The current essay analyses an article by Stone about the Costco company (55). The article analyses the business development and its growing into one of the most successful corporations in the United States. It is mostly concentrated on CEO Craik Jelinek because his management is probably the reason for Costco’s realization and success. Therefore, the company’s business model and strategy are bright and worth a thorough investigation.
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Costco’s Business Level Competitive Strategy and Its Major Elements
Probably, the most striking feature of Costco’s strategy is creating appealing jobs for employees and practicing humanistic treatment to the workers. The article notes that Costco “treats its employees well in the belief that a happier work environment will result in a more profitable company” (Stone 55). Thus, the company offers the real beneficial conditions for its employees, creating productive functioning and growth of the business.
Costco developed a competitive strategy showing a one of a kind story of company development. Bill Durling, a spokesman for the Sam’s Club division of Walmart, argues that it was advantageous to start in the urban area because of the bigger average expenses of citizens there, as cited in Stone (57). Costco takes into account other companies’ experiences but always follows its principles. The pricing for Costco’s products is determined by the beneficial arrangements with its suppliers.
In consequence, the company offers the lowest prices in the market. Moreover, the variety of products is rather wide: from groceries to jewelry and electronics. However, the company’s merchandising policy leads to providing high-quality products with particular attention to recognizable brands. Another influential decision was to introduce the membership system, which could result in the rise of customers feeling of being in-group. To summarize, Costco has been showing smart decisions from the beginning.
Costco’s Business Model
Costco’s business model is characterized by a selection of high-quality products that are sold in large quantities in warehouses, primarily in the United States and Canada, but also reaching Europe and Asia. The product range is quite wide, which is likely to make people perceive Costco as a universal place for shopping. Since a large part of the business is focused on selling low-margin goods, Costco also has around fifty million members, which each year guarantees the company stable revenue with high profits.
However, although the merchandise variability is vast, the number of products is more limited than in other companies like Amazon and Walmart because Costco concentrates on low-price high-quality items. Thus, Costco offers an exclusive selection of goods with the most optimal quality and price.
Besides, Costco’s relationships with its partners are worth considering, because the company builds trusting and loyal communication with its vendors, arranging the most profitable partnership. Along with attention to employees’ and customers’ attitudes, this model resembles networking principles and may strengthen the company’s reputation. Moreover, the company establishes collaborations not only in the US but also internationally. Therefore, this business model places special emphasis on the interaction and communication of its members at different levels.
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Most Interesting About the Content of the Article
While describing the Costco business and providing comments from different experts, the article shows the personality of Craik Jelinek. There are many quotations which mostly signify Jelinek’s lifestyle and philosophy in the text. For example, he says, “if you treat consumers with respect and treat employees with respect, good things are going to happen to you” (Stone 58). Thus, it seems that he does not separate business and the rest of his life, treating them as highly related to each other.
In conclusion, Costco has been demonstrating a splendid business system notable for an analysis. The company pays special attention to the employees’ occupation conditions, creating a productive and beneficial atmosphere among them. Costco developed a smart system of membership, supported a profitable partnership, and contributed to the best product selection. Moreover, Craik Jelinek seems to contribute to business success by applying his life philosophy to the company management.
Stone, Brad. “How Cheap Is Craig Jelinek?” Bloomberg BusinessWeek, 2013, pp. 54-60.