1. Compare and contrast centralized and decentralized organizations. Is your Project Company (COSTCO WHOLESALE) centralized or decentralized? Why?
2. Describe the culture of an Organization (COSTCO WHOLESALE)in which you have either worked, volunteered, or studied. Which of the four types of organizational culture described in our textbook does the organization illustrate?
3. Company Analysis, Organizational SWOT Analysis ( COSTCO WHOLESALE). Prepare a complete SWOT Analysis that analyzes your project company's current situation and future prospects?
1. There are two basic kind of decision making process that are used by organizations, namely, centralized and decentralized. When all the big and small decisions are taken by the top management and when the lower level employees needs to get approval from the top management for every small decisions, then the organization is said to be following centralized decision making structure (Kury, 2015). The authority lies with the systematic central points within the organization. In a centralized structure, the all the decision making power lies with the top management who takes strategic decisions while the lower level are supposed to work at the directions of the management to implement such decisions.
In a decentralized organization structure, the decision making power is distributed equally at all levels of the management. The top management are only responsible for taking strategic decisions and formulating policies while all the other decision making power is delegated to the middle and lower level employees (Petrakos, Maier & Gorzelak, 2000). This structure reduces the burden of the top level executives and allows the middle and lower level employees to take independent decisions regarding their work, which in turn, enhances their skill. This structure enables the management to coordinate the operations of the organization at divisional levels. This improves the morale of the employee and motivates them to perform better and act independently.
Costco Wholesale follows a decentralized decision making structure, because they recruit best and talented people. The company invests in their people by providing them continuous training and they have adopted divisional structure for their operations (Faccio, 2015). Thus, they are able to retain knowledgeable staff by creating loyalty among them. They are loyal to the company as they are allowed to participate in decision making and their suggestions are valued and accepted if feasible. The employees are appropriately rewarded and they are led by example. The CEO of the company would pick up throw the paper into the dustbin in front of middle level employee, thereby setting example for them to follow same behavior. The employees are continuously driven to adopt ethical practices and adopt ethical thinking in their decision making process. The management continuously communicates with the employees to address their problems and to involve them in any decision making process. There is clear communication between all the divisions. They have created a happy and diversified work environment for the employees and offer them competitive package which has allowed to company to maintain a dedicated workforce.
2. Organization culture can be referred as a system of shared beliefs, standards and moral principles that guide the behavior of the employee within the organization(Argyris, 2012). These values and beliefs strongly influences the way people dress, behave and complete their tasks.
According to Robert E Quinn and Kim S. Cameron, there are four types of organizational culture as follows:
Costco Wholesale religiously follows the clan organizational culture. The company highly values its employees and has created a high performing team by encouraging flexibility, teamwork and providing autonomy. They are highly concerned about the growth and well being of their employee and offer them competitive packages and provide them with an exciting and diversified workplace. They have a unique business model where the priority is given to the customers and the employees. They empower their employees to participate in the decision making process and communicates with them directly. They invest in training of their employees so that they are updated with the latest technologies and learn and develop their skills. The company has developed strong loyalty among its employees due to its concern for them. The company is flexible and shares a very easygoing attitude in terms of work environment. They offer great heath benefits to the employees ('ZINO DAVIDOFF SA v. A & G IMPORTS LTD LEVI STRAUSS & CO. AND LEVI STRAUSS (UK) LTD v. TESCO STORES, TESCO PLC AND COSTCO WHOLESALE UK LTD (JOINED CASES C-414/99, C-415/99 AND C-416/99)', 2002). The company firmly follows its four strong values. They are obeying the law, taking care of the customer’s and employees and practice intelligent loss of sales. Therefore the company enjoys high productivity and low employee turnover rate. They are the preferred employers by many of the employees.
Costco is an international warehouse club chain for its only American members. They seek to bring quality products at lowest price than its competitors to its customers. They have around 700 warehouses around the world and in the second largest retailer in the world. It follows a unique business model. It was established in 1976 as a Price Club in San Diego, California. They provide a wide selection of convenience products and merchandise to its customer (Costco.com, 2015). They have solid technical potential and connected with its customers through online shopping sites and social media platforms. They have come up with innovative technologies such as predicting the sale and making suggestions to the consumer by using the Smartphone’s data. They have always worked towards providing utmost convenience to its customers and taking care of all their queries.
There many external factors like labor laws, political and economic conditions of a country, availability of quality supplier, intense competition (Brunner, 2013), rapid technological development and availability of skilled workforce impact the decision making process of Costco Wholesale.
The company has the potential to inflate its market share by engaging into marketing efforts (Kim & Choi, 2007). There is a possibility if increasing their margins and grow through online sales and expand its stores through acquisitions and enter into new markets.
It can be concluded that overall the company is doing well with its optimum management policies and loyal employee and customer base. They are continuously striving to offer wide range of quality products at lowest prices to the customers. However, they have opportunities to expand their operations and increase their revenues by engaging in marketing efforts. The company follows ethical practices across the board and thus the future of the company is bright.
Argyris, C. (2012). Organizational traps. Oxford: Oxford University Press.
Brophy, A. (2013). The Financial Times guide to lean. Harlow, England: Pearson.
Brunner, M. (2013). Wholesale price discrimination with interdependent retailers. OR Spectrum, 35(4), 1009-1037. doi:10.1007/s00291-013-0326-7
Chang, B. (2012). Channel strategies, product types, and performance in the US retail industry.International Journal Of Electronic Marketing And Retailing, 5(2), 110. doi:10.1504/ijemr.2012.051030
Costco.com, 2. (2015). Welcome to Costco Wholesale. Costco.com. Retrieved 17 July 2015, from https://www.costco.com
Faccio, M. (2015). Service spare parts versus production parts: a centralised or decentralised warehouse?. International Journal Of Logistics Systems And Management, 20(4), 516. doi:10.1504/ijlsm.2015.068491
Hanna, J. (2013). Real-world application of MedsCheck opportunities: The Costco pharmacists intervention trial for reduction of cardiovascular risk. Canadian Pharmacists Journal / Revue Des Pharmaciens Du Canada, 146(6), 325-328. doi:10.1177/1715163513506831
Kim, S., & Choi, S. (2007). The role of warehouse club membership fee in retail competition. Journal Of Retailing, 83(2), 171-181. doi:10.1016/j.jretai.2006.04.001
Kury, T. (2015). The impact of coordination on wholesale market participation: The case of the U.S. electricity industry. Utilities Policy, 32, 38-44. doi:10.1016/j.jup.2014.12.005
Petrakos, G., Maier, G., & Gorzelak, G. (2000). Integration and transition in Europe. New York: Routledge.
Shih, S., Yu, S., & Yen, F. (2015). How Does Costco Win Customer Satisfaction: A Case Study of the South of Taiwan. JOEBM, 3(3), 360-363. doi:10.7763/joebm.2015.v3.210
ZINO DAVIDOFF SA v. A & G IMPORTS LTD LEVI STRAUSS & CO. AND LEVI STRAUSS (UK) LTD v. TESCO STORES, TESCO PLC AND COSTCO WHOLESALE UK LTD (JOINED CASES C-414/99, C-415/99 AND C-416/99). (2002). Reports Of Patent, Design And Trade Mark Cases, 119(10), 403-418. doi:10.1093/rpc/2002rpc20
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