business model entails offering fee-paying members as well as sellingand receiving funds for inventory before many of its merchandisevendors are paid. The business model of the company has beenappealing because, for instance, the membership fee was meant toprovide enough supplemental revenues that would boost its overallprofitability. Through the payment terms provided by vendors, thecompany was in a position to finance its merchandise inventory.
Theprincipal factors of ’s strategy are the geographicexpansions, ultra-low prices, a strong emphasis on low costs ofrunning the company, a treasure hunt shopping condition, and arestricted choice of publicly marked and private-label commodities.The strategy is good as it made the company grow within a very shortperiod.
AlthoughJim Sinegal was the co-founder of , I think that he has been aneffective CEO due to his frequent visits to the stores of thecompany. In fact, I would grade him A considering how he commencedthe process of designing and executing the strategy of . Thesupport that I can offer for this category is the fact that thecompany has been showing a significant increase in its net sales.
Someof the core values and business principles stressed by Jim Sinegal at include obeying the law, taking care of members of the companyas well as the employees, respecting the suppliers of the enterprise,and rewarding the shareholders.
Inthe North American wholesale club industry, its competition wasgrowing at a faster rate than retailing as a whole. Considering thefive competitive forces, one can see that pricing is the strongestbecause the firm sold its products at low prices to stand out themost competitive one in the market.
Froma financial perspective, it is apparent that is doing well.For instance, in 2000, the company had a total revenue of 32,164,which increased to 88,915 by 2011 (Thompson, n.d.). By doing somenumber crunching, one can see that the income increased by 88,915 -32,164 = 56,751. However, this indicates that the company isperforming well in generating its revenues.
Moreover,the financial performance of is excellent than other companiesdue to various reasons. Given the total income of the three companiesfor some years, it is evident that remains with the highestincome.
Froma strategic perspective, one can perceive that is performingwell since its key elements made it grow as a big company.Furthermore, enjoys a competitive advantage over other firmssince its nature is higher with the many available stores across theworld (Thompson, n.d.). Besides, has a winning strategy ofselling its products at a low price.
’sprices can be considered too low as it was aiming at stocking onlythe items that could be priced at a bargaining level. Furthermore,this provided its members a chance to save their money significantly.
Consideringthe compensation practices of , one can see that it wasnecessary for executing the company’s strategy successfully. Inthis case, I am not surprised with the employees being wellcompensated than in other enterprises, such as Sam’s Club or Bj’s,because this shows that is getting better productivity.
Givena chance to make recommendations to top executives about thebest way to maintain the growth of the business as well as improveits financial performance, I would advise them to focus moreprimarily on investing in various environmental and energy savingsystems. By doing so, it will keep the company standing out the bestwith the increase in the number of waste products in the environment.
Thompson,A., (n.d.). Wholesale in 2012: Mission, Business Model, andStrategy. TheUniversity of Alabama.