Costco Strategy

COSTCO STRATEGY 6

Abstract

Toolssuch as system sustainability, traditional strategies, andcomplexities of application analyses helps to capture a whole newperspective on the challenges that are experienced by Costcostrategic plans, operations, and future profitability. These toolscould be applied to create a long-term viability of the company. Bydoing so, they are forced to apply certain applications that whenintegrated into the company’s future plans, chances are, changesare going to be experienced that could drag the company in the rightdirection. With such a company, there are strategies that triggerrealization of more profits with strategic enterprise plan put intoplace. Costco strategy in this case aims at maximizing its strengthswhile at the same time curtailing issues that tend to drag thecorporation behind. With such strategies executed, the stakeholdersare put in a place where they feel their effects are beingappreciated. Such applications also aim at taking risks inunfamiliar territory that could create a trend and dominate newmarkets.

Applicationof complexity analyses, systems and sustainability analyses, andtraditional strategies are some of the tools that captures the biggerpicture when it comes to challenges facing Costco’s strategy andfuture profitability and operations. Applying these tools means thatCostco could detail analyses for creation of long-term success andfuture viability.

Application of traditional strategic thinking includes (a)Stakeholder Identification, (b) Porter’s Five Force, (c) GeneralForce Analysis, (d) Value Chain Analysis, (e) SCOT/SWOT analysis, (f)and Key Success Factor Matrix. According to Bloomberg Business Week(2012), Value Analysis and Strategic Identification exemplifyCostco’s utilitarian strategy through maximizing profits for allthe stakeholders however, Costco neglects stockholders and othergroups willingly. Harvard Business School (2005) notes that Costco’sstrategy suggest that the corporation integrates a broad strategicenterprise. The corporation’s proposition feasibly fits within thecurrent societal framework. On the other hand, General Force Analysisas per Bloomberg Business Week (2012) study reveal the threats suchas increasing labor and health care costs, fluctuations in foreignexchange, and low growth and heavy reliance in mature markets onCostco’s operations. These three opportunities align Costco’scompetencies, capabilities, and skills for potential profitability.

From Bloomberg Business Week (2012) analysis, Porter’s Five Forces,identification of threats to global entry to barriers are very lowand those of new entrants are high couple with a negativeprofitability impact. Rivalry, buyer power, and substitutes givepotential strong negative effect to profitability. Theseopportunities could include domestic entry to barrier that are highand new entrants’ threat seemingly low.

In response to Detailed Value Chain Analysis, Costco’s success invalue chain, successful exploitation of strengths, capabilities, andskills leverage against weaknesses. Costco’s strengths include HRM,firm infrastructure, and support services. The corporation’s majorweaknesses are operating with low operation profit margins. Indealing with this, Costco’s strategy involves better positioningand operating with effectiveness than the whole industry couldaverage.

Detailed SCOT/SWOT analysis reveals Costco’s action plan andpossible strategies, which positions the corporation’s strengths,capabilities, and skills in guarding against threat, mitigatingweaknesses, and leveraging opportunities. Subsequently, the mainSuccess Factor Matrix is evidenced with ten main success factors thatare critical to Costco since their impact in future profitability(Bloomberg Business Week, 2012). The matrix include factors such as:sufficient management support, high value proposition with lowprices, and keeping the current customers happy.

Costco’s current strategy aims at creation and domination of newmarkets that seems to stagnate ineffectively with other retailerssuch as Wal-Mart, Sears, Target, and Home Depot operating nearby.Alignment and Goals Analysis results reveal that Costco’s employeespossess necessary skills to enable the strategy function, support thestrategy, have required resources for success, and maintainingattitudes for strategy alignment (Harvard Business School, 2005).

Application of Complexity Analysis includes (a) conducting FitnessLandscape, (b) Bold Analysis, and (c) Translation Analysis. Thesereveal the current shape strategy of the retail strategy for thescope “Big Box” analysis. From this, Costco’s strategy makesthe corporation compete in all fronts that focus on sustainabilityand community relations towards human and societal services.

Summary

Costcostrategy aims applying suggested tools that when not applied couldresult in challenges that could result in future drop in operationsand profitability. Such tools include applying complexity analyses,sustainability and system analyses, and traditional analyses. Again,the company aims at applying other strategies such as (1) stakeholderapplication, (2) porters five force, (3) general force analysis, (4)value chain analysis, (5) SWOT/SCOT analysis, and (6) key successfactor matrix. All this applications are then broken down that aimsat aligning the company’s competencies, skills, and capabilitiesfor potential profitability. For example, SCOT/SWOT analysis aims atrevealing the plans of the company and its possible strategies bypositioning the company on its strengths, weaknesses, capabilitiesand skills. Costco current strategy is aimed at developing anddominating new markets that have since stagnated ineffectively withother retailers such as Target, Wal Mart, and Home Depot. All theapplications ensure the company is complete and can compete in allaspects that focus in community relations and sustainability towardsservices to humanity.

References

Bloomberg Business Week (2012).&nbspWal-Mart StoresInc.&nbspRetrieved from

http://investing.businessweek.com/research/stocks/financials/ratios.asp?ticker=WMT

Harvard Business School (2005).&nbspStrategy: create andimplement the best strategy for your business.&nbspBoston:Harvard Business School Press

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