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Costco Code Of Ethics Case Study

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I chose to do my current event essay on Costco and the effect that their employees have on quality. Costco has a very simple and straight forward code of ethics and it involves key items that they focus on throughout their organization.
1. Obey the law
2. Take care of our members
3. Take care of our employees
4. Respect our suppliers
While each of these items has much more detail provided in their corporate mission statement and code of ethics, they are seemingly very simple and straight forward. There is not a lot of large unnecessary words or corporate speak used. To me this reflects directly on how Costco treats its employees and customers. (Statterfield, 2015) When reading about Costco, it becomes clear pretty quickly that they are focused on their employees. They have an extremely low turnover rate and pay an average wage of over $20 per hour. These two thing are almost unheard of in the retail industry. In addition, they offer company health care and the employees pay less than 10% of the cost. By focusing on their employee’s happiness and treating them well, they are making it clear to them …show more content…

Costco cares about its employees and its employees care about Costco. As a result, quality becomes the number priority for everyone. They aren’t marking their products up by huge amounts, or having flashy stores or offices. They are exactly what they say they are, a large volume warehouse retailer that sells quality products, with a reasonable markup. By keeping their employees happy, they keep their members happy, which keeps the profits coming in. Even though they could make some changes to increase profit that is not Costco’s number one priority, and as a Costco member, I couldn’t be happier with their values. By focusing on the right things, they have steadily increased their sales and stock price over the last eight years and I’m confident that trend will

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Only criticism that this warehouse receives is about the long lines at billing counters and having to buy things in bulk. Surprisingly, Costco sells goods at break-even point. Only way it generates profit is from membership fees. The CEO and co-founder of Costco, Jim Sinegal is on the road for most part of the year, visiting every store of the company worldwide. He personally sees what is selling and what is not, which makes Costco a success.

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Costco's focus on driving sales also helps explain why it offers better pay and benefits than competitors (Luts 2014). The organization attempts to retain employees while trying to grow sales and increase consumers but they recognize the need to compensate their employees properly. Costco members know that the warehouse store has consistently lower prices when compared to traditional grocery stores. While other stores may have occasionally lower prices on their loss leaders, Costco has permanently capped its margins to ensure that members can justify paying for a membership. The word average is important in that explanation.

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Costco has built a reputation of being a caring corporation1 with a low cost structure in the discount services sector. Their founder, Jim Sinegal, believed in building a business on strong ethics while offering a wide selection and great value. Costco’s vision is expressed in its code of ethics which contains five key tenets by which the company operates: Obey the law, take care of our members, take care of our employees, respect our suppliers & reward our shareholders.2 With this vision Costco has built the third largest retailor in the United States. By looking closely at the code of ethics it becomes possible to see it has built in strengths and weaknesses.

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