Costco - Project Paper

Executive Summary

Operations Management is identified as a business' functional area that is devoted to creating, planning, and managing its resource capabilities to improve its products and services portfolio (Gerston, 2010). These resource capabilities include the workforce, technology, manufacturing, equipment and IT infrastructure and processes. Costco is among the leading wholesale businesses and has a massive network of warehouses that span nearly 40 countries and three continents (Gerston, 2010). Over the years, the business has faced tough competition from its major competitor, Wal-Mart. With a more aggressive marketing strategy, efficient supply chain and a sophisticated information system, Wal-Mart has been able to command a much larger share of the target markets. Apart from this, rapid innovations in the field of technology has also shifted the focus from conventional operational management processes and paved the way for innovation (Gerston, 2010). Therefore, there is a pressing need for Costco to devise an effective operations management analysis that identifies the shortcomings of the business and devises strategies to overcome them. Costco has mainly relied on its conventional business strategy which focuses on offering customers a variety of premium quality products at an affordable price (Gerston, 2010). However, the company may need to rethink its operations management strategy in order to widen its competitive moat in a market that is becoming increasingly competitive. Among the main areas of focus for the company include the workforce, information-based technology, supply chain, and inventory-distribution system.

Costco - Project Paper

Background

Costco Wholesale Corporation is the owner and operator of a global chain of warehouses that sell a wide range of products at wholesale prices. The products are mainly sold under the “Costco Wholesale” brand which is seen as a sign of premium quality and reasonable price (Gerston, 2010). By selling a massive array of products at prices that are much lower than those found at conventional retail or wholesale stores, Costco fulfill its promise to its consumer base of delivering premium quality products at extremely affordable prices. The annual global revenues generated by the company exceed $99 billion (Gerston, 2010). The massive size of the business can also be determined by the fact that it has a staggering 107,200 employees in the United States while the number of employees across the globe exceeds 160,000. Costco's warehouses are specially designed for the purpose of facilitating small-to-medium-sized businesses by allowing them to minimize purchase costs related to resale (Gerston, 2010). Apart from this, individuals are also allowed to make purchases from the warehouse to meet their own personal needs. Costco is a public limited company that is listed on NASDAQ. The company's market capitalization exceeds the $50 billion mark while its trading volume is a staggering $1.9 million (Gerston, 2010).

Strategy

Costco's strategy is specifically designed while keeping in mind the preferences of the consumers of the target market. It is tailored to offer affordability, utility, accessibility and best value for money. These concepts form the core of the business' operations across the globe and promise Costco a competitive advantage in a highly ...