Limited inventory and limited time offer:
Always keeping low price is Costco strategy. And they can compete with their competitors. Exploited a new market, and then hold the bigger market. Provide lower price and higher quality products to customers, it is always be a way to let customers become the regular customers
3. Do you thing Jim Senegal is an effective CEO? What grades would you give him in leading the process of crafting and executing Costco’s strategy? What support can you offer for these grades?
Yes, I think Jim Sinegal is an effective CEO. If I give him grade, I will give him A. He has many special ideas. And every idea is good and useful. Jim Sinegal always maintains an important management philosophy is keep members come in and shop by low price. He stress products should cheap as possible as they can. He thinks provide value for their customers is more important than get more money. He thinks they should let their employees get more money and better benefit. They are company’s treasure. He hopes Costco can develop in many territories. It is good for members. And he thinks they should stable expansion. All the things tell us that his management is flexible and he is an effective CEO.
4. Are Costco’s prices too low? Why or why not?
In my opinion, Costco’s prices are not too low. One of Costco’s key strategies is keep low price to members. And Costco know what members need---low price and popular merchandise
Why Costco is a top warehouse club, one of reason is low pricing, it use low cost to purchase large volume of wholesale. But Costco keep low inventory level. Low purchase price and low selling price result in members come in to shop, but Costco’s profit higher than the other wholesale club every year. It means small profit but quick turnover.
Low price is Costco’s competitive advantage and not all of product at low price all the time, it limited low price to nation brand and private-label merchandise.
So I think Costco’s prices are not too low.
5. Does Costco pay its employees too much? Does it make sense for Costco to compensate its employees so much better than the employees at Wal-Mart/Sam’s Club? Why or why not?
Costco's compensation for their employees are far above better than other company. Keeping your people working with you is very good business. You must do something good for your employees, if you want your employees loyal and work hard to you. Take care of our employees is one of the Costco's corporate culture and the manner. They believe employees are their most important asset and having a well-compensated workforce was very important to executing Costco's strategy successfully. So, Costco's pay its employee's too much is not only good for employees, but also an important part of the company's development. It is the Costco's business philosophy and value.
A good compensate package can attract and retain talents. The Costco’s employee hasn’t a skimpier benefits package and benefits package and lower wages, so they turnover rate is low. Costco's offer a good career and given opportunity to their employees, in return, the employees will loyal, work hard and willing to dedicate. It will get better productivity. It's the competitive advantage of the Costco.
6. What recommendations would you make to Jim Senegal regarding the actions that Costco management needs to take to sustain the company’s growth and improve financial performance?
I think the company should continue to maintain their good status, and to provide more low prices and high quality merchandise to customers.
And high reputation satisfied the customers with good quality, competitive price to win customer's trust.
Expanding sales coverage, and set up online shopping and branch stores in other countries, which would allow more people to buy Costco merchandise.
