Costco Case Study

Lauren Ryan

Professor Buckingham

GEOG 123, Section AN

8 December 2014

Costco: A Cut Above the Rest

Introduction

Costco Wholesale Corporation, in terms of their business practices and ethical standards, stands out above the rest. From the beginning, the owners, James Sinegal and Jeffrey Brotman, decided they wanted to avoid the corrupt practices associated with globalizing. No company is completely free from or unaffected by globalization; but Costco has done a pretty good job being fair in all of its transactions and affairs. From when it started to where it globalized, Costco’s process for globalizing and the reasoning behind it have made them not only a great company but also an incredibly successful company. Furthermore, many company’s

All of its products are made by other companies in their factories all over the world. Granted, Costco has a lot of say in how these products turn out and can usually get an incredibly low price for them. The surrounding community benefits from wherever Costco stores are located. Not only do consumers get the opportunity to enjoy Costco’s low prices but they also will see products from local businesses stocked on Costco’s shelves. Costco looks to buy from local suppliers in order to cut down on distribution costs and appeal to the local tastes. This also benefits the local economy by supporting local businesses which in turn benefits Costco.

Another reason why Costco globalizes is to stay ahead of its competitors, which prevents them from being a threat in the future. By expanding its market reach far and wide, Costco is safer from shifts in the market related to prices and products. It has many inflows of profit from all of its stores that it can rely on. Currently, Costco is way ahead of its competitors globally. BJ 's Wholesale and Sam’s Club are its two main competitors. However, BJ 's Wholesale does not operate any stores outside of the United States; and Sam 's Club, which is owned by Wal-Mart, only has stores in three foreign countries (Costco’s

Costco builds new warehouses and offices in other countries. There are many incentives associated with building new retail outlets in other countries such as access to more consumers and products. Costco applies new infrastructure and business laws in accordance with whichever country it is located in (Costco’s Global). By doing so, they gain access to new markets and new consumers while also avoiding economic and trade barriers. Costco also makes a point of tailoring each of its stores to the local culture by seeking out local retailers and providing local cuisine (The Costco Craze).

Furthermore, Costco learns to tackle socio-cultural issues such as culture, language, attitudes, and values by globalizing (Costco’s Global). This will make their company more successful in the long run because they will have various business models on how to conduct themselves in other countries. They are also able to reduce transaction costs such as product and shipping costs by gaining access to more products and by searching locally for suppliers (The Costco