Abstract
Costco Wholesale Corporation operates a warehouse that is for members only, and which sells products and services of high quality at an affordable price. It is the largest club operator in the United States with over 71 million members in over 40 states of the US. Over three-year time period from 2005-2008, Costco expanded its membership base while at the same time increasing its number of warehouses both within the U.S. and internationally. In 2008, Costco’s U.S. sales increased by 10.4%, while the revenue from Canadian operations grew by 20.7%, and the company’s other international sales grew by 21.9%. This paper looks at the description of the company, its mission and vision statement, the history of the company; it identifies and analyzes external environmental factors and other environmental issues, the organizational strategy, and the executive leadership.
Description
Costco Wholesale Corporation is a fortune company that is based in the U.S. It oversees the operations of various membership warehouses in the U.S. with the main aim of offering low prices on the selected and specialty brands in its wide range of products. It is one of the largest, and of its own kind in the U.S. Stores Organization in the U.S. ranked it among the top three largest retailers in the U.S. in 2010. It is currently ranked 9th largest retailer in the whole world. The corporation has direct merchandise network through which it buys its products directly from the manufacturers and then sends those products to its warehousing facilities directly. The warehouses of Costco are of average size of about one hundred and forty thousand square feet and its workers work seven days a week on the basis of sixty nine hour per week. The stocks of Costco are traded in NASDAQ stock exchange.
Mission and vision
The mission of Costco is to continually provide their members with Quality goods and services at the lowest prices possible. Costco runs its business according to the code of ethics which is; to obey the law, take care of its members, respect its suppliers, take care of its employees and reward its shareholders.
History
Founded by Jeffrey Brotman and James Sinegal, Costco opened its first warehouse on September 15, 1983 in Seattle, Washington. Sinegal had begun wholesale distribution by working for Sol Price at both Price Club and FedMart. Brotman, an attorney from a Seattle retailing family, had also been involved in the business of retail distribution from an early age. The founder of Wal-Mart, Sam Walton had plans of merging Sam’s Club with Price Club. However, in 1993, Costco merged with Price Club. The business model and size of Costco were similar to those of Price Club, which was founded by Robert and Sol Price in San Diego, California in 1976. Just after merging, PriceCostco had 206 locations that were generating $16 billion in annual sales. PriceCostco was led by executives from both companies initially, but then Sol and Robert Price, his son, founded Price enterprises and left Costco in December of 1994.
In 1997, Price Enterprises changed its name to Costco Wholesale and all locations of Price Club were rebranded Costco. On March 26 of 2001, Retalix Limited announced its signing of an agreement with Costco Wholesale Corporation which called for the installation of the StoreLine Fuel software solution of the company across 152 Costco retail outlets of fuel in the U.S.
Competition
The degree of rivalry in the industry that Costco is in is low. There are three main players in this industry; Costco, BJ’s and Sam’s club. The growth rate of this industry is below the market requirements given that it is at seven percent. There are rare incidences of stores closing because of competition in this industry. The competition in this industry is based on merchandise, price, quality and selection.
Other environmental factors
Other external environmental factors include changes of law and regulation that are beyond the control of Costco, technological, economic and ecological factors. The economic downturn affects the overall wholesale discounters. Although the industry is affected by the poor economy, the wealthy clients of Costco help during poor economic times.
Executive leadership of Costco
The following are the names of the current executive officers of Costco, their position and also ages;
The President/Chief Executive Officer (W. Craig Jelinek)
He is the president and the Chief Executive Officer. Mr. Jelinek has been the president and Chief Executive Officer since January of 2012 and has been serving as the director from February 2010 to December 2011. Prior to that, he the Executive Vice President, Chief Operating Officer, and Merchandising since 2004. He is 60 years of age and has been an executive officer since 1995.
Other Executives
Jeffrey H. Brotman: he is the Chairman of the Board and has been a director at Costco since 1983. He is 70 years of age.
Richard A, Galanti: he is the Executive Vice President and Costco’s Chief Financial Officer. He has been a director since January of the year 1993, and he is 56 years of age.
Franz Lazarus: He is the Executive Vice President in charge of Administration. He has been executive officer since 2012 and is 65 years of age.
John Mckay: Executive Vice President and, Chief Operating Officer in the northern Division. He has been executive officer since 2010 and is 55 years of age.
Paul G. Moulton: He is the Executive Vice President in the docket of Information Systems. He has been executive officer since 2001 and has 61 years.
James Murphy: He is the Executive Vice President in charge of International affairs. He has been the executive officer at Costco since 2011 and he is 59 years of age.
Joseph P. Portera: Executive Vice President and Chief Operating Officer in Eastern and Canadian Divisions. He has been the executive officer since 1994 and he is 60 years of age.
Thomas K. Walker: He is the Executive Vice president in charge of construction and distribution. He has been the executive officer since 2004 and has 72 years.
Dennis R. Zook: Executive Vice President in charge of Southwest Division and Mexico. He has executive officer since 1993 and he is 63 years of age.
