Costco Organizational Theory and Behavior Essay

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Research and Report for Costco

What is Costco’s Competitive Advantage?

Costco’s competitive advantage lies in the value attained from membership. The warehouse club's members pay for the desire of shopping there and that produces a difficult to disrupt circle that profits the company. In essence, paying for membership strengthens the customer’s associations to the brand while the fundamental value proposition either gives rise to an upsurge in usage levels or creates onus on leaving. Consequently, this results in a competitive advantage for Costco that only a small number of other retailers in the market can compete with (Kline, 2017). Executive Members account for just about 30 percent of the total membership of Costco but make up approximately 66 percent of the company’s sales. This is a major aspect that sustains Costco’s competitive advantage. Notably, Costco offers consumers low prices for different products, and joining, particularly making payment for the Executive Membership, is a suitable approach for attaining cost savings for numerous people. Remarkably, once the Costco chain gets a consumer, there is a great likelihood that the company will hold on to him or her, owing to the guarantee of what the company offers, and the increased forthcoming savings it signifies (Kline, 2017).

Imperatively, for a competitor in the retail industry to disrupt Costco’s cycle, it implies that it would have to offer equivalent pricing devoid of charging customers a membership fee and at the same time incurring costs to convey such approaches.

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This would be a difficult endeavor for any company to attempt owing to the reason that majority of Costco’s profit, approximately 75 percent, emanates from membership fees. The inference of this is that any rival trying to place similar prices for Costco, and at the same time incurring expenditure to market its brand devoid of taking in membership revenue, would be an intention of losing funds up until it creates a substantial amount of market share. This outlines the prominence of Costco’s competitive advantage (Kline, 2017).

What is Costco’s Best Practices?

Best practices can be defined as a set of guiding principles, ethics or conceptions that signify the most effective or practical course of action and generate optimal outcomes. Costco’s best practices lie in their employee relations. The focus on employees at Costco is pivotal to the corporation’s success and capability to incessantly provide a better shopping experience for its members. A….....

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