Thanh Phu 06/11/24 MGMT 885 Michael McLeod Real-World Application 4: Power, Legitimacy, and Urgency Introduction Costco, a cost-leading membership warehouse club, relies on a diverse range of stakeholders whose influence is pivotal to its operations. These stakeholders, with their power, legitimacy, and urgency, shape Costco's business strategies and outcomes. We will delve into the roles of three key stakeholders for each category, highlighting their significant contributions to Costco's success. Stakeholders with Power 1. Shareholders are crucial in Costco because they provide funds for the company's operations and growth. They can influence major corporate decisions, such as mergers, executive appointments, and dividend policies. Shareholders can vote on important …show more content…
If unhappy with the company's performance or strategy, they can push for changes to the board of directors or executive leadership. Their investment choices directly affect the company's stock price, impacting Costco's market value and its ability to raise more funds. For example, the top individual insider shareholders of Costco are Craig Jelinek, Charles Munger, and Patrick Callans. The leading institutional shareholders are Vanguard Group Inc., BlackRock Inc., and State Street Corp. https://www.investopedia.com/articles/insights/061116/top-5-costco-shareholders-cost.asp 2. What is the difference between a'smart' and a'smart'? Suppliers Costco's suppliers, including manufacturers and distributors, possess substantial power due to their role in the supply chain. They determine the availability, pricing, and quality of products sold in Costco warehouses. Justification: Suppliers can influence Costco's inventory and pricing strategies. If a supplier decides to change the terms of their contract, it can affect Costco's product offerings and profit margins. Maintaining good relationships with suppliers ensures a steady flow of products, competitive pricing, and the ability to meet customer
Key Stakeholders and Their Stakes A stakeholder is defined as an individual or group who has an influence or is influenced by any achievements made by an organization (Sexty, 2017). It is imperative for any business, especially in the banking industry, to be able to identify and respond to these various participants in order to remain successful. TD Bank has a myriad of stakeholders and has only recently looked to further its relationship with each of them in order to sustain a competitive advantage over other financial institutions (TD and Importance of Stakeholders, n.d.). One of the many groups that TD interacts with is the customer (Corporate Responsibility, n.d.).
Costco’s business strategy is different from their competitor’s in the wholesale retail industry because their purpose is to keep overhead down and pass the savings to their customers. They do this by choosing not to advertise, sell fewer brands and having an innovative approach by having their own manufacturing facilities for a variety of merchandise. Costco does not market their warehouses and their marketing is through word of mouth from current customers who also must have a membership to shop at Costco. When compared to Walmart Costco sells four brands of toothpaste and Walmart sells sixty brands of toothpaste. Costco can buy more for less from the manufacturer of the four brands of toothpaste and pass the savings on to their customers. Costco’s strategy is to sale a limited number of items because this strategy according to (Lutz, 2013) “increases sales volume and helps drive discounts.” Because of Costco’s profitability in the retail market they have managed to continue to be profitable even in an oppressed economy. Costco’s focus is on high-end customers indicated by some of the brands they carry such as Coach Handbags. Costco offers three different levels of membership and is only open to customers who have a membership. Costco’s philosophy is they do not advertise or markup items more than 15% in order to save their customer’s money. These practices lowers the overhead costs and continues passing the savings to the customer. Costco is an international company and has (Costco Wholesale Corporation, n.d.) “462 locations in 43 U.S. States & Puerto Rico; 87 locations in nine Canadian provinces; 25 locations in the United Kingdom; 10 locations in Taiwan; 9...
Costco is one of the good companies in the USA. The company has quality products that function in four different department's food, health care, employee discount cost, and some types of delivery services. The company actually sells fewer kinds of products than Wal-Mart, Giant and others, however, this means that they can keep their costs down this way. They are also able to keep costs down by charging customers a yearly fee, which allows Costco to have more brand loyalty because of this. So, Costco is a good option because it has provided better services for many years.
Costco Wholesale Corporation is a large corporation with a total of 721 stores worldwide club operators over the past 15 years. With Growth earnings at an average annual rate of 11% for the next five years, and 12.12% forecasting earnings increase for this year. Close to 6000 quality products from furniture to Food to electronic goods are offered to customers with a membership.
The biggest challenge that Costco may face is that its main benefit, offering low-price items through bulk purchases, may no longer attract consumers as before. Furthermore, there are other substitutes to most of Costco’s goods, particularly food products and similar commodities that are easily accessible and can satisfy consumer’s expectations, thereby this is a threat that could be classified as high. Based on this threat of the Five Forces model, the external factors leading to a high threat must be considered one of the company’s most important challenges.
Porter’s Five Force analysis breaks down competition into five market forces for industries or companies. It discusses the threat of new entrants, the bargaining power of new entrants, the bargaining power of customers, the bargaining power of suppliers and the threat of substitute products or services. A company can protect themselves and attack their rivals with proper knowledge of Porter’s Five Force analysis and applying it to their company. Let’s explore Costco Wholesale and the market forces in Porter’s Five Force analysis.
Costco Wholesale Corporation has various key corporate social responsibility programs that effectively address the interests of its stakeholders. Both the company and the stakeholders affect each other significantly and it is necessary for Costco to make sure that its corporate social responsibility efforts address any concerns that the stakeholder’s may have. If they keep the stakeholders happy, then they can have long lasting beneficial gains from it, such as a stronger brand image and loyal customers. Costco’s organizational activities aim to enhance performance all across the board within the company and their corporate social responsibility programs address the following stakeholder groups and they are arranged according to significance
Strengths Quality name brand products at low prices. This is the cornerstone of the Costco business model and one of the biggest drivers of its success. Costco has built an identity based on this strength. Fast inventory turnover and High sales volume This is a key strength that directly relates back to the first strength. Fast turnover means they are collecting on their purchases often before payment is due, cutting borrowing costs and further reducing prices.
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
In business, the mantra that success comes to those who can recover from setbacks is widespread all over the world. One of the organizations that poignantly illustrate this element is Costco. Costco is a warehouse firm that was founded in 1976 in San Diego. Although many people may envy the company as its owners enjoy huge success in the warehouse and retail industry, what the majority of individuals do not know is that in the first year of operations, Costco lost $750, 000, but after 3 years, the company had $1miilion in profit, 900 employees, and 200000 members. This shows that in business, the strategy can be the difference between success and failure. This essay describes how Costco has undergone evolutionary changes from its inception
1. What is the difference between a. and a. Does the company’s strategy reflect the company’s mission? Explain the adage of the adage. In order to compare Costco Wholesale’s mission to its strategy, it is essential to determine exactly what Costco’s mission is and how they plan to accomplish it through their business strategy. Costco’s mission is: The company will continue to pursue its mission of bringing the highest quality goods and services to market at the lowest possible prices while providing excellent customer service and adhering to a strict code of ethics that includes taking care of our employees and our members, respecting our suppliers, rewarding our shareholders, and seeking to be responsible corporate citizens and environmental stewards in our operations around the world.
Suppliers must maintain good relations with the companies in the industry. This is low because there are multiyear service contracts and the delivery industry uses items such as vehicles, employee benefits, general goods and airline contracts associated with overhead of running business, but all contracts are rewarded through an RFP process. There are enough players in the market and had high fixed cost and thus have substantial buying power.
Stakeholders are ‘… individuals or groups who are affected by the goals, operations or activities of the organisation (Mullins, 1999). Who are Barclay’s stakeholders and what influence do they have? Barclay’s key stakeholders are their employees, customers, shareholders and the communities in which they operate. Below is a table adapted from Sims (2003, p41) showing what stakeholders expect from an organisation. To fulfil the purpose of this assigned the stakeholders of Barclays will be incorporated within the table.
Stakeholders are interest of an individual or groups that directly or indirectly affected by the organisation’s activities, policies and objectives (Henry Frechette, 2010). Stakeholders can be divided as internal (managers and employees) and external (shareholders, customers, and suppliers) (BPP F9). Different stakeholders may have common interests or conflict interests with company. Company board members or management must take care about stakeholders’ interest. They can’t make the decision based on their own interest or their relation with others organisation. Conflict of interest will arise when interests of organisation act in concert with managers’ personal interests or interests of another person or organisations, (Anon, no date).
2. Why do you think Wal-Mart has had a recent number of ethical issues that have been in the news almost constantly?