Costco FDI Strategy in U - Case Study Example

The paper "Costco FDI Strategy in АU" is a perfect example of a business case study. The company is likely to face a number of challenges considering that it is new. Costco is strategically extending its portfolio of stores in both the US and abroad. On the worldwide front, the retailer is hoping to exploit rising consumer demands that characterize the developing markets, particularly in Asia in the key markets of Japan, Korea, and Taiwan. In addition, the wholesaler wanted to open 34 new distribution centers in FY2015 to help its aggregate square footage by 5%, incorporating 20 new stores in the US, four in Mexico, three in Japan, two each in Australia and Korea, and one each in Canada, the UK, and Taiwan (David, 2015, p.85). One of the markets that Costco wants to exploit due to its potential is the Australian retail market. Even though the Australian market is characterized by stiff competition, the business environment presents a good opportunity for the firm to expand and explore in a profitable manner. With the political stability as well as the other factors that are taken into consideration performing well in Australia, it is advisable for Costco Company to invest in the country with Greenfield FDI.

• Overview of the firm

Costco is a wholesale corporation that operates an international chain of membership warehouses. It is the main headquarters is in the USA. It operates all these under the one name that is popularly known as Costco Wholesale. The industry operates on the basis of reducing the prices of goods unlike most of the conventional wholesale and retail sources where the prices are really high. The warehouses that are the members of Costco have the advantage of making purchases at a lower cost (David, 2015, p.19).

The warehouses that operate under Costco have a diversified variety of products and goods under the same roof. They operate by providing and assembling different types of goods under the same roof in order to make it easy for their customers to shop with no inconveniencies (David, 2015, p.33). Some of the categories of goods that are present in the warehouses that operate under Costco are watches, books cameras, sporting equipment, vehicles, hardware and grocery among others.