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Wholesale Competition

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1. What is competition in the North American wholesale club industry? Which of the five competitive forces is the strongest and why? The competition in the North American wholesale club industry consisted of Costco, Sam’s and BJ’s. From looking at all five of the competitive forces, the threat of new entry is the strongest because of the extreme pricing and limited access to the distribution channels. 2. Do all three warehouse club rivals-Costco, Sam’s and BJ’s wholesale – have highly similar strategies? What differences in their strategies are apparent?

Does one rival have a better strategy than the others? Does one rival have a somewhat weaker strategy than the other two? The three warehouse club rivals do not have the same similar strategies.

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The differences where their strategies are apparent are, Costco’s is providing items in bulk and at low prices, consumers allure toward using discounts hoping to get their monies worth. Sam’s is decreasing product costs by buying from low cost labor countries.

BJ’s is focusing on retail shoppers offering more grocery items and smaller quantities of packaged goods.

In my opinion, Costco has the best strategy due to the cost efficient distribution through the use of the cross dock distribution. Yes, BJ’s has the weakest strategy than the other two because they are not as popular in the US, and they aren’t benefiting from the economies of scales. 3. Which of the three warehouse club rivals has the strongest financial performer in recent years? Costco has a favorable Asset Turnover and CAGR Total Assets and BJ’s has favorable CAGR total revenue. 4.

Does the data in case Exhibit 5 indicate that Costco’s expansion outside North America (the U. S. and Canada) is financially successful? Yes, because CAGR has a rate of 10. 24% for the total revenue and the operating income has 18. 20% for the five year period. 5. Five years from now, is Costco’s standing as the industry leader likely to be stronger or weaker? Are the other two rivals likely to gain or lose ground to Costco? Why or why not. In my opinion Costco will continue to be the industry stronger leader.

I believe this because the strategy that they are using isn’t extremely risky. Since they have low risk factors, they are less vulnerable to general conditions in the world economy which diversifies them from Sam’s and BJ’s as the stronger industry leader. The other two could possible gain grounds to Costco, however if Costco consider acquiring BJ’s Wholesale Club, reducing the market share between themselves and Sam’s Club. Costco needs to tackle its major competitor by initiating its existence into the market place, because Sam’s Club has more operating stores. 6.

What recommendations would you make to Jim Sinegal regarding the actions that Costco management need to take to sustain the company’s growth and improve its financial performance? I would suggest for Jim Sinegal to make sure 95% of all stores sell gas, allow every type of credit card to be used for payments from customers, and use social networks to advertise and become better acquainted with their consumers, educating them about wholesale and investing. 7. What actions do you think management at Sam’s Club should take to boost revenue growth and overall financial importance?

I think Sam’s Club is doing an exceptional job as far as their revenue growth but they could do even more by targeting a more upscale clientele. 8. What actions do you think management at BJ’s should take to boost revenue growth and overall financial importance? As the weakest of the three Warehouse Club competitors’, BJ’s must be cautious in planning for the future. Since this company does not have the resources for an aggressive growth strategy to expand, they should look into more urban locations and consider merging with smaller competitors in order to expand.

Cite this Wholesale Competition

Wholesale Competition. (2016, Oct 26). Retrieved from https://graduateway.com/wholesale-competition/

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