Strategic Leadership Practice: Costco's Organizational Analysis

This report provides a comprehensive analysis of strategic leadership practices within Costco's organization. It begins by defining effective leaders and managers, differentiating between them, and identifying key factors that contribute to effective leadership. The report then delves into the role of strategic leaders in shaping organizational vision, mission, and values, and examines the impact of personal energy, self-belief, and ethical leadership on leadership styles. Furthermore, it evaluates various leadership styles, including transformational, transactional, and situational leadership, and assesses their impact on organizational strategy. The analysis includes a detailed examination of Costco's business strategies, leadership approaches, and their implications for organizational performance and competitive advantage. The report concludes with recommendations based on the findings and a discussion of the balance needed between strategic management and strategic leadership in achieving organizational goals. This report is a valuable resource for understanding leadership dynamics and strategic management in a real-world business context.

Student Name:
Strategic Leadership Practice in Costco’s Organization
Title: Strategic Leadership Practice.
Assignment Name:
Student Name:
Course Name and Number:
Professor:
Date:
0

Student Name:
Strategic Leadership Practice in Costco’s Organization
Executive Summary
This work tells about Strategic Management, its principle, working theories, the linkages to
key leadership qualities and overall organizational framework. This also educates us about
the definition of an effective manager or leader and his organizational roles and tasks. The
Company taken here is Costco in the US. This research also entails types of Leaders in
various organizational setups. It talks about a company's mission statement and its goals
with respect to Global execution and Key Human Resource policies in different hemispheres
of the Organization. This work also does scrutinize the Strategic viewpoint of Managers of
the medium level company in order to ascertain their Leadership styles. The main agenda is
to find the competitive streak, profitable margins in decision making to win the Business
Market. This study and its various forms are basically to evaluate the organizational
performance framework for a good hike in Market Profit Maps.
1

Student Name:
Strategic Leadership Practice in Costco’s Organization
Contents
Introduction and Background.....................................................................................................3
Task 1: Analysing Effective Leaders and Effective Managers..................................................4
1.1 Analyze the concept of managers as effective leaders................................................................4
1.2 Analyze the concept of leaders as effective managers................................................................5
1.3 Analyze the balance needed between the demands of strategic management and strategic
leadership..........................................................................................................................................5
Task 2: Strategic Leadership Styles and its Impact on Organizational Values..........................8
2.1 Evaluate the role of the strategic leader in the creation of the organisation’s vision, mission
and values..........................................................................................................................................8
2.2 Discuss the leader’s role in communicating the organisation’s vision, mission and values to
others................................................................................................................................................9
2.3 Analyze how personal energy, self-belief and commitment impact leadership styles and their
application in the strategic environment...........................................................................................9
2.4 Discuss how ethical leadership engenders empowerment and trust, identifying its impact on
organizational practice......................................................................................................................9
Task 3: Evaluating Transactional, Transformational and Situational Leaderships..................11
3.1 Evaluate transformational leadership and its impact on organizational strategy......................11
3.2 Evaluate transactional leadership and its impact on organizational strategy............................11
3.3 Evaluate situational leadership and its impact on organizational strategy................................13
Recommendations and Conclusion..........................................................................................15
References................................................................................................................................16
2

Student Name:
Strategic Leadership Practice in Costco’s Organization
Introduction and Background
Introducing the second largest retailer in the whole world after Wal-Mart and the
largest warehouse club retailer on the world level, hailing from the United States. The
company Costco is famous for eateries that are food and everyday merchandise, appliances
and their categories. Their business strategy is good as they offer good discounts on all
products. Costco’s competition is with BJ’s wholesale organization and Sam’s Club as well.
The strategic business protocols are more or less the same as what Costco is built upon.
Costco offers merchandise in volumes, but at reasonable prices or sometimes below the
market price. This marketing strategy has helped Costco in its favour at the time of recession
also. This has also shown a positive slope of the graphs in profit analysis for Costco's
company graph. Down the slope during the downside of economic growth, companies like
Costco with their low costing strategies, attract a large number of customers who run after
sales and lower costs thereby attaining the maximum sales target even in difficult times.
Although many other organizations suffer a lot with the downsizing of the world economy
and market, Costco due to its strategic business policies reigned supreme. But the flip side
of their rapidly expanding goal can result in loss of quality experience for its customers in
various store locations. The executive leaders need to slow down this race of expansion if
they want to grow their consistent graphs in international markets. They have an agenda to
cannibalize in order to sustain their markets. One can talk about leadership styles and
manager policies of Costco as a winning move for the company. To retrospect on the same
analogy, this work further is divided into three major junctions of investigation of facts and
information namely; Effective Leaders and Managers with their impact of Company
Strategies, Strategic Leadership which can increase or decrease the overall organizational
values and last of all evaluating the various leadership styles for fulfilling the organizational
goals.
3

Student Name:
Strategic Leadership Practice in Costco’s Organization
Task 1: Analysing Effective Leaders and Effective Managers
For defining Effective Leaders or Effective Managers, one must analyse effective
managers as evolving leaders and effective leaders as successful managers. Not only this,
one needs to measure the effective leadership and effective management impacting the
organizational graphs and profit markets. Thereby, they compare and challenge the strategic
management policies for both local and global perspectives.
1.1 Analyze the concept of managers as effective leaders
To be an effective manager one must get the most out of oneself and others. They
should be self-motivated in achieving their targets and should be master of resource
allocation with time management. In any organization, management has an imperative role
to play. Rather, one can say diverse yet unified roles to play for good strategic policies.
Diverse for global perspectives and unique to bring together the vision and missions under
one umbrella of local goals1. The old school research and era marked managers as
dominating, lacking flexibility, creative solutions and with stringent rules for deadlines. On the
other hand, leaders should be motivating with alternate creative solutions and highly
inspiring for others.
The two images of leader and manager are contradictory and the revolution started
way back from 1970 as the Japanese theory of replacing the managers with motivating,
thought-provoking, and direction providing leaders. Managerial styles can be people or task
oriented, but the problem is people in the early days took leaders like the good man and the
manager as the bad man. This notion needs to be dispelled for a proper definition of a leader
who is a manager and vice versa2.
In order to drive the strategic policies of any organization, the management
perspectives should be restored to the parallel side of great leadership for complete success
theory. The new thought process takes managers as new leaders. Management starts from
self-management activities, gaining an MBA Degree, be it professional, personal or money
matters, a manager holds the pivotal place in any context or organization. They have to get
the work done in the most effective job, time and resource scheduling programs.
Management as a process is always valued and style neutral. A good manager’s modus
operandi tailor-made according to circumstances3. They add value to the organizational
1 Debbie Platts, 'Leaders Benefit From Self-Awareness' (2018) 24 Pharmacy Today 40.
2 Tara Wernsing and Rachel Clapp Smith, 'Developing Global Leaders Through Building Cultural Self-Awareness'
(2013) 7 European J. of International Management 535.
3 Anna Baczynska and Pawel Korzynski, 'Leadership Competences Among Managers' (2017) 25 Journal of
Management and Business Administration. Central Europe 6.
4

Student Name:
Strategic Leadership Practice in Costco’s Organization
strategic goals by optimum use of resources. Managers should also be good with people
even if they are leaders or not, that is the second part of the discussion, but it is prerogative
for them to be a people's person.
1.2 Analyze the concept of leaders as effective managers
As the adage goes, “Great Leaders are born, not made.” This can be true to some
extent, but one can make the efforts to be a great leader, although it might not be in hate or
inherent in the nature of their professional persona. Working hard, attaining good leadership
qualities given below is in every manager’s grasp.
Great leaders should do self-assessment. They analyse their skills, weaknesses, and
opportunities to broader perspectives. They recruit or make a group of people who
supplement and complement their skills for bigger strategic goals.
Great leaders have a sharp perception of their surroundings. They perceive well what
is there in the other’s mind, what are their social needs and personality traits. A great leader
is a social person who is more human and people’s person than being a group leader. He is
responsive to the group's need as a result of being perceptive. He maintains clear
communication and total transparency at all levels about information like strategic
management protocols, work ethics and desired outputs taking Human Resource Issues into
account. He has the skills of negotiation, team building, motivation and goal setting. A great
leader knows his organization, its situations and people from all perspectives. He keeps
abreast of all the updated happenings and current news in a very subtle way. Effective
leader shapes the new future and builds the next incoming generation, so visions are broad,
engage today’s talents to an optimum level and also harness traditional knowledge
databases4. A great leader does not wait for changes and opportunity to knock on their door,
they make things happen, they create miracles. A manager and a leader have many things
which complement each other, though both are important in their roles in the respective
organization5. Let us now see the complementary side that is, the differences between an
effective leader and an effective manager.
1.3 Analyze the balance needed between the demands of strategic management and
strategic leadership
4 Herciu Mihaela, 'A Synergistic Approach Of Cross-Cultural Management And Leadership Style' (2014) 7
Journal Of International Studies 106.
5 Marijan Cingula, 'Entrepreneurial Competences In Contemporary Management' (2013) 15 Ekonomski
horizonti 77.
5

Student Name:
Strategic Leadership Practice in Costco’s Organization
The Strategic Management goals of every company require people who can manage
all with ease be it a Leader or Manager, be it same or different. So one needs a perfect
balance with the demands of strategic management and strategic leadership. Though cases
can be there where best of leaders fail to be good managers and good managers do not
prove to be apt leaders, though both are playing their pivotal roles in the organizational
strategic goals. Both are imperative in generating profit margins. Both impacts the
employee's mind and their engagement in work. They are like that coin which can be
different, yet complement each other in company’s strategic goals6.
Six key factors to analyse if managers make effective leaders are discussed below.
The areas where they differ still work unanimously for the company are described. The fifth
and sixth points are taken as one because they are interrelated to a large extent:
1. Envision or Observe: The Leader envisions the dynamic strategic vista, that is the long
term goals of the organization, the business and professional insights, the emotional
intelligence of dealing with human resource, all the business tools, micro, and macro
visions. Leaders are all about the realization of corporate visions than wordy words by
fluent and good presentations enriched in corporate communication. The Manager
observes the daily occurrences. The current status of the Strategic Management
scenarios. Setting output goals with performance excellence and handling the people
with their working environment7. The Manager manages the knowledge base,
expectations of the system, thereby contributing specifically to what, how, why, when,
where’s of Strategic Management goals.
2. Value or Evaluate: The Leaders add meaningful values to the business nodal points
from the executive office to the clerk's desk. Identify the Strategic and Human resource
goals, giving a clear statement of understanding all the objectives. Whereas the
Manager unfolds the execution environment of the company, evaluates the worth,
resource usage, proper allocation, measuring their outputs to an optimum level and
appraising the methods and people who give good profit margins. Leaders motivate
people, managers inspire them for progress.
3. Change: Good Leaders recognize rather sense market conditions, the maturation effect
of the global environment and try to adjust their business ethics and protocols
accordingly. They propagate innovative strategies; at times take apparent risks for
6 Thomas Garavan and others, 'Strategic Human Resource Development: Towards A Conceptual Framework To
Understand Its Contribution To Dynamic Capabilities' (2016) 19 Human Resource Development International
289.
7 Peter Carlos Okantey, 'Why Leaders Lead The Way They Lead Organizations Today: The Four Major
Leadership Styles That Influence Leader Follower Relationships' [2012] SSRN Electronic Journal.
6

Student Name:
Strategic Leadership Practice in Costco’s Organization
longer goals. They cash on the company's strengths, create opportunities and manage
weakness for balancing strategic management goals. Managers execute this plan at the
operational level; they take this further in a good direction with consistency8.
4. Participation: Be it Leader or Manager, both need to be human and good to the people
of the organization. Recreate opportunities for their participation, take their feedback
and viewpoint, and give them a happy environment for retention.
5. Planning and Decision Making: Leaders formulate strategies and Managers execute
those goals. The planning, forecasting, and the vision are all Leaders work. Smart and
time execution along with small level operational decisions is a manager's prerogative9.
Let us evaluate the Costco’s Leadership styles and its impact on organizational value in
the next section, with a background of efficient management and leadership study done
in this section.
8 Agnieszka Postuła and Julita Majczyk, 'Managers And Leaders In Need Of Entrepreneurial Competences'
(2018) 6 Entrepreneurial Business and Economics Review 91.
9 Tebogo Sethibe And Renier Steyn, 'The Impact Of Leadership Styles And The Components Of Leadership
Styles On Innovative Behaviour' (2017) 21 International Journal of Innovation Management 1750015.
7

Student Name:
Strategic Leadership Practice in Costco’s Organization
Task 2: Strategic Leadership Styles and its Impact on Organizational Values
2.1 Evaluate the role of the strategic leader in the creation of the organisation’s vision,
mission and values
This section discusses the Strategic Leadership Style from Costco’s vision, its
mission and company values. It further entails the leader’s pivotal role in communicating the
organizational strategic goals to all levels of people from suppliers, employees, executives to
the clerk’s desk. This also envisions and elucidates that self-belief and motivation, higher
energy levels, motivating commitments to impact the leadership styles and apparently the
strategic circumstances and situations of the organization be it, Manager or Leader. Ethical
Leadership is also measured in this company study of Costco, all research boils down to
measuring the said impact on organizational strategic practices and protocols thereby
motivating for the best profit graphs.
Costco follows and is focussed stringently on Flexible Leadership style. This flexible
Leadership has a direct relation to the performance graph. Costco decided on this leadership
style as it has been profitable in the past and also envisions long term goals of performance
and profit in the near future. This theory, if Flexible leadership by Ken Blanchard points
towards situational leadership style. This also points towards the required skills depicting the
same as one becomes well versed after trying out different leadership styles according to the
company’s changing situation, needs, and demand and supply chain’s requirements10. The
Flexible Leadership in Costco's scenario talk about flexible management rules which are
transparent to end users providing them with good below market rates and discounts. This
also means the rates; product description and quality must be as per the customer's needs
and specification11. Company Goals and Customer Satisfaction being prime motives in this
style of leadership. It also enriches the competitive streak among its sections of employees,
suppliers, stakeholders, investors and customers with no margins of trial and error but with
total clarity in outputs and inputs12. One challenging point for the Leaders here is balancing
all the nodal points of Strategic Goals, be it incorporating innovative performance
techniques, harnessing adapting to the economy and the environment, inculcating a good
company culture and to be consistent in dramatic and frivolous market graphs13.
10 Supriya Mahajan, 'Study On Leadership Styles And Theories' (2011) 4 Indian Journal of Applied Research 281.
11 Stella Marie Minahan, Patricia Huddleston and Constanza Bianchi, 'Costco And The Aussie Shopper: A Case
Study Of The Market Entry Of An International Retailer' (2012) 22 The International Review of Retail,
Distribution and Consumer Research 507.
12 Sherry K. Schneider and Winnette M. George, 'Servant Leadership Versus Transformational Leadership In
Voluntary Service Organizations' (2011) 32 Leadership & Organization Development Journal 60.
13 Shiau Pei Shih, Szuchiang Yu and Feng Ju Yen, 'How Does Costco Win Customer Satisfaction: A Case Study Of
The South Of Taiwan' (2015) 3 Journal of Economics, Business and Management 360.
8

Student Name:
Strategic Leadership Practice in Costco’s Organization
2.2 Discuss the leader’s role in communicating the organisation’s vision, mission and
values to others
In the era where International globalization reigns supreme, different culture and
expansion goals are there, the company's need to look beyond traditional leadership styles
to maintain their place in a competitive environment and also generate profit margins of the
business market. Market trends undergo maturation effect with respect to product variety,
likes and taste of people, economic, environmental and political policies and rules, etc. The
organization can be impacted inversely if the Strategic leadership styles do not change with
these changes and survive fluctuations14. Flexible Leadership has come from traditional
leadership styles. The core of Flexible Leadership analogy comprises of some key feature
sets; Balancing the demand and supply along with performance, adjusting to a change in
environment, requirements and other parameters. Integrating and having their own
leadership styles for the best-fit approach.
2.3 Analyze how personal energy, self-belief and commitment impact leadership
styles and their application in the strategic environment
Leadership styles are mixed and matched according to different aspects of
organizational units and conditions along with adherence to ethical leadership given by
organizational role model analogy. Flexible Leadership is more about improvements in
increments and adhering to changes, thereby solving challenges and issues at all levels of
operations in the strategic management realm. It adds operational value to the
organization15.
Any organization can have its Leadership style estimated or measured by some
requirements of the framework they belong to. The qualities are Survival Instincts', name in
the market, the net profit, rate of investments, Profit graphs, growth rate, stock market value,
etc. Other than this can be Operational process consistency, reliability parameters, adapting
to the changing business climate, innovative measures of business, retaining good human
resource and knowledge base. This impact Leadership styles a lot. Let us calculate the
various traits of the organization which follows Flexible Leadership.
14 Kristín Loftsdóttir and Már Wolfgang Mixa, 'The Opening Of Costco In Iceland: Unexpected Meanings Of
Globalized Phenomenon' (2017) 13 Veftímaritið Stjórnmál og stjórnsýsla 189.
15 Daniel Herrmann and Jörg Felfe, 'Effects Of Leadership Style, Creativity Technique And Personal Initiative On
Employee Creativity' (2012) 25 British Journal of Management 209.
9

Student Name:
Strategic Leadership Practice in Costco’s Organization
2.4 Discuss how ethical leadership engenders empowerment and trust, identifying its
impact on organizational practice
Be it Efficiency and Process Reliability which involves good management of
organizational Human Resource and other resources with the point of view of cost-cutting,
best utilization, and performance up gradation. This also adheres to Quality and Safety
Standards as well. This also encompasses the cost of sales, productive performance charts
and operational expenses. Manufacturing and Delivery process is also part of this value-
adding Flexible Leadership style. This also entails managing challenging situations of error,
damage and other such things16. The Leadership style is such that is ready for the
challenges and its repair.
Second, comes Human Resource Management; Motivational strategies to retain
Human Resource, thereby knowledge and skills in organizational database. The third is
adapting to changing circumstances and innovating new techniques of production and
manufacture to assist change management in an organization. They are the assets of the
organization and products of core competencies.
16 Wee-Liang Tan and Samuel T. Tan, 'Entrepreneurs, Managers And The Competency Approach: Do
Entrepreneurial Competencies Differentiate Entrepreneurs From Managers?' [2012] SSRN Electronic Journal.
10

Student Name:
Strategic Leadership Practice in Costco’s Organization
Task 3: Evaluating Transactional, Transformational and Situational Leaderships
3.1 Evaluate transformational leadership and its impact on organizational strategy
Transformational Leadership Theory inculcates a process where the Leader and
teamwork unanimously in every decision-making process, change management, executing
the company's goals and missions. This is the core Leadership model. The Impact of
Transformational leadership on Organizational Infrastructure is optimum. As they say, it is
the core Leadership model so any change in organizational policies is made aware of its
people and this type of leadership can handle all the change management effectively well. It
can take care of risk covers, backup plans and improve upon the process and products of
the organization. The transformations are well recorded and executed with decision-making
powers distributed equally to people having to say matters at all levels17. The mission and
goal of the organization are better to handle as it can take care of any change in
environment and undergoes a complete transformational cycle to harness or improve upon
the product and services with clear information at all levels.
3.2 Evaluate transactional leadership and its impact on organizational strategy
Transactional Leadership points toward the leadership style or type where the
Leaders make their process or goals executed by people who work for them and also reward
them for the attainment of benchmarks and profits. The balance and subtle control are
through this punishment and reward framework. Transactional Leadership has a subtle
impact on organizational strategies. It is for the people and by the people. This style of
leadership requires people's management. The Human Resource perspective has to be
focussed gravely in order to optimize the output and overall performance. Dominance and
control will not work. Training and updating skills are imperative in this kind of setups. Also,
the retention power of employees should be looked after as a pivotal point. Human
considerations and Human Resource policies from global and local perspectives must be
measured and implemented18. Good feedback system, human approach towards Human
Resource will take this style of Leadership towards success. A backup plan in crises must be
taken care of and employees should be made aware of policies and decision making at all
levels.
Situational leadership talks about a leadership paradigm where the Leader or
respective manager changes their policy and working principles according to the situations in
17 Kwasi Dartey-Baah, 'Resilient Leadership: A Transformational-Transactional Leadership Mix' (2015) 6 Journal
of Global Responsibility 99.
18 Nataliia Aliekperova, 'Pharmaceutical Leadership In Ukraine: Transformational And Transactional' (2018) 11
Economics & Sociology 265.
11