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Offensive strategy options - CostCo - Essay Example

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Costco has excelled in the domestic and international strategy due to its offensive strategies. Firstly, Costco enjoys the first-mover advantage, having been the first retail store to establish business…
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Offensive strategy options - CostCo
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Offensive Strategy Options-Costco Offensive Strategy Options-Costco Costco is the market leader in the America’s wholesale retail industry. Costco has excelled in the domestic and international strategy due to its offensive strategies. Firstly, Costco enjoys the first-mover advantage, having been the first retail store to establish business centers and introduce green technology in its warehouses. Secondly, Costco has successfully implemented the best cost provider strategy by offering high quality products, at a relatively lower price, compared to competitors in every market that it serves. These offensive strategies have been successful in maintaining its market leadership position. Nevertheless, with increased domestic competition within the U.S. retail industry and the maturity of the market, Costco needs to consider other offensive strategies that would not only enable them to improve their market share but also enhance their financial performance. Costco may consider implementing initiatives that capitalize on the weakness of competitors, and/ or pursue end run offensive strategies.
Capitalize on Competitor Weaknesses
The stiff competition in the domestic U.S. retail industry, coupled with the maturity of the market implies that firms should focus on holding and milking their market share (Valdani & Alessandro, 2012). However, Valdani & Alessandro observes that firms may seek to improve their market share in these markets by focusing on the weaknesses of their main rivals. The SWOT matrix rank reveals that Costco is a strong company, which is able to take on their rivals head on. Nevertheless, Costco may direct its internal strength, capabilities and resources towards attacking the weaknesses of its rivals in the U.S. retail market. Costco may achieve this by going after customers whom the competitors are less equipped to serve. It may also attack those rivals offering poor customer services. Alternatively, Costco may expand into regions and market segments where their rivals are either weak or have ignored completely.
End Run Strategies
Apart from capitalizing on weaknesses of their competitors, Costco may consider pursuing end run offensive strategies. The end run offensive strategies enable firms to avoid frontal and head on attacks that may escalate and produce unhealthy competition (Cullen & Praveen, 2013). With the end run strategies, Costco would be able to go around competitors, capture the market segments that are ignored by the rivals and establish the first mover advantage in these markets (Cullen & Praveen, 2013). Cullen & Praveen observes that a company may implement end run strategies in four ways. Firstly, Costco may lead the way in developing and launching new products that change the terms and conditions for competition in the retail market and industry. Secondly, Costco consider expanding their retail store presence in areas not served adequately by competitors. Thirdly, Costco may create new markets and segments through introduction of new products with better features and ability to meet customer expectations. Lastly, Costco may pursue modern and advanced technologies that would enable them to stay ahead of competition in operations management and customer service delivery.
Cullen, J. & Praveen, P. K. (2013). Multinational Management. 6th ed. USA: Cengage Learning.
Valdani, E. & Alessandro, A. (2012). Competitive Strategies: Managing the Present, Imagining ` the Future. New York: Palgrave Macmillan. Read More
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