Costco Business Analysis: SWOT, Environmental Factors, and Strategies

This report provides a detailed analysis of Costco, a global supermarket chain, examining its strengths, weaknesses, opportunities, and threats (SWOT). It delves into environmental constraints, including political, economic, social, technological, legal, and environmental factors (PESTLE). The report identifies key stakeholders, such as customers, employees, investors, and communities, and analyzes Costco's organizational structure, highlighting its organic structure and decentralized decision-making. It also discusses employee motivation strategies, specifically the employee engagement theory. The report offers strategic recommendations for improving Costco's mission and vision, business-level strategies, employee motivation, and corporate strategies. Finally, it outlines control mechanisms, including plan review dates, feedback controls, employee training, and performance tracking, to monitor and improve business activities. The analysis is supported by relevant references.

Research 1
Research and Analysis Paper
Part-II Final Project

Research 2
Contents
Summary..........................................................................................................................................3
SWOT..............................................................................................................................................4
Environmental constraints...............................................................................................................5
Stakeholders.....................................................................................................................................8
Organizational structure and design................................................................................................9
Motivating employees...................................................................................................................10
Recommendations..........................................................................................................................11
Controls and Recommendations....................................................................................................12
References......................................................................................................................................13

Research 3
Summary
The selected organization in the analysis of this paper is the Costco organization that is a
supermarket and deals in the varieties of products and services. The organization works in the
warehouse operations of the club in the overall 8 countries of the world. This organization is
firstly opened in the year 1976 and this organization begins its services in Canada in the year
1985. The organization deals in several products like grocery products, electronic, clothes and
several other necessary goods. The Costco has 100 warehouses in Canada and there is also strong
brand value adopted by the business in the market.

Research 4
SWOT
 Strengths
The strengths of Costco that is analyzed in the previous paper gives several profits to the
business. As these strengths have more value in the growth of the organization. The
organization get better customer attraction with lower prices of products and with the use
of proper customer membership.
 Weakness
The Costco mainly has three weakness in their business which includes fewer products,
less diversity of consumer and less presence in the global process (Yee and Yazdanifard,
2015). The protection of organization is necessary from these weaknesses so the business
needs to make the store attractive by having more products and makes the proper
availability of the products. The Costco needs to work in the global market to reduce
these weaknesses and the company needs to work on the different varieties of products to
improve the customer base.
 Opportunities
The opportunities give several advantages to the Costco business and improve its services
in the market. The two main opportunities of Costco are online business and offering of
organic products (Alshakhoori, et al., 2015). By this process, the customer gets attracted
towards the products as the organic products maintain the health of the customers and
online offerings improve the growth of the business.
 Threats
The organization need to protect themselves from different market threats. One of the
major threats is competition and another increasing labour cist. The organization works
on the deceasing of labour costs and manage productivity in the different varieties for
facing the competition in the market.

Research 5
Environmental constraints
 Pestle of Costco
Political Factors
The Costco business faces different political factors in the market which includes the
risk of military invasion, political stability and importance of discount, level of
corruption and wages legislation (Nandonde, 2019). All these factors affect the
business of Costco in the market.
Economic factors
The different economic factors faced by the organization include government
intervention, types of the economic system, education level in the economy and
economic and inflation rate in the country.
Social factors
Some of the important social factors faced by the organization include demographic
and skill levels o population, leisure interests, class structure in the social and cultural
aspects of the society (Spencer-Mcdaniel and Anthony, 2012).
Technological factors
The technological factors also affect the business that includes the impact of
technology on offering the products, impact of cost structure, rate of technological
diffusion and recent developments of technology in Costco business.
Legal factors
The legal factors that impact the Costco business are discrimination law, health and
safety law and data protection.
Environmental factors
The environment of Costco industry affects the overall business strategies that
include, climate change, recycling, waste management and endangered species.
 Environmental constraints faced by the organization
Several environment constraints faced by the Costco organization in their business aspects. The
main constraints are the impact of climate change in Canada, inflation and unemployment rate
and several other political factors.

Research 6
 Constraints that create challenges for the organization
Costco business addressing these constraints by different analysis of the different environmental
factors. Some of the constraints create several challenges in the business of Costco. The
government intervention creates the challenge of making regulatory reforms complex, the
economic factors create the limitations in the overall system and it also restricts the budget for
the business (Gibson and Warren, 2017).

Research 7
 Elements that create opportunities
The several elements of the environmental constraints create opportunities for the business that
elements include political stability in major markets, increasing international trade and increasing
demand of business for social responsibility

Research 8
Stakeholders
 The main stakeholders of Costco organization include the customers, employees,
investors and communities. Employees are the most significant for the business as
they directly impact the performance of the organization (Walker and Dyck, 2014).
Customers are also important for the business as they affect the revenues of the
company. Investors are also important for the business as the used to determine the
capital available.
 The organization give the highest priority to the employees as the whole business
depends on the employees work only and it develops the better performance the
business in the international market (Bolton, 2015).

Research 9
Organizational structure and design
Costco organization follows the organic structure that is the more flexible structure which
provides several benefits in the growth of the business. By using this structure, the organization
adopt several changes in the business in a proper manner (Levine, 2016). The organic structure is
identified as having little job specification, decentralized decision-making and a few layers of
management.
Costco determines the organizational structure by the different elements like it groups
employees as per their business functions and by divisional organization structure Costco groups
business components. The organization identifies the decentralized decision making by the
continuous training and they adopt the divisional structure (Daft, 2015).

Research 10
Motivating employees
The motivating of employees is important for the business and it properly manages the
overall organization. The motivation is too important for the employees of the Costco
organization (Risner, et al., 2015). The employee engagement theory is used by the organization
to motivate the employees for better work. The employee engagement theory is best in the retail
sector. This theory is applied in the Costco business by involving the employees in their
decision-making.
Employee engagement theory is one of the best motivational theories adopted by the
organization. In this theory, the organization involve their employees in their decision-making so
the employee's satisfaction is achieved (Barringer, 2015). This theory would be applied in the
business by making the employees aware of the important decisions taken by the organization.

Research 11
Recommendations
The company need to follows several recommendations for the better management of the
organization. These recommendations improve the organization. The organization needs to
improve the several areas of the business that includes:
 Mission and vision
The organization need to make a strong mission and vision so the organization achieves immense
growth by fulfilling the desired mission of the organization. The mission is related to the quality
products so the organization also involved better satisfaction of employees in their mission
(Uilecan and Mehta, 2015).
The core values used by the organization needs to be some differences so that the proper
strategic vision can be considered by the business and the organization maintain the vision to
attain betterment in the business strategies.
 Business level strategies
The company needs to make better business-level strategies apart from the cost leadership. The
business-level strategies need to be proper so that the several strategies get improved. The
company needs to change its business-level strategies.
 Motivating employees
The company uses the employee engagement theory to motivate the employees who are not
sufficient for gaining the motivation of the employees. The organization needs to use the proper
motivation theory for better motivation and in this company may use the Maslow motivation
theory so that all needs of the employees can be attained properly.
 Corporate Strategies
The corporate strategy of the business relates to the quality and innovation of new products.
These products are included in the business. So, the business needs to involved the proper needs
of the customer to make corporate strategies better.

Research 12
Controls and Recommendations
 The organization uses a different process to monitor the progress of business plans and
activities. The major activities include the creation of plan review dates, coordinate
business and marketing plans and make changes when necessary. These processes need
to make several changes in the plans.
 The organization uses feedback controls to monitor the activities. The use of feedback
controls is much better for controlling organizational activities. These controls analyse
the different activities of the business (Berman, 2015).
 It has been identified that feedback controls are used to monitor the activities of the
business. For this, specific feedback control is used in the overall process of the
organization. The two controls used in this process includes employee training and
tracking employee performance.
 The selected controls help the organization to achieve the goal of the business. The
employee training improves the employee satisfaction and makes the employees aware
regarding the work process and the other is tracking employee performance that provides
several benefits to the business (Shih, et al., 2015). The tracking performance also helps
to maintain the quality of the products.

Research 13
References
Alshakhoori, N., Alkenaizi, A., Ebrahim, N., & George, S. (2015). Business Strategies of
Discount Retailers: A Comparative Study of Target Corporation and Costco Wholesale
Corporation.
Barringer, B. R. (2015). Entrepreneurship: Successfully launching new ventures. Pearson
Education India.
Berman, B. (2015). How to compete effectively against low-cost competitors. Business
Horizons, 58(1), 87-97.
Bolton, B. (2015). The Role of the Firm’s Stakeholders. In Sustainable Financial
Investments (pp. 27-50). Palgrave Macmillan, New York.
Daft, R. L. (2015). Organization theory and design. Cengage learning.
Gibson, C., & Warren, A. (2017). Surfboard making and environmental sustainability: New
materials and regulations, subcultural norms and economic constraints. In Sustainable
Surfing (pp. 87-103). Routledge.
Levine, I. (2016). Analysis of Costco, San Francisco.
Nandonde, F. A. (2019). A PESTLE analysis of international retailing in the East African
Community. Global Business and Organizational Excellence, 38(4), 54-61.
Risner, J. R., Eames, R. H., & Betts, T. A. (2015). Common grace and price discrimination: A
motivation toward authentic relationship. Journal of Markets & Morality, 18(1).
Shih, S. P., Yu, S., & Yen, F. J. (2015). How Does Costco Win Customer Satisfaction: A Case
Study of the South of Taiwan. Journal of Economics, Business and Management, 3(3).
Spencer-McDaniel Sr, J. A., & Anthony, P. (2012). Sustainable Solutions Paper: Several
Strategic Analyses of Costco Wholesale Corporation.
Uilecan, I. V., & Mehta, S. S. (2015). U.S. Patent No. 9,113,309. Washington, DC: U.S. Patent
and Trademark Office.

Research 14
Walker, K., & Dyck, B. (2014). The primary importance of corporate social responsibility and
ethicality in corporate reputation: An empirical study. Business and Society
Review, 119(1), 147-174.
Yee, F. M., & Yazdanifard, R. (2015). The comparison between NGO marketing and
conventional marketing practices from SWOT analysis, marketing mix, and performance
evaluation perspectives. Economics, 2(9), 1075-1087.