Review Questions To Answer:

Costco business model

1. What is Costco’s business model? Is the company’s business model appealing? Why or why not?

2. What are the chief elements of Costco’s strategy? How good is the strategy?

3. Do you think Jim Sinegal was an effective CEO? What grade would you give him in leading the process of crafting and executing Costco’s strategy? What core values or business principles did Jim Sinegal stress at Costco? Refer to Figure 2.1 in Chapter 2 in developing your answers.

4. What is competition like in the North American wholesale club industry? Which of the five competitive forces is strongest and why?

Use the information in Figures 3.4,3.5, 3.

Costco business model

6, 3.7, and 3.8 (and the related discussions) in Chapter 3 to do a complete five-forces analysis of competition in the North American wholesale club industry. Rate the importance/ strength of each force as either high, medium, low. Explain the rationale for your rankings.

6. How well is Costco performing from a financial perspective? Do some number-crunching using the data in case Exhibit 1 to support your answer. Use the financial ratios presented in Table 4.1 of Chapter 4 (pages 85-87) to help you diagnose Costco’s financial performance.

7. From a strategic perspective, how well is Costco performing? Does Costco enjoy a competitive advantage over Sam’s Club? Over BJ’s Wholesale? If so, what is the nature of its competitive advantage? Does Costco have a winning strategy? Why or why not?

8. What recommendations would you make to Costco top management regarding how best to sustain the company’s growth and improve its financial performance?

Helpful Costco Videos/References

Costco business model (The Five Competitive Forces that Shape Strategy)