Case Study 2 Research Paper Example | Topics and Well Written Essays - 1250 words

Case Study 2 - Research Paper typesetters caseThis part of the schema is in keeping with low cost mathematical product. Costco also only purchases certain sizes, colors, and unbendable moving inventory. This part of the design is to avoid keeping inventory that customers leave behind not be arouse in buying. In doing this inventory will always be moving out of the door and and then the party will always have a high inventory turnover. Not only is Costco special in terms of choosing the characteristics of the products but Costco actu whollyy keeps a small standard of products on hand in order to avoid an inefficient number of products that are slow-moving or become unable to move. wiz part of the model that is concerning is that there is a lack of serious competitors in the membership warehouse business. I would be concerned with the possible effect of new competition and the growth of current firms like Sams friendship and BJs Wholesale. Another concern I would have with Costco is the massive holding of the land and warehouses. Certainly this could be judgement of as a benefit for the company but with the recent drop in real country prices the value of the property could fall and thus be slight(prenominal) able to sell in the emerging with 150,000 sq. ft. warehouses on the land. On the other hand the land is purchased on low priced land, not necessarily in high traffic areas which would be a positive if the real estate price dropped, since it would be less likely to drop significantly. This is a a great business model because not only is the company able to sell a high amount of inventory in a short amount of time, but Costco is also able to finance inventory purchases through their vendors, thus avoiding long term debt. This allows them to regress on the discounts to the customer which in turn causes the volume and higher revenue. 2. What are the chief elements of Costcos strategy? How good is the strategy? Volume Purchasing is one of the mai n elements of Costcos strategy. By purchasing in large amounts Costco is able to realize discounted prices from vendors. Not only that, due to discount pricing Costco is able to sell all of the deal before payment is due. By doing this Costco can realize their profit before paying for merchandise while avoiding the need for financing. The Costco vendors are actually financing the sale of the merchandise which is the advantage of this strategy. Treasure-hunt merchandising which is a Costco phenomenon where Costco purchasing agents search for deals that the Costco members would find desirable and stock the shelves with this product that will sell out quickly. The merchandise is purchased from wholesalers and retailers who are struggling and need to move old inventory. The inventory comes in deeply discounted even though the products are brand name products. By selling this deeply discounted merchandise Costco is able to lure in customers who love brand name products. Not only will cu stomers purchase this merchandise but members will most likely be on the look out for such deals thus increasing the likelihood of a quick sale of the merchandise. Costcos business strategy also calls for less marketing through pricey channels such as television and radio. Instead Costco utilizes direct marketing which is not only less expensive but also very personal. The company opens up a store and directly calls companies, individuals and employees in big