Bright Horizons is a company that brings quality early childhood education to children. As Bright Horizons has grown, they have created their own curriculum. It involves math, science, technology, social studies, the arts, cooking, and physical education. They also provide different types of services. They have client-based centers, community centers, elementary schools, after school care programs, and summer camps.

Bright Horizons (2014), states that they “strive to nurture each child’s unique qualities and potential.” As a way to extended this mission statement, I propose to offer tutoring as a part of the after school care program. This way the company can extend its mission statement to older students or past students. It is a way for Bright Horizons to extend their services to past students. Strong partnerships are a key value of Bright Horizons. I recommend that the parents get to choose their child’s tutor through a database of tutors in their area. To match another of Bright Horizons values is the collaboration with employers to build family-friendly workplaces, I recommended that the tutors going to customer’s house. Bright Horizons already has its own University to help aid in the growth of its employees. I recommend that they had more classes to aid in the knowledge of the tutors on staff.

The environmental scan involves many different categories. Through remote environment, Bright Horizons can look at the economics, social, political, technologic, and ecological factors involved in their company. Through this analysis Bright Horizons can continue to be the competitive company that they are within the child-care industry. They are consistently working to bring quality child-care to their cliental. Adding in tutoring services would just expand their strong brand and international connections.

In looking at the implementation plan, it is vital to complete for any and all short-term and long-term successes. The tasks and task ownership are there to help keep everyone accountable to their portion of the plan. This is where directors, assistant directors, and current teachers can aid in the expansion of the service. Milestones are there to have a goal to strive for within the company. Having a beta center gives the company a unique perspective. In aligning resources with the strategic plan, it allows Bright Horizons to fulfill its mission statement in a new and innovated way.

My strategic plan will be to offer tutoring through the Bright Horizon Company. To ensure the organization’s vision, mission, and people strategies and value statements are aligned, I will refer to what Bright Horizon’s strives to do for each child. They strive to “nurture each child’s unique qualities and potential” (“Bright Horizon”, 2014). Therefore, in the tutor services, I propose to develop a curriculum that will be based of each child’s learning style. Other items Bright Horizons strives to do are to support families through strong partnerships, collaborate with employers to build family-friendly workplaces, create work environment that encourages professionalism, growth, and diversity, and grow a financial strong organization” (“Bright Horizon”, 2014). Helping the company grow is another alignment of values because tutoring is a $4 billion dollar industry (“Franchise Help”, 2014). Strong partnership is a key value of Bright Horizons. I will be recommending that the parents get to choose their child’s tutor through a database of tutors in their area. To match another of Bright Horizons values is the collaboration with employers to build family-friendly workplaces, by recommending that the tutors going to customer’s house. Bright Horizons already has its own University to help aid in the growth of its employees. I will recommend that they had more classes to aid in the knowledge of the tutors on staff.

The remote environment includes factors that are a part of the company’s operating situation. There are five factors: (1) economic, (2) social, (3) political, (4) technological, and (5) ecological factors (Pearce & Robinson, 2013). A part of Bright Horizons is client-based centers. For example, Bright Horizons goes to a company and lets them know that they can provide quality child-care to their employees. Not sure you should start a sentence out with it. This allows the employees to drop their children off to onsite daycare. According to Bloomsburg Businessweek (2014), “Child care benefits the employers who sponsor it by improving employee morale, reducing turnover and absenteeism, and increasing productivity.”

Social factors are key within the daycare business, especially when dealing with an international company. Bright Horizons embraces diversity. A number of the centers are a part of accreditations like NAEYC (National Association for the Education of Young Children). Also, the company has some of the highest paid workers due to the client-based centers. They offer benefit packages even to part-time workers. Politically, Bright Horizons always has to deal with new laws and regulations. The company is an international company therefore; they have to maintain other countries’ laws and regulations.

Technological factors are faced every day with the day-care centers. From personal experience, the center I work at has just finished going completely paperless for our children’s portfolios. Prior to this, the company did some technological forecasting, as they wanted to protect and improve the communication between teachers and parents. Thusly, increasing the company’s probability by attracting more customers.

According to Pearce & Robinson (2013), industry environment is “the general conditions for competition that influence all businesses that provide similar products and services.” Bright Horizons has many competitors including in home daycares. According to Lamiman (2007), “One relatively new entrant is Knowledge Learning Corporation, which acquired KinderCare Learning Centers, Inc., in January 2005. Knowledge Learning reports its network now includes more than 120 employer-partnerships centers. Another company in the field is La Petite Academy, with 29 corporate-sponsored early learning centers.” Therefore, there are a number of competitors throughout the industry. Bright Horizons strives to offer multiple services throughout the year to include back up care, summer camps, and vacation support (school age).

An operating environment deals with the factors in the immediate competitive situation such as looking at factors that deal with a company’s success in acquiring needed resources. According to Pearce & Robinson (2013), “Among the most important of these factors are the firm’s competitive position, the composition of its customers, its reputation among suppliers and creditors, and its ability to attract capable employees.” Bright Horizons maintains many different types of centers around the world. They are consistent with training and attracting new customers by sharing their success stories with other companies. They are a part of many accreditations and follow a number of states and countries regulations and laws. They also maintain learning and professional growth opportunities for their employees. Their competitive position is high in the daycare industry. According to Lamiman (2007), “A company spokesman reports that most of Bright Horizons' competition comes from the small owner operated childcare businesses that represent most of the industry. However, in the most recent years, there has been a slight increase in the competition at the corporate end of the industry. (Bright Horizons appears to be the only publicly traded company.)” Thusly showing how their position within the child-care industry is competitive. Their structure is what they call a management (cost-plus) model. In other words the client (a major corporation) provides the space, pays start-up costs, buys capital equipment, handles facility maintenance and retains more control over operations (Lamiman, 2007). Bright Horizons has about 40 percent of their centers under this model. Others are modeled after community centers, where there is a director, managers, and teachers creating the organizational structure.

Companies should complete analysis of its company’s strengths and weaknesses. SWOT is one that is most commonly used and stands for for strengths, weaknesses, opportunities, and threats. Bright Horizons strengths include a strong customer base, specialized services, and a strong brand. To expand on one of these strengths, a strong brand is a main portion of Bright Horizons. They have their own curriculum. They included state standards but they hold their day care centers to a company standard. Their daily letters, newsletters, and class documentation all reflect these standards, which are all under the Bright Horizon brand. Weaknesses of Bright Horizons include stringent regulations and reliance on future corporate acceptance. Through personal experience, I have seen the problem with reliance on future corporate acceptance. Our contract with our company is reviewed yearly, Bright Horizons and the company negotiation on a yearly bases to keep the two centers that we have onsite. Through utilization of a SWOT Analysis, Bright Horizons can work at improving their weakness and growing their strengths.

According to Pearce & Robinson (2013), “Innovation is a grand strategy that seeks to reap the premium margins associated with creation and customer acceptance of a new product or service.” Bright Horizon Family Solutions is a leader in innovation among early childhood education. It needs be consistent in its innovation. “Corporations that embrace innovation and, as importantly, manage innovation well, are able to remain buoyant even in the choppy waters of today's uncertain global economics” (“Innovation”, 2012). This can be done through the improvement of their existing services. Bright Horizon would need to development and testing of the new services. It would be recommended that they have customer surveys after they have introduced new or improved services. This would allow them to respond accordingly to the wants and needs of their customers. Therefore, it is recommended that they spend time in the improvement of existing services or the development of new services.

Although, Bright Horizon Family Solution has used the product differentiation strategy, they should continue to use it within their company. This will guarantee their mission of “providing quality childcare” (Bright Horizons, 2014). According “Product Differentiation” (2006), it is “the means by which suppliers attempt to distinguish their own products from those offered by competitors.” This would be through the promotion of the World Curriculum, which offers a variety of subjects like Art Smart (art classes), Movement Matters Zone (P.E. program), Math Counts (learning math through play), and Cooking Club (cooking lessons). They need to create and sustain a demand for their brand loyalty. This would then give them a competitive advantage over rival centers. This strategy may even serve to act as a barrier to entry to other childcare centers that may want to open within the area.

STR/581

August 26thth, 2014

Alfonso Rodriguez

Table of Contents

Executive Summary

Costco Wholesale Corporation started as Costco Companies Inc. in 1976 in Washington State and began as a corporation in 1983. Costco has 555 warehouses around the world with about 142,000 full and part-time employees. The company has about 54.5 million cardholders worldwide. Costco offers their members competitive low prices on a limited selection of products that include a wide range of national and private label brands. Costco’s operating efficiencies are accomplished with volume purchasing, warehouses, and distribution of products to these warehouses. Volume purchasing allows Costco to purchase their products at a lower price, which in turn they can pass off to their members. Efficient distribution of their products to these warehouses allows Costco to properly distribute their products where customers are more drawn to them. Costco’s fast turnover ratio and operating efficiencies give them a lower gross margin compared to their competitors. In order for Costco to be even more successful or survive unexpected economical events, they must come up with strategy to strive for in the future. In the past Costco’s organizational company has pushed them above their competitors and to be known as a household name. For Costco to understand what to change in their organizational strategy in the future, they must understand the industry they’re in and how their internal environment is operating. Costco must analyze how their industry is doing and in which direction it is moving so they can tailor a strategy to fit the external elements. Costco must also analyze their internal environment operations so they understand if they are operating to their fullest potential, and if they aren’t they can tailor their strategy to fit their internal operation goals. When understanding both the external and internal environments the company can then create an organizational strategy that will help them succeed and survive unexpected economical events.

Strategic Plan and Presentation

Access to Costco Warehouses is restricted to members who pay a small annual fee for access. Started primarily as a small business supply company, Costco’s inventory focus has grown to include high-end consumer goods including home electronics and luxury items. Costco has succeeded by focusing on the demands a specific customer group while continues to provide for other profitable customers.

The vision of Costco founder, Jim Sinegal, is to give the customer the best value that they can. Costco strives to be a company that’s on a first-name basis with everyone. The company is committed to treating people with respect.

Costco’s mission: "To continually provide our members with quality goods and services at the lowest possible prices." Costco doesn't have a vision statement, but it runs on a Code of Ethics: "Costco runs its business according to its Code of Ethics: to obey the law; take care of its members; take care of its employees; respect its suppliers; and reward its shareholders."

The values at Costco have helped to create a culture of fairness, transparency and respect for the consumer that shapes not just how Costco does business, but how its work force sees itself, and how customers experience the brand. One of the best-known is ‘the 14 percent rule,’ which states that no Costco product will be marked up more than 14 per cent over wholesale – regardless of how it’s selling or what competitors are doing.

Environmental Scan

We will compare Costco’s values versus Sam’s Club values. The Kirkland brand has the Costco expectation to be equivalent or better than national brands. A continual product improvement is the exact objective for the maximum competing goal. Product quality and price comparison is continuously revisited by the internal Costco research team. Sam’s club is a division from the Wal-Mart Corporation. Although Sam’s and Costco have a close race, there is an outstanding difference when considering the research that goes into product expectations and supplier preference. Costco is very similar to Sam’s, but in resent comparison Costco has beat out many companies in the same bulk market. Costco and Sam’s have excellent programs for their employees and team effort climate has both companies at an outstanding stance to overall organizational performance.

Costco is known as the anti-Wal-Mart. As of 2005 research demonstrates that Wal-Mart was unstoppable and created strife for small local businesses and destroyed many small businesses. Wal-Mart is an unstoppable force and revenues of $247 billion with a growth of 15% a year. Costco’s is approximately 30% the size of Wal-Mart and Costco competes against Sam’s approach to bulk sales. During the past 20 years Sam’s has had more than 5 CEO’s and has incorporated many strategies in order to try to gain control of the top position. All these ploys have been smothered by Costco’s array of visual space and prestigious options. Consider some figures. Sam's Club has 71% more U.S. stores than Costco (532 to 312), yet for the year ended Aug. 31, Costco had 5% more sales ($34.4 billion vs. an estimated $32.9 billion). The average Costco store generates nearly double the revenue of a Sam's Club ($112 million vs. $63 million), (Helyar, 2003).

When considering the Political, Economic, Social, and Technological aspects to Costco and Sam’s Clubs; there are applications and dues that apply to both organizations. If there is any violation to a customer’s legal liberties, the Better Business Bureau can step in and provide help for paying back any dues or compensations. Services must also fall under the ethical and humane way of treating anything or anyone with rights. Recalls are available through many options into a righteous resolution of matters. The Food and Drug Administration will step in to apply righteous and ethical behavior to products, such as food and all types of medications. Regulations in place are always to be followed by both companies. In some instances, companies such as Costco and Sam’s club may be vulnerable to contaminated foods, such as vegetables, fruits, and processed meats. Over the years, Costco has held a responsible advantage over Sam’s when choosing their provider of such items. As with all businesses offering consumable goods; Costco and Sam’s have to comply with the health inspection section of individual states. Because of their stature in business proceedings, both organizations have avoided problems in matters of this nature. James D. Senegal CEO for Costco remains adamant that mistakes will happen but then to recuperate a team effort to improve must be made. This is what has set the progressive result and rising for Costco’s future. According to Senegal (2003), “We think when you take care of your customer and your employees, your shareholders are going to be rewarded in the long run. And I'm one of them [the shareholders]; I care about the stock price. But we're not going to do something for the sake of one quarter that's going to destroy the fabric of our company and what we stand for."

Some Costco practices are often criticized; Costco has proven to survive through customer research and meeting their needs and wants. Moreover, even while Costco was critiqued on certain decisions Senegal decided to meet the challenge by analyzing, improving the product and advertisement of services. Small decisions and strategies of this nature proved to elevate Costco over Sam’s. Rather than the recommended wage reduction, a decision toward improving the stakeholder, shareholder, and employee treatment was placed in motion. Therefore, visible, and internal improvements to every Costco aspect are evident by proof of costumer surveyed satisfaction.

The core assets/activities of this industry are primarily the facilities (geographic location included), the contracts with suppliers, buyer power, and the barriers to entry.

The factor affecting rivalry among existing competitors is a significant concentration within the industry that has left five or six main competitors capturing major market share. Competing on price at high volumes is the winning strategy within this industry. The firms competing in this industry are very sensitive to costs and capacity utilization. The majority of the facilities in this industry are often around 140,000 square feet, and they are sparsely located based of consumer population within that area. There is a high industry price elasticity of demand. Overall, rivalry is determined by the price and cost structure of the firms operating within the industry, thus rivalry is low or high relative to the price per product.

The factor affecting the threat of entry is brand loyalty. Brand loyalty has been created by some firms impacting the purchase decision. Entrant’s access to distribution channels is not easy. Entrant’s access to raw materials and technology/know-how is easy due to the advancements over the years (especially in operations management). There is an experience-based advantage to the current firms. Overall, threat to entry is relatively low given these circumstances.

The factor affecting or reflecting pressure from substitute products and support from compliments is close substitutes that are readily available. Overall, substitute products are not competitive based on the pricing strategy.

The factor affecting or reflecting power of suppliers is concentration of the suppliers to this industry is minimal at best. Firms in the industry do not purchase relatively small volumes and as such they are able to negotiate volume discounts and strip the power of the supplier. Many suppliers can guarantee sales levels by negotiating contracts with these firms. Overall, supplier power is minimal.

The factor affecting or reflecting power of buyers is buyers’ industry is not more concentrated than the industry it purchases from because buyer’s can go anywhere. Typical buyers purchase large volumes, and they purchase individual items in bulk. There is some negotiation of prices in this industry between buyers and sellers on each individual transaction, but most transactions are a “take-it-or-leave-it” price application. Overall buyer power is high given buyer options.

This industry has limited rivalry, a few enormous barriers to entry, very little supplier power, strong buyer power, and little threat from substitutes.

Internal Environment

Costco’s mission statement in the membership warehouse business reads, “To continually provide our members with quality goods and services at the lowest possible prices.” The companies basic business model is too generate high sales volumes and rapid inventory turnover by offering members low prices on a limited selection of branded and private label products in a wide range of merchandise categories. Costco has a simple but differentiated business strategy that works. Their strategy is low prices, bulk buying, limited selection, and a treasure-hunt shopping environment. Costco is known for selling top-quality national and regional branded products consistently below traditional wholesale or retail outlets. Costco also abides by a strict pricing rule to cap its markup on brand-name merchandise at 14 percent compared to competitors at 20 to 50 percent markups. Yet another price strategy is Costco’s Kirkland Signature products which are a private label designed to be of equal or better quality than national brands, but priced some 20 percent below competing brands. Product selection is another main aspect of Costco’s business model. Companies such as Wal-Mart and Target may stock some 150,000 different items to give shoppers a wide selection to choose from. However Costco’s strategy is to provide members with a selection of only about 4,000 different items.

Finally, the part everyone likes, treasure-hunt shopping. Costco’s product line may only consist of approximately 4,000 items, however, about 25 percent of those are constantly changing. Also, since approximately 1,000 items are constantly changing members know they had better buy now, because the product may not be their next time. When looking at the cross-sectional financial analysis between Costco and Wal-Mart between 2005 and 2008, Wal-Mart has had a larger profit margin compared to Costco’s over those years. Costco’s profit margin has ranged from 13.38% to 13.17%, while Wal-Mart’s profit margin has gradually increased from 24.43% to 25.29%. Costco’s average profit margin from 2005 to 2008 was 13.27% compared to Wal-Mart’s 24.80%. This shows that Wal-Mart has better control over their cost. In order for Costco to improve their profit margin, they must control their cost as well as Wal-Mart. In the cross sectional analysis, Costco’s total asset turnover has been higher than Wal-Mart’s. Wal-Mart’s total asset turnover has ranged from 2.43 to 2.60, while Costco’s total asset turnover has ranged from 3.18 to 3.50. Wal-Mart’s average total asset turn over from 2005 to 2008 was 2.29 compared to Costco’s 3.35. This shows that Costco is doing a better job at turning their assets into revenue than Wal-Mart is. When comparing each company’s equity multiplier, Wal-Mart tended to have the higher equity multiplier from 2005 to 2008 compared to Costco’s. Costco’s equity multiplier ranged from 1.88 to 2.27, while Wal-Mart’s ranged from 2.43 to 2.60. Costco’s average equity multiplier from 2005 to 2008 was 2.08 compared to Wal-Mart’s average of 2.51. This shows that Wal-Mart is relying more on stockholder’s equity or debt to finance its assets. In order for Costco to increase their equity multiplier they must use more debt to finance their assets. Costco’s return on equity from 2005 to 2008 is lower compared to Wal-Mart’s. Costco’s return on equity ranged from .80 to 1.05, while Wal-Mart’s ranged from 1.41 to 1.46. The average return on equity was .92 compared to Wal-Mart’s 1.43. In order for Costco to increase their return on equity to Wal-Mart’s they must increase their profit margin and equity multiplier. Costco must control cost and use more debt to finance their assets to increase their return on equity. The average sales for Costco between 2005 and 2008 were $62 billion, while Wal-Mart had average sales of $328 billion. Costco’s average sales growth of 11.07% between 2005 and 2008 is higher than Wal-Mart’s 9.52%. Even though Costco’s sales are not as large as Wal-Mart’s, their sales growth has been growing. The average income for Costco between 2005 and 2008 was 1.13 billion, while Wal-Mart had average income of 11.37 billion. Costco’s average income growth of 6.80% between 2005 and 2008 is lower than Wal-Mart’s 7.56%. Both companies took a hit to their income in 2007, but Costco had a negative growth compared to Wal-Mart’s. Costco’s return on assets from 2005 to 2008 is lower than Wal-Mart’s. Costco’s return on assets ranged from 5.52% to 6.38% in this time frame, while Wal-Mart had a range from 7.44% to 8.54%. The average return on assets for Costco was 6.10% compared to Wal-Mart’s 7.98%. This tells us that Wal-Mart is doing a better job at taking their assets and generating earnings. When competing with Wal-Mart, Costco should look into more efficient ways of using their assets so that more earnings can be generated. When doing a longitudinal financial analysis on Costco, Costco’s profit margin has been slightly increasing between 1999 and 2008. It had a profit margin of 12.79% in 1999 to 13.29% in 2008. This gives the company an average profit margin of 13.16% compared to the industry average of 20.40%. This shows that even though Costco has been gradually increasing its profit margin, it is still below the industry average. The company needs to control costs in order to increase their profit margin. Costco’s total asset turnover has stayed relatively the same from 1999 to 2008. The average total asset turnover in that time period was 3.40 compared to the industry average of 2.85. Compared to the industry Costco has a moderately high total asset turn over. This means that Costco is doing a very efficient job in using its assets in creating sales. Costco’s equity multiplier has ranged from 1.88 to 2.27 from 1999 to 2008. The average equity multiplier in this time period was 2.06 compared to the industry average of2.34. Costco is slightly lower than the industry average. To increase their financial performance the company should increase their financial leverage and rely on more debt to finance their assets. The average return on equity for Costco between 1999 and 2008 was .92 compared to the industry average of 1.19. Costco’s below average return on equity is mainly because of its profit margin. In order for Costco to improve on their financial performance, the company needs to handle their cost associated with their operations. Costco has had gradually increasing sales from 1999 to 2008. The sales growth shows an average growth of 11.43% for Costco compared to the industry average of 10.48%. This shows that Costco is above average in the industry with its sales growth. The average sales for Costco between 1999 and 2008 were 47.38 billion compared to the industry average of 88.53 billion. Costco’s averages sales puts the company in third place for the largest sales right behind Wal-Mart and BJ’s. Costco also has had a gradually increasing net income from 1999 to 2008. The net income growth shows an average of 15.2% for Costco compared to the industry average of 13.68%. This shows that Costco is above average in the industry with its net income growth. The average net income for Costco between 1999 and 2008 were 846 million compared to the industry average of 2.8 billion. Even though Costco’s net income is below the industry average, it is slightly growing every year. Costco has been generating below average profit margins compared to the industry average. At the same time Costco isn’t controlling their cost which is hurting their profit margins. The company gives generous pay to their employees higher than the average believing that this will result in lower turnover and saving cost on new hires and training. Another cost for Costco is their inventory and markup on products. They make less per sale but make more with higher number of sales. If this is the case then Costco is generating more cost with their inventory decreasing profit margins. The key elements of Costco’s strategy and drivers of performance are low prices, bulk buying, limited selection, and a treasure-hunt shopping environment. Another reason Costco has been generating below average profit margins is because they are doing it on purpose. Sinegal was quoted saying the following about Wall Street, “Those people are in the business of making money between now and next Tuesday. We’re trying to build an organization that’s going to be here 50 years from now.” Sinegal is saying that by keeping prices low they are driving out competitors. If Costco was to raise prices a new competitor may be able to enter the market and beat them.

Strategic Recommendations

When looking towards the next 2 to 5 years, Costco must make sure that it understands where the industry is heading. Based on the external environment and industry analysis conducted above, Costco must make sure that it can cut costs as much as possible. As mentioned above in the Key Success Factors, the most successful company within the discount, variety stores industry is a company that is able to keep prices low. Customers have very low switching costs; therefore, Costco needs to constantly remain on its toes in order to compete and sustain its position in the industry. Because Costco needs to maintain very low prices, a lot of pressure is put on the profit margin of the company. In the past, Costco has kept relatively low profit margin levels versus other competitors within the industry. Table 3 below compares Costco’s average profit margin to that of its competitors over the past ten years. Table 3

One way for Costco to cut their cost would be in their wages. "From the perspective of investors, Costco's benefits are overly generous," says Bill Dreher, retailing analyst with Deutsche Bank Securities Inc. "Public companies need to care for shareholders first. Costco runs its business like it is a private company. (Zimmerman)" Costco’s generous wages and benefits to their employees are one of the reasons for their below industry average profit margins. One of our recommendations would be for Costco to reduce the amount of employees’ health-insurance premiums they pay by at least 6%. Costco in 2004 paid about 92% of their employees’ health-insurance premiums compared to the top U.S. companies paying on average 80% (Zimmerman). By cutting the amount Costco pays for their employees’ insurance premiums by at least 6%, Costco will still be above average compared to the top U.S. companies and still be semi-generous to employees while at the same time increasing their profits margin. One thing that has been hurting Costco and many other retailers has been the inflation cost on food. There has been a rise in cost for many of the products that Costco carries, and the company has been having a hard time passing those cost increases to their customers. This is because the costs of their products are rising to fast not giving them enough time to pass the increase to consumers. “Consumers have felt the pinch of rising prices, but Costco and other retailers have often resisted passing along all their cost increases to avoid losing sales to rivals (McWilliams )”. Costco is stuck in a corner with the rising cost of their products, because if they choose to raise prices they face the threat of losing customers and if they decide to keep prices the same they are losing profits and increasing cost. Our recommendation would be for Costco to raise prices slightly below their competitors. This is an economic condition that many retailers are facing and in order for them to survive they must increase prices as well. With the belief that many retailers are going to raise their prices as well, Costco should do the same. The price increases should be proportionate to how much the cost is rising for the product but to also try to keep the price within the 14% markup that Costco has compared to their competitors. This in turn will keep cost for Costco under control while keeping customers and still being a price competitor. With the current economic times and massive Government spending any company needs to financially and strategically place themselves for success in the future. Simple economics tells us that with huge amounts of spending and Government debt comes inflation. This is a viable outlook for the economy and to place oneself to benefit during inflationary times one needs to increase debt. Costco should do as the Government does and issued debt, take out loans, or do whatever it takes to increase the amount of debt on their balance sheet. Then during the inflationary times Costco will be able to repay that debt with a cheaper dollar instead of having their asset purchasing power devalued.

References

Costco Investor Realtions, (2014). Retrieved via the world wide web: http://phx.corporate-ir.net/phoenix.zhtml?c=83830&p=irol-irhome&cm_re=1_en-_-Bottom_Nav-_-Bottom_investor&lang=en-US.

Helyar, J. (2003). The Only Company Wal-Mart Fears Nobody runs warehouse clubs better than Costco, where shoppers can't resist luxury products at bargain prices. Retrieved from

Running head: STRATEGIC PLAN AND PRESENTATION 1

Xerox Inc. is a multinational company that focuses on the management of information and hard copy documents by manufacturing an assortment of products such as printers, photocopiers, other printing equipment and a range of digital information and production machines. Through the assembling and production of such equipment Xerox, Inc. has, therefore, solidified its strategic position in the information management through the use of hard copy media storage. This paper will focus on highlighting various essential items in the strategic plan of the Xerox Company. The essential items under consideration have been in use at the different management level within this organization. This report will also focus on the primary driving factors. Xerox, Inc. has a long history rich and dotted with numerous changes in the organizational and cultural change since its establishment. The changes have driven the firm from the simple manufacturers of printers many years ago to the modern that is diversified in information management. Xerox has a unique culture of focusing on the needs of customers and delivering innovative products that will satisfy these needs. In the long term, Xerox has been focusing on being one of the industry leaders; delivering innovative products, growing internally, externally in terms of profitability, customer base, capitalization and sustainability.

By overcoming the technological challenges through establishment of special research and development centers, the firm has gained an edge over its competitors in the information management through the application of technology in delivering satisfactory results. This report will also focus on the company values, internal and external environment analysis. Xerox has been grounded on a rich tradition of maintaining success in various sectors by fostering relationships through the satisfied customers, delivery and innovative products, market leadership, value addition and empowerment of its employees as well.

The environmental scan will highlight the internal and external factors that are either driving or slowing down the growth of Xerox. The environmental scan will focus on assessing the factors that will have an impact on the financial and non-financial performance of Xerox. The external environment (opportunities and threats) scan will highlight the effects of the micro and macro-economic factors on the overall performance of the organization; the effects of political, economic, social-cultural, technological, legal and political factors. On the other hand, the internal environment scan will address the strengths and the weakness of this firm.

This paper will assess how the firm has adopted to these changes in becoming a market leader in information management. Xerox is also thriving as a result of combining the grand and generic business strategies and objectives in the long term scope. The focus will be on the marketing, promotion, financial and the non-financial strategies that the organization has put in place in bettering its performance over the years and as a result establish its strategic position in the delivery of innovative and technological products. With the assessment of the grand and generic strategies and how they are likely to affect the performance of the company in future, the complete strategic plan for Xerox, Inc. goes on to assess the best strategies that should be taken into consideration for further growth in performance and managing competition. The recommendations part of the complete strategic plan for Xerox, Inc. assesses and recommends the best approaches to enable a continuous growth in terms of innovation, customer satisfaction, capitalization and profitability. Implementation of the recommended strategies and approaches highlights how Xerox can shift from its current state and face the future with reduced uncertainties. The paper lays bare all the risk contingencies plans that will help Xerox mitigate all the risks attributable to the future and the uncertainties due to implementation of the strategies under consideration.

Strategic Plan and Presentation

Xerox is a global American firm in the document management sector that manufactures and sells a wide variety of products such as printers, photocopiers, digital production, and printing devices. Additionally, the company offers a variety of consultation services on its products and those in the same field (Adrian & Richard, 2003).

Xerox's rich legacy bases much on consumer focus and employee core values that aid in delivering growth, sustainability, and profitability.

Xerox’s mission focuses on becoming the change agents and innovators. This is achieved by utilizing Xerox Lean Six Sigma that continually searches for an enhanced means to meet the difficulties and make business procedure outsourcing, new advances, IT results, items, and administrations for brilliant government and business customers that empower better comes about.

Since Xerox’s initiation, it has functioned under the leadership of six core values:

· Corporate success through customers satisfaction.

· Delivery of excellence and quality in all our operations.

· Requirement of the assets' premium return.

· Technology usage to build market leadership.

· Employees value and empowerment.

· Corporate citizens responsible behavior.

In general, when analyzing the various factors that may affect the growth and subsequent sustainability of a company, looking into the current environmental issues is substantial. This aspect helps understand the areas that need consideration prior to making any decisions. The environment refers to the various factors that have some influence on something, an individual, or a group. Environments differ in the degree of influence they have on the aforementioned. In the business world, an environment earns the name business environment. By definition, business environment refers to the summation of all internal and external forces that have some influence in the general operations of the business body (Adrian & Richard, 2003). Depending on the business structure, the business’ internal and external factors may work in harmony or work separately each having its share of influence on the total business performance. In order to determine the degree of impact and the direction the impacts offers, either positive or negative, there is a great need to conduct an analysis and monitor the various factors. The above factors are possible through environmental scanning, which is an important element of global environmental analysis.

As explained earlier external factors influence the business from outside, including the social factors, microeconomic factors, macroeconomic factors, and technological factors (Xerox Corp., 2013). Each of these factors has varied the impact on the various operational elements of a company. To begin with, the most significant external environmental factor in Xerox’s remote environment will be identified and analyzed. A remote environment refers to the forces that influence the decision making process of a business entity. In the case of Xerox, the most significant remote external environmental force is the technological factor. Xerox has heavily invested in the latest technology with the aim of ensuring it meets the latest technological standards. In this line, the use of great technology has enabled the firm to set its standards upon which the decision of quality production lays.

In the same direction, technological advancements have great influence at the industrial level hence affecting the company’s industrial environment. As previously mentioned, the company has set specific standards that guide the production of their products. The standards ensure the latest technologies are used in the production of Xerox’s products and services. To finalize, technological advancements the company exhibits have great influence on the corporation’s operations. Through the technology the firm uses, it has made its distribution chain easy. The external factors have enabled the firm to handle competition effectively making it part of the pool of market leaders in the document management sector.

For a company to enjoy success and market dominance, it is important for it to conduct a strength analysis to determine the strengths of the firm. Once it identifies its strength, it is at a position to use it in its advantage in the race to acquire business success and market dominance. In Xerox's case, the most significant strengths include the company’s ethics, managements of finances, and human resource management strategies. Xerox has concrete ethical standards that define the company’s code of conduct. In any business, setting ethics plays a great role in guiding the various stakeholders on how to conduct themselves while associating with a business entity. The aforementioned has been of great benefit since it has ensured that the business observes high level of ethics in their daily operations. In addition, its high levels of ethics have served as grounds for practicing high levels of integrity in the business’s operations factors (Xerox Corp., 2013). Adoption of an ethical profile has helped in the creation of a good relationship between the business entity and the various relevant stakeholders.

The other strength is the ability of the firm to manage its financial resources. The firm was able to leverage success from its short-term finances and current asset. In addition, the company has well utilized it working capital, which has resulted to great financial prosperity. Finally, the company has a well elaborate human resource management scheme that has seen the firm create an excellent workforce. The financial resources have led directly to an excellent performance. Xerox has invested heavily in ensuring that diversity is observed in the selection of its workforce. Recently, FORTUNE magazine and Forbes magazine recognized Xerox as part of the top 50 firms that embrace diversity factors (Xerox Corp., 2013).

Every business must have various elements that act as downing force towards its success. Just like any other business, Xerox is not an exception of the previously said. Among the most crucial weakness that have immense influence on the firms operations are high technological prices, stakeholders’ adoption problem to technological changes, and a retiring poll of resources. A greater portion of success in Xerox is from its incorporation of high levels of up-to-date technologies (Zook, 2004). Despite the fact that it brings along some benefits, it also comes at a price. Currently, the firm heavily invests to ensure that it runs with the latest levels of technology. For the achievement of success, it has to channel a lot of its funds into technological advancements, which could have been put into use for other purposes.

The other weakness is the period the stakeholders may take to adapt to technological advancements. Some stakeholders may not understand the need of a given technology and it may take them some time to comprehend its importance. As a result, this may create an opposing force that may lead to the slow implementation of new technologies. Due to the constant change in the face of technology, the firm finds itself with many retired resources that have little economic value to the company. In turn, the company finds itself in a situation where it has to abandon some resources in order to a accommodate others. These resources may include an old workforce, old equipment, and old production techniques among many others factors (Xerox Corp., 2013).

Xerox is an organization endeavoring to movement the legacy view of its brand while amidst conversion. Xerox Corporation Ltd. is an American international record management organization that creates and offers scanners, advanced creation printing presses, a scope of printers both color and black-and-white, multifunction frameworks, and related consulting services and products. Xerox Inc. produce, outlines, supplies, services document equipment, solutions, software, and services to a large community (Xerox Corp, 2013).

Xerox has a generic strategy that has come a long way over the years. Xerox once used product sponsorship primarily as a customer entertainment platform. The document organization has overhauled its market approach in supporting its evolving product and service offering and drive new business. The plan includes three primary components of gaining business from sponsored properties, validating brand story through product/service showcase and using intellectual property and other assets in 360-degree promotion plans and campaigns. In supporting the new strategy, Xerox has expanded its sports-heavy sponsorship portfolio into the world of art as well as diversified entertainment and added global assets that provide international reach and local touch points (Xerox Corp, 2013).

The grand strategy of Xerox is vigorously working to distinguish and fortify its project managed print services (MPS) contributions through both extended services and enhanced go-to-market. An important differentiator for Xerox is its span of service assistance that includes the entire range of printing services; from the office to the print room. Its next production MPS platform is assembled on three pillars, which includes assessing and safe, optimize and incorporate, and simplify and computerize. These fundamentals are maintained by a series of technology, products, and services that help venture activities around benefits, practicality, and expense decrease (Louella, 2014).

Xerox's strategy is to perform a reasonable, reachable, and testing objective which concentrates on expanding the organization esteem and long-term investors’ returns. Xerox's experimentations yield new items and administrations that outpace aggressive dangers since a society that examinations deliver better long-term value. Xerox's technique is to enhance continuously. This serves to ensure against competitive dangers and expands shareholder returns (Louella, 2014).

Strengthen the execution foundation by putting resources into 'safe wagers' is the suggestion. Despite which development technique is picked, a company's foundation must be dependent upon a standard so as to support thriving execution. An on-set duty to making such a framework is a 'safe wager' which involve wiping out departmental or territorial storehouse, using leading pointers and execution drivers that adjust to the methodology and developing leaders of all ranks, which includes managerial and non-managerial (Zook, 2004).

Launch a procedure to distinguish techniques with a high likelihood for achievement could be an alternate critical viewpoint. It is suggested that upper management start the procedure by taking into consideration the development probable inside the current center of the business and/or the prospects and development potential connected by making inventive quality suggestions for underserved client groups. While higher authority group travels throughout this development, it will appear obvious if and when adjoining development alternatives ought to be considered.

Adopting an agreement of artificial goods separation, low-cost management, and item for expenditure extension strategies will help to capitalize on potency, counteracts intimidation as these strategies continue their mission, and organize in a line with their objectives. The company will provide their customers with better substitution. The populace are escalating and growing speedily. In 2009, people aged 65 years and above were in excess in the United States. Forecasts indicate that in 2030, there will be 72.1 million Americans. Xerox has beforehand imitation a procession of products modified to the aging process, heaviness aware, and will extend to produce and get well upon these products. Xerox creates leading boundary products, civilizing based on the over-riding ahead of them when required, and use their superseding market split to carry on low expenses.

To put into practice a tactical map productively, Xerox must recognize temporary objectives, landmark, and deadline; kick off precise practical strategy; converse strategy that authorize populace in the association, while satisfying them efficiently; allocate job possession to precise everyday jobs; and assign possessions. Xerox temporary necessities comes in with the developed project in flanked by 5 to 6 percent as well as compose larger both innovative products and recuperate available goods. “Short-term objectives are experimental result probable or predictable to be attaining in one day or fewer. This plan is based on a set of goals that is also obtained by conflicts to be better understood for the important problems to meet and comment development with the necessities to be acknowledged for quantity (Ross, 1996).

All these strategies will be processed for its temporary goals in the environment with tactics so powerful for the complete period in to its responsibility. Practical approaches are the behavior that must be finished to appreciate the temporary objective. The company is however performing well because it has been capable of transforming positive cash flows from its operating activities and the company is further operating at high profit margins despite the heavy competition it faces at the market. However, Xerox remains a valuable company that one can invest in because it has a commanding lead in the field of office technology, and it has exhibited an effective marketing strategy through provision of groundbreaking items through a continuous expansion of the customer base.

The company’s stock is making returns quickly and frequently for its investment on the company’s shareholders. Through dedicated leadership and strategic management, the company has been able to restructure its priorities by placing employee culture and customer service before and everything else. Xerox as a company, also appreciates the importance of its workers as being a valuable line of communication for customer satisfaction and the general public image. Xerox has apart from investing highly in the development and research also created a strong public image so as to create innovative new products that suit the customers. It is through these information technology based products that Xerox has been able to streamline its business operations and therefore to help the company to save substantial amounts of money.

The company is performing well because it has been capable of transforming positive cash flows from its operating activities and the company is further operating at high profit margins despite of the heavy competition it faces at the market. However, Xerox remains a valuable company that one can invest in because it has a commanding lead in the field of office technology and it has exhibited an effective marketing strategy through provision of ground breaking items through a continuous expansion of the customer base. The company’s stock is quickly and frequently making returns for its investment for the company’s shareholders. Through dedicated leadership and strategic management, the company has been able to restructure its priorities by placing employee culture and customer service before and everything else. Xerox as a company, also appreciates the importance of its workers as being a valuable line of communication for customer satisfaction and the general public image. Xerox has apart from investing highly in development and research also created a strong public image in order to create innovative new products that suit the customers. It is through these information technology based products that Xerox has been able to streamline its business operations and therefore helping the company to save substantial amounts of money.

Adrian. S., & Richard. W., (2003). Six principles for making new growth initiatives work, Ivey Business Journal, (4), pp. 15-25

George S., Philip E., & Lawrence S., (1992). The new rules of corporate strategy. Harvard Business Review.(23)45-63.

Louella. F., (2014). Xerox Progresses Next Generation MPS Strategy. Retrieved from http://industryanalysts.com/xerox-progresses-next-generation-mps-strategy-louella-fernandes/

Ross, J. R., (1996). Benchmarking: Improving Performance Through Standards of Comparison, Stores, 78, (11), pp. 53–54.

Xerox Corp., (2013). Inside Xerox’s Evolving Sponsorship Strategy. Strategy. Retrieved from http://www.sponsorship.com/iegsr/2013/10/07/Inside-Xerox-s-Evolving-Sponsorship-Strategy.aspx

Zook. C., (2004). In Beyond the Core. Harvard Business School Press.

Executive Summary and Company Background