UK Custom Essay Sample on «Company Analysis: Costco Wholesale Corporation»

Company Analysis: Costco Wholesale Corporation

Influence of Globalization and Technology Changes on the Corporation

Due to the fact that Costco Corporation specializes in any type of merchandise all over the world, it is evident that the influences of such phenomena as globalization and technology should not be neglected. In fact, technological innovation should contribute to the development of Costco Communication channels (Costco Wholesale, 2014). Therefore, the role of technology and globalization in the company’s success should not be underestimated. The globalization process has a mixed impact on the wholesale activities in general. To begin with, the process implies the development of relations and formation of new commercial interactions making a significant contribution to the diffusion and interaction of cultures, peoples, and markets. As a result, new forms of industrial organization emerge to promote communication that should adjust to the relational and informational needs of society. In this context, Costco should integrate new forms of business activities that would be directed at the development of locally oriented relations that could be presented internationally. Due to the fact that globalization is a sophisticated process of political, economic and cultural system interactions, it is related to the new belief systems and ideologies of the business entities congruent with the new values and ideologies of the modern customers. As a result, if Costco plans to enter new markets, it has to deal with the cultural diversity, authenticity, and cultural context in which new products will be introduced (Benyon & Dunkerley, 2014). Therefore, relationships and patterns of communication should be taken into account to achieve success.

Use of Industrial Organization Model and Recourse-Based Model Can Contribute to Higher Returns of the Corporation

Industrial organization model is “…based on territorial diffusion of productive activities grew within a dynamic economic context” (De Jong & Shepherd, 2007, p. 107). In the case of Costco, the distribution of activities in different countries can reduce the risk of failure because of the differentiation strategy and cross-cultural communication. The availability of multiple stakeholders contributes to the company’s stability. The corporation creates subsidiaries for distributing responsibilities, which has a positive influence on the company’s productivity. The territorial distribution is also congruent with the new way of innovation and technology.

In fact, the industrial model sheds light on the role of buyers, sellers, suppliers, potential new entrants and substitutes. In the case of Costco, attention should be paid to all of the aspects. When it comes to suppliers, the company owns a weak bargaining power because of the multiple suppliers, many substitutes, and large quantities incorporated into the wholesale activities. When it comes to the clients, there are also potential threats due to large membership base and switching costs. However, the corporation can still prosper due to the best services proposed to the buyers. The substitutes pose a certain threat because there is always a possibility to find good substitutes at a moderate price. Low switching costs and a variety of featured products proposed provide the corporation with a significant advantage. When it comes to seller, the attention is made to the fierce competition that Costco is able to win due to the higher quality of operations, growing buyer demand, and low switching costs (Costco Wholesale, 2014). Finally, there is a low threat coming from potential new entrants. However, Costco is always ready to cooperate with new companies and organizations. Small number of candidates, high barriers to entry, attractive profits and constantly expanding market are among the leading features of a highly competitive corporation.

Concerning the resource-based model, the emphasis should be placed on the analysis of location and geography when dealing with the availability of resources, as well as the collection of those possessed by the company itself. The uniqueness of such resources shapes the basis of the company’s strategic vision (Hitt, Ireland, & Hoskisson, 2006). With the help of this model, it is possible to establish priorities for human, physical and organizational capital. The resources could be both tangible and intangible and directed at retaining capacity. According to the model, differences in companies’ performances across time could be explained by unique capabilities and resources, but not by industrial characteristics. Therefore, the model could imply the acquisition of different resources, as well as how the acquired resources are used. The latter implies methods and training techniques that improve the quality of work due to the employees’ greater flexibility.

Impact of Vision Statement and Mission Statement on the Corporation’s Overall Success

The main company’s vision is confined to the company’s attempt to provide their clients with the best value through business activities. Hence, the customer-centered orientation can give a valuable advantage for the company because customer demand is among the major elements of successful business operation. The company vision is also premised on the equal and respectful treatment of all stakeholders in the company to adhere to the prescribed ethical standards. Furthermore, the corporation strives to attain the balance of best price and best value.

Apart from focusing on people rather than goals, the company also introduces various strategic frameworks with the help of which they integrate their business. There are two major types of integration – partially vertical integration and backward integration. Partially vertical integration implies cross-dock distribution, whereas backward integration focuses on the development of the relationship with manufacturers and suppliers, as well as the introduction of Kirkland signature brand. The latter reveals the importance of considering individuals while shaping mission and philosophy of the company, as well as defines what aspects should be included in brand development.

The importance of vision and mission for an organization should not be underestimated because it defines further paths of development. As soon as the mission is formed, the company starts building the corresponding strategies that would guide it across diverse business operations. It also shapes the foundation for employees and clients who become part of the formed ideology. Therefore, it has a potent impact on Costco Corporation as well because it introduces future goals, current problems, and proposed solution to those problems.

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Influence of Stakeholders’ Activities on the Company’s Success

As it has been mentioned above, the company’s orientation on client’s needs and preferences is essential for sustaining a competitive advantage over other wholesale corporations. However, the company takes into consideration the welfare of other stakeholders involved in the business activities. When it concerns employees, the attention is also paid to hiring talented people and treating them equally in accordance with the established ethical codes. In this context, employing efficient communication is the key in communicating the company’s ideology and mission. In order to encourage greater productivity of employees, the company introduces different training programs for empowering the skills and experience of talented workers. The training and educational opportunities are the key to running business successfully and sustaining long-term profitability.

In order to spread business and open new locations, the corporation establishes good relationships with the global community and constantly researches the markets in different countries to promote stability and prosperity of the corporation. The managers make everything possible to ensure fruitful and trustful cooperation with investors, clients, community, and non-governmental organizations. The latter is of great importance because they closely relate to the social and cultural activities in different regions.

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The community is considered to be one of the most influential stakeholders because the social environment plays a vital role in shaping clients’ needs, concerns, and preferences. Therefore, Costco Corporation should pay closer attention to the social and political dynamics in a specific community with regard to the cultural differences and demographics. To be more exact, the organization should be more concerned with the roles of social problems and challenges in shaping commercial activities. In order to eliminate risks, the company should conduct market research to define the potential threats and understand how each culture can contribute to the consumer demand and overall business activities in a certain region.

The suppliers of goods, products, and services are also represented as potential buyers and sellers, which is the major peculiarity of the corporation. Therefore, the company’s client-based approach is relevant for the given strategy. Additionally, such services as shipping, returns, fraud prevention, export and volume sales are also among the activities that are proposed both to customers and suppliers. Therefore, there are different types of membership within the company that allow the corporation to attract new clients and encourage fruitful cooperation.

Supply chain cooperation is also among the peculiarities of the relationships. Therefore, the company should also differentiate between vendors and suppliers. It also implies ethics designed for suppliers, as well as supplier diversity, which is also associated with different locations and destinations (Costco Wholesale, 2014). The diversity of stakeholders is also among the leading features of the company’s activities. Encouraging membership is carried out through the rewards and bonuses for the members, as well as privacy rights of each member. The community within which members operate is strongly protected and supported due to the effective communication and interaction. The special events are among the issues that contribute to better coordination and information exchange. All members of Costco Corporation work on creating fruitful and trustful cooperation to focus on common goals and objectives.


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