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Tutorial Case Study 1 - Costco's Winning Formula - Coggle Diagram
Tutorial Case Study 1 - Costco's Winning Formula
Focused on reduced prices, created brand image based around this idea.
Warehouses are designed to operate efficiently
5 Porter Forces Analysis
Buyer Power:
customers can switch to other companies easily
lots of competitors which customers can buy groceries from
this is a high priority force
Supplier Power:
there are a lot of suppliers
supply received is large in quantity
so supplier power is reduced, because there are alternative suppliers for costco
this is a low priority force
Threat of Entry
The market is already saturated in terms of grocery stores and retail stores.
This is a medium priority force
But if the new retail store offers lower prices then customers can switch easily
Rivalry
in the retail industry there are many giants costco needs to compete with
few are: walmart, carrefour, spinneys
Rivalry is a important factor for CostCo
To ensure customer loyalty, costco offers prices lower than competitors
this is a high priority force
Substitutes:
substitutes are many in number, and easily accessible
some substitutes offer online delivery so customers will feel more inclined to switch
swot analysis must be done of competitors and substitutes for costco to compete effectively
this is a high priority force
strategies used by costco to lower prices
negotiate deals with suppliers
decor of warehouse
only offer 3600 unique products at a time
expansion plans into asian markets. reason is that customer spending and growth is higher
main advantage: workforce
employee compensation is above the industry
lots of benefits and good wages
workforces morale is boosted as a result
due to good treatment of workers, average turnover per worker is $530000
expansion in international markets has been a successful venture
despite only 25% of sales coming from international markets, growth is 400 percent faster than those in the US and Canada markets.
huge success in 2016 in melbourne and sydney