Analysis of The Financial Performance Assignment

Running head: FINANCE
Finance
Name of the Student:
Name of the University:
Author’s Note

FINANCE
1
Table of Contents
Introduction....................................................................................................................2
Analysis..........................................................................................................................2
Alternatives....................................................................................................................3
Recommendations..........................................................................................................4
Bibliography...................................................................................................................5
Appendix........................................................................................................................6
PESTEL Analysis...........................................................................................................6
Dominant Economic features analysis.........................................................................11

FINANCE
2
Introduction
The main purpose of the assessment is to conduct a thorough analysis of the financial
performance of the business and strategies which are formulated by the business for
enhancing the operational status of the business. Costco Inc is recognised as one of the
American Multinational company which operates numerous warehouses for wholesale
operations and it is also recognised as one of the leading businesses in the retail sector as well
(C-17). The company is known for its organic products and food products which are quite
popular among the customers of the business. The business strategy which is followed by the
company is to offer products at a lower price and the product should also be of perfect
quality. The report would be going into details regarding the issues which are faced by the
company and how the same is affecting the operations of the business. In addition to this, the
analysis would also present recommendations and measures which can be implemented so
that further improvements can be brought about in the operational process of the business (C-
19). The alternative strategies which can be implemented by the business would be
containing pros and cons for the same so that proper decisions can be taken in this regard.
Analysis
The business of Costco Inc faces significant challenges from the changes which are
taking place in the market. The taste and preferences of the consumers are changing and
therefore appropriate changes are required to be brought about in the operational process of
the business so that it can appropriately meet the demands of the customers. One of the main
concerns which the business is facing is the high competitive pressures which the company is
facing in the market. The high competition is mainly from established companies such as
Target Inc and Walmart in the retail sectors and Sam’s Club and BJ's Wholesale Club which
are close competitors of the company in the Wholesale operations (C-34). The management
of Costco Inc needs to formulate proper strategies so that efficiency and flexibility is
maintained in the operational process of the business.
The business of Sam’s Club also aims to maintain a low profit margin and therefore
the price for the products gets automatically reduced resulting in more sales for the business.
In this manner, the business is able to enhance the sales of the business and expand its
operations further (C-35). It is clear that the key strategies which are implemented in the
business of Costco Inc are also followed by Sam’s Club and therefore it is anticipated that the
competition pressure in the market would be high. These strategies intensify the competition
and thereby enhance the rivalry in the market. The management of Costco Inc appropriately
tries to expand the operations so that the level of competition can be managed in an effective
manner. The management of Costco Inc needs to formulate counter measures so that more
demand for its products so that more revenue can be generated. The analysis of financial data
which is shown in the appendix section shows that the business has been able to maintain its
sales but considering future trends, the business needs to consider the level of competition in
the market so that more revenue can be generated from the activities of the business (C-21).
In order to properly estimate the financial health of the business, key financial ratios are
computed and the same is shown in the appendix section with proper identification regarding
the key areas of performance for the business.
The corporate and business strategies which are formulated by the business
systematically aim to enhance the operations of the business and thereby achieve growth in
the market. The business also wants to lower the costs of operations so that goods products
are available to the customers at a reasonable price [E-5 (S-1.3.2)]. The product which is
offered needs to be of highest quality and thereby maintain the sales of the business.