Operation and Supply Chain Management at Sydney Costco - Case Study Example

Costco Business Expansion Plan Name: Institution: Professor: Course: Date Due Table of Content Executive summary……………………………………………………………………………..3 Costco Business Objectives…………………………………………………………………….4 Keys to Success…………………………………………………………………………..…….5 Costco’s Mission………………………………………………………………………………..6 Costco’s Products and Services………………………………………………..….…………….7 Costco’s Future Products and Services…………………………………………………………8 Targeted Consumers Segment Strategy…………………………………….…………………..8 Company Strategic Positioning Strategy……………………………………………………….8 Competitive Comparison………………………………………………………………………..8 Costco SWOT Analysis………………………………………………………………….……..9 Conclusion………………………………………………………………………………..……12 Executive summary Costco among many other firms trading in the chain store business are currently faced with a highly lucrative market in this fast growing economy. The retail firm is placed fifth largest chain store trader in the United States and second in Canada. The current trend towards increased number of entrepreneurs and overall retailing environment has cost many retailers to rethink on their strategies. Costco management, however, has concentrated on improving on its initial trade value and is having increased success. Costco management has currently planed to invest in the Australia’s Sydney market. Sydney Costco being a start-up chain store in the newly identified market, a region that Costco’s management is preparing for good business returns from her products. The firm finances are expected to come from private investors, with workforce remaining dependant on the Costco’s long term servicing employees with additional number from the market location. This should effectively drive the business to better heights as it familiarize with customers and impact driven by her immediate rivals. With financial support in place Costco’s marketing team are able to schedule product-service promotional activities in order to inform customer of the firm’s product presence in the market and what it is offering. This should focus on informative messages creating increased awareness of the firms’ product to her customers. Introduction Operating a supply chain business calls for a strategic business positioning, a good plan on how to penetrate new markets is of great importance (Boyer, 2009, pp. 19). The business management has to involve her marketing team in conducting a market survey. This is important, as business management will identify their product strong factors and possible weakness to strategically plan for an entry, considering that the market has other similar products on offer. To effectively and sustainably manage business under this setting, management has to create clear links both servicing her customers and ensure steady supply of products to the business premises (Cohen, 2005, pp. 113). This calls for a cross-functional approach which involve managing movement business inventory, aspects of internal processing, distribution of purchased items. This introduces as to Costco, whose management are planning an expansion plan with the identified market being Australian Sydney region. Costco Business Objectives Costco business strategies seek to provide quality information to our various target groups of customers; in the process we act to fully satisfy customers’ needs, as management plan to meet all aspects of price, quality and service delivery (Mentzer, 2004, pp.38). This has to be undertaken through recruiting of expert marketing resource research and business team consultancy, while the firm management works to produce higher quality reports in the already existing branches in support of strategizing in the Costco new market (Blecker, 2009, pp. 23). The business outline has to be professionally designed this will help in selling Costco’s image and reputation within the existing and the newly found market. The firm intends to build good relationship with the Australian authority more importantly the Sydney authority agencies and other supportive private institution within the locality. This is the foundation that remains critical and important to be achieved within the earlier stage in order to boost Costco’s business aspiration (Bozarth, 2006, pp. 122). Designing and adopting internet based advertisement will not only increase our product value within the newly identified market but rather across the world. Strategically planning for this service will cost a fair value comparing the long term effect created on the Costco’s product image and reputation to its target region (Cohen, 2005, pp. 57). This is particularly important for foreign firm establishing it self in Australia. Obtaining the market information provides the management with easy access demands of customers on preferred product quality, price and service as the newly established store (Kulkarni, 2004, pp. 51). Web presence use as a natural objective in reaching suitable and potential customers, Costco has to design brochures that will enable clients have an understanding of type of products and service the firm offers as well identify the potential advantages of using Costco products over the other rival’s products. Developing clear brochures, company profile among other aspects often attract customers’ attention to yearn to know more about the firm and its products. Adopting these measures in to our system will surely generate increased market share will keep the firm competitive although the Australian market system (Frederick, 1998, pp. 365). Keys to Success Key to Costco success majorly depends on effectual market segmentation by identifying several strategic positions over its market rivals and work on mechanism on implementing these strategies. The marketing team has to be involved in designing personal selling or direct marketing strategies (Bozarth, 2006, pp. 66). The marketing team for example can be involved in street rotation within the target location to keep in touch with customers, financing institutions and word of mouth for more to customers to sending an informative message on why their products are the right products over their rivals create a different expectation for the customers by revealing additional offer they have created in their either products or service. This will work to win more customers in the market (Cohen, 2005, pp.45). Although the entire cause will ultimately may be expensive it is important to consider the long term effect as the firm is involved in a battle to win over customer from their current suppliers. According to National Association of Purchasing Management (2002), Costco’s key success factors may include a) Brilliance in fulfilling their promise, the management and the entire workforce within the Sydney Costco store have to remain committed and reliable in delivering right products and after sell services to their customers (Cohen, 2005). Developing rigid commitment to the excellence of the job done, develop informational data mechanisms that relevant for management purpose. b) Successful product or brands marketing, the marketing team has to design advertising mechanisms, this will develop visibility to the general market, making sure that customers find Costco’s products through aggressive marketing. c) Timely response to client’s orders, the firm can not afford to delay customer orders for whatever reasons as this will portray negative image and reputation on Costco including future business. Being a new market for Costco the marketing team has to keep communicating with the client. d) Marketing know-how, since there exists an increasingly competitive market there is need to aggressively market Costco’s products and service provided so that the firm can continually gain top form of its prospective and current customers minds and demands. e) Entrepreneurial flair, the Australian market as any other market has its own volatility and more business investors have a tendency of increasing replication of business ideas. Costco’s product service marketer among other important employees have to continuously keep embracing new trends and competitors strategies to win over the market. Costco’s Mission Costco’s offers its customers reliable, quality products and service making it easy for customers to access a range of goods as per their choice. Market development and channel development marks the effective tool used to maximize Costco’s business development (Cohen, 2005). The firm plans to involve expertise in its business functions who will offer higher practical experience, know how of the Sydney market and customer needs to fully meet these requirements. It is important that customers now they are working with Costco and the firm management is committed to have less risky ways of way of doing business. Borrowing Blecker (2008, pp. 39), plan on outsourcing in areas that the management feels can work in favor of both Costco’s customer’s needs and those of the firm. Costco’s Products and Services Costco has employed an estimated 103,000 people on full time and part time. The offers quality products and service compared to other potential rivals in the market such as Wal-Mart chain store at a price that is relatively low. The firm sells bulk sizes products to basic large families, small businesses and to families of owners of the business (Frederick, 1998, pp. 365). Costco is famous for keeping overheads low (Cohen, 2005, pp. 12). This overhead costs are in return is given back to its customers at a reduced prices. Most of its products come in on shipping pallets and are distributed directly from the pallets a different case in handling customer’s products when compared to their market rivals who prefer breaking down pallets and stock individual products on shelves. The firm is also known for its distinctive inventory practices, the firm only keeps identified range of products brands within each product range category. Unlike her potential rivals Costco carries a few popular categories and few products between each category. This is aimed at achieving the best deals available at any given time (Bozarth, 2006, pp. 58). Often the Costco warehouse holds isolated product brands for a shorter time and change to other new fashionable products. This concept serves to encourage customers to visit their warehouse for more surprise deals. Over the years Costco has expanded its range of products and service offer to her customers. Initially the firm only handled products that came in boxes, were it only distributed by tearing off or un-wrap the pallet. Currently the firm sells many products that are difficult to handle for instance, fresh produce and flowers among many others (Blecker, 2009, pp. 38). Costco’s Future Products and Services Costco business management attempt to put the business practices together in offering products and services that allow the Costco always be in demand over its close market rivals (Blecker, 2009, pp. 27). This is achieved by understanding the most important factors in developing constant improved product quality and service to its customers. The growing Australian economy, especially with prospects of Sydney unemployment rates revealing a reducing trend the firm has come in the right time as a bigger percentage of this population have extra income and are keen to acquire quality products at reasonable price (Daft, 2011, pp. 127). Targeted Consumers Segment Strategy Costco marketing strategy is based mainly on making the right information available to the right target consumers (Boyer, 2009, pp.114). Costco has done this considering customers price sensitive demands. The Costco product pricing concept takes in to account basic elements used to appreciate consumer’s price, quality and quantity demands. The product promotions seek to point out the quality of products and service the firm is committed to deliver to its customers. Company Strategic Positioning Strategy Although the firm serves in many country markets, Costco management and the entire workforce is committed in making Sydney store reliable and fully sustainable for not only on the benefit of the Costco but also to the Sydney’s community(Blecker, 2009, pp. 44). Competitive Comparison Costco’s management sought to identify competition in terms of companies that work to satisfy their customer’s needs that they intend to meet. Costco has fewer competitors in their primary product and services (Cohen, 2005, pp. 29). This call for increased need to distinguish Costco as a brand from other product providers in the market, this will help Costco hold on to its previous customers as it seeks to improve on the market share over its rivals. Costco SWOT Analysis Strength Diversify in product and market segment. This reduces the possibility of Costco’s dependency on one particular product or market in servicing its customer’s needs. Costco has a well established business image and reputation this creates a superior force over her rivals in the newly established market The firm has a clear marketing plan strategically positioning the Costco far beyond her competitors. The firm has a continuous growth in profitable customers Employee retention, this is one element that has boosted its operational efficiency Has a strong management team Weakness The firm lacks a well established distribution network within the Sydney market segment. Introduction of newly recruited individual personnel who have not previously worked together, this presents an immediate challenge to the human resource team and the management as more training is required to improve their skills and competence at work. Costco’s new store management lacks a solid and a well developed network in determining the market trends among other research important for management planning. Opportunities Increased growth in the newly found market, presents an open opportunity for Costco investment possible in the market. Introduction of e-commerce business boost her trading opportunities Customers appreciation of high quality information which is accurate, unbiased and serve Threats Costco’s does to much promotional activity, this has impact on her product price and profits Economic slowdown during the crisis period impacted core shoppers an effect that was felt in the Costco’s trading activities. This is slowly picking to the normalcy state. Conclusion By understanding the Costco’s strength, weakness, threats and possible market opportunities, the Costco management can strategically plan realize the opportunities the market offers by applying her basic strength. It is evident basing on Costco’s achievement in other markets such as the US and Canadian markets (Frederick, 1998). The firm stands to benefit from her previous experience in the business. Costco has experience management team among other employees this is particularly important considering her entry to a new market that has other service and product providers, strategic planning, team work among all stakeholders is of great importance. However, Costco has a weakness in over spending, primarily achieved through advertising among other product promotional activities (Boyer, 2009). It will be important if the management particularly the marketing team consider reversing her marketing tactic and only consider majoring on informative advertising as excessive expenses will ultimately hike product price and lower profit. References: Boyer, K, K. (2009). Operations and supply chain management for the 21st century. London: Cengage Learning. Blecker, T. (2009). RFID in Operations and Supply Chain Management: Research and Applications. Berlin: Erich Schmidt Verlag GmbH . Cecil C. Bozarth, R. B. (2006). Introduction to operations and supply chain management. London: Pearson Prentice Hall. Cohen, S. (2005). Strategic supply chain management: the five disciplines for top performance. New York: McGraw-Hill Professional. Daft, R. L. (2011). Management:Business & Economics. Wall Street journal , pp.681. Frederick, R. D. (1998). Competing through supply chain management: creating market-winning strategies through supply chain partnerships. London: Springer. Kulkarni, S. (2004). Supply chain management: creating linkages for faster business turnaround. New York: Tata McGraw-Hill Education. Mentzer, J. T. (2004). Fundamentals of supply chain management: twelve drivers of competitive advantage. London: SAGE,. National Association of Purchasing Management. (2002). The journal of supply chain management. The journal of supply chain management , Volumes 38. Read More