Case Analysis- Costco Essay Example

find great deals and value while shopping, and this is especially true for treasure hunt items which are selectively stocked for a short period of time. Even if a member did not come looking for a specific item, they may still purchase it because they know the price is good and the item will likely not be there if they come back. Cost is able to provide these types of items because of their demographic and two internal business principles that focus on employee compensation and treatment. Both full-time and part-time employees are valued, with CEO Jim Senegal stressing the importance of taking care of employees in order to make the most of their business strategies. He believes that paying good wages and keeping employees happy is good for business as it creates loyal ambassadors for the company.Cost hires individuals at an hourly wage that surpasses most retail companies and provides benefits to even part-time employees after a certain period of time. They also place a premium on employee advancement, with a policy to promote from within, filling at least 86% of higher-level positions, although in reality, the figure is closer to 98%. The current ratio, which considers current assets versus liabilities, demonstrates Cost's ability to maintain inventory flow as it is above 1. Additionally, Cost's inventory moves quickly and they can finance new purchases, as the ratio is in balance. While Cam's Club generated a higher operating income than Cost with 3%, and Bi's Warehouse had a lower operating income than Cost with 1.7%, Cost outperforms both in overall sales by billions. To maintain their competitive edge over rivals Cam's Club and Bi's Wholesale,

Cost adheres to two core principles that value their employees and prioritize internal promotions for higher-level positions.

Cost Wholesale Corporation values their employees as their most important asset, as reflected in their hourly wage and benefits package. They distinguish themselves from other companies through their commitment to five principles: obeying the law, taking care of members, employees and suppliers, and rewarding shareholders (Thompson, 2007). By upholding these principles, they demonstrate their worth to their members by providing affordable goods while considering everyone's needs. Additionally, Cost's internal promotion system provides an advantage over competitors since the most knowledgeable employees are given opportunities to advance. Overall, Cost's successful strategy justifies providing better compensation to employees as demonstrated by their enormous yearly profits (Thompson, 2007).