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Comparison Of Costco And Family Dollar

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Introduction Most organizations view internal processes as ways of creating profits. In contrast, good companies create structures that use both societal and human values in its decision-making processes. These organizations believe that they have common purpose and strive to produce good and services that improve the lives of users and balance public interest with financial returns (Moss Kanter 2011). They also work to enhance the lives of the people that work for them. Good companies view their employees as their most value asset. The purpose of this paper is to compare and contrast the differences in company culture of two major retail companies, Costco and Family Dollar. Costco is the second-largest membership warehouse club with hundreds …show more content…

Eighty percent of its gross profit comes from membership fees; customers renew their memberships at a rate of close to 90 percent (Stone 2013). The company’s stock has doubled since 2009. In 2012, Costco’s beloved co-founder and Chief Executive Officer, Jim Sinegal, retired and Craig Jelinek took over. Share prices rose 30 percent on the heels of this change. Possibly because Jelinek shares the same value system and leadership style as his predecessor. “If you treat consumers with respect and treat employees with respect, good things are going to happen to you,” Jelinek says (Stone …show more content…

Leon got his entrepreneurial spirit honestly. His father founded the Hub store in 1908 and his uncle founded Pic-n-Pay in 1957. Leon envisioned Family Dollar as a self-service retail store marketed towards middle and lower class families with all merchandise sold for one dollar. The company expanded quickly and opened stores across North Carolina and neighboring states. By the early1970s the company owned 100 stores. In 1975, sales declined due to a downturn in the furniture, textile, and tobacco industries and Family Dollar’s profits plunged by fifty percent (Northcarolinahistory.org 2014). The company was forced to revamp their marketing strategy. With this new strategy, products were no longer sold for three dollars or less, inventory controls were changed, and a new electronic, data price system was put to use. As a result, Family Dollar reached $151 million in sales by 1979 (Northcarolinahistory.org 2014). Throughout the 1980s, Family Dollar experienced a series of highs and lows which included earning record profits and opening new stores to a drop in sales due to high competition from other retailers. To beat out competitors, Family Dollar slashed prices in its stores and slowed down expansion. In the summer of 1987, Ralph Dillon became the new CEO and went back to the foundations of the company by slashing prices even further and began supplying more upscale items. In the

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The warehouse companies, such as Costco and Sam’s Club, use the subscription business model. Customers, who want to buy at the store and get the best offers, discounts have to buy a membership with the commitment of lower prices for the initial cost (Page 2015 n.p.). The companies’ customers subscribe not for products, but rather for serves of low prices.

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