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Impact Of The Current Global Economic Environment At Costco

4569 words - 19 pages

Executive Summary
Costco is one of the most profitable retail stores in the United States at the moment. This is in spite of the prevailing tough global economic times and stiff competition from stores such as Wal-Mart and Target. Costco, a members’ wholesale retail store, was founded in 1983 in Washington by Jeffrey Brotman, who serves as the current Chairman of the board of directors and James Sinegal, the current company president. Costco has not been spared by the current global economic conditions. They have affected it in a number of ways that have made the company’s management respond in a manner that is meant to ensure that the business not only survives but grows even stronger. ...view middle of the document...

The current global economic and financial situation has also made Costco pay extra attention to the prevailing cultural and social climate. The company has made sure that social and cultural issues that can be detrimental to the company’s operations if poorly implemented are handled with extreme care. These include paying attention to rights of special groups and respecting the environment as part of corporate social responsibility. Costco stores use skylights to light its stores during the day to save on electricity. This is also good corporate social responsibility as the company helps protect the environment by reducing the amount of electricity consumed by its stores. Costco also minimizes packaging of products as a way of not only saving on costs but also protecting the environment. This is also observed more closely during the current tough global economic conditions as a way of cutting costs and keeping the company profitable. The impact of the prevailing global financial and economic condition on the operations management of Costco is also evident in the manner in which the company is handling its opening of new stores. The approach is cautious and measured- a deliberate approach that is meant to avoid costly investments. The current global economy that is a great consumer of technology has also pushed Costco into the online domain. At the moment, Costco does a lot of its business in the online domain like several other stores. This is necessary if the store is to remain competitive.

The current tumultuous economic and financial climate has proved to be challenging to numerous businesses around the world. As Michael Porter once noted, there is no way that business entities can escape the forces that form the environment that such businesses operate in. Therefore, it is no surprise that business corporations such Costco have to be managed in a manner that takes into account what is happening in the global economic and financial environments. The economic and financial circumstances around the globe can affect different aspects of Costco, and indeed any corporation. Some of the areas that get affected by global economic circumstances include investment, access to supplies, compensation of employees, hiring of employees, operations, social issues, labor practices, output, marketing, and expansion to new markets. This paper examines the impact of the current global economic and financial conditions on staffing, compensation, operations management, social issues, and labor practices of Costco. The business reality is that the current global economic and financial conditions have not led to cuts in compensation of employees and the slimming down of some of Costco’s outlets as it is the case with other stores such as Wal-Mart. Hiring has also not stalled and labor practices are now being carefully observed to minimize litigation costs. Additionally, contentious cultural and social issues are steered clear of as a way of...

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