Module 3 Costco Assignment swot PDF

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SWOT analysis of Costco...

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Strengths, Weaknesses, Opportunities, Threats (SWOT) Costco Wholesale Corporation is the second biggest retailer in the world after Walmart. This success is linked to Costco’s ability to strike a profitable balance in addressing the internal and external factors shown in this SWOT analysis. The SWOT analysis examines the internal strategic factors (strengths and weaknesses) and the external strategic factors (opportunities and threats) relevant to the business. Costco’s SWOT analysis gives insights on the most significant issues that the company must include in its strategic formulation. Effectively addressing these issues in the SWOT analysis can support the continuation of Costco’s position in the global retail market. Strengths Costco Wholesale’s strengths are linked to the company’s current operations and strategies. The strengths in the SWOT analysis model are the capabilities that firms use for a profitable business. In Costco’s case, the following are their most notable strengths:   

Strong market presence Expansive supply chain Strong brand (Kirkland Signature)

As the leading membership warehouse club chain in the United States, Costco Wholesale Corporation enjoys strong market presence. The company’s name is popular among consumers. Additionally, Costco’s expansive supply chain is a strength that allows to the company’s ability to achieve economies of scale. Another strength of Costco is its Kirkland Signature brand, which consumers view as a label of quality. These strengths in the SWOT analysis of Costco highlight the benefits of the company’s current position in the market. Weaknesses Costco Wholesale’s weaknesses result from the company’s current and somewhat limited strategic focus. The weaknesses in the SWOT analysis model are the internal strategic factors that act as limitations or barriers to profitable business. Costco’s most detrimental weaknesses are as follows:   

Limited product mix Exclusivity to members Low profit margins

Costco has a limited product mix compared to the wider and more extensive selection available from competitors like Walmart. This weakness prevents the maximization of revenue from consumers who might not find what they are looking for at Costco warehouses/stores. Also, Costco’s business model creates exclusivity to members and prevents other shoppers from easily purchasing at its warehouses. Moreover, because of Costco’s generic strategy, the company has the weakness of low profit margins, which leaves little room for price adjustments. This SWOT

analysis of Costco Wholesale Corporation shows that the company’s weaknesses are directly related to what they choose as a business. Opportunities Costco’s opportunities emphasize the need to adjust business strategies. The opportunities in the SWOT analysis model are external strategic factors that enable business growth and development. The following are Costco Wholesale’s main opportunities:   

Diversification Expansion of product mix Expansion of locations

Costco has the opportunity to diversify its business through the addition of new services or an entirely new business in another industry. The company could also expand its product mix, which is currently limited compared to those of firms like Walmart. What’s more, Costco has the opportunity to expand its business around the world by opening new warehouses/stores in overseas locations, especially in high-growth economies. This SWOT analysis of Costco Wholesale Corporation points to opportunities for growth and expansion. Threats The threats against Costco are sociocultural and market-based and are the external strategic factors that could reduce business performance. The main threats against Costco are:   

Competition with retail stores Online competition Animal rights activists

Costco Wholesale Corporation faces tough competition with retail firms like Walmart, especially Walmart’s Sam’s Club. What’s more, in the online market, many small and medium-sized firms are now selling goods for low prices, thereby competing against Costco. The animal rights activists are a threat because they have potential to reduce demand for some of Costco’s products. However, the company has the opportunity to address this matter by further improving its supply chain policies. This SWOT analysis of Costco shows that the company must improve its strategies and policies to overcome threats in its external environment. STRENGTHS Strong market presence

WEAKNESSES Limited product mix

OPPORTUNITIES Diversification

THREATS Competition with retail stores

Expansive supply chain

Exclusivity of members

Expansion of product mix

Online competition

Strong brand (Kirkland Signature)

Low Profit Margins

Expansion of locations

Animal rights activists

SWOT Analysis for

Costco Wholesale Company

Positive

Negative

Strengths

Weaknesses

 Strong Market Presence  Expansive Supply Chain  Strong Brand (Kirkland Signature)

 Limited Product Mix  Exclusivity To Members  Low Profit Margins

Internal Opportunities  Diversification  Expansion Of Product Mix  Expansion Of Locations

Threats  Competition With Retail Stores  Online Competition  Animal Rights Activists

External Costco Wholesale Company

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