COSTCO WHOLESALE CORPORATION: MARKET EXPANSION AND
GLOBAL STRATEGY1
Chansoo Park, Vipin Viswanathan, Raadhika Gopinath, Sara Parveen, and Mary Furey
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Costco Wholesale Corporation (Costco) became the world’s second-largest global retailer (see Exhibit 1).2
In 2016, the company had been successfully established in eight countries. It was clear that Costco’s next
steps would have to build upon this momentum and that the company would have to expand operations.
For any retailer, selecting new countries and an appropriate entry mode was of utmost importance, as
different markets presented different challenges and considerations. Before the company could create an
expansion plan, it was necessary to analyze the entry methods it had used in its prior expansions to
understand the factors that had contributed to each success. What would be the best method for entry based
on existing barriers in terms of culture and operational constraints?
COSTCO WHOLESALE CORPORATION
Headquartered in Issaquah, Washington, Costco was the largest membership warehouse club in the United
States, with 481 warehouses in 43 states and Puerto Rico. Costco had more than 80 million members and
employed more than 200,000 full- and part-time employees around the world. The company sold brand name
products at low prices and high volumes and offered ancillary service departments such as gas stations,
pharmacies, food courts, optical centres, one-hour photo services, hearing centres, and travel services at its
warehouse locations. Costco also offered its own private label brand, Kirkland Signature, at its warehouses.
Some of Costco’s global competitors were Walmart Inc. (Walmart); Walmart’s membership club, Sam’s West
Inc. (Sam’s Club); Amazon.com Inc. (Amazon); Metro Inc. (Metro); Carrefour Group (Carrefour); the Home
Depot Inc. (Home Depot); and Best Buy Co. Inc. (Best Buy).
GLOBAL EXPANSION TO DATE
Costco’s 2014 sales totalled US$112.6 billion,3 of which $32.1 billion was from international operations.4
That year, the company’s international operating income saw more growth than Costco’s total operating
income (see Exhibit 2). In the five-year period ending in 2014, sales from the company’s international
branches showed a significant increase compared to its U.S. branches (see Exhibit 3) [Show Less]