What Makes Cotsco the Best Place to Work and Why - Research Paper Example

Costco of the of the Question Fundamental Driving Forces Costco Wholesale Corporation is a warehouse club locatedin United States. This organization provides a wide range of merchandise to its target audience. It is the third largest retailer across the globe and second largest in context of United States. In initial years the firm was known as Price Club but later it was called Costco. Costco Wholesale Corporation at early stage confined its business operations to specific regions in United States. However in current scenario the firm posses a total of 671 warehouses and has extended its business operations to United Kingdom, Japan, Mexico, Spain, Australia, Canada, Taiwan and South Korea. Costco operates in an industry which is highly dominated by other players. The sales breakdown structure as per global industry has been represented in figure 1. Figure 1: Sales Breakdown in Global context (Source: Gerston, 2014) On the basis of figure 1 it can be denoted that Costco occupies a certain portion of overall sales margin but maximum sales percentage is acquired by Walmart. Global competition is one of the driving forces responsible for shaping organizational environment. Sam’s Club of Walmart effectively competes with Costco. Porter’s five forces model is able to denote certain driving forces prevalent in the industry. Threat of substitutes is strong in this particular industry due to more product features, comparable product line, low prices, low switching costs, etc. There is intense competition prevalent in global retail or wholesale industry but Costco is able to survive through offering better quality products at low prices, addressing growing customer demand, etc. The company is engaged into offering best value and this weakens bargaining power of customers. There is low threat of new entrants in this specific industry because of lump sum investment, well established players and narrow margin for product differentiation. Suppliers usually impose lower bargaining power due to wide array of suppliers and high requirement of bulk quantities. Market saturation is another driving force that is shaping external environment of Costco. The company needs to continuously develop innovative strategies in order to remain competitive in the market place. Increasing costs is also considered to be a driving force since it is enabling substitutes to gain market presence. Costco encompasses an employee base of 195,000. These employees are not citizens of United States but belong to different country and culture. This aspect of workforce diversity is also a driving force since it influences the company to undertake decision suitable for all workers. Diversity brings forth a lot of opportunities in terms of varied opinions or ideas, but it even give rise to workplace conflict. Costco is stated as the topmost employer in United States due to its morality and ethics. The company maintains its ethical standards through various ways such as offering employees $20 per hour where other retail firms offer $12.20 per hour, enabling company sponsored healthcare facilities, believes in customer retention and employee retention and enforces equality throughout organizational system (Wall and Wood, 2005). Technological innovation occurring across retail industry is structuring the external environment of Costco. Technological advancement has resulted into internet based services which is reflected upon by the firm. Costco has also incorporated technology in workplace so as to reduce work load of employees and eliminate any form of human error. Question 2 Practices or policies at Costco Workplace practices are highly responsible for developing a productive employee base. These practices are basically centered towards corporate strategy and help to retain best talent in a firm. Costco operates in an intensely competitive market place. The company can sustain its market share only when it constitutes increased level of employee productivity. Costco in United States is known as the most preferred employer. This is simply because all its organizational policies are employee centric. The company believes in performance related pay and this strategy has enabled the firm to develop a motivated team of workers. There is retail firms present in global market and even in United States which are offering less pay structure in comparison to Costco. They possess some specific practices which defines their organizational culture. These practices are gaining employee feedback on certain scenarios, forming effective relationship with customers, involving employees in strategic decision making process, encouraging employee ideas and following ethical policies. Their policies denotes not creating excessive pressure on employees, facilitating work-life balance, providing value to customers, performance appraisal systems and giving additional benefits to employees. Costco does not support any individual interests but takes into consideration interests of all stakeholders. High morality is observed at Costco in terms of their long term relationship with suppliers, employees, shareholders and customers. These practices have significant impact on organizational outcomes because it is associated with level of employee performance. The policies framed by Costco are able to generate a wider base of loyal employees. This indicates that the firm represents lowest employee turnover. It has been translated into consistent business success and growth. The organizational outcome is well observed in the form of increased revenue margins and profit rise since past few years. Correlation between happy employees and growing profit margins has been highlighted in figure 2. Figure 2: Happy Profits and Happy Employees (Costco) (Source: Gerston, 2014) The company has profitability rates much lower than its rival companies but possess a strong brand reputation in the market place. Renewal rate of Costco’s membership card is about 9.1% and it indicates high level of customer loyalty. Individual outcomes of the policies are increased employee satisfaction, promotions, job security, high level of enthusiasm, etc. Question 3 Effect of diversity on work attitudes Work attitudes in US organizations are centered towards appropriate organizational functioning. There is intense competition witnessed in the workplace of US organizations. Work attitudes in these organizations are aligned with company’s goals. These work attitudes are strongly associated with workplace practices. It can be stated that US workplace environment is completely different from that of other regions. In this country, individuals are more performance driven and prefer being appreciated for their hard work. This approach is adopted by all US based organizations. Diversity management is an important aspect of every firm located in United States. There are workers coming from different locations who share common business knowledge. Costco considers diversity management to be a critical aspect as it greatly affects workplace productivity. Employee productivity is closely knitted with workplace practices and this is altered with changing diversity. Diversity mainly reflects employees belonging to varied culture and preferences. This cultural aspect is outlined during their work performance and it can lead to organizational success. Diversity affects compensation structure of workplace, training programs, performance appraisal systems, working hours, etc. For instance, employees belonging to US culture are more determined to perform well and are motivated through setting high targets. On the contrary, individuals coming from Spain needs to be motivated through monetary rewards (Bamberger and Meshoulam, 2000). This causes adverse effects on organizational practice since management needs to satisfy diverse demands of employees. These effects on workplace environment can be addressed only through collaboratively decision making process. Strategic decisions should be structured only with the support of employees since they possess varied knowledge on different regions. It has been observed that firms which indulge into participative style are most profitable business segments. These firms are able to acquire ideas from employees and then implement it further. Diverse ideas are often beneficial for a company since it encompasses varied view points. Effective diversity management is also a way to mitigate such issues. This kind of diversity management can be facilitated through intra-group conference and job rotation. It is a productive strategy because employees belonging to different culture can interact with one another and frame strategies for further organizational benefits and growth. References Bamberger, P. and Meshoulam, I. (2000). Human resource management strategy. CA: Sage. Gerston, L. (2014). The Costco experience 2011. New York: Open Road Media. Wall, T. and Wood, S. (2005). The romance of human resource management and business performance, and the case for big science. Human relations, 58(1), pp. 429-462. Read More