Course Project Assignment

Key Success Factor Analysis

The key success factor analysis conducted on Costco Wholesale Corporation outlines the factors that have contributed to the company’s success. Some of the factors include an emphasis on customer satisfaction by creating and implementing a customer-centric culture. The approach allows the company to focus its processes and operations towards providing quality and satisfying customer service to achieve excellent customer satisfaction. The company has adopted the membership-based approach to generate its revenues and achieve customer loyalty through the annual membership fees charged (“SECURITIES AND EXCHANGE COMMISSION Costco Wholesale Corporation Corporation,” n.d.). As a critical component for success, the company understands the impact of employee satisfaction and retention in achieving its goals and objectives. Costco Wholesale Corporation has ensured that it maintains a well-motivated and competent workforce through competitive rewards and remuneration for excellent customer service and low turnover rates. Besides, having an efficient supply chain has enabled the company to streamline its inventory management and distribution systems, maintain low costs, and ensure timely product availability.

Internal Analysis using the External Factor Analysis Summary (IFAS).

The internal factors analysis summary tool assesses Costco Wholesale Corporation’s internal weaknesses and strengths against the existing external market opportunities and threats (Garipova, 2019). The company has various internal weaknesses, such as a lack of investment in e-commerce (score 2), which limits it from matching the increased demand for online shopping and e-commerce compared to its competitors. Increased market competition as the new company faces Costco Wholesale Corporation seeks to make way to the retail industry. The existence of legal and regulatory challenges (Score 2) the company faces hinders its ability to expand its operations to various markets globally. Another internal weakness of Costco Wholesale Corporation is its inability to adopt a product mix strategy (Score 3) to meet the dynamic customer preferences, hence the lack of maximum customer satisfaction.

On the other hand, the company has internal strengths that enable it to navigate various external factors. The existence of an efficient supply chain is a significant strength (score 4), which allows the company to ensure product availability and timely response to dynamic customer needs. Maintaining a conducive working environment has led to low turnover rates and high employee satisfaction (score 4), improving customer service. Besides, the company can generate stable revenue from the annual membership fees, enabling it to achieve customer loyalty and personalized marketing.

Financial Analysis of Costco Wholesale Corporation

The 2022 annual report shows that Costco Wholesale Corporation has a 16% increase in the total net sales resulting from increased sales in the newly opened warehouses and comparable sales by 14 percent. The membership income increased by 9 percent during the fiscal year with membership upgrades and new sign-ups (“SECURITIES AND EXCHANGE COMMISSION Costco Wholesale Corporation Corporation,” n.d.). Besides, the ability to retain the annual renewal rate for existing members by over 90 percent globally contributed to the increase in membership income. The consolidated income statement shows a total revenue of 226,954 million dollars resulting from the net sales and membership fees received by the company as of 28 August 2022 (“SECURITIES AND EXCHANGE COMMISSION Costco Wholesale Corporation Corporation,” n.d.). Its comprehensive income for the fiscal year was 5,158 million dollars. The consolidated balance sheets show the current assets at 32,696 million dollars against the current liabilities amounting to 31,998 million. This shows the liquidity of the company in its ability to settle its short-term obligations with the available current assets.

Marketing Analysis of Costco Wholesale Corporation

The Analysis sheds light on the target audiences, key success factors, marketing, and competitive positioning strategies adopted by Costco Wholesale Corporation. The 4Ps of marketing are evaluated in the Analysis, which include people, product, price, and place. The company has targeted consumers looking for low-price but quality products, such as small-scale businesses, retailers, and families (Faks et al., 2022). The company has also adopted the everyday low-pricing model for its products to ensure affordability. Product diversification has enabled the company to provide diverse products such as electronics, furniture, household essentials, and groceries, reaching a more comprehensive market range. Moreover, technological advancement has enabled the company to provide e-commerce and in-store customer service (Faks et al., 2022). The company has a running website that allows customers to shop online, irrespective of their physical location, through e-commerce. The strategy has also enabled the company to expand globally by reaching out to new customers globally. The in-store option allows the customers to enjoy a limited selection of quality products and free samples offered during the shopping experience.

Strategic Factors Analysis Summary (SFAS) of Costco Wholesale Corporation

The strategic factors analysis summary assesses the internal and external factors affecting g the company’s strategic position. Considering the internal and external factors this allows the company to evaluate its ability to achieve the desired outcomes with the existing strategies. The external factors present opportunities and threats, while the internal factors show the weaknesses and strengths of the company. The SFAS analysis matrix allows for rating the company’s opportunities, threats, strengths, and weaknesses (Phadermrod et al., 2019). Below is the SFAS matrix for the internal and external factors affecting Costco Wholesale Corporation.

Table 1: SFAS Matrix for Costco Wholesale Corporation

Strengths, Weaknesses, Opportunities, and Threats (SWOT) Analysis of Costco Wholesale Corporation

As outlined in the SFAS matrix, the SWOT analysis evaluates the strengths, weaknesses, opportunities, and threats of Costco Wholesale Corporation within the existing market of operation (Phadermrod et al., 2019). The strengths of Costco Wholesale Corporation include the existence of an efficient supply chain, the adoption of the membership model as a revenue generation channel and maintaining customer loyalty. Besides, its ability to ensure employee satisfaction has been instrumental in providing excellent customer service. The company has also expanded its operation to international markets, which presents more growth opportunities. Nevertheless, the company has various weaknesses affecting its maximum performance, including high dependence on membership fees as a revenue generation channel, limiting its profitability. The company is yet to develop a stable online presence through e-commerce, hindering its ability to meet the growing online shopping demand.

On the other hand, the external environment presents opportunities and threats which influence the performance of the company. The opportunities include technological advancements that provide data analysis and personalized marketing solutions to improve its operations and customer experience. The growth of the e-commerce market presents an opportunity for the company to invest in its online presence and reach a wider market. Threats such as stiff market competition, legal challenges, and product price and economic crisis affect the success of the company and its ability to achieve quality customer experience.

Summary of the Analysis and Strategy Adopted by Costco Whole Corporation.

From the analysis, it is evident that the company’s management understands its internal and external environments and the impact on the company’s operations towards achieving the desired outcomes. The key success factors analysis shows the factors that have led to the growth and success of the company, such as employee satisfaction, maintaining an efficient supply chain, and providing quality low-price products. The IFAS analysis compares the internal strengths and weaknesses of the company to the external opportunities and threats (Garipova, 2019). The analysis allows the company to measure its internal ability to succeed with the opportunities and threats in the market. The financial analysis provides an understanding of the company’s financial performance as it strives to achieve success and profitability. The analysis shows that the company’s liquidity allows it to settle its short-term obligations with its current assets when due. The marking analysis involved the evaluation of the 4Ps of marking on the strategies adopted by the company to create brand awareness and reach the target audience.

References

Faks, V., Xie, T., Saka, D., & Seaman, C. (2022). Costco Wholesale Corporation Corporation: Correlation between Costco’s marketing strategy and profit. Journal of International Finance and Economics, 22(2), 47-55. https://doi.org/10.18374/jife-22-2.4

Garipova, A. Z. (2019). Strategies for applying swot-analysis intoday’s business environment. National Association of Scientists, 2(50), 56-58. https://doi.org/10.31618/nas.2413-5291.2019.2.50.115

Phadermrod, B., Crowder, R. M., & Wills, G. B. (2019). Importance-performance analysis based SWOT analysis. International Journal of Information Management, 44, 194-203. https://doi.org/10.1016/j.ijinfomgt.2016.03.009

SECURITIES AND EXCHANGE COMMISSION Costco Wholesale Corporation Corporation. (n.d.). SEC.gov. Retrieved October 8, 2023, from https://www.sec.gov/Archives/edgar/data/909832/000090983222000021/cost-20220828.htm