Strategic Management and Corporate Social Responsibility

This assignment delves into the intersection of strategic management and corporate social responsibility (CSR). It examines how companies integrate CSR considerations into their strategic decision-making processes. The focus is on the influence of trade liberalization on businesses' adoption of ethical practices. Students are expected to analyze relevant literature, theories, and real-world examples to understand the complex interplay between these concepts.

Running head: LEADERSHIP IN BUSINESS
Leadership in Business
Name of the student
Name of the University
Author Note

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Introduction
Costco is a membership warehouse club, it helps in giving to the members the
best prices and quality branded merchandise products. Jim Sinegal founder of Costco
defined the company’s goals as, giving the customer the best value” in price and
product. Costco, has various stores located worldwide, it provides a wide collection of
merchandise. It has convenient speciality department which gives exclusive services
to members for services such as health, investments, mortgages, travel, automobile,
and many more. Costco is thus a retailer with a multi-billion dollar retails located
throughout many of the Countries (Flammer, 2015).
Despite Costco’s impressive size, it consistently provides an atmosphere in
which employees thrive, and shopping experience exceeds the need of customers.
Topic: Business of Costco
Source: (Kaufman, 2015).

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Success of Costco in terms of the following determinants and relate it to
1. Employee Commitment
Costco primary marketing object is to provide its members with a memorable
shopping experience. They aim to provide a wide range of quality merchandise at a
price that it consistently lower than its competitors – a strategy that will lead to
increased membership and revenue. Costco’s advertising is limited to spending by
giving coupons to existing members
The CEO maintains a good lasting relationship with all their employees’
customers and vendors. The vendors have their products stocked at Costco; in large
result to the massive number of units Costco is able to sell. (Hill, Jones & Schilling,
2014).
The employee turnover rate of the employee of the company is very low. The
company maintains a low cost and high wages. The organization is focused that the
productivity of both the employees and the asst is very crucial and it reduces their
operating cost. They have dedicated their efforts to eliminate those which hamper the
employee productivity therefore it increases a high level of employee commitment
towards he organization and values.
The short duration of working hours that is from 10am in the morning till 8.30 pm
at night. Their minimal over- and under-stocks saves labour. In the US, the retail is
closed on seven holidays that is on New Year's Day, Easter; Memorial Day, July 4th,
Labour Day, Thanks giving day and Christmas which serve as a employee benefit and
it makes them sustain and committed towards the organization (Huddleston et
al.,2016).
Costco is committed to promoting from within the company. The majority of their
current management team members are home grown. It therefore helps the
organization for ample opportunities for personal and career growth.
2. Strategic Management

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Strengths
Pricing: Costco’s greatest strength is its ability to provide quality products low
pricing to its members. This strength direction corresponds to the customer loyalty.
Costco’s product and pricing mix, increases satisfaction, as well as the number of
return and new customers. Costco has its gasoline business which draws the members
to the warehouses; their gas prices are consistently lower than their competitions.
Brand Loyalty: Costco has constantly offered to its customer’s high-quality
merchandise at a low price that attracted loyal customer base. This helps the company
to grow in its market share in the thereby helping to increase their customer base
throughout the years.
Weakness
Costco’s performance is largely dependent on the sales and revenue in North
America. In 2014, the sales of U.S. and Canada are 87% of Costco’s sales total. The
company is dependent on the sales in California, which is 32% of sales for the United
States. As a result, a significant decreased in sales in California could significantly
and negatively impact the company’s sales (Brea‐Solís, Casadesus‐Masanell &
Grifell‐Tatjé, 2015).
Opportunities
Costco plans to expand domestically and internationally. Costco currently has
671 warehouses. In the next few years, however, Costco anticipates opening 30-35
new warehouses, with the majority being location internationally. Recently, Costco
expanded into Spain; plans to expand into France are underway.
Threats
As previously mentioned, the warehouse industry is very competitive. They
pose a threat to Costco, and force Costco to keep their prices competitive. Internet
retailers like Amazon, while not direct competitors of Costco, offer a wide range of
low-cost product and free shipping options that are hard to beat.
The Kirkland’s brand offers a wide variety of products and fiercely competes
with top-brands, by offering a comparable product 10- 20% cheaper (Boone & Kurtz,
2013).
Costco receives bulk merchandise directly from the manufacturer before they are
required to pay for them. This factor allows for minimal mark-up in pricing.

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3. Decision Making
The organization follows many strategy and decision making tools to improve and
grow in the market. The company provide quality products to their customers at a
very low cost. It follows a different decision tools for their members who is divided in
two classes that is individual and the business. They make scheme so that they are
able to retain the loyal customers therefore they provide membership card benefits
(Huang, Huang & Tzeng 2016).
The companies’ innovation, design and packaging for their products are very good
and this makes the items very appealing to the customers. The design is
environmentally sound and thus it helps in repackaging wrapping their product.
The organization follows the Product Life Cycle which can vary from product to
product. A product usually remains in Costco as long as it is profitable and selling at a
good rate.
a. Place
As of December 2014, Costco owned and operated 671 warehouses which is
spread in 43 states.
b. Price
Costco’s aggressively buys from select vendors and sell in volume, which
drives the cost down for members (Luo, Kanuri & Andrews, 2014). Costco does not
mark up their items more than 14%; although the supermarkets and department stores
often mark up their goods by 25% to 50%.
c. Promotion
Costco’s promotional offers are distributed in the form of coupon mailers, the
Costco Connection managing, and emails to members promoting merchandise.

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How Costco can provide higher compensation and benefits to its employees and
still be competitive with its competitors.
Employee Compensation plays a major role so as to attract the employee talent
in the organization. A compensation strategy is followed by large organization in
order to attract the people who are willing to give best services, thus it helps it helps
the organization to build a strong team of talented people.
Compensation is a factor which shows that the organization values the
employee. Costco maintains a compensation strategy which is updated with the
current market data and it is competitive for the employee. Compensation and benefits
are one of the main reason for which the employee works in an organization.
Employee turnover plays a real threat in the growth of the company. Maintaining a
fair compensation strategy plays an important role in retention of the employees in the
organization. Due to the bonuses, benefits and incentives and increases in the pay the
top performers do not leave the organization (Slocum, Lei & Buller, 2014).
In today World, talent is the top most competitive advantage, thus the
compensation structure is vital so as to retain those talent in the organization. Costco
updates their data according to the job grades, individual data and therefore plan
compensation benefits. As the top tier talent in the market has become very
competitive it became vital for Costco to enhance stronger offers to their employees.
The last aspect of Costco’s compensation strategy is to create a long lasting
motivated team of loyal workers. Costco does this by offering generous salary
packages, time off for holidays, and hours that promote a work-life balance for
employee. Additionally, Costco promotes from within, allowing cashiers to advance
to managerial positions.
These offerings will increase workplace morale.
 End executive partnership with American Express:
From nearly 15 years, American Express has been the only credit card accepted at
Costco. Partnering with other credit card provides, such as Visa, Discover, and
MasterCard, will give Costco a direct pipeline to a much wider pool of consumers.
As of the end of 2014, there were more than 304 million visa credit are in circulation,
far greater than the 55 million American Express cardholders (Bowie, 2017). Utilizing

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several credit card carriers, will appeal to the impulse buyers; buyer will be able to put
items they wish to purchase, but do not necessarily have expendable cash, on credit.
Accepting multiple credit card carriers would likely increase the sales of the
company.
 Expansion
Costco’s U.S. sales are too dependent on California. By expanding, both
nationally and internationally, Costco can reduce its dependency on
California. The factors such as demography, economic growth, the political
risk, human rights and the sustainability should be analyzed (Osterman,2017).
 Offer trial passes
Currently, only BJ’s and Sams Club offer trial memberships or one-day shopping
passes to prospective memberships. Costco should institute a similar trial or limited
shopping pass to new member. A driver’s license can be used to track issuance of
trials. Such a marketing measure can be instituted for little to no expense to Costco,
since they are already sending targeted mailers to prospective members (Butler et al.,
2016).
Costco to motivate and retain their employee
Costco has high level of employee motivation and commitment and therefore they
are compensated very well. The employee in the Costco has a very high level of
motivation. They are motivated and therefore give suggestion to the organization to
improve their stores and product mix so as to increase their creativity. The employees
in the organization makes plan with the organization on a regular basis in order to
improve their customer service.
The employees in Costco are well trained so that they can be eco friendly and
helpful whenever he customers approach them. The employees in the store help the
customers to locate the place (Kaufman, 2015). These things help the company to
maintain a competitive position in the market and therefore compete with the rest of
the competitors such as Wall mart
The company keep a very low and standard cost for the products and it concentrates
on serving quality products to their customers. The CEO of the company is very
humble and he gave more importance on the credit of his employee who he thinks

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played a major role in contributing to the success of the organization. The most
important thing is that he understands the value of talented people working in the
organization and he offers various benefits and incentives to retain them (Valente,
Dredge & Lohmann, 2015).

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The leadership theory which is used to analyse the behaviour of CEO and to
describe how he influence the company
Leadership Theories applied in an organization are as follows:
a) Trait Theory
This type of theory is based on the characteristics and behaviour of the individual.
The behaviours of the leader reflect their intellect and they are open to changes,
extraversion and have attention to detail and sincerity.
b) Transactional Theory
As per the theory the leaders have set goals for the individual in the organization so
that they are able to assess the performances and reward or punish them according to
their performance (Adams, 2013).
c) Transformational Theory
In this type of theory the leaders are able to look upon their actual goal so that they
are able to motivate their followers so that they are able to achieve their vision.
d) Contingency Theory
This theory tells that the leader shall change their theory according to the scenario.
Thus there is no such concept of a fixed theory that could be applied when there is a
need for a particular situation arise (Adebanwi & Obadare, 2016).
The leadership theory of Servant leadership is used to explain the work of the
CEO and its influence over the company
Listening
It is a very effective part of communication. Any person who is not a good
listener would not be able to communicate effectively. For being a good
communicator it is important to listen what the other person is trying to articulate. As
we mention listening it also includes things such as gesture, voice, expression. This
non-verbal gestures or signs are something which is very important details that is
needed to be understood while communicating with a person. When we mention
listening it also includes this gestures or signs (Erakovic et al., 2015). As a person
communicates he does not only communicate with only voice but also with his

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gesture and signals. It is very needed to be understood in order to understand what the
person is trying to convey. A good listener has a habit of understanding these tiny
details so that they can understand what the other person is trying to communicate and
thereby reply accordingly
Empathy
Empathy is one of the most important characteristic amongst several other
characteristics that a good communicator posses. When we mention that someone is
empathetic, we mean that the person understands the situation of the other person. To
understand a person fully or what the person is trying to convey, it is very important
to put yourself in the situation of that person, to understand the point of view of the
person. Communication is a tricky thing and something which may be conveyed by
Mr. X can be inappropriate for Mr. Y where Mr. X thinks it to be appropriate. So it is
very important to understand the point of view of a person or the situation through
which a person is communicating. A empathetic person understands the problem and
situation and tries to put himself or herself in the situation of the other person and then
judge or communicate with the person. This makes the communication more effective
and makes the person a better communicator (Renz, 2016).
Healing
A leader should understands the difficulties and problems that other are facing
and support them accordingly so that it helps them to heal. A supportive leader is been
seek by all and it is one of the rarest characteristics that a person posses and this
characteristic differentiate the normal person from a leader. Each and every person
seeks someone who can offer support and comfort so that it make a situation easier
for the followers. It is one of the characteristic of leader to create an environment
which is supportive and healing in nature (McVeigh et al., 2016).
Awareness
It is the duty of a leader to understand the details of their follower. They
understand what a person is capable of doing or achieve and what kind of values that
a person has and according support that person so that the goals can be achieved
(Popescu & Predescu, 2016).

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Persuasion
A leader carries the characteristic of persuasive in nature. There power to
convince and influence is one of the most important characteristics that differentiate
them from a general person. They have an assertiveness in their voice and there nature
that they can easily persuade and convince people (Reich & Gregory, 2014).

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