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    Costco Company Analysis (2010 words)

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    Costco is the among largest multinational corporations which was incorporated in American and it operates a wide range of membership chains called warehouse clubs. The company deals in a wide range of multiple choice items which includes organic foods, prime beef wines and rotisserie chicken. The company faces strong competition from Walmart but it has continued to have a biggest market share irrespective of the competition. The company has its headquarters in Issaquah in Washington. The history of Costco dates way back in 1976 and it has been involved in a variety of mergers. By 2018, the company owns over 759 warehouses across the world but with the majority operating within the united states of American. The company has been in position of maintaining its philosophy which its mission which was cores for its establishment. The company is in position of maintaining costs low while delivering value to its members. It has helped to succeed in the industry compared to other smaller industry players (Dalavagas).

    Corporate Social Responsibility

    Costco corporation has instituted a wide range of programs on its corporate social responsibility strategy which have accelerated its success today. The company normally introduces new programs and policies aimed at improving the performance of CSR in its supply chain. The company has developed many activities which drive performance in major areas of business to improve and maintain performance (Perez). The company has identified the following priority areas in its corporate social responsibility (CSR);

    The company has prioritized its employees on its CSR programs and this has been due to the fact that employees play a fundamental role in ensuring the success of the organization. Employees are key stakeholders who influence the performance of the business. The company engages in equitable career and employment opportunities to all people without engaging in any form of nepotism and discrimination. Other programs which have been instituted by the company include health benefits, disability insurance payment of the medical expenses and policies related to the development of internal leadership. It means that company usually has a motivated and experienced work force who deliver excellent services to the company which leads to improved performance hence success of the organization (Perez).

    Customers are the second stakeholders which the company prioritizes when implementing CSR strategies which can drive its success. Customers play a crucial role towards the development of the company and they impact greatly on the revenues of the organization. Costco tries to serve the interests of the customers which include product affordability and quality. The company is in position of maintaining and strengthening agreements with its suppliers in regards to low bulk prices. The company deters its self from stocking products which do not conform to the standards of low prices during bulk purpose and of high quality. This helps the company to satisfy the interest of the customers in its corporate social responsibility which in turn increases its revenues and sales in the retail industry.

    Investors also form a bigger part on the programs laid down by Costco under its corporate social responsibility. The company fights to satisfy the interests of its investors since they are the shareholders and decide the capital requirement of the company. Capital is very fundamental for the growth and expansion of nay business venture. The company serves these interests through continued expansion to other countries across the globe which results into the growth and increased profitability of the company. The investors who are mostly shareholders receive their share in form of dividends and other profits are reinvested to stimulate further growth.

    Lastly, communities where the company operates form the least priority areas in its stakeholder engagement under its CSR policies. Communities affect the operations of any business through hindering the employee and consumer perceptions. Community can also influence the supply chain of the company when not handled well. Costco corporation engages supporting community developments and environmental protection to improve the wellbeing of the people it operates. The corporation has instituted a charitable committee to address the interests of communities where by it has managed to provide grants for both regional and local organization. The intention is to address the education and health needs of the children.

    Innovation and Change

    Organizations which embrace advanced technology and innovative ideas are the ones who continue to thrive in turbulent and competitive industries. It means that organizations must always design the creative ideas which are aimed at delivering value to customers through improved quality products and services. Technological innovation can as well enable the organization to duplicate various benefits reached by another competitor in the same industry. Costco is the global distributer and its innovation surrounds thinking out the box in the context of its products. The company has managed to identify the source of profits in the retail industry and it derives them from the membership sales other than product sales. The company achieves this through implementing a pricing strategy which gives benefits its members other than depending on consumers, a practice emulated on most industrial players.

    Costco corporation is also in position of being innovative in the logistics or shipping industry. The company has mastered the art of transporting its logistics a cross the world and this has reduced on the transport and distribution costs which reduce on the profitability margins through increased expenses. Shipping costs increase the prices of final products which in turn reduces the products demanded by consumers. Costco has managed logistics very well where by it incurs costs of transport and it does not allow stock out in its stores which increases its sales and profits. Lastly, the company’s innovative ability of not advertising make it not to incur the related marketing expenses which are mostly incurred by industry player in the retail chain. The company puts flyers in news once on the weekly basis and it hopes that other people will just hear deals from their friends. The company is also in position of maintaining products like hot dog which are able to bring customers to the store on a daily or regular basis (Kissinger).


    Control involves setting of standards to be attained by organizations and comparing the actual results with the set standards to ensure no deviation from the set targets. Controlling is a vital management function which requires managers to enhance the success of the organizations they lead. Control is very fundamental towards the achievement of the organizational set targets and objectives hence managers must exhibit effective control over the employees. Controlling is carried out all organization whether small or big to ensure corrective action is undertaken to achieve the set targets. Control is used to compare actual performance with the predetermined standards so that deviation made, a corrective action is undertaken to achieve the set goals and targets.

    Areas of Control at Costco


    Costco uses the scheduling approaches which are mostly comparable with those used by other industry players in a retail industry like Walmart. The company uses automated systems for scheduling its personnel who works mostly in the warehouses to ensure high productivity and efficiency in the organization. When the company identifies some inefficiencies in a particular section, employees are rescheduled to other departments to ensure that quality and service delivery to customers is not compromised. The employees are altered before deviations from the set standards are reached which helps the organization to remain competitive in the industry (Kissinger).

    Supply-chain Management

    The company operates a diversified supply strategy which focused on the areas of low cost and quality. It has made the company to offer a limited range of products in its stores which attract low prices and it does not deal in the purchase of bulk products which are highly priced. Therefore, the company ensures control where it identifies deviation from the set standards of low cost and prices from the suppliers and it shifts to suppliers who can maintain the standard. Lastly, Costco employs control in the area of human resource and job designing where it offers training of the employees internally and it motivates them through the set mechanism to minimize high turnover rates.

    Managing Information

    Organizations need information to be in position of organizing and planning their business processes in a strategic manner. Organizations require information regarding customers, competitors, markets, suppliers and the industry large. Information is usually obtained through market research and intelligence to gain an overview of the entire market. The information obtained through this process need to processed, stored and disseminated to relevant authorities to take appropriate action and plan for the organization more strategically. Costco needs information concerning the needs and preferences of customers in order to provide products which suit their interests. When an organization sells products after getting information concerning its clients, it is easier to deliver value to them since the company provides what is needed in the market (Sharon).

    Costco corporation has bought software like Paxpro which are used in carrying out the marketing function. The software is used to streamline and automate all the processes which can aid in meeting the high market demands. The software is in position of analyzing the information and help the company in meeting its increased demands in the market. It also helps the managers to plan and execute tasks in real time as it results in high accountability and control of the processes. Information management is very fundamental when it comes to achievement of core business functions of production, finance, human resource and marketing. Information is required to plan and position the organization strategically in these core areas which results into increased competitiveness in any industry. The ability Costco corporation to manage information on the entire supply chain has made it gain a competitive edge in the industry where there are also other retail companies like Walmart (Bytheway).

    Why Costco is More Successful Than its Competitors

    Costco has employed the pricing authority among its members and providing quality products which can deliver value to them. The company does not focus on price maximization on the short run but it aims at maintaining the pricing authority among its customers. Such perception always keeps drawing customers back to the company since they believe that it provides the best prices around the industry. That can kind of practice has not been adapted by the competitors and it has eventually gained a competitive edge in the industry than them (Dalavagas).

    Costco has also attained brand loyalty among its customers which has made successful than its competitors in the retail industry. The company engages in the provision of high quality products to customers which offer great value to them and they end up remaining royal to it. It allowed the organization to grow bigger in terms of market share as well as increased customer base.

    The Challenges Costco Faces and How it is Prepared for the Challenges

    The company faces competition as the major challenge more especially in Canada and United States of America. There are many competitors like amazon operating in those markets also dealing warehouse retailing and offering discounts to customers. Some of the competitors offer similar products, prices and quality which customers a wide range of selection. However, Costco is prepared to mitigate this challenge through carrying international expansion to countries where discount stores are less saturated and capitalize in those markets to reduce the fear of competition. Also consolidating on the brand loyalty already gained maintaining quality standards.


    Costco continues to engage in expansion of its operations both locally and internationally while maintaining product quality and value to customers. It has managed to create a strong brand loyalty among its customers which has helped it withstand the stiff competition in the American market and Canada. Corporate social responsibility continues to play a great role in the success of Costco corporation especially the employee empowerment and motivation. It has resulted into improved the morale of workforce leading to the provision of quality services and products to customers. Furthermore, it also managed to carry out control as one of its management functions to ensure that it does not deviate from its standards of quality and low prices.

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