Organizational objectives investigation

CostcoWholesale
Lindsey Ren

Introduction
Costco Wholesale Corporation is the second biggest retailer after Walmart. Originally named price

club in 1962, the company developed its retail business with financial strategies, allowing it to

achieve its current global position in the retailing industry.

services at the lowest possible prices.” To conclude, the statement implies the following goals that

Costco is trying to achieve

- Quality goods and services

- Low prices

- Consistency in providing quality goods and services at low prices

Vision statement
Costco Wholesale doesn’t have an official vison statement. However, according to the company’s

history, its vision statement is “a place where efficient buying and operating practices give

members access to unmatched savings.” Its vision statement mentions the following targets for its

company

- Efficient buying

- Operating practices

- Access through membership

- Unmatched savings

Strategies/ Tactics
Firstly, Costco uses the cost leadership strategy, which is defined as “establishing a competitive

advantage by having the lowest cost of operation in the industry” this strategy is based on porter’s

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model, and it allows Costco to have a competitive advantage over competitors in the retailing

industry such as Amazon. And wholefoods market, Home Depot.

Secondly, Costco has a membership-only warehouse club business model. This means that only

consumers who paid for a membership card can access the low-cost products available at the store.

Not only do these membership cards account for over 70 % of Costco’s total operating profit

annually, but customers also love their membership cards, so much so that Costco’s annual

membership renewal rate is over 90%. This strategy gives them an advantage in comparison to

their competitors because they can lower the prices of their goods even more to attract more

customers. For example, their roasted whole chicken is priced at $5 only; even though they lose 4

million annually on these roasted chickens, they intentionally place it at the furthest section of the

warehouse, tempting customers to buy more of their low-priced products.

Thirdly, Costco has amazing inventory management as well as a good warehouse design. Costco

sells about 3700-3800 items in each warehouse, though this is minuscule in comparison to its

biggest competitor Walmart who has around 142000 items in their store; Costco’s items are

carefully selected, so it leaves their customer with a good experience, and it also ensures that

customers have quality goods. Additionally, the design of the warehouse is suited to maximize

restocking, which saves time and transport costs for Costco.

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Questions
Importance of objectives in managing your organization

Objectives are short-to-medium term and specific targets an organization sets in order to achieve

its aims. In this case, Costco’s mission statement, “to continually provide our members with

quality goods and services at the lowest possible prices.” is what determines the nature of these

objectives. Not only does the objective give the company a general-purpose and sense of direction,

but it also gives their staff members a motivation to work with efficiency, as the staff members are

working towards a common goal.

One advantage and one disadvantage of your organization’s mission or vision statement

Firstly, a vision statement is an optimistic and inspiring declaration that defines the purpose and

value of an organization and where it wants to be in the future. A mission statement is a clear and

concise declaration of an organization’s fundamental purpose, i.e., a succinct description of what it

does to become what it wants to be. One advantage of this statement is that they directly link to

Costco’s business model, which defines the fundamental principles of Costco’s business. This

enables Costco to construct its objectives for the company. It also attracts potential investors as it

allows Costco’s stakeholders to see a clearer picture of Costco’s desired level of performance. One

disadvantage of Costco’s mission and vision statement is that they do not all fulfill the SMART

goals, so they are not specific, measurable and within a time frame. Despite that the vision and

mission statement could be achievable and realistic; the corporation will never measure its goals.

For example, their mission statement hopes to achieve quality service for their customers;

however, this is not quantifiable.

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Discuss relationship between aims, strategic objectives and operational objectives for your

organization

As one of the top retail companies globally, Costco achieves this by effectively fulfilling its

mission and vision statement. Thereby, all their strategies, aims, objectives are linked towards their

mission and vision statement. Therefore, these goals: Efficient buying, Operating practices, Access

through membership, Unmatched savings, Quality goods and services, Low prices and Consistency

in providing quality goods and services at low prices. As mentioned above, Costco’s three main

business strategies are cost leadership, membership-only warehouse club business model, and good

inventory management and warehouse design. All three strategies allow Costco to obtain their

mission and vision. For example, the membership-only warehouse strategy means that only

consumers who paid for a membership card can access the low-cost products available at the store.

This strategy accounts for a large proportion (70%) of Costco’s annual operating profit, allowing

Costco to lower the prices of their goods even more, which achieved the ‘lower prices’ and

‘unmatched savings from their mission and vision statement. In addition, the inventory

management strategy where certain goods are meticulously selected links with the ‘quality goods

and services in the mission statement.

In conclusion, Costco’s wholesale corporation’s mission and vision statement is aligned to the

nature of its business, so it makes sense if the business’s aims, strategies and objectives are all

directed to achieve these statements.

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Reference

Snyder, Benjamin. “This Surprising Thing Is Costing Costco $40 Million per Year.” Fortune,
Fortune, 29 May 2015, https://fortune.com/2015/05/29/costco-chicken-prices/.

About Us | Costco. https://www.costco.ca/about-us.html.

United states securities and exchange commission. “Annual report pursuant to section 13 or 15(d)
of the securities exchange act of 1934 for Costco Wholesale.” 10-K,
https://www.sec.gov/Archives/edgar/data/909832/000090983215000014/cost10k83015.htm.

Posted by: Team Tony, Tony Robbins. “Smart Goals: Importance and Elements.”
Tonyrobbins.com, 20 Oct. 2021, https://www.tonyrobbins.com/career-business/the-6-steps-
to-a-smart-goal/.

Lombardo, Jessica. “Costco Wholesale's Vision Statement & Mission Statement.” Panmore
Institute, 5 Feb. 2017, http://panmore.com/costco-wholesale-vision-statement-mission-
statement.

Gregory, Lawrence. “Costco's Mission, Business Model, Strategy & SWOT.” Panmore Institute,
25 Mar. 2017, http://panmore.com/costco-mission-business-model-strategy-swot.