Costco Corporation falls to the second spot after Walmart in the wholesale industry worldwide. The company’s success is determined by its ability to tackle the internal as well as external factors in a balanced way so that the company may profit from them. The SWOT analysis reveals the company’s strengths, weaknesses as well as opportunities, and threats. The first two act as the internal factors, whereas the last two exert themselves as the external factors strategically impacting the company. This SWOT Analysis has revealed the most imperative problems as well as solutions, and if the company addresses them, it may experience long-term growth and stability in the retail, industrial market.
This Analysis reveals the significant internal and external factors that are affecting the working of the company. This tool is significant for managers and investors to realize the company’s business in the retail market worldwide.
Strengths of the company (Internal Factors)
The company’s strengths are related to the prevailing policies and strategies on which the company is running its business. These strengths capacitate the industry to grow organically and generate revenue. Costco’s significant strengths are discussed below:
- Solid roots in the market
- Extensive network of supply chain
- Strong brand image (Kirkland signature)
The company holds a strong presence in the market in the US. Costco Corporation has successfully rooted its worthy position in the membership warehouse club chain across the US. The firm is popular among consumers, and it retains a healthy market share. The company’s widespread supply chain is another strength of the company by which Costco can accumulate finances. The company’s private-label Kirkland Signature is viewed by the public as the signature of quality and superiority. Therefore, the company is enjoying a strong brand reputation and a loyal customer base across the US market. This SWOT shows the strengths of the company by virtue of which Costco is functioning its business.
Weaknesses of Costco Corporation (Internal Factors)
This section enumerates the weaknesses of the company prevalent in the internal environment of the company. These limits can severely limit business growth and expansion. Most notable business weaknesses acting as growth barriers are given below:
- Limited diversity in products
- Dedicated to Members only
- Low margins of profit
The company is suffering from many weaknesses due to the pitfalls in the internal strategic factors. The limited availability of products at the company’s warehouses is distracting the company from accumulating profits. Competitors like Walmart are displaying a wide range of product mixes, and the customers are likely to find the desired product from other stores. Moreover, the company’s business model has severely restricted the growth and profit margins by preventing shoppers from purchasing at its warehouses. Likewise, despite the strategy of attracting more customers by offering a low-price product that has attracted many customers, it has limited the company’s profit margins. Thereby, the SWOT analysis, after examining the company’s weaknesses, inferences that the company needs to alter its business model to ensure profit and growth in the long term.
Opportunities prevalent in the business environment (External Factors)
The opportunities are prevalent in the external business environment of the company. These opportunities can foster the growth and development of the company. However, Costco needs to later the existing business model of the company to cash these opportunities. The potential opportunities relevant to growth and business are:
- Diversification in services
- Diversify the product range
- Exploration of new locations
The company has the opportunity to grow its revenue and sales by exploiting a few available techniques. The company can expand its business operations by offering several new services. This is easy for Costco when viewed through its financial standings. Moreover, the company can expand the range of its products to capture more customers and clients, just like its rival Walmart has done. Furthermore, the company has the opportunity to grow by exploring new locations worldwide, in growing economies. These growing economies have great potential due to the presence of large populations. Therefore, this SWOT analysis has revealed the opportunities available to Costco Corporation in terms of expansion, growth, and revenue accumulation.
Threats in the way of Costco (External Factors)
These threats are the potentially harmful elements prevailing in the external environment that can inflict damage to the company. They are surfacing the market and socio-cultural facet. They have the potential to reduce business performance. The significant threats surfacing around Costco are discussed below:
- Increasing competition between retail stores
- Intensifying online competition
- Trending animal rights
The company is facing robust competition from online retail stores like Walmart. In the same way, online marketing and business have become the new norm. This trend has enabled online retailers and sellers to sell their products online. Thereby intensifying the already swelling competition in the retail market. The trends of animal rights can pose some threats to the company as Costco can suffer a drop in some of its products by this. However, the company can address this issue by strategizing its supply chain. Therefore, the company must strategize its policies to cope with these threats.
Recommendations
Costco’s market position is a strong strength of the company. Nonetheless, the company’s business model has posed serious limits to its expansion, growth, and expansion. Costco needs to diversify its products by introducing more diverse products to accumulate customers and profits. Furthermore, Costco must undergo expansion policy in newly emerging economies of the developing world. In the end, the company addresses the animal rights concerns to sustain its product availability.
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