1.What is Costco’s business stick? Is the bon ton’s business model appealing? Why or why not?
• Costco’s business model was to generate high sales volumes and rapid broth swage by offering members low prices on a limited selection of nationally branded and selected private-label products in a roomy range of merchandise categories. Management believed that rapid inventory turnover, when combine with the operating efficiencies achieved by volume purchasing, efficient distribution, and reduced handling of merchandise in no-frills, self-service warehouse facilities, en subjectd the company to bring profitably at significantly lower gross margins than conventional wholesalers, mass merchandisers, supermarkets, and supercenters.
• Yes, this model is appealing for the following reasons:
o Allows the company to sell and receive cash for inventory originally it had to pay many of its merchandise vendors
o Allows company to attain advantage of early allowance discounts
o Company is able to finance a big percentage of its merchandise inventory through the payment terms provided by vendors rather than having to nurture sizable working capital to facilitate timely payment of suppliers
2.
What are the chief elements of Costco’s strategy? How good is the strategy?
• The chief elements of Costco’s strategy are low determine, limited product selection, and a treasure hunt computer storage environment.
• Pricing: a key element of their pricing strategy is to cap its markup on brand-name merchandise at 14% and markups on their private label items can be no higher than 15%. This strategy keeps customers coming in to shop by wowing them with low prices.
• Product Selection: this fortune of the strategy only provides members with a selection of about 4000 items. Their product range covers a broad spectrum but the selection in each product category is...If you want to get a full essay, order it on our website: Ordercustompaper.com
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