Costco Research Paper

Southern States University
Principle of Management
Aline Campos

Costco was founded by James (Jim) Sinegal and his partner in business Jeffrey H. Brotman, on September 15, 1983. Costco is a warehouse that offers food, clothes, appliances, office supplies and other supplies at prices that are bellow general retail.
The concept of warehouse came from Price Club which was a warehouse that provided small business the opportunity to buy a limited variety of products at nine percent over wholesale. When the demand expanded they included retail customers to shop at their place as well. In 1983 Costco merged with Price Club and they opened their first store in Seattle and by the end of their second year in business they opened
additional locations in four other cities.
The company has become one of the largest in the US. They have almost five hundred outlets and more than $50 billion in sales. They are also the largest membership warehouse club chain in the world.
I picked Costco CEO for my assignment because I think is a company that is very present and useful in a lot of people’s daily life.
Jim Sinegal, is a son of a steelworker and he came a long way to be where he is today and has a very inspirational history. He was born on January 1, 1936 and was raised in a typical working class family. When he was younger his dream was to go to medical school and he applied for enrollment at San Diego College and after he finished his degree he enrolled in San Diego State University. To maintain himself through school years he applied for a job at Sol’s price newly expanded Fed-Mart and his tasks there were unpack mattresses as they arrived. At this job he discovered his passion for retail and within a few years he was promoted to a store manager which made him to quit school and dedicate himself full time to this position. After years of hard work he was the executive president of the chain. Fed Mart was a success but Jim was ready to move on and invest his experience in another project:
Costco. Costco Wholesale Corporation operates an international chain of membership only warehouses. At Costco Warehouse the prices are extremely lower than the rates of their competitors. The pricing strategy of the company permits them to focus on the needs of their members. They provide a large but limited variety of products with discounted prices. As opposed to their competitors like Wal-Mart that has an average of 150.000 of products Costco just have about 4.000 and this strategy is to make people in and out of their warehouse without much hassle. They carry good quality products to satisfy their customers. They also have their own brand Kirkland that is designed to be equal or better quality than other national brands.
The company is controlled and organized by the top management. Its organizational structure observe the following business ethics: taking care of employees, obeying the law, respecting it employees, taking care of its members, respect suppliers and reward shareholders. They believe that if these goals are achieve they will make their everybody happy. Management has so much respect for its employees, their philosophy is to value each and every employee of the company. They are known for keeping their employees working for them for long and paying better than average. Workers are provided with a wider range of health benefits. The company has a high performance culture that makes their employees feel excited about work. It operates like an extended family with shared values and common goals. They receive extensive and ongoing training and education to continually improve their skills.
Costco culture is based on the philosophy that customers and employees comes first. They believe that the right culture will push a company in to a top performance in its industry, which they are.
Jim Sinegal’s leadership transformed his store into one of the most successful retailers in the world.
He is doing a great job to balance employees, suppliers, members and shareholders’s interests. He likes to visit his warehouses very often, he spends forty weeks on the road to check out the performance of his stores. He believes that his role in the company is the same as each member of the organization and he is very humble and does not put himself on a pedestal to be above everybody else. His leadership is very authentic and has a strong connection with his employees and they genuinely like their boss. He answer his own phone and has an office with no walls which is very welcoming to every person of the company. He never forgot his roots, he started his retail experience unpacking mattresses and has strong working-class values.
Costco’s success is attribute to team work as well. Teamwork and mutual support are important characteristics of the company. They believe that if everyone works together and communicates with each other, the job gets done more quickly and productively. They believe if their employees are happy therefore their members will be happy
too.
Another good characteristic that Jim Sinegal has is that he deals very well with changes and is always thinking about his employees and their loyalty with Costco. As much as they are loyal to the company the organization tries to remain loyal to its employees no matter what problem there are dealing with. As an example were the times of recession. Costco is one of the few major retailers not laying anybody off. The way he conducted the situation is directing their business in a fashion that the attrition would handle whatever reduction in force they wanted to have, and they had some new warehouses coming up and they were able to transfer some employees to those new facilities not letting anybody down.
Jim Sinegal conducted his leadership in a humble way. He always make himself assessable to everybody in the company. He really worries more in “doing the right thing” than achieving short term financial gains, he sacrifices them in order to have long term achievements. He is a leader that has a deep sense of humility and sensitivity which really caught my attention because in my opinion success is a natural consequence of that. He is a leader of one of the most admirable capitalistic institutions in the world and what he brings is a very inspiring history of a man that became one of the most successful CEOs on earth.

References:
An Interview With Jim Sinegal, Co-Founder of Costco. (n.d.). Retrieved November 10, 2014.
Goldberg, A., & Ritter, B. (2006, August 2). Costco CEO Finds Pro-Worker Means Profitability. Retrieved November 10, 2014.
Costco Wholesale. (n.d.). Retrieved November 10, 2014.
Inside the Box: What’s the secret to Costco’s success? (n.d.). Retrieved November 10, 2014.
Reference for Business. (n.d.). Retrieved November 10, 2014.