Introduction

Costco Wholesale Corporation started as Costco Companies Inc. in 1976 in Washington State and began as a corporation in 1983. Costco is comprised of membership warehouses that provide a wide selection of products to their members. Costco has 555 warehouses around the world that include warehouses in Canada, the United Kingdom, Taiwan, Korea, Japan, Mexican states, and the United States with about 142,000 full and part-time employees. The company offers three types of memberships which are Business, Gold Star, and Executive memberships. Currently Costco has about 54.5 million cardholders worldwide. Costco offers their members competitive low prices on a limited selection of products that include a wide range of national and private label brands. This vast range of products is picked purposely to appeal to both businesses and individual members. The company depends on the competitive low prices in order of them to have high sales volumes that in turn give them a faster inventory turnover rate. Costco’s operating efficiencies are accomplished with volume purchasing, warehouses, and distribution of products to these warehouses. Volume purchasing allows Costco to purchase their products at a lower price, which in turn they can pass off to their members. Their warehouses allow them to handle their products less with self service to their members. Efficient distribution of their products to these warehouses allows Costco to properly distribute their products where customers are more drawn to them. They have mastered the basics of supply chain management by cutting out the middle man and lowering costs that are connected with a multi-level distribution channel. After buying directly from manufacturers, instead of distributors, they ship it straight to the selling warehouse to be sold and stored instead of a distribution and storage warehouse. Costco’s fast turnover ratio and operating efficiencies give them a lower gross margin compared to their competitors. In order for Costco to be even more successful or survive unexpected economical events, they must come up with strategy to strive for in the future. In the past Costco’s organizational company has pushed them above their competitors and to be known as a household name. Currently, due to market conditions, Costco needs to change their past organizational strategy to survive and keep up with their competitors. For Costco to understand what to change in their organizational strategy in the future, they must understand the industry they’re in and how their internal environment is operating. Costco must analyze how their industry is doing and in which direction it is moving so they can tailor a strategy to fit the external elements. Costco must also analyze their internal environment operations so they understand if they are operating to their fullest potential, and if they aren’t they can tailor their strategy to fit their internal operation goals. When understanding both the external and internal environments the company can then create a organizational strategy that will help them succeed and survive unexpected economical events.
 * Introduction:**