Question

1. Are Costco’s prices too low? Why or why not?

2.  What do you think of Costco’s compensation practices? Does it surprise you that Costco employees

apparently are rather well-compensated?

3. What recommendations would you make to Costco top management regarding how best to sustain the

company’s growth and improve its financial performance?

Answer 1

Answer.1-

I do not believe Costco’s prices are too low. I think that if they raised their profits that people would not buy as much in bulk and their competitors will move ahead of them. They need those low prices to keep the customers coming for that “wow” factor. They might be a little too low, but I think they need to keep them low otherwise they will lose their customers. They may be able to up them a little if they are still below their competitors.  

Answer.2-

It does not surprise me at all since employee appreciation is such a big part of their business model. They not only are financially well compensated but also get a lot of benefits along with it for the salaried employees. I think these compensation practice is great and that if they can keep up with it financially that they should continue to compensate their people well.

Answer.3-

They are already doing a wonderful job of containing their costs and expenses but there is always room for improvement. I recommend that they even trim cost even more by really taking a deeper look at how they spend their money and I am sure that they can find some ways to trim the fat. As we talked about earlier I think they could also stand to raise their prices some if they are still below their competitors.I don’t think that they should open more stores internationally because I don’t think it is worth it in the end, but I do believe they should open more stores in America. Especially they need to take advantage of Sam’s decline. As a student that enjoys shopping at Costco and is upset because there is not one in Tuscaloosa, I think that they have a lot more room to grow nationally.