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Costco Case Analysis

Costco Case Analysis. INDIA. Paid member based shopping model. Factory direct purchasing, high velocity resale. Lower shrink – less stolen, more sold. Member model reduces shrink. Higher freight volumes, lower turnaround to sale time Redistribution is quick – centralized.

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Costco Case Analysis

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  1. Costco Case Analysis INDIA

  2. Paid member based shopping model. • Factory direct purchasing, high velocity resale. • Lower shrink – less stolen, more sold. Member model reduces shrink. • Higher freight volumes, lower turnaround to sale time • Redistribution is quick – centralized. • Cost reductions realized from fast inventory sales. • Efficient sales floor layouts – more product, less wasted space = more sales. Costco Business Model

  3. Very low marketing, labor and a targeted discount model • Coupon/Sales blasts sent to a limited target audience – members only. • Reduction in marketing dollars over competitors equals lower costs for goods. • Labor costs reduced via larger volumes of stock on hand, in pallets and ready for customer distribution with low labor required. • Hours of operation limited to core shopping times and light need for overnight stocking staff. • Return policy highly favorable in the market, most goods accepted back without receipts and with extended warranty options. Costco Value Proposition

  4. Gross Domestic Product (GDP) – $4.06 trillion (5th in the world) • Inflation – 12% - High (206th in the world) • GDP Growth Rate – 10.4% (5th in the world) • Foreign Reserves – $287.1 Billion (7th in the world) • GDP Per Capita - $3,500 (262nd in the world) • Currency Stability – 43 - 49:1 USD – 52wk Range India - Economy

  5. Ruling Party and Leader • PratibhaDevisinghPatil – (2007 – Current) • Party: Indian National Congress • Government Stability • Democratic Nation • Harsh relations with China over allegations of munitions being traded with Pakistan and China’s oversized military footprint. • Money Out – Imports • By 2035 India will be the second largest importer of fossil fuels. • Subsidies • 14% of Indian GDP is subsidized. • Majority of Indian subsidies are oil of which 39% of subsidized kerosene is stolen. India - Government

  6. Indian Transport and Fuel Infrastructure • Airports – 353 (249 with paved runways) • Heliports – 40 • Pipelines • Condensate/Gas – 2km • Gas – 9,596km • Liquid Petroleum Gas – 2,152km • Oil – 7,448km • Refined Products – 10,486km • Railways – 63,974km (4th in the world) • Roadways - 3,320,410km (3rd in the world) • Waterways – 14,500km (9th in the world) • Merchant Marine – 324 (29th in the world) India - Infrastructure

  7. Indian Real Estate Cost • India-wide housing prices have increased 21.3% in Q2 2011. • Ranked 2nd out of 50 countries for annual growth of residential prices. • High Growth - Compared to 2010 by City • Bhopal +46.41% • Faridabad +44.74% • Chennai +35.52% • Bengaluru +35.29% • New Delhi +33.64% • Low Growth – Compared to 2010 by City • Kolkata +10.23% • Surat +9.56% • Jaipur +4.92% India – Real Estate Cost

  8. Real Estate Availability • Moderate availability due to financial situations in India. • High cost is a big detractor in Indian Real Estate Sales. • Cost of land post Indian 2001 Economic Bubble exceed that of the median home sales prices. • 65% of flats sold in Delhi and 35% of flats sold in Mumbai have sold to speculators. • Booming growth in Indian GDP may result in more availability over 2013-2015 at affordable prices. • Jones Lang LaSalle remains the largest partner for real estate sales and coverage in India. India Real Estate – Avail/Partners

  9. The following Web Content was used for this presentation. • The United States Central Intelligence Agency, Retrieved 10/6/2011 • https://www.cia.gov/library/publications/the-world-factbook/geos/in.html • Yahoo! Finance, Retrieved 10/6/2011 • http://finance.yahoo.com/q/bc?s=USDINR=X&t=5y&l=on&z=m&q=l&c= • Wikipedia, Retrieved 10/6/2011 • http://en.wikipedia.org/wiki/Energy_policy_of_India • http://en.wikipedia.org/wiki/Real_Estate_in_India • Global Property Guide, Retrieved 10/6/2011 • http://www.globalpropertyguide.com/Asia/India ADA Citations

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