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Table of Contents
1.0 Introduction ...................................................................................................................... 3
1.1 Mission......................................................................................................................... 3
1.2 Vision ........................................................................................................................... 3
1.3 Strategic goal ............................................................................................................... 3
2.0 Costcos strategy and changes over decades ................................................................... 4
2.1 Costcos Strategy ......................................................................................................... 4
2.2 Changes in business growth strategies over decades ................................................... 4
2.3 Costcos strategic goals................................................................................................ 7
2.4 Influence of business growth strategies on Costcos strategic goal ............................. 7
3.0 Costcos strategies- Realized ...................................................................................... 10
4.0 Costcos success other than profit maximisation ........................................................... 12
5.0 Influence of stakeholders on Costcos objectives .......................................................... 12
6.0 Change of global ambitions ........................................................................................... 13
7.0 Costcos relationship with partners ................................................................................ 13
8.0 Costcos business success .............................................................................................. 14
9.0 Conclusion ..................................................................................................................... 16
References ............................................................................................................................ 17
2
1.0 Introduction
The Economist is a leading news magazine in the world which does not necessarily
adhere only to economic affairs as its name suggests. The Economist is a pioneer in
delivering news from all over the world covering the aspects of business, finance, science and
technology. However, the name of the brand is often mistaken to be billion dollar business
corporation is a pioneer in the field of retail and wholesale sales with the dedication to deliver
high quality business through exceptional business values. Costco Wholesale Corporation
operates with more than 700 warehouses throughout countries such as the US, the UK, the
Asia-pacific region and Australia with a gross revenue of 116.2 Billion and a gross income of
15. The Economist is a leading news magazine in the world which does not necessarily
technology. However, the name of the brand is often mistaken to be the storage of items in
large warehouse stores which offers its customers fresh and high quality products at a price
lower than that of its competitors (Costco Wholesale, 2014).
1.1 Mission
"To continually provide our members with quality goods and services at the lowest
possible prices (Costco Wholesale, 2016)
1.2 Vision
a place where efficient buying and operating practices give members access to
unmatched savings (Lombardo, 2015)
1.3 Strategic goal
reach 1000 warehouses by 2025 (Steinberg, 2012)
3
2.0 Costcos strategy and changes over decades
2.1 Costcos Strategy
technology. However, the name of the brand is often mistaken to be leadership model enables
maximisation of warehouse space, maintenance of very small margins and reduction of
operation costs in almost all aspects.
Table 1: Costcos Strategies
Strategies Description
Product Strategy The product strategy of Costco implies meeting the diverse needs of its
customers through serving the products at lowest price which allows
high volume purchasing by customers(Dalavagas, 2015).
Pricing strategy The pricing strategy of Costco aligns the companys business strategy
wherein the name itself denotes Wholesale and the mission statement
reveal lowest possible prices. Furthermore, the firm also prices its
products at 10-15 per cent lower than its market rivals. Other strategies
include limited product SKUs, no advertisements, and low
compensation costs of top management(Carr-Hilton, Mak, Luongo and
Ho, 2014).
Inventory and Membership cards are provided to customers to increase the brand
Membership loyalty. The inventory strategy includes promotion of warehouse
Strategy environment to the customers thereby promoting bulk sales(Cheung,
Qian and Carrillo, 2013).
Compensation The compensation strategy of Costco is different from the retail and
strategy wholesale leader in the US, the WalMart. It is claimed that the average
wages at Costco is around 21 dollars per hour which is double the
compensation at WalMart (Yang et al., 2015).
Source: Adopted from Dalavagas (2015); Carr-Hilton et al. (2014); Cheung, Qian and
Carrillo (2013) and Yang et al. (2015).
2.2 Changes in business growth strategies over decades
The business growth strategies by Costco are explained in the following table:
Table 2: Business growth strategies

4
Expansion of - Costco intends to open another 100 international stores in the next
stores decade
- The company aspires to launch stores throughout Asia, Europe
and Australia, and local warehouses
Organic - Provide high quality products at low price
growth - Increase membership count
E-commerce - Expansion options through online marketplace may aid new
establishments in foreign nations
Source: Adopted from Costco Wholesale (2014)
technology. However, the name of the brand is often mistaken to be company over decades
which are almost based on the adoption of the business growth strategies.
Figure 1: Changes in business growth strategies of Costco over decades
Organic growth strategy
1976 First warehouse club
First hot dog cart- high quality hot dog +

1985
soda sold at $1.50
1987 First bakery production initiated
1995 Kirkland signature brand introduced
2001 Costco Hot dog and soda still sold at $1.50
Expansion growth strategy
5
1986 First warehouse in Canada

E-commerce strategy
1998 E-commerce business began
Source: Adopted from Costco-Business (2016)
Figure 2: Expansion of Costco warehouses in Asia
YANGJAE, SEOUL
YANGPYUNG, SEOUL DAEJEON
MAKUHARI, CHIBA
1994 1997 1998 1999 2000
DAEGU HISAYAMA, FUKUOKA
ILSAN, GYEONGG
KANAZAWA SEASIDE,
SANGBONG, SEOUL SAPPORO, SAPPORO
YOKOHAMA
IRUMA, SAITAMA
2001 2003 2004 2007 2008
AMAGASAKI, HYOGO KAWASAKI, KAWASAKI
ULSAN, GWANGMYEONG EUIJEONGBU,GYEONGGI

BUSAN TAMASAKI, CHEONAN, CHUNGNAM
SHIMISATO, SAITAMA MACHIDA,TOKYO HITACHINAKA, IBARAKI
KOBE SEISHIN, HYOGO IZUMI, OSAKA
2009 2011 2012 2013 2014
KITAKYUSYU, FUKUOKA
MAEBASHI, GUNMA HIROSHIMA, HIROSHIMA
KYOTO YAWATA, KYOTO TSUKUBA, IBARAKI
ZAMA, KAWASAKI CHIBA NEW TOWN,
CHIBA
CHUBU AIRPORT, AICHI
6
Source: Adopted from Baek (2015)
technology. However, the name of the brand is often mistaken to be considered. Costcos
expansion towards the east Asia, especially Korea and Japan had major issues such as shift in
culture. Transnational business does not necessarily reveal fruitful results. However, in Japan
the warehouse model with membership based sales was challenging and Costco achieved
success by selling selected products of national brands which attracted the native Japanese
customers. Costco provided selected range of products at low prices which lead the business
model to success in Japan. In the Korean context, the company witnessed success when The
Economist is a leading news magazine in the world which does not necessarily adhere only to
economic affairs as its name suggests. The Economist is a pioneer in delivering news from all
over the world covering the aspects of business, finance, science and technology. However,
the name of the brand is often mistaken to be the retail warehouse segment in the country
(Baek, 2015).
2.3 Costcos strategic goals
Costco Wholesale aspires to reach 1000 warehouses by the year 2022-2025. This is
also considered to be a long term goal of Costco (Steinberg, 2012). With such a goal, the
company aspires to become the number one global retailer surpassing Walmart, which is in
the first position right now.
2.4 Influence of business growth strategies on Costcos strategic goal
technology. However, the name of the brand is often mistaken to be warehouses by 2025).
The estimated values based on the historical data of Costcos increase of total warehouses
using the FORECAST function in MS-EXCEL revealed the increased growth of Costcos
7
warehouses to reach 954 stores which is in line with the goal of Costco to reach 1000 stores
by 2025.
8
Figure 3: Actual growth of Costcos warehouses over years
NUMBER OF WAREHOUSES
800 715
663 686
700 608 634
592
600 540
500
400
300
200
100
0
2010 2011 2012 2013 2014 2015 2016
Source: Statista (2016)
Figure 4: Estimated Costcos warehouses growth
NUMBER OF ESTIMATED WAREHOUSES

1200
1000 927 954

874 900
821 847
766 795
800 744
600 Number of estimated

warehouses
400
200
0
2017 2018 2019 2020 2021 2022 2023 2024 2025
Source: Author calculations
9
3.0 Costcos strategies- Realized
technology. However, the name of the brand is often mistaken to be of Costco Wholesale
Corporation are composed all together as shown in Table 3.
Table 3: Costco Wholesale Corporation- strategic goals, objectives and achievements
No Goal/ Description Whether achieved at Costco?

Objectives
GOALS
1 Reach 1000 Costco Wholesale aspires to Costcos total number of
warehouses by reach 1000 warehouses by the warehouses reached 715 in 2016.
2025 year 2022-2025 Estimated values return positive
results (Figure 3,4)
OBJECTIVES
1 High quality at The services and goods sold at Low cost and high quality
low prices the firm should be of good products are sold which is evident
quality at low prices through Kirkland signature,
products of Costco
2 Management of Operations management Human resource training and
Quality objective involving quality development programmes for
control establishing consistency and
quality control achieved at Costco
3 Capacity and Capacities of storage should be Warehouse style design serves the
process design maximised and operations in objective which ensures utilisation
capacity management should be of spaces and capacities
efficient
4 Location Warehouse stores should be at Stores are located mostly in cities
the reach of customers easily
5 Layout design Appropriate use of company Warehouse style store designs
spaces enable minimisation of extra
spaces
6 Human Highly productive employees Internal leadership programmes to
resources are required to work at promote employees to the next
warehouses and internal level.
leadership should be nourished
7 Management of Effective management of Combine operations of both retail
inventory inventory and storage spaces in one place
positively affect management of
inventory
10
8 Scheduling Human resource utilisation Scheduling of jobs through
should be maximised automated systems aids
maximised utilisation of human
resources.
9 Maintenance Maintenance costs should be Warehouse style design aids
reduced reduce the cost of maintenance.
Business model (Cost leadership
model) is itself a maintenance cost
reduction strategy.
Source: Adopted from Kissinger (2015)
technology. However, the name of the brand is often mistaken to be achieved through the
adoption of cost leadership model which satisfies the strategic objectives of the company.
With new warehouses to be established in the near future, Costcos strategies were intended
at the beginning and will deliberately become a realised one.
Figure 5: Costcos Realised strategy
INTENDED STRATEGY REALISED STRATEGY
Goals- Reach 1000 warehouses all over

the world
Objectives-
High quality at low price
Appropriate management of Total number of
Quality warehouses till
Appropriate capacity and 2016- 715
process design
Objectives of the
Felicitous selection of location
for Warehouse stores company are
Appropriate layout design satisfied through the
Appropriate management of
adoption of Cost-
human resources
leadership model
Appropriate management of
inventory
Appropriate scheduling
Appropriate maintenance
11
UNREALISED STRATEGY
- Advertisements
- Merger with Price EMERGENT STRATEGY
- Increased product SKUs - Memberships, no advertisement
marketing, sales of limited items,
Source: Author, 2016
technology. However, the name of the brand is often mistaken to be chain to adopt
membership model in Taiwan (Economist Intelligence Unit, 2016). The number of
memberships has even improved in the country which denotes the organisations intended
strategies (cost leadership with membership model, low pricing, compensation strategy) to be
realised in the Asian region (Fruitnet, 2010). However, the organisation is examining whether
they could acquire fruitful results with expanding into China which is a country where even
WalMart is struggling to achieve success (Moskowitz, 2014).
4.0 Costcos success other than profit maximisation
Costcos business model has led the organisation to be known as the worlds second
largest retail chain (Farfan, 2016b). Apart from profit maximisation, Costcos Kirkland
Signature appears to have acquired a brand name in the global market equal to other national
and international brands (Costco, 2016).
5.0 Influence of stakeholders on Costcos objectives
Three levels of stakeholders are identified for retail stores and are the same for
Costco. They are internal owners, employees and shareholders, Government, and community.
Internal owners and shareholders are the sole decision makers of the firm and set the strategic
objectives of the firm.
12
technology. However, the name of the brand is often mistaken to be Employee relations had
been a major concern with Costco. Though Costco provides many great benefits for its
employees, the Teamsters unions which represent 16000 workers in the Costco wholesale are
trying to reject contract with the company due to pension discrepancies. Such issues may
affect the growth of the company. However, if the results of negotiations are better, then
Costco will further be steered by committed employees (Reuters, 2016).
Government policies on certain cases of animal welfare had great impacts on Costcos
brand name. An example would be the undercover investigation conducted by the Humane
The Economist is a leading news magazine in the world which does not necessarily adhere
only to economic affairs as its name suggests. The Economist is a pioneer in delivering news
from all over the world covering the aspects of business, finance, science and technology.
However, the name of the brand is often mistaken to be 6.0 Change of global ambitions
The goal of Costco is itself a global ambition to spread sales across countries in
different continents. Costco has been embracing the expansion frenzy scenario since 2013
wherein the company had opened 200 new warehouse stores outside the U.S. (Farfan, 2016a).
7.0 Costcos relationship with partners
Costco strategically aligned with Price Club in the year 1993 and named the
company as PriceCostco. The strategic alliance improved the sales of the merged
brand. However, the duo dissolved and an independent enterprise named Costco
Wholesale began operations in 1997. The company has partnered with different
companies such as Mypublisher.com to diversify their portfolio (Successstory, 2016).
Partnership firms with Costco enjoy great benefits which could be explained through
a real time example. AmEx (American Express) which had partnered with Costco for 15
years is now losing its relationship with the company and claims to lose great revenue with
this dissolution. This proves Costcos impact on its partner firms (Sweet, 2015).
13
8.0 Costcos business success
Costcos business strategy which mostly adopts the cost leadership model has positive
impacts on the companys growth over the years. An analysis to examine the growth of the
company in terms of its sales reveals the organisations presence as the second largest retailer
in the US by sales. Following are the graphs to elucidate the sales of Costco comparing the
same with its competitors and the estimated growth of the company in terms of sales -
14
Figure 6: Sales Comparison
600 SALES (in billion USD)

483.84
500
400
300
200
112.4 117.94
71.6 92.03
100 61.09 39.41 15.67
0
Source: Adopted from Deloitte (2015)
Figure 7: Estimated sales growth
SALES (in Billion USD)

140
135.48
135
130
127.25
125
Sales (in Billion)
120 118.72
115
110
2016 (A) 2017 (E) 2018 (E)
Source: Adopted from 4-Traders (2016)
15
The tremendous growth of the organisation over the years and the estimation based on
the analysis of historic data of sales growth reveal the companys growth in the retail market.
9.0 Conclusion
Costco Wholesale Corporation is the second largest retail firm in the United States
and identified to be one among the global pioneers in retail sales. The adoption of cost
leadership strategy is identified to be the driving factor for financial growth of the firm. The
cost leadership model supported the organisation to achieve all its strategic business
objectives and positively influence all its stakeholders. Overall, the companys adoption of
business strategies has been successful towards achieving its mission values and improved
sales growth.
16
References
4-Traders, 2016. Costco WholesaleCorporation (Cost). [online] Thomson Reuters. Available

at: <http://www.4-traders.com/COSTCO-WHOLESALE-CORPORAT-4866/financials/>
[Accessed 19 Oct. 2016].
Baek, J.-Y., 2015. Cross-National Comparison of Costcos localization and Consumer

Satisfaction in East Asia. [online] /University of Marketing and Distribution Sciences.
Available at: <http://www.cai.ku.ac.th/Paper-SARD/paper35.pdf>.
Carr-Hilton, M., Mak, J., Luongo, C. and Ho, J., 2014. Case Synopsis For: Costco Wholesale
Corporation. [online] Available at:
<http://www.sfu.ca/~sheppard/478/syn/1147/Group_E.pdf>.
Cheung, A., Qian, C. and Carrillo, K., 2013. Costco Wholesale Corporation: Possible
Expansion to Hong Kong. [online] Woodbury university. Available at:
<https://cheungalley.files.wordpress.com/2013/04/04-24-2013-costco-possible-expansion-to-
hong-kong.pdf>.
Corona, R. and Altamirano, N., 2010. Is The Treasure Hunt Strategy Working For Costco?
International Journal of Management and Marketing Research, [online] 3(3), pp.8393.
Available at: <ftp://ftp.repec.org/opt/ReDIF/RePEc/ibf/ijmmre/ijmmr-v3n3-2010/IJMMR-
V3N3-2010-6.pdf>.
Costco, 2016. Kirkland Signature means quality and value. [online] Costco Wholesale.
Available at: <http://www.costco.com/kirkland-signature.html> [Accessed 24 Oct. 2016].
Costco Wholesale, 2014. Costco Wholesale Corp. [online] University of Oregon. Available
at: <http://uoinvestmentgroup.org/wp-content/uploads/2014/06/Costco-Final-Report.pdf>.
Costco Wholesale, 2016. The Costco Story. [online] Available at:

<http://www.costco.ca/about-us.html> [Accessed 19 Oct. 2016].
Costco-Business, 2016. Timeline. [online] Costco-Business. Available at: <http://costco-

business-report-courtneyt.weebly.com/the-history-of-costco---a-timeline.html> [Accessed 26
Oct. 2016].
17
Dalavagas, I., 2015. SWOT Analysis: Costco Wholesale Corporation. [online] Value Line.
Available at:
<http://www.valueline.com/Stocks/Highlights/SWOT_Analysis__Costco_Wholesale_Corpor
ation.aspx#.WA37jeV97cc> [Accessed 25 Oct. 2016].
Deloitte, 2015. Global Powers of Retailing 2016 Navigating the new digital divide. [online]
Available at:
<https://www2.deloitte.com/content/dam/Deloitte/global/Documents/Consumer-Business/gx-
cb-global-powers-of-retailing-2016.pdf>.
Economist Intelligence Unit, 2016. Taiwan Consumer goods: Consumer Goods and Retail
Report Taiwan. [online] The Economist. Available at:
<https://store.eiu.com/product.aspx?pubid=757113875&pid=1987096798&gid=757113875>
[Accessed 26 Oct. 2016].
Farfan, B., 2016a. Costcos Retail Innovation Craze. [online] The Balance. Available at:
<https://www.thebalance.com/costco-international-expansion-and-retail-innovation-
2891768> [Accessed 24 Oct. 2016].
Farfan, B., 2016b. Worlds Largest U.S. Retail Chains in 2015. [online] The Balance.
Available at: <https://www.thebalance.com/largest-us-retail-chains-2892857> [Accessed 24
Oct. 2016].
Fruitnet, 2010. Costco booming in Asian markets. [online] Available at:

<http://www.fruitnet.com/asiafruit/article/6385/costco-booming-in-asian-markets> [Accessed
26 Oct. 2016].
Kissinger, D., 2015. Costcos Operations Management, 10 Decisions, Productivity. [online]

Panmore. Available at: <http://panmore.com/costco-wholesale-operations-management-10-
decisions-areas-productivity> [Accessed 19 Oct. 2016].
Lombardo, J., 2015. Costco Wholesales Vision Statement & Mission Statement. [online]
Panmore. Available at: <http://panmore.com/costco-wholesale-vision-statement-mission-
statement> [Accessed 20 Oct. 2016].
18
Market Watch, 2016. Costco Wholesale Corp. [online] Available at:
<http://www.marketwatch.com/investing/stock/cost/financials> [Accessed 26 Oct. 2016].
Moskowitz, D., 2014. Costcos Global Expansion... With a Twist. [online] The Motley Fool.
Available at: <http://www.fool.com/investing/general/2014/07/14/costcos-global-expansion-
with-a-twist.aspx> [Accessed 26 Oct. 2016].
Reuters, 2016. Teamsters recommends rejection of Costco contract. [online] Business News.
Available at: <http://www.reuters.com/article/us-costco-wholesale-teamsters-
idUSKCN0WH215> [Accessed 26 Oct. 2016].
Shanker, D., 2016. After months of pressure, Costco commits to a cage-free egg supply.
[online] Quartz. Available at: <http://qz.com/582427/after-months-of-pressure-costco-
commits-to-a-cage-free-egg-supply/> [Accessed 26 Oct. 2016].
Statista, 2016. Number of Costco warehouses worldwide from 2010 to 2015. [online]
Available at: <https://www.statista.com/statistics/269769/costcos-number-of-warehouses-
worldwide/> [Accessed 24 Oct. 2016].
Steinberg, J., 2012. How Costco Will Meet Its Growth Expectations. [online] Seeking Alpha.
Available at: <http://seekingalpha.com/article/376591-how-costco-will-meet-its-growth-
expectations> [Accessed 24 Oct. 2016].
Successstory, 2016. Costco Success Story. [online] Successstory. Available at:

<https://successstory.com/companies/costco> [Accessed 26 Oct. 2016].
Sweet, K., 2015. Americans Are Leaving Home Without AmEx. [online] US News. Available
at: <http://www.usnews.com/news/business/articles/2015/03/24/trouble-at-amex-some-
cardholders-can-leave-home-without-it> [Accessed 24 Oct. 2016].
Yang, J., Whitfield, M., McKee, C., Brasfield, J. and Wardley, R., 2015. Competition with
both quality and quantity a case study. [online] Available at:
<http://www.aabri.com/SC2015Manuscripts/SC15032.pdf>.
19

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1.0 Introduction ...................................................................................................................... 3

1.2 Vision ........................................................................................................................... 3

1.3 Strategic goal ............................................................................................................... 3

2.0 Costcos strategy and changes over decades ................................................................... 4

2.1 Costcos Strategy ......................................................................................................... 4

2.2 Changes in business growth strategies over decades ................................................... 4

2.3 Costcos strategic goals................................................................................................ 7

2.4 Influence of business growth strategies on Costcos strategic goal ............................. 7

3.0 Costcos strategies- Realized ...................................................................................... 10

4.0 Costcos success other than profit maximisation ........................................................... 12

5.0 Influence of stakeholders on Costcos objectives .......................................................... 12

6.0 Change of global ambitions ........................................................................................... 13

7.0 Costcos relationship with partners ................................................................................ 13

8.0 Costcos business success .............................................................................................. 14

9.0 Conclusion ..................................................................................................................... 16

1.3 Strategic goal

reach 1000 warehouses by 2025 (Steinberg, 2012)

2.1 Costcos Strategy

Table 1: Costcos Strategies

2.2 Changes in business growth strategies over decades

Table 2: Business growth strategies

Source: Adopted from Costco Wholesale (2014)

Figure 1: Changes in business growth strategies of Costco over decades

Organic growth strategy

1976 First warehouse club

First hot dog cart- high quality hot dog +

1987 First bakery production initiated

1995 Kirkland signature brand introduced

2001 Costco Hot dog and soda still sold at $1.50

Expansion growth strategy

1986 First warehouse in Canada

1976 First warehouse club

1998 E-commerce business began

Source: Adopted from Costco-Business (2016)

Figure 2: Expansion of Costco warehouses in Asia

1994 1997 1998 1999 2000

DAEGU HISAYAMA, FUKUOKA

2001 2003 2004 2007 2008

AMAGASAKI, HYOGO KAWASAKI, KAWASAKI

ULSAN, GWANGMYEONG EUIJEONGBU,GYEONGGI

2009 2011 2012 2013 2014

2.3 Costcos strategic goals

2.4 Influence of business growth strategies on Costcos strategic goal

Source: Statista (2016)

Figure 4: Estimated Costcos warehouses growth

NUMBER OF ESTIMATED WAREHOUSES

1000 927 954

600 Number of estimated

Source: Author calculations

Table 3: Costco Wholesale Corporation- strategic goals, objectives and achievements

No Goal/ Description Whether achieved at Costco?

Source: Adopted from Kissinger (2015)

Figure 5: Costcos Realised strategy

INTENDED STRATEGY REALISED STRATEGY

Goals- Reach 1000 warehouses all over

4.0 Costcos success other than profit maximisation

5.0 Influence of stakeholders on Costcos objectives

7.0 Costcos relationship with partners

600 SALES (in billion USD)

Source: Adopted from Deloitte (2015)

Figure 7: Estimated sales growth