Support Activities

7.2.1 Firm Infrastructure

One of their targets is to create more profit, and they have already attained this goal; the other target is open more warehouse stores. Therefore, they try to operate more warehouse steady in global every year. In 2016, there are 29 new locations in global, 21 stores are in the U.S., including four Costco Business Center, and two new locations were opened in both Canada and Japan; and one new warehouse was opened in the U.K., Taiwan, Australia and Spain. In 2017, they decided open 31 new openings, and extending their global footprint into two more countries: France and Iceland.

Figure 33 Average Sales Per Warehouse

Costco’s culture

With a lot of competition coming its way, Costco has preserved its edge by building a unique culture. Culture is at the root of everything. The most successful organizations of the 21st century have the greatest cultures too. Costco has also created a distinct culture and that has led to higher productivity and better performance from the employees. A focus on employee excellence has resulted in two things.

First of all, it has led to satisfaction and happiness for the employees and second it has led to better performance and higher productivity. Happier employees are always more focused and deliver with dedication. If Costco has been able to sustain its low prices and customer centered strategy then somewhere its organizational culture has played a very important role in it. Costco leaders themselves attribute its financial success and growth to the organizational culture and the important role that employees play in the execution of its strategy.

Important highlights of Costco’s organizational culture:

- Focus on employee satisfaction - Focus on internal collaboration

- Focus on employee training and growth

- Low pressure related to productivity and performance

- A learning environment that provides best opportunities of learning and growth.

The company’s focus on employee satisfaction has paid in the long run. Not just are its employees highly satisfied but they are more productive and highly dedicated too. Costco strengthened its promise further by raising the wages in 2016. Focus is on collaboration and not pushing the employees to deliver more than they can. This was known to be the norm at Walmart where employees were made to work much more than they were paid for. Continued assault from various groups has made Walmart make changes and it has also increased the minimum wages for its employees. However, still in terms of having an employee oriented culture the brand is years behind Costco.

Despite the pressure from other retail and e-retail brands, it has not deviated from its norm and sustained its culture where the employees and customers are at the center.

Employees do not feel any pressure related to performance and are given ample space to work and grow. They can learn from each other and serve their customers happily and without any pressure. It is also why the customer retention rates at Costco are higher.

The employees are promoted from within and due to the opportunities of growth they last long at the organization. The senior officials at Costco even claim that people will bang their doors down to work at Costco. This is also why the competitors are generally unable to steal Costco’s workers. It is not difficult to come across people at Costco who have been working there for more than ten years.

Check-out efficiency

Because the workplace environment in Costco is really good, not only on benefits but also on salaries, employees are more willing to do more for their company, Costco.

Moreover, the checkout machines are many in one store and can do checking the bill

efficiently, not need to wait too long. And, employees work efficiently to make customers’ merchandises orderly not confusing.

 Taiwanese

- The first and only company adjusting wages automatically by computers.

Hourly-rated employees’ wages will be adjusted by computer when their working hours are enough to company’s regulations, will not be caused by other reasons, such as employers.

- All employees are hourly-rated except for managers. Wages rates are from NT$170 to NT$280. Full-time staffs need to work 40 hours weekly and hourly staffs need to work 20 hours at least per week.

- Free staff group insurance, including Term life insurance, Personal injury insurance, Injury medical insurance, Hospitalization medical insurance, Cancer insurance, Occupational injury insurance (employees’ spouse and children under 23 years old can have free Hospitalization medical insurance and Cancer insurance) - Employees can take off two days a week without deducting wages.

- Benefit for free optical examination- Getting NT$2,500 optical coupon per year (Employees’ spouse and children under 18 years old can get it free) - Physical examination

- Four membership cards for free per employee - Pension funds

- Labor/ health insurance - Night duty allowance 7.2.2 Technology Development

- CRS system

The introduction of the CRX system by Costco enabled Costco's supplier to

conveniently track and check the current stock and provide the overall operation of the supplier's global operations at COSTCO,

- IRI system

Provide the inventory of individual retail sales.

7.2.3 Procurement

 Parking lot

 Forklift and pallet

 Check-out machines

 Carts

 Picnic tables

 Shelves for products

 Price cards

 Lamps for stores