III.

SWOT ANAYLSIS
Strengths Weaknesses
Management Majority of top management officials Simple layout may detract from
are “home grown” luxury items offered in store
Section B-1
Only 6% of Costco employees leave
after the first year, compared to 44% of
Wal-Mart’s
Section B-1
Marketing Increase in comparable store sales 2004- Costco does little to no formal
2005 (8%) and 2005-2006(7%) advertising except in the instance of
a store opening, so they may not be
“Treasure Hunt” aspect makes shopping reaching their full membership
fun again potential.

Costco’s philosophy is to keep overhead Section B-2

costs low and pass those savings on to
customer’s in the form of low prices.

Section B-2
Accounting / Costco turns over its inventory nearly
Finance once a month, which is more frequent
that its competitor BJ’s
Costco has consistent Return on Sales
and Return on Assets.
BJ’s has a stronger Asset Turnover
than Costco.
Costco’s gross profit margin has
declined from 2004-2006, while BJ’s
has increased.

Section B-3 Section B-3

Production & Costco operates stores in the US, Costco has not yet opened stores in
Operations Canada, Mexico, UK, Japan, South all regions of the globe
Korea, and Taiwan
Section B-4

Because of Costco’s high inventory

turnover we generally have the
opportunity to sell and be paid for
inventory before we are required to pay
many of our merchandise vendors

Section B-4
Information Costco has a separate website for stores
Systems in each of its international reasons.
Costco offers special online deals each
week dubbed “This Week’s Treasure
Hunt”
Costco only offers an online retail
outlet to customers in Canada and
the US.
Costco’s homepage is overwhelming
due to the conglomeration of

Cost4co’s website showcases the quality
of the products it offers and lets the
customer view products from various
different angles
Section B-5
Opportunities
Economic Costco operates stores in countries with
high GDP per capita and targets
customers with high disposable income.
US- $40,100
Canada-$31,500
Japan- $29,400
Inflation Rates are relatively low:
US- 2.5%
Canada-1.9%
Japan- -0.1%
Demographic / Approximately 67% of the population in
Sociocultural the US, Japan, and Canada are between
the ages of 15-64 and will fall in
Costco’s target market.
Political / Legal Constitution based democracy in the US
and a constitutional monarchy in
Canada and Japan are good types of
government for retail competition.
Governments should not impose any
restrictions unless the possibility of a
monarchy arises.
Technological 159 million internet users in America
and 16.11 million in Canada have access have access to online purchases in
to Costco’s website and can make
purchases online.
graphics.
Section B-5
Weaknesses
12% of the US population is below
the poverty line and 15.9% of
Canada’s population is below the
poverty line. These people will not
be able to afford a Costco
membership and are not in Costco’s
target market.
Costco will have to expend energy
and resources for translation of
company materials and websites as
all of the regions we operate in have
a different primary language.
Different laws and legal systems
exist in each area, so Japanese
workers will be subject to different
restrictions that American workers or
Canadian workers and vice versa.
57.2 million internet users do not
Japan.