Essay: The possibility of the existence of long run profits

Essay: The possibility of the existence of long run profits
May 23, 2011 Comments Off on Essay: The possibility of the existence of long run profits Academic Papers on Business Studies,Sample Academic Papers admin

Sample Essay

Since Costco works on a low pricing strategy like many other giants of the industry depend upon, the chance of earning profits on a longer run are likely to be bright. Since on the initial level, due to the fewer margins of profit, ability to earn quickly is a vague thought, therefore in a greater passage of time, if it is reviewed in the Annual report, the profits have gone higher since the very beginning. The company believes in great earnings but keeps it slow in order to cope up with the ever-attractive low pricing method.

As it is said, “slow and steady wins the race”, the company creeps towards the profits since they are sales and revenue has grown at large. the best example would be a food product worth $5. The company bought it for $4, and sold it keeping a $1 profit at a rate of 20%. The other companies did the same, so Costco, hypothetically, reduced the price for $4.5 as total selling price. Customers got attracted by this price since it overtakes the selling prices offered anywhere else. Initially, the profits for Costco were less as compared to others, but the pricing attracted a large number of customers, eventually raising sales and profits on the whole (Costco Wholesale).

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