1 Costco Case Analysis 05/21/2019 Dr. Sabolic Submitted as partial fulfillment for the requirements of MGMT 483 BT Team members: Abdulaziz Samkary Chihong Hieng (Dylan) Abdullah Alhuwaimani Maha Alnami Costco Case Analysis 1. Competitive Strength Analysis Business Model The business model of Costco is basically using a membership of warehouses club. The memberships of the club is providing to their customers the ability to shop at Costco stores and have the access to buy the products with the lower price. The strategies that Costco using them to make money: 1. The Price is less than the competitors, which attract the customers, as well the high quantity of all the products. 2. Scarcity the number of products in shelves. For example: comparing Walmart to Costco, Walmart carry 150,000 items, Costco only carry 4,000. They limited the number of products to give more value to their products. 3. They having their own private label power, in order to provide their customer an economical options for their shopping lists. In addition, it’s 10-20% lower than other brands. 4. They have 4 types of membership model, that includes customer discount, and offers such as gas station and groceries. As a fact Memberships is the most effective strategy that Costco Considered. 5. They are using marketing in their magazine, coupon mails, and weekly emails from Costco.com. What is happening now, today? · They applied strategies and techniques that helped the company making more money, as well hire more employees and lead the company to succeed. · The website covers about 90% of the products that are in the store. · They offer organic food. · Costco memberships could replace Netflix subscription. 2. SWOT Strength: Costco is one of largest retailer in the U.S. and seventh largest in the world that offer membership warehouse club. Costco offers wide selection of merchandises and wide range of products in high volume with low prices to its membered customers. The company has many stores location in the U.S., Canada, Mexico, Korea, Japan, UK, and many others. It also offers e-commerce website for customers to order products online, this way it allows customers to have more access to Costco’s products and more convenient. Costco is able to provide low prices for its merchandises by buying directly from the manufacturers, this way it also allows Costco to eliminate the traditional middle distributor and increase in inventory turnover. It also has its own in-house brand that produce high quality products with better value compare to its competitors. Weakness: Costco offers limited variety of merchandises and brands in stores, which limit the freedom for customers to have more choices when purchasing products. It also has different operation schedule compared to others retail stores. Costco only open from 10am to 8:30pm and it also has an earlier closing hours on the weekend, which could be inconvenient for its customers who want .

1. 1
Costco Case Analysis
05/21/2019
Dr. Sabolic
Submitted as partial fulfillment for the requirements of MGMT
483 BT
Team members:
Abdulaziz Samkary
Chihong Hieng (Dylan)
Abdullah Alhuwaimani
Maha Alnami
Costco Case Analysis
1. Competitive Strength Analysis
Business Model
The business model of Costco is basically using a membership
of warehouses club. The memberships of the club is providing

2. to their customers the ability to shop at Costco stores and have
the access to buy the products with the lower price.
The strategies that Costco using them to make money:
1. The Price is less than the competitors, which attract the
customers, as well the high quantity of all the products.
2. Scarcity the number of products in shelves. For example:
comparing Walmart to Costco, Walmart carry 150,000 items,
Costco only carry 4,000. They limited the number of products to
give more value to their products.
3. They having their own private label power, in order to
provide their customer an economical options for their shopping
lists. In addition, it’s 10-20% lower than other brands.
4. They have 4 types of membership model, that includes
customer discount, and offers such as gas station and groceries.
As a fact Memberships is the most effective strategy that Costco
Considered.
5. They are using marketing in their magazine, coupon mails,
and weekly emails from Costco.com.
What is happening now, today?
· They applied strategies and techniques that helped the
company making more money, as well hire more employees and
lead the company to succeed.
· The website covers about 90% of the products that are in the
store.
· They offer organic food.
· Costco memberships could replace Netflix subscription.
2. SWOT
Strength:
Costco is one of largest retailer in the U.S. and seventh largest
in the world that offer membership warehouse club. Costco
offers wide selection of merchandises and wide range of
products in high volume with low prices to its membered

3. customers. The company has many stores location in the U.S.,
Canada, Mexico, Korea, Japan, UK, and many others. It also
offers e-commerce website for customers to order products
online, this way it allows customers to have more access to
Costco’s products and more convenient. Costco is able to
provide low prices for its merchandises by buying directly from
the manufacturers, this way it also allows Costco to eliminate
the traditional middle distributor and increase in inventory
turnover. It also has its own in-house brand that produce high
quality products with better value compare to its competitors.
Weakness:
Costco offers limited variety of merchandises and
brands in stores, which limit the freedom for customers to have
more choices when purchasing products. It also has different
operation schedule compared to others retail stores. Costco only
open from 10am to 8:30pm and it also has an earlier closing
hours on the weekend, which could be inconvenient for its
customers who want to come to the store on regular hours. By
offering limited brands and shorter operation schedule, it could
drive Costco’s customers to go to other retailers to meet their
need such as Target and Walmart.
Opportunities:
It is an opportunity for Costco to improve their weaknesses
such as offering more variety in products and brands that it
carries in store, improve e-commerce to reach more market and
countries, because e-commerce is a huge trend for business
today that allows businesses to reach to its customer faster and
easier. Increase its operation schedule to compete with its
competitors and meet the consumer needs.
Threats:
Despite Costco’s success in their business strategy,
there are also some competition in the market that could
potentially overtake and threat Costco. Wal-Mart is growing and
developing quickly in spreading their brand international, other
retailers such as Target, Kohl’s, Sam’s club, and many others
that try to compete in the retailers industry and offer lower

4. prices in merchandise. These could challenge Costco’s business
and steal Costco’s customers, therefore it is significant for
Costco to be aware of its competitors and understand the market
well in order to succeed in the business.
3. Financials
Ratios:
.P/E ratio = Share price / Earn per share
= 248.35$ / 7.79 = 31.88
.Current ratio: Current Assets/Current liabilities
20,289/19,926 = 1.01
.Quick ratio = Total current assets- Inventory/ Total current
liabilities
= 20,289 - 11,040 / 19,926 = 0.464
Sales growth rate has been increasing 11% each year since
2015.
- - - - - - - - - - - - -
According to the report, the Gold Star members in 2018 have
increased by 2.1 million customers which is an increase of
5.4% from 2017. The current Gold Star members are 40.7

5. million.
The report shows an increase of 100,000 Business members
which is 0.92% increase from 2017. The current Business
members are 10.9 million.
Costco’s cash flow of 2018 have decreased 956,000$ which is
around -14.15% from 2017.
4. Conclusions & Recommendations
Recommendation
According to the analysis that conducted above, at this moment
present the following recommendations that seek to improve the
position of Costco Company. The recommendation is strongly
anchored on the finds from the financial analysis as well as the
marketing strategies employed by the company. The
recommendations are as follows.
• There is a need for the company to improve or increase the
inventory turnover to have the business enhance its financial
soundness.
• Enhance the average collection period for the accounts
receivables to improve on the cash inflows of the company.
• Reduce on the payments and which helps in increasing the
inventory levels.
• Investigate more on the major areas of weakness to apply
the necessary measures for this company.
Conclusion
According to the analysis that I have conducted for the
company, the financial reports reveals that the business is not
doing well at all. There are many indicators that the future of
this company is not certain, owing to the negative financial
reports. Some areas that reveal serious weaknesses for this
business include collection period for the accounts payable as
well as the stock levels maintained by this company. The ratios
conducted for this company are below the average, and this
gives a hint on how bad the company is performing, these areas
include profit margin, credit controls, and the management of

6. inventory. For this area that has registered weaknesses, there
needs to be a series of an in-depth investigation to understand
the root causes of the problem and also employ the
recommendations made above to ensure that this company gets
back to its healthy state.
Case Study/Project Analysis Factors
1. Competitive Strength Analysis (Uncover Issues)
Business Model – How does the company make money??
“Bring it Current” – What is happening now, today??
2. SWOT – Mapping – What are the strengths, weakness,
opportunity, and threats facing the company.
Competitive Analysis
Corporate Culture
Leadership
3. Financials – Do the “number crunching”
Cash Flow – Cash on hand
Income Statement – net profit percent, P/E – Price/Earnings
Ratio
Balance Sheet – Ratios: Current, Quick, Market Cap
4. Conclusions & Recommendations – What do you advise the
CEO??
Empowering people to do extraordinary thingsMGMT 483 A1:
Business Policy and Strategy (Summer 2019)
Course Information
Units
3
Prerequisites
MGMT 400 and WRIT 112
Day/Time

7. Tuesday 6:00 – 10:00 P.M.
Classroom
TBA
Faculty Information
Instructor
Dr. Paul Sabolic
Email
[email protected]
Office Hours
TBD
Office Location
School of Business Faculty Offices
Woodbury University Strategic Principles
Transdisciplinarity, Design Thinking, Entrepreneurship, and
Civic Engagement
School of Business
Cultivating Innovative Business Leaders for Sustainable Society
Woodbury University’s School of Business cultivates the
distinctive talents of each student to prepare future leaders of
business who communicate effectively, act ethically, and think
globally.Alignment with BBA Program Goals
This course is designed to support the following program
learning goals:
1. Communication skills (develop)
2. Quantitative skills (develop)
3. Accounting & Financial skills (develop)
1. Ethical perspectives in professional decision-making
2. Global awareness.
3. Leadership skills.
4. Information Literacy.Catalog DescriptionThis course is the
"capstone" course for business majors. It provides an
opportunity to integrate previous studies in the functional areas
of marketing, finance, accounting, production, and management.
Organizations are analyzed with respect to the effectiveness and

8. appropriateness of strategies and goals in each of the functional
areas and the synergies of the functional areas for achieving
optimal results consistent with their respective missions. The
major topics covered include: competitive analysis, the strategic
management process, the role of the chief executive officer,
strategy formulation and decision making, and strategy
implementation. Lecture. Prerequisites: MGMT 400, Operation
Methods in Value Chain Management and WRIT 112, Academic
Writing II or WRIT 212, Rhetoric and Design. Note: A
minimum grade of "C" or better in this course is required to
graduate.Course Learning Outcomes
Upon successful completion of the course, students will be able
to
1. Demonstrate mastery of all BBA Program Learning Outcomes
through case analysis
2. Describe business strategy
3. Apply strategic concepts to a caseOffice Hours
You can either walk in, or give me a call to setup a time to
meet. My office is in the School of Business, Faculty Offices.
Required Materials/Textbook
1. Strategic Management: An Integrated Approach, (2018), Hill,
C.W., Jones, G. R. and Shilling, M.A. Cengage
Learning:Stamford, CT, 12th Edition. ISBN: 101305502272
Optional Materials
2. HBR’s 10 Must Reads on Strategy (2011). Available for $14
on Amazon. ISBN: 1422157989
3. Jim Collin’s How the Mighty Fall: And Why Some
Companies Never Give In (2009). Available for $12 on Amazon.
ISBN: 0977326411
4. Jeremy Kourdi’s (listed as The Economist) Business Strategy:
A guide to effective decision-making (2015). Available for $15
on Amazon. ISBN: 1610394763
Textbooks may be purchased in hardback, paperback, or eBook
version.Time Estimation

9. The credit hour system at Woodbury estimates that each hour of
normal in-class work will require around 2 hours of out-of-class
preparation. For an accelerated course, this is doubled again.
As a result, a normal full-term course should take around 4
hours outside time, and an accelerated undergraduate course
should require 16 hours per week outside time.
Performance assessment and course grade break-down:
There are a number of major grading components for this
course. Each assignment is worth a number of points (see
Moodle for the final breakdown). Every point for the class is
equal; assignments are not weighed. These assignments are
preliminary, and may change during the course.
Strategic Management Final Team Project
With your team (3-4 persons per team), you will identify a
Fortune 50 company and do a Strategic Audit of the Corporation
using the information and directions in the Guidelines posted in
Moodle. This team project will require an in-depth analysis of
the company, using all material available to you from leading
business periodicals, company literature, internet sites, and
general library material, including a financial analysis. Each of
these issues must also be addressed :
1. Competitive Strength Analysis
2. SWOT Analysis
3. Financial Ratios
It is expected that you will become very familiar with this
company so you may want to choose a company where you
might want to work someday. The “basic” approach to most
every strategic problem starts with answering the Three
Strategic Questions:
1. Where are we now? (What is the current situation?)
2. Where do we need to go? (What are the objectives or Goals?)
3. How do we get there? (What are the plans to achieve the
Goals?)
The Guideline material is only that, “a guideline”, and should
be used accordingly. In your research, you may find a more

10. “user friendly” model. However, you should stick closely to the
one offered. You will be required to provide periodic reports of
your team’s activities.
Late work is discounted 50% immediately following the due-
date, and then 10% per day thereafter. I will drop the lowest
quiz grade to deal with any technical problems in the course.
Students are required to make all major exam dates and
presentation days.Grading Criteria
Your overall grade is calculated at [ total points earned ] / [
maximum points available]. The resulting % is assigned to a
grade letter using the following scale. Grades are rounded to
the nearest tenth of a percent, e.g. 91.2%.
Grades
Students’ grades will be calculated based on the following grade
schedule:
Case Studies 25%
Mid-Term Exam 15%
Team Case Analysis 25%
Oral Presentation
Written
In Class Activities 15%
Final Exam (Case Study) 20%
100%
A
94-100
A
Clearly stands out as excellent performance and, exhibits
mastery of learning outcomes.
A-
90-93
B+
87-89

11. B
84-86
B
Grasps subject matter at a level considered to be good to very
good, and exhibits partial mastery of learning outcomes.
B-
80-83
C+
77-79
C
74-76
C
Demonstrates a satisfactory comprehension of the subject
matter, and exhibits sufficient understanding and skills to
progress in continued sequential learning.
C-
70-73
D+
67-69
D
60-66
D
Quality and quantity of work is below average, exhibits only
minimal understanding and skills are not sufficient to continue.
F
0-59
F

12. Quality and quantity of work is below average and not
sufficient to progress.Instructional Methodology
I believe in making the most efficient use of our time. Please
come to class prepared to discuss the textbook contents assigned
for the respective class period.
As a result, I encourage you to first encounter information
outside the classroom. This may be through readings, a
textbook, or videos. I expect that you come to class prepared to
discuss and apply these concepts. If you do not come prepared,
you will have a hard time understanding the
material.Attendance Policy
The School of Business has standardized a school-wide
attendance policy. Below is the official policy.
Absence and tardiness policy:
In the School of Business we believe in preparing our students
for workplaces in which discipline and participation are
considered part of their performance. We therefore expect our
students to attend all class meetings, because the dialogues,
presentations, and lectures are critical and cannot be substituted
by mere textbook readings and test submissions. As is often the
case in the corporate setting, learning happens by being there:
through listening, sharing, asking, and other means of
constructive communication.
Please find below our policy on absences and tardiness:
· For 7-week courses there is a zero tolerance policy due to the
condensed format. This means that no absences are tolerated in
this format. Therefore,
· If a student misses the first class, regardless of his/her
reasons, (s)he will be dropped.
· If a student misses any of the subsequent classes, his/her final
course grade drops with a full letter (A becomes B, A- becomes
B-, etc.).

13. · For traditional courses:
· In twice-a-week traditional courses, students will experience a
course grade reduction after missing 4 class sessions. After the
fourth absence, the final course grade will drop a full letter
grade (equivalent to 1 missed session in a 7-week course). If
more than 5 sessions are missed, the student will be either
required to withdraw or will be dropped one letter grade for
each additional absence from then on.
· In once-a-week traditional courses, students will experience a
course grade reduction after missing 2 class sessions. After the
second absence, their grade will drop a full letter grade
(equivalent to 1 missed session in a 7-week course). If more
than 3 sessions are missed, the student will be either required to
withdraw or will be dropped one letter grade for each additional
absence from then on.
· All traditional-format courses, sessions missed during the
add/drop period count as absences.
· Tardiness policy: every 2 late attendances as the equivalence
of 1 absence.
· Special circumstances will be dealt with on a case-by-case
basis.
Other Policies
1. Academic Honesty
Assignments you turn in in are to be done by you alone, and
your hands must be on the keyboard. Submitting work
completed by another student will result in a reduced or failing
final grade. Making your work available to other students for
them to cheat with it will also result in a penalty for you. It is
ok to ask for feedback from another student or for help with
generating ideas, etc., but it is not ok to have someone else tell
you step-by-step to complete an assignment.
a. Plagiarism
i. Turning in plagiarized work will result in a reduced or failing

14. final grade for the course.
ii. All plagiarism incidents will be reported to Student Affairs.
b. Cheating.
i. Use of any device during quizzes or tests is prohibited.
1. You can use translation devices if I approve them
beforehand.
ii. Evidence of cheating will result in an “F” grade being
assigned for the course.
iii. You are not allowed to use assignments, quizzes or tests
from any other sections that I do not provide. Being provided
with a copy of a quiz or exam, and not notifying me, will be
treated as an academic honesty issue.
iv. You may not use your cellphone at any time during class.
2. Disabilities
This class will adhere to the following standard Woodbury
policy on disabilities.
Woodbury University is committed to making reasonable
accommodations to assist individuals with disabilities in
reaching their academic potential. Students desiring
accommodations due to a physical, learning or psychological
disability must first complete an Accommodations Request
Form, which can be downloaded from http://go.woodbury.edu,
and found under “Academic Resources.” Accommodations
cannot be granted prior to the instructor’s receipt of a
Notification of Special Needs Release Form from the
Disabilities Coordinator. Accommodations are never provided
retroactively. (For more information, contact the Disabilities
Coordinator in the Whitten Center (818) 394-3345.)
3. Subject to change
This syllabus is provisional and subject to change
4. Preparation for class
a. Students are expected to arrive prepared. This includes

15. having paper, pens/pencils, and having completed all assigned
readings or assignments. Unprepared or disruptive students
may be asked to leave.
5. Licensing of Student Work
a. All student work must be licensed with the Creative
Commons Attribution 3.0 Unported license (CC 3.0). You do
not need to specifically provide this attribution to your work, as
your enrollment in the course signifies your acceptance of this
requirement. See http://creativecommons.org/licenses/by/3.0/
for information on this license.
i. I require this license for all submitted for several reasons:
1. It protects your rights. All use of your submitted work will
have attribution attached, and you will retain full copyright
ownership of the material.
2. It clarifies the ways in which the university can use your
work. The university already has certain rights in what it can
do with your work. This license clarifies those rights by to
explain how we will provide attribution.
3. A significant component of this course is the analysis and
understanding of the new ‘open’ culture on the Internet. Using
licensing as a pedagogical tool, I require you to use an open
license in order for you to experience both the pros and cons of
such a format.
4. Lastly, the sharing of your work with current students, future
students, and other interested parties is a way to enrich the
overall educational experience. As an institutional partially
funded by the government, I believe that we have an obligation
to provide a social good to the larger community. Open
licenses and re-usable educational resources is one method by
which this public good can be accomplished.Tentative Class
Schedule
Please refer to Moodle for the final list of assignments.
Week
Date
Readings

16. Assignments
1
5/14
The Strategic Management Process
Review Syllabus
Team Project Guidelines
Strategic Leadership
Strategy for competitive analysis
In-class Activity
Read Ch. 1
Read Ch. 2
Case Study
2
5/21
SWOT Analysis External Analysis: Internal
Analysis: Strength & Weaknesses Opportunity and Threats
Read Ch. 3
Read Ch. 4
Case Study
3
5/28
Resources and Competitive Analysis Functional-Level Strategy
Building Competitive Advantage
Read Ch. 5 Read Ch. 6
Case Study
4
6/4
Mid-Term Exam!! Team Project Workshop
Read Ch. 7 Read Ch. 8
Case Study
5

17. 6/11
Business-Level Strategy The Industry
Environment Strategy & Technology
Read Ch. 9 Read Ch. 10
Case Study
6
6/18
Strategy in the Global Environment Corporate-Level Strategy
Vertical Integration
Read Ch. 11 Read Ch. 12
Case Study
7
6/25
Corporate-Level Strategy
Diversification Implementation Strategy
Team Project Presentations!! Final Exam!!
MGMT 483 Syllabus – Page 8