SWOT as a strategy tool
I work in Costco Company, one of the successful retailers in the United States, with stores across the globe. The ability to grow and attract new members forms the foundation of Costco Company’s success. Moreover, Costco Company has various strengths, which make it one of the best retailers across the world. Costco wholesale company has many stores across the United States and well known in its exclusive membership and favorable treatment of the employees (Alshakhoori, Alkenaizi, Ebrahim, & George, 2018). The company has reasonable prices at bulk hence acting as a strength and making a difference in the market based on its discounted prices. Another advantage of Costco Company is the decreased operation cost as products are bought in bulky. The operational strategy of purchasing products in massive amounts leads to reduced prices by the Costco Company hence successful in the competitive market. Based on Costco Wholesale Corporation (2015), Costco has a strong brand, Kirkland Signature, which serves as an internal strength in its operation.
On the other hand, weaknesses of Costco include limited product mix hence reduction of revenue once the customers fail to get some products in the warehouses (Dalavagas, 2015). The use of membership-only warehouse club retail models makes non-member consumers feel unwelcomed to buy in Costco company stores. Based on SWOT analysis, Costco’s generic strategy leads to low-profit margins due to the existence of little room for price adjustment.
External opportunities for Costco involves business diversification in which the company could add new services in other industries to meet customers’ diversified needs. Costco competitors strive to create new services to win and attract more customers hence the need to explore the opportunity to fit in the competitive market (Dalavagas, 2015). Another real chance of Costco is the expansion of the product mix that currently poses a challenge to its performance. Increasing product mix leads to more profitability for the company as customers can get most of the products they are searching for in the warehouses. Also, product mix increment helps to attract and develop customers’ confidence in accessing everything they need at any time. Moreover, Costco has the opportunity to expand its locations by opening and running new warehouses across the world (Alshakhoori et al. 2018). The new warehouses should be located in high -growth economic regions to compete successfully with other competitors.
Costco faces various threats to its future profitability, such as increasing competition with retail firms in the market. Companies such as Walmart and other firms’ offer stiff competition by reducing the prices of their products and services, hence threatening Costco’s future in the market (Dalavagas, 2015). Moreover, the online market offers a competitive threat to Costco. Notably, online marketing has experienced robust growth in the past few years due to its improved services with low product prices hence winning the market. Another possible threat to Costco Company in its future profitability is the animal rights trend as it has the potential to affect the demand for products negatively. Animal rights trends may lead to reduced Costco product demand hence decreasing its profitability. Fortunately, the threat resulting from the matter of animal rights trends can be addressed by improving supply chain policies. Costco Company has to develop its operating procedures and strategies to address the possible threats for better. Also, the company needs to address its internal weaknesses, such as secure future profitability.
References
Alshakhoori, N., Alkenaizi, A., Ebrahim, N., & George, S. (2018) Business Strategies of Discount Retailers: A Comparative Study of Target Corporation and Costco Wholesale Corporation.
Costco Wholesale Corporation (2015). Kirkland Signature Means Quality and Value.
Dalavagas, I. (2015). Swot analysis: Costco Wholesale Corporation. The United States.