Costco Wholesale Corporation: Market Expansion and Global Strategy
(9 pages of text)
Case (Pub Mat)
In 2015, Costco Wholesale Corporation (Costco) was ranked as one of the world’s largest global retailers based on sales revenue, second only to Walmart Inc. It had successfully expanded into eight international markets: Canada, Japan, South Korea, Spain, Mexico, Taiwan, Australia, and the United Kingdom, managing to grow despite the turbulent economic conditions prevalent in these countries. Costco challenged stereotypes and employed unconventional business strategies to position itself as a leading transnational retailer. Costco’s business model was crucial to the company’s financial success and expansion over the years. Key company success factors included its membership-based operating model, its focus on low-cost efficiencies, the perceived quality and value of the Kirkland Signature brand, and its philosophy of rewarding human capital. However, as Costco made plans to expand its operations, it faced challenges due to intensified competition in the global retail industry and policies and regulations in local markets that restricted big box retailers. In this context of uncertain international markets, which markets should it enter next? What was the best entry method for each individual market?
This case is suitable for an undergraduate- or graduate-level business course on strategic management, global strategy, international business, or international marketing. The case examines Costco’s international expansions and highlights key success factors in each market, enabling students to analyze and determine appropriate modes of entry based upon the challenges presented in various countries. After working through the case and assignment questions, students will be able to do the following:
- Describe the global retail business industry.
- Examine and evaluate the effectiveness of Costco’s international business strategies in eight markets and its global expansion strategies.
- Evaluate Costco’s entry mode into each of the eight markets.
- Examine Costco’s key success factors and strategic challenges in the eight markets.
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