Swot Analysis For Costco

I. Organization System Perspective for Costco
Inputs from the environment:
 Strategic Vision,
 Employment and Management Objectives,
 Strategic alliances,
 Website and Functional Area Strategies,
 Alliances and Partnerships,
 Corporate Social Responsibility,
 Staffing the organization,
 Culture and Leadership,
 Image and Reputation.
 Increase Brand recognition through Marketing
 Financial Growth
 Improve Brand Loyalty
 Decrease Marketing Cost
Transformation Process:
 Facebook will be use to bring awareness to the Costco brand.
 Greening of Costco Warehouses
 Finding New Ways to Repackage
 Outsourcing
 Competing in Foreign Markets
 Energy Management and Conservation
 Enterprise Facility Information Management

system (EFIM)
 Building an Organization Capable of Good Strategy Execution
 Create a Marketing Plan (policy) utilizing Social Media that enables to address the inputs, by utilizing Facebook, Twitter, Instagram, by improving customer insights and providing incentives for customers who promotes their page Outputs to the environment:
 Vertical Integration
 Economies of Scale
 Strengths
 Generic Competitive Strategy
 Recent Lawsuits
 Community Service Activities, Charitable Causes, and Better Quality of life
 Employee Well-Being
 Rewards and Incentives

II. Feedback: Overall Costco is doing great; however, some consumers believe they still have room for improvements. Here is a recommendation list given by consumers:
1. Start accepting manufacturer coupons and food stamps.
2. Acquire BJ’s Wholesale Club
3. Keep expanding overseas
4. Be more ethical
5. Continue to add services
6. Better promotions
7. Improve e-commerce
8. A little good PR better than no PR
9. Preserve Corporate Culture
III. Details Suggestion List:
1. Costco should attempt to acquire BJ’s Wholesale Club. They can gain 180 stores without worrying about market saturation. Then they will be ahead of Sam’s club. Costco already has a lot of stores on the east coast so their distribution network is in place. Employees would gladly trade for higher pay and better benefits.
2. Go Global: Get 50% income from international sales, Partnerships in more countries, and More profit sanctuaries. The Costco formula can work anywhere. As an adept first-mover, they can dominate the international markets.
3. Change Ethics: Ethical universalism will not continue to work in the international environment. Since Costco wants to grow there, they need to modify their current philosophy, and begin to use the integrated social contracts theory. This will better suit foreign countries like Japan where the culture and social customs are very different from the United States. They also need to retrain the unintentionally amoral managers, and weed out the intentionally amoral managers.

4. Market conditions: It’s very easy for Costco to place their brand name on something and offer it to their members. Adding new services like money orders and money transfers could save members time and give them one more reason to renew memberships.
5. PR: Jim flies a lot just to visit stores. Corporate jets are expensive. Instead of flying so much, Jim could invest in a little PR to promote Costco and make customers feel good about shopping there. Spending money at Costco helps children's hospitals and improves the quality of the environment. Good PR can also be purchased at bargain rates.
6. More efficient e-commerce: There are seven Costco websites; two are e-commerce sites that don’t ship outside the US or Canada. We want to see one e-commerce site that has multiple-language support, and ships anywhere in the world.
7. Offer Shared Memberships: Costco is losing 10 to 20 % of all consumers, those who won’t buy in bulk; they just write them off, calling them the “intelligent loss of sale.” Costco shouldn't just write them off! How about a little PR or better promotions? A shared membership between two families may encourage more people to try Costco, and when the promotion ends, some people will buy a regular membership.
8. Preserve Corporate Culture: Jim is 79. Costco will lose the man who invented the wholesale club industry, who had the passion and drive to make it what it is today. With a new CEO thing might change. In order to reduce the impact, Costco needs to find ways to adhere to its core values. So it can keep what makes them Costco.
IV. Inputs from the environment:
1. Material inputs – Costco is building new warehouses and acquiring new members. These trends are expected to continue at the same rate despite the recent recession.
Image and Reputation: The most recent American Customer Satisfaction Index again placed Costco at the top of the list of retailers for the fifth consecutive year, and Fortune Magazine named Costco the fourteenth most admired company in the U.S. this year.
2. Human inputs – Give customers the best value at the best price, treat people right and with respect. Always promote from within and constant training. Opportunities to grow your own talent.
Costco partners with manufacturers to make bulk packages and also to manufacture the Kirkland Signature brand (high-quality at a low price). Costco Mexico is a partnership. Taiwan is a subsidiary. Kirkland Signature brand forms strategic alliances with suppliers of products like auto insurance and also with manufacturers like Bumble Bee and Martha Stewart
3. Financial inputs – Achieving financial objectives: Costco has Better net sales, better net income, and keeps expenses down year after year. $71 billion in sales by end of 2008.
Costco has donated more than $140 million in just the past 10 years. They provide Financial services like 401 (k)s Loans, Insurance, and High-Yield Savings Accounts & CDs. They owned 80% of real estates and buildings.
4. Information inputs – Costco is partnering with UST for IT support; 75 out of 100 jobs are in India and only 25 are in the United States. Shipping website orders to customers is outsourced to UPS.
The warehouse club Industry is a small but profitable part of the retail industry. In 2008 as the recession took hold, warehouse clubs saw an increase in membership and in sales of basic household items. As the dollar recovers, foreign sales are weakening. In the United States, there is at least one store in every major metropolitan area.
V. Transformation Process:
1. Technology – Costco strives to keep innovate ideas as part of their day to day business. Costco is getting greener in ways that save them money. Costco wants to improve the environment. They have a new recycling program and partner with gazelle to buy used electronics. Costco is experimenting with green packaging and they also make their own line of green cleaning products.
Energy Management and Conservation: use of skylights, control lighting based on the time of day, evaluating lighting technologies for better light at a lower cost, high efficiency heating and air conditioning, solar panels, hybrid delivery trucks.
Costco installed their first solar power system in 2006 at Lancaster, CA. It was so successful they are installed 4 more. Costco has the largest privately owned, multi-site commercial PV systems in the US. At the end of 2008, they had a total of 17 rooftop installations. By Implementing a Social Media policy, Costco can bring awareness to its costumers of all their efforts to improve the environment in addition, this would develop awareness to the brand.
2. Operation systems – Costco has the highest revenue. A lower operating margin equals a lower markup on merchandise. A lower operating margin is consistent with charging lower prices and running a leaner (no-frills) operation. Costco has the lowest operating margin and Sam’s club has the most locations.
3. Administrative systems – Costco uses the same basic strategy to compete everywhere, but each manager has the authority to make decisions about their own store because Mexico and Japan have different tastes. In organizing the work effort: Costco uses a decentralized structure allowing store managers to make critical decisions about running their store. They utilize strong peer pressure on individuals to act responsibly.
4.

Control systems – Costco has an Enterprise Facility Information management system, each Costco is connected to corporate, the EFIM provides real-time information, management of control systems (like energy), and an inventory management system that allows suppliers to monitor their own stock levels at any Costco. The EFIM reduces costs related to energy consumption, maintenance, and contracted services
VI. Outputs to the environment:
1. Products and Services – Costco is partially vertically integrated. The Kirkland brand partners with manufacturers and suppliers to provide top quality at a low price. The Kirkland brand is on hundreds of products from meat to caskets.
They provide internet sales, no-hassle return policy, only stock bargains, and vast network retail locations. Utilizing Facebook to promote their Kirkland brand will aid for the brand to be recognize with customers and potential new customers.
Strengths: low price, strong brand name, excellent merchandise, exceptional employees, huge membership base, economies of scale, efficient distribution and operation.

2. Profits and losses – They lost lots of revenue through recent lawsuits.
Costco.com earned nearly $2.0 billion and Costco.ca earned $150

million.
Quarterly profit fell 29% because of softer sales and litigation charges (due to poor ethics), and a slump in spending on discretionary items like jewelry. Increased employee health care costs were also a factor.
3.

Employee behaviors –Employees are actively involved in the community with reading programs, scholarship programs, and raising money for children’s hospitals. The employees are loyal. All managers are hired from within so they really know the business.
4. Information outputs – They order massive amounts from manufacturers. Bulk packages sell larger quantities to consumers. The huge warehouse clubs eliminate the need for actual warehouses. At the same time, they reduce the need for handling. This greatly enhances distribution efficiency. Their large-scale membership base makes them strong.
Costco has one of the most competitive benefits packages in the industry. Not only do they provide employees with a full spectrum of benefits, but employees also may elect coverage for their spouses, children and domestic partners. The company pays a larger percentage of the premiums than do most other retailers. Costco's customers like that low prices do not come at the workers' expense. And The Costco website offers online tools to manage health.
Non-monetary rewards: Costco only hires the best of the best. There are employee contests with great prizes; it is fun to work there. Monetary rewards: the best pay and benefits in the industry, bi-annual bonus for hourly employees, and free membership. Also, paid vacation, paid sick days, paid

holidays.

Reference
The Top 10 Benefits Of Social Media Marketing. (n.d.). Retrieved November 19, 2015, from http://www.forbes.com/sites/jaysondemers/2014/08/11/the-top-10-benefits-of-social-media-marketing/
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