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Costco Wholesale (SWOT Analysis)

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“SWOT is an acronym for the internal Strengths and Weaknesses of a firm and the environmental Opportunities and Threats facing that firm. SWOT analysis is a widely used technique through which managers create a quick overview of a company’s strategic situation. The technique is based on the assumption that an effective strategy derives from a sound “fit” between a firm’s internal resources (strengths and weaknesses) and its external situation (opportunities and threats). A good fit maximizes a firm’s strengths and opportunities and minimizes its weaknesses and threats. Accurately applied, this simple assumption has powerful implications for the design of a successful strategy.”

Costco Wholesale 

Costco Wholesale Corporation (Costco or ‘the company’) operates membership warehouses. The company provides a limited selection of nationally branded and private label products across a wide range of merchandise categories at very lower prices. The company is headquartered in Issaquah, Washington and employs approximately 127,000 people. Costco has a diversified range of products and services which help the company to serve a large and diversified customer base. This would in turn result in hedging itself against business risks. However, intense competition in the market may also lead to price wars, thus affecting the margins of the company.

Strengths, Weaknesses, Opportunities and Threats (SWOT)

Location of Factor

TYPE OF FACTOR

Favorable

Unfavorable

Internal

Strengths

  • Diversified products and services
  • Strong market position
  • Low cost promotion and marketing strategy

Weaknesses

  • Concentration of operations in Californian market
  • Lax quality control
  • Weak compliance function

External

Opportunities

  • Growing demand for private label products
  • Increasing online sales
  • Expanding market presence

Threats

  • Increasing competition
  • Sub prime crisis
  • Low consumer confidence
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