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Analysis of Costco Wholesale Corporation’s Organizational Structure
Costco Wholesale Corporation’s organizational structure is based on the company’s current operations and its markets in the United States. Costco’s strategy is based on low price level, ultra-low markups, and high-sales volume which makes customers believe they are saving money when they shop. By using this strategy Costco became the first company in the United States history that reached one billion dollar sales in less than six years. The company keeps growing with 785 stores and more than 98 million members. Costco’s management team looks at things from the viewpoint and perspective of its members; they assure their customers have a great buying experience and they assure their employees are happy and motivated.
First-line managers hold job titles such as: shift supervisor, department manager, store manager or crew leader. These managers are responsible for the daily management of line workers and are a crucial part of the company. At Costco these are the managers who oversee their stock employees, people who work with forklifts etc. Although they do not set goals for the corporation as a whole, they have a big influence on the particular store they are working at because they interact with the employees on a daily basis and can see who is doing their job correctly. First-line managers can contribute to organizational efficiency and effectiveness by directing their employees and by motivating them to accomplish tasks according to the plan.
Middle-level managers hold job titles such as: Regional Manager, Divisional Manager or General Manager. Middle-level managers on the other hand are responsible for accomplishing goals set by the top management. At Costco, these managers can contribute to organizational efficiency and effectiveness by motivating the first-line managers and also by preparing plans according to the company’s goals and vision. They are very important to the company because they can provide valuable information to top managers in order to help improve the workforce productivity.
Top-level managers hold job titles such as: CEO, CFO, COO, Vice President, Board President etc. Their main responsibility is the performance of the organization as a whole and setting direct goals that need to be achieved. Costco’s vision statement is: “a place where efficient buying and operating practices give members access to unmatched savings”. Costco’s mission statement is: “to continually provide our members with quality goods and services at the lowest possible prices’. Top-level managers at Costco can contribute to organizational efficiency and effectiveness by creating strategies to meet this mission and by keeping a good name for the company.
Organizational Culture is includes an organization’s expectations, experiences, philosophy as well as the values and the ways of interacting that contribute to the unique social and psychological environment of an organization. Organizational culture also includes the organization’s vision, norms, systems, symbols, language, assumptions, beliefs, and habits (Needle, 2004). Costco’s main characteristics of organizational culture are: common goal of excellence, positive attitude, high energy and fast pace, service orientation, and teamwork. Costco Wholesale’s organizational culture focuses on excellence in performance and they push their employees to further achieve high quality service in order to get customer satisfaction. Also, Costco helps their employees reach their personal career and educational goals, by even paying for part of their tuition. That is one of the reasons why in 2017, Forbes ranked them first on “America’s Best Large Employers”. Two things that have also contributed to Costco’s fantastic organizational culture are teamwork and positive attitude. The company believes that if a customer sees the employees getting along together and being friendly to one another, helps the company keep a good image in the market. Through teamwork, employees achieve flexibility that enables the company to address different variations in customer preferences.
Ethics affects every individual, from the business owners, customers, employees and even competitors. Having the proper ethic while running a business is crucial. The study and practice of ethics help us develop skills to articulate our own values and to evaluate the values of other people. Keeping the proper ethic is necessary in order to develop good relationships not only in business, but on a daily basis as well. Costco needs to satisfy the interests of their stakeholders, because they are the ones that determine the available capital for growth every year. The main interests of the stakeholders are business growth and profitability. In order for the company to be more profitable, they need to open up more stores nationwide or add more products to their product line. Considering they have strong competitors such as Sam’s Club, they always have to be on top of their game. Costco’s code of ethics conducts of these four main points: Obey the law, Take care of our members, Take care of our employees, and Respect our vendors.
The task environment is the set of forces that originate with global suppliers, distributers and customers that influence the managers. As a company expands more overseas, the task environment becomes more complex. Costco imports lots of their furniture and electronics from China. They need to keep a good relationship with the Chinese distributors in order for things to go smooth with the company. Costco has employees in China that go and look at the actual pieces of furniture or electronics, and decide what is best to sell in the American markets. Managers might face challenges because if there is high demand for a TV the company is selling in America, and they are out of stock in China, he needs to find a different solution or possibly even find a different distributor. The bigger the corporation the more complex this system is.
The general environment compromises wide-ranging global economic, demographic, political, sociocultural and technological forces that affect an organization. A manager needs to be aware of all of the following and they need to keep up with the latest news in order for the company to keep being successful. At times, this might be out of the manager’s hands but it is up to the manager to use and allocate its resources to find a solution if there is a problem in the first place. For example, if one state changes its tax rate, a manager should know then how to price its products. And if the company is losing money, a manager should know exactly what to do, whether is cutting hours for different employees or whether lowering the pay rate.
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