores can be found in Mexico, Japan, Australia, South Korea, Taiwan, Puerto Rico, and the United Kingdom. Membership costs about $50 per year and is available to businesses and individuals.

Costco’s business model emphasizes rock-bottom prices on a limited selection of mostly name-brand products in a wide range of merchandise categories. A typical outlet carries about 4,000 products, ranging from alcoholic beverages and appliances to fresh food, pharmaceuticals, and tires. Costco also offers its members insurance, financial, and travel services. Its subsidiary, Costco Wholesale Industries, is an operating manufacturing business in food packaging, meat processing, and jewelry to support the retail efforts.

Much of Costco’s success can be attributed to its ability to minimize costs by negotiating fiercely with suppliers. The company never requires its members to pay more than 14 percent above the firm’s cost for goods.

Jim Sinegal stepped down as CEO in 2012 and was succeeded by COO Craig Jelinek.

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MINOR PROJECT CASE QUESTIONS (5 points)

  1. Introduce the organization.
  2. Specifically identify the industry and the competitors.
  3. Analyze the potential profitability of the industry.
  4. What political/legal forces affect the industry?
  5. What economic forces affect the industry?
  6. What social forces affect the industry?
  7. What technological forces affect the industry?
  8. Who has succeeded and failed in the industry, and why?
  9. What is the current firm-level strategy?
  10. What is the current business-level strategy?
  11. What are the business strategies of the major competitors?

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Case Challenges/Deliverables (5 points):

1. How does Costco differ from other warehouse clubs like Sam’s Club?

2. Does Costco compete with non-membership retailers, such as Walmart and Target? Why or why not?

3. Can Costco compete successfully on a large scale outside of the United States and Canada? Why or why not?

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Suggested Sources

  1. Campos, “Why Costco Is Beating Walmart,” USA Today, 2 December 2013, http://www.usatoday.com/story/money/markets/2013/12/02/why-costco-is-beating-wal-mart/3691555/
  2. CNBC, “TheCostco Craze: Inside the Warehouse Giant, 9 April 2012 http://www.cnbc.com/the-costco-craze-inside-the-warehouse-giant/
  3. Stone, “Costco CEO Craig Jelinek Leads the Cheapest, Happiest Company in the World,” BloombergBusiness, 6June2013,http://www.bloomberg.com/bw/articles/2013-06-06/costco-ceo-craig-jelinek-leads-the-cheapest-happiest-company-in-the-world
  4. Tuttle, “Why Costco May Never Raise Prices on $4.99 Chickens, $1.50 Hot Dogs,” Money, 29 May 2015, http://time.com/money/3901655/costco-rotisserie-chickens-hot-dogs/