Revenue and Business Model Essay

Submitted By Juddert
Words: 474
Pages: 2

Justin Royce
1.) I believe that Costco’s business model is based on a best-cost strategy. The company business model is appealing because it attracts customers and not just any customers but you attract loyal customers who will continue shopping at Costco because of their business model. When it comes to discount shopping, consumers want to feel like they are getting the best price and with Costco, they really are.
2.) The chief elements include fewer prices, a very restricted product line and selection of products, and an atmosphere that welcomes the thrill of shopping. They are able to attract more customers with the low prices they offer. The strategy is great because it has kept them in business for many years while earning a substantial amount of revenue that has allowed them to expand and continue offering lower prices.
3.) I believe Jim Sinegal is a very effective CEO because he has been able to create this long lasting and cherished brand. I would give him and A if I were to grade him only because he has been able to really succeed in knowing what consumers want and need; h was responsible for driving the company to achieve yearly sales of almost $130 million per store.
4.) There are two core values that appear: Costco provides high value to consumers by offering globally and locally tagged products at a very low price & its human resource management coordinate and integrate its employees quite easily.
5.) Exhibit 1 in the case study indicates that the financial performance has been quite high from 2000 to 2008. The net sales have increased from $31.6 billion to $71 billion throughout the year 2000 to 2008. The CAGR of 12.3% from 2000. The company’s revenues have increased from $32.2 billion to $72.5 billion with the CAGR of 12.3% as well.
6.) 2011 Sales Growth: Strong - Costco realized a 14.1% sales growth and a17.4% increase in operating income. This is due