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Costco Versus Sam’s Club Essay

The navigator basis of image has the control to navigate the company through external issues. Costco employs a divisional organizational structure that is nationwide and divided into three different divisions. Each division is controlled by an Executive Vice President and the regions are divided for the Senior Vice President. Costco opens its stores in different states such as the first time to open in South Carolina, “It’s pretty much spread like wildfire” (McMaster, 2001). One of the pressure for change was the economy and the recession that the businesses encountered and to be more strategic than its competitors to sell products as bulk to save money and make the consumer happy especially with large families.

Sam’s Club does not have as much pressure as Costco would since Sam’s Club is a subsidiary of Walmart which is the largest retail store chain all across the world. “In this image, some, but not all, change intentions are achievable. Power, processes, interests, and the different skill levels of managers affect their ability to produce intentional change outcomes” (Ian Palmer 26). Costco and Sam’s Club are able to embrace the changes and the great outcomes by thousands of members who shop at the companies. Costco differ from other retail companies by the wholesale products that consumers can buy in bulk while still saving money in the long run even with the annual membership that Costco and Sam’s Club charges.

The other change manager at Costco and Sam’s Club is that they both utilize the highlights of the goals as a coach because the way training goes, both warehouse company focuses on not only delegating the work but actions leading with words. For example, when customers are shopping for a certain item and the manager trains the employees on the products, what’s coming in and what’s going out, and also following schematics to ensure customers that when they shop at each parenting store, the customers are able to find the product in any store and in any state.

One of the models that Costco and Sam’s Club seem to use is the 7-S Framework because the managers have goal sets, strategies and structure on how to train the employees and how they want the job to be performed. As a warehouse company, new products will arrive such as groceries and out goes the old because they are perishable. Based on the readings, “The 7-S Framework was developed by the McKinsey & Company consultants Robert Waterman Jr., Tom Peters, and Julien Phillips. It is based on the propositions that organizational effectiveness comes from the interaction of multiple factors and successful change requires attention to the interconnectedness of the variables. They characterize the factors into seven categories: structure, strategy, systems, style, staff, skills, and superordi-nate goals (Ian Palmer 125). The only bad thing about the 7-S framework is that its weakness is viewing at the external aspects because the products sold are not for just one type of demographic but more than one by offering different type of products and services.

SWOT Analysis

Since Costco and Sam’s Club are both huge warehouse retailers, each one has strengths, weaknesses, opportunities, and threats. Not only are the analyses internal, they are also external. Both have high employee retention because they do treat the employees well by offering above average salaries and great benefits. As for externally, both warehouse companies offer other products and services such as food courts, sell and install tires, gasoline, and business cards. As the class textbook says, “The Strategic Inventory involves a much more sophisticated analysis than that provided by the ubiquitous SWOT analysis (strengths, weaknesses, opportunities, threats). The danger with SWOT analysis is that it very easily becomes a listing not of strengths but “believed strengths,” not of weaknesses but “believed weaknesses,” and so forth” (Ian Palmer 137).

Costco strengths offer a wide variety of products, high end and mid range, online and services but have a weak compliance function which limits the customer to product choices. One of the opportunities for Costco is that they have a growing demand for private labeling on their products which well
known as Kirkland but with the foreign exchange rate fluctuations, the profit margins may seem lower than expected and services are much less used in other countries. Costco’s wide spread geographic presence though has its benefits, also exposes the company to the threat of foreign exchange rate fluctuations. Stated in the datamonitor, “Costco has operations in the US, Puerto Rico, Canada, the UK, Korea, Taiwan, Japan, Mexico and Australia. Thus, the company generates revenue in many other currencies besides its domestic currency which is the US dollar” (Costco Wholesale Corporation, 2011). Below listed is Costco SWOT analysis on Appendix A.

Sam’s Club strengths are much stronger based on the fact of its association with Wal Mart but causing weakness because of the same products can be found in Sam’s Club where members have to pay for a membership and the Wal Mart supercenters may have more products to choose from without membership fees. In the readings of Real Estate Dynamics in Broadlines Retail, “SAM’S has the greatest geographic breadth of the three players, but the least attractive real estate and demographics: SAM’S faces the least competition with other clubs given that over 60% of the markets in which it has a presence are single-player club markets, and almost 40% of its store base is in these markets” (Turf Wars, pg. 55).

The opportunities that Sam’s Club is offering online products and services, since Wal Mart also does online purchases, this gives the companies a greater advantage with Ecommerce. One of the weaknesses that Sam Club faces is that not only does the products and services overlaps with Wal Mart but also with other wholesale warehouse such as Costco. Below Listed is the SWOT analysis of Sam’s Club on Appendix B.

Recommendation

The recommendations for further actions within the organizations and the rationale chosen would be to focus more on the competitors’ products and services and match it or beat it by a certain percentage. There are two main retail wholesalers which are Costco and Sam’s club, keep as is ensures they are on top and not being able to monopolize the business. With antitrust laws, an agreement between competitors, this prevents the monopoly of powers, certain restrictions on mergers, and not only does it protect the sellers but also the buyers as well (www.antitrustlaws.org).

References:
Costco Wholesale Corporation SWOT Analysis. (2012). Costco Wholesale Corporation SWOT Analysis, 1-9. Retrieved from EBSCOhost. DATAMONITOR: Costco Wholesale Corporation. (2011). Costco Wholesale Corporation SWOT Analysis, 1-10. Retrieved from EBSCOhost. Ian Palmer. Managing Organizational Change, 2nd Edition. McGraw-Hill Learning Solutions, 2008. <vbk:0077587448#outline(5.4.5)>.

John, M. (n.d).Costco to Open First South Carolina Store with Promotional Giveaway. Post And Courier, The (Charleston, SC), Retrieved from EBSCOhost.
The Warehouse Club Industry. (2004). Black Book – Turf Wars: Real Estate Dynamics in Broadlines Retail, 55-81. Retrieved from EBSCOhost.
Retrieved from the internet:
http://www.antitrustlaws.org/
http://www.freeswotanalysis.com/retailing-swot/225-sams-club-swot-analysis.html
http://www.yousigma.com/comparativeanalysis/costcowholesaleswot.pdf


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