Value Chain analysis for Costco
Costco’s value chain is successful at exploiting strengths, skills, and capabilities to leverage
against weaknesses. Costco maintains operational effectiveness and better positioning than
industry averages which allows them to be the fourth largest retailer in the USA. Costco receives
cost advantages from business (value adding) activities, such as the pharmacy, gas station, and
copy centers. And focuses to differentiate core competencies (skills) successfully outperforming
competitor’s capabilities and achieving higher than industry averages across business activities.
Costco’s inbound logistics is handled by a division of the company called Costco Wholesale
Industries. They operate manufacturing businesses, including special food packing, optical
laboratories, and meat processing and jewelry distribution. They all have a common goal of
meeting customers’ needs of high quality products and low prices. The operations are based
under one single roof. They present the largest and most exclusive product category selection
under one roof.
Costco’s top three strengths include:
• Firm infrastructure; Sinegal’s leadership style or philosophy is similar to Theory
Y. He demonstrates a democratic leadership style in terms of the way in which he
manages his employees. The staff work on a first name basis, even the owner Jim.
• HRM; The experience curve, Costco treats the employees well, gives them good
jobs, and tries to do right by them. Management always promotes from within the
company. Training happens constantly and they allow the employees to grow their
talent which helps model what management wants out of employees. And they
offer the employees above average benefits.
•Services; Pharmacy, Optical store, Gas stations, Copy centres, Memberships, and
special offers for consumer services.