Financial opportunity of COSTCO and Walmart
COSTCO and Walmart have different financial opportunities due to the different business models. Importantly, COSTCO earns higher profits from membership premiums while Walmart depends on profit margins. The business strategy applied by COSTCO implies that the retailer can sell its products at lower prices compared to Walmart. This aspect gives COSTCO a competitive advantage in the marketplace. The purchasing power of COSTCO continues to increase with respect to its size, which gives the retailer an opportunity to bargain favorable prices and suitable financial condition for its products. Regarding performance, COSTCO has been doing better that Walmart for some years. In April 2015, COSTCO announced a rise of 6 percent in comparable sales. On the other hand, Walmart realized 1.1 percent increase in the United States in comparable sales (Cardenal, 2015). The increase in sales of COSTCO did not take into account the effect of inefficacy in foreign exchange and fluctuations in fuel prices. Nevertheless, Walmart has a large infrastructure base, and it is even improving its presence in Canada. Conversely, COSTCO has many customers in the U.S.
Walmart and COSTCO revenue comparison: April 30, 2016
Figure 1: Wal-Mart Stores (2016)
The company I would lend money to between COSTCO and Walmart
I would lend money to Walmart. Even though COSTCO seems to be more competitive, Walmart generates huge profits. Thus, it can make money elsewhere other than sales to pay its debts.
Investment opportunity presented by the companies
Both Walmart and COSTCO operate in the same industry although they target different customers and have different business models. COSTCO mainly runs warehouse retail while Walmart has a presence in the same industry through the Sam’s Club Division. Walmart has about 11, 500 outlets, which help it generate huge profit margins. Although COSTCO has relatively fewer stores, it registers a more of customer satisfaction. Evidently, the aspect of customer satisfaction accounts for the tremendous growth of COSTCO. Walmart attracts investors with its low entry price. Regarding dividend, Walmart provides better packages than COSTCO. Walmart offers a dividend of 2.7 percent at the start while COSTCO provides 1.1 percent (Cardenal, 2015). Vincent, (2013), states that Walmart has been raising its dividends each year from 1974. Notably, the companies offer attractive investment opportunities for investors.
The company which the work team could invest $100,000
The work team would invest $100,000 in COSTCO. Although the company offers relatively lower dividends compared to Walmart, it has a substantial growth potential. Also, COSTCO has been outperforming Walmart in the recent years. Ideally, the company may offer higher returns in the long-run.
Employment opportunity presented by the companies
COSTCO and Walmart are both good employers. They both offer attractive wages and employee benefits. Walmart offers tuition aid and scholarships to associates and their relatives to study at U.S universities. The company also provides other learning opportunities for the staff. Employees who complete training may be offered more duties and higher wages. Both Walmart and COSTCO offer comprehensive health plans for the employees and their families. The companies are keen on ensuring the well-being of their employees through programs such as vision and dental care. The companies also provide 401 (K) plans for the employees. Walmart also offers discount coupons to its employees as a way of appreciating their support (Saporito, 2007). However, COSTCO pays high wages than Walmart to ensure employee retention.
The company that the team would select to work for
The team would choose to work for COSTCO. Both companies offer comparable health and financial benefits. However, COSTCO pays higher wages, which improve employee satisfaction. Notably, the continuous growth of COSTCO promises even better salaries in the future.
References
Cardenal, A. (2015). Better buy now: Wal-Mart stores, Inc. Vs. Costco wholesale corporation -- the motley fool. Retrieved August 11, 2016, from http://www.fool.com/investing/general/2015/06/15/better-buy-now-wal-mart-stores-inc-vs-costco-whole.aspx
Saporito, B. (2007). Restoring Wal-Mart. Time, 170(20), 46-52.
Vincent, M. (2013, March 15). Retail Giant Wal-Mart Ups Cash Dividend. Investors Business Daily. p. B06.
Wal-Mart Stores Revenue (TTM): 483.21B for April 30, 2016. (2016). Retrieved August 11, 2016, from https://ycharts.com/companies/WMT/revenues_ttm
