Costco Case Analysis

This article is about Jim Sinegal who is co-founder and ex- CEO of Costco. Sinegal was one of Sol Price’s top lieutenants. Sol Price was founder of FedMart and Price Club. Price Club’s business model was that products should only be marked up by a limited amount, in the belief that retailers added only limited value. Sinegal brought the price club model to Washington in 1983 to start Costco with a local attorney Jeff Brotman. Sinegal had the vision to identify and select the appropriate method to pursue their goals like the membership program. Customers who want to shop at the store must buy a membership (currently $55 the basic one and $110 the executive this one provide the reward program). This is an excellent strategy because eighty percent

Another really good strategy is an excellent wage pay and health insurance for its employees this motive and energize individuals and groups to work together to archive organizational goals. “I just think people need to make a living wage with health benefits,” says Jelinek. As CEO, he is following the globalization his biggest move is increasing Costco’s international presence. Over the next two years, Costco will open its first locations in France and Spain. Another good part in this article is that Costco does not hire business school graduates, they preserve its distinct company culture. It cultivates employees who work the floor on its warehouses and sponsor them through graduating school. They also mentioned that Sol Price’s virtuous cycle continues to work for the company happy employees are more productive, and effective workers. Jelinek is content to focus on the future of Costco, vowing to keep prices low, volumes high, and his employees happy. “As long as you continue to take care of the customer, take care of the employees, and keep your expenses in line, good things are going to happen to you” he

There is a reason that it is the second largest and continues to grow. There are many things we can take from what Costco has done. Craig Jelinek said “treat the consumers with respect and treat employees with respect, good things are going to happen to you.” He treats his consumers with respect and they keep coming back to buy more good at the lower prices that Costco has. All of the benefits that he is giving his employees between their wages and healthcare, this in return puts money back in the economy and makes for a healthy country. Another thing to learn from this is creating a happy work environment. By treating its employees well Costco believes that it is creating a happy work environment in which they believe will result in a more profitable company. Also what you can learn from Costco is they are marking things up by fourteen percent or less. This is attracting customer to their goods, and as stated in the article by David Schick “they are selling more olive oil, more cranberry juice, and more throw rugs than just about anybody.” This is allowing Costco to get larger discounts from their suppliers and allowing Costco to set the industry’s lowest price. Some simple things as that are good to take away from what Costco has done. Treating people right makes them want to come back, lower prices helps you sell more and get larger discounts when you buy things, and helps you