(Tiểu luận) mid term reportcase costco

If you were in charge of human resources at Costco, would you retain the philosophy of sending rank-and-file employees to school rather than hiring business school graduates?. Costco Bus

NATIONAL ECONOMICS UNIVERSITY

ADVANCED EDUCATIONAL PROGRAM

-*** -MID-TERM REPORT CASE: COSTCO

Group Student Name : Vu Huy Binh - 11210971

Lai Manh Cuong - 11211199Hoang Gia Minh - 11213802

Ngo Minh Quang - 11214997

Vo Hoang Tan - 11219209

CHAPTER I ABOUT COSTCO COMPANY 1

1 General information 1

2 Vision Statement 1

3 Mission Statement 1

4 Core values 1

5 Employee Alignment 1

6 Ranking & Achievements 3

7 Locations 3

8 Financial performance in recent 5 years 5

9 Costco Business Centers 5

CHAPTER II COSTCO’S CASE SUMMARY 6

CHAPTER III QUESTIONS ANSWERING 7

Question 3.1 How exactly does Costco’s low turnover rate help it in its battle against Walmart? Will any of those factors also help against Amazon? 7

Question 3.2 What would a “perfect turnover rate” be for a company like Costco? Describe the consequences of a turnover rate that’s too low 10

Question 3.3. If you were in charge of human resources at Costco, would you retain the philosophy of sending rank-and-file employees to school rather than hiring business school graduates? Why or why not? 11

CHAPTER IV RELATED THEORIES 12

1 Job satisfaction 12

2 Diversity in organization 12

3 Organizational culture 13

4 Understand working team 14

5 Motivation 14

CHAPTER V LESSON FOR OURSELVES AND COMPANY 16

Figures

CHAPTER I ABOUT COSTCO COMPANY

6 Ranking & Achievements

7.1 Total number: 839 warehouses worldwide (as of September 2022)

 578 in the United States and Puerto Rico

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 Similar to the company’s domestic locations: identical layout, signage, and

parking lot markings

 Menus in the food court are tailored to international tastes:

o Meat pies in Australia

o Jacket potatoes in the UK

o Self-service gasoline stations in a number of its U.S, Canada, Australia, Japan, UK, Spain, Mexico, Taiwan, and Iceland locations

 The merchandise availability at international warehouses is mixed and adjusted tofit local tastes, offering American and local products

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8 Financial performance in recent 5 years

in mil USD$

Net income

in mil USD$

Price per Share

Warehouses Employees Ref(s)

Figure 3: Financial performance in recent 5 years

9 Costco Business Centers

 Costco Business Centers are warehouses similar to regular Costco warehouses, and are open to all Costco members, regardless of membership type

 Target customers: enterprises and small businesses

 Products and Services:

o Not offer most of the consumer-oriented services and products found at regular Costco warehouses, for example, clothing, jewelry, media, and tires

o Provides printing professional services

Have large parking spaces for trucks.

o Can deliver large quantities of goods to businesses

CHAPTER II COSTCO’S CASE SUMMARY

Costco confronts challenges from two separate sides as it attempts to expand on itssuccess:

 The first comes from Walmart, the only US retailer larger than Costco.Employees at Costco are paid 20.89 dollars per hour, whereas those at Walmartare paid 12.67 dollars per hour 88% of Costco's employees have company-sponsored health insurance, while Walmart is only half as much Fifteen per cent

of employees at Costco belong to the International Brotherhood of Teamsters,but Walmart actively discourages unionization However, Walmart has drawncriticism for cutting staff from 343 employees per store to 301 over the past fiveyears

 The rise of Amazon-Costco's second competitor has signaled a decline forseveral retailers as its business model is partly based on online ordering.However, Costco has been able to hold its own for three reasons First, Costcoreceives more discounts from suppliers, which allows them to provide goods atlower prices than Amazon Secondly, groceries comprise a large portion ofCostco's business; a field Amazon has yet to conquer Third, Costco does have atleast some online presence, with its website being the 17th most popular retailsite in the United States

The different threats Walmart and Amazon present to Costco have led to anorganizational commitment dilemma With a turnover rate of 5%, Costco has a cost andstability advantage over its traditional rivals On the other hand, that retention restrictsthe innovative ideas that outsiders can offer the company Costco will not recruit recentgrads from business schools (instead opting to send rank-and-file employees to school).Jim Sinegal, the 77-year-old CEO who recently retired, still serves as a consultant

CHAPTER III QUESTIONS ANSWERING

Question 3.1 How exactly does Costco’s low turnover rate help it in its battle against Walmart? Will any of those factors also help against Amazon?

One of the great reasons Costco competes with other renowned organizations is the lowturnover rate More than other businesses, Costco depends on the renewal of customermembership; thus, providing customers with excellent services and products is crucial.The company must give employees a lovely and comfortable work environment ifturnover is under 5% Comparing Costco to Walmart, the low turnover rate oftenbenefits Costco in various ways

First, by paying more excellent compensation, Costco will attract more applicants,

giving them a larger pool to choose prospects and workers As previously indicated,Costco staff make $20.89 per hour, whereas Walmart employees make $12.67.Additionally, the higher remuneration will entice workers to stick around and give thecompany more time

Second, the low turnover rate would strengthen employee commitment In order to

maintain a position in the company, employees must grasp the importance of "workinghard" to enhance their performance Customers eventually become devoted by stayingwith the business rather than switching due to the service offered by the staff

Third, long-term employees become accustomed to their jobs and work moreeffectively the better they treat their clients Long-term employment with theorganization results in a stable labour base that helps it run more efficiently Long-termemployees will have a wealth of information and expertise that will make their jobsmore manageable, and they will also be more able to assist consumers

Fourth, it will be easier to hire and train new employees when there are numerouslong-term employees, saving time and money for each employee

Fifth, if employees work for a company for a long time, they will come to know the

clients, and sometimes buyers will buy products because they are familiar with

reputable vendors.

Last but not least, more knowledgeable and motivated employees will be able to provide

more superior customer care, which will generally broaden the base.

Based on the above-listed variables, Costco can retain its customers and staff morethanks to a lower turnover rate Costco's low turnover rate (just 5%) indicates that it doesnot employ a sizable workforce As a result, employees are less likely to leave thecompany and have greater faith in the HR department, executives, and the business.Long-term employees and pay are not necessary when evaluating the company'scapacity to compete with Amazon Wage may become advantageous, but what mattersmost is considering the internet market, what is being sold, and the availability, cost, andworth of the item in question The convenience of not having to leave one's house hasallowed the online market to continue operating Amazon can thus continue to competewith Costco, even if not on the same terms as it did with Walmart, depending on theproducts offered and their value However, Amazon is different because it uses lessphysical effort to give the service to its clients People like to visit stores where they canexamine more information about products before purchasing them, such as theexpiration date and designs

Additionally, Costco has an advantage over Amazon for the same reasons listed above

( Costco receives more discounts from suppliers -> lower prices than Amazon; Costco’s business revolves around groceries — a market that Amazon has yet to crack, Costco's website is the 17th most popular retail site in the United State -> has an

online presence) However, it was improbable that Amazon would also benefit from thesame edge Young technical graduates make up a sizable portion of Amazon's staff,supporting the company's operations as it provides services online

Although Walmart is a giant corporation than Costco, the latter has undoubtedlybenefited from having a workforce with more expertise and providing better servicesthanks to higher salaries, health insurance, and other benefits

What would a “perfect turnover rate” be for a company like Costco? Describe the consequences of a turnover rate that’s too low.

The "perfect turnover rate" would be 0% in an ideal world However, this is improbableand impossible, particularly for a firm the size of Costco In terms of employees, the

"ideal turnover rate" would also be 0-1%; nevertheless, the present figure is 5% Even

though having a low turnover rate has many advantages, it also has drawbacks The absence of new hires and, consequently, fresh ideas within the organization would be one example of these implications Another illustration is the risk of not having workers qualified to take over as executives once they have finished their work with

the organization The corporation has become quite inbred, according to John Matthews,vice-president of human resources at Costco, confirming the problems that result from

retaining members with the company for an excessive amount of time and failing to bring in new personnel and, consequently, fresh ideas

A meagre turnover rate may prevent the company from responding quickly because the

competitors may not provide accurate information Some former employees of other

businesses (Walmart and Amazon) may work for Costco They can also provide freshconcepts and expose the shady practices of their former employer

The average age of the personnel at Costco is substantially greater because it has beenprimarily kept throughout time Because they are still learning, the newest technologyand internet retail may cause them anxiety

Question 3.3. If you were in charge of human resources at Costco, would you retain the

philosophy of sending rank-and-file employees to school rather than hiring business school graduates? Why or why not?

To compete with other businesses and get successful, the company should choose two

ways of strengthening the human resource We think Costco should actively use both

of its resources—hiring business students and sending rank-and-file employees to school

—to stay competitive Sending insiders to colleges and hiring students from businessschools are both wise moves, which keep the two primary sources of new ideas andworkers in place and enable a "step-up" compared to the rivals By sending staffmembers to business school, it upholds the philosophy that Costco has adopted and hasbeen successful with Employing business students expands the pool of potential ideasand workers for the workplace Keeping both helps Costco develop a more desirable andemployee-driven workplace

CHAPTER IV RELATED THEORIES

 Create a pleasant work environment

 Reward and recognize achievement

 Participate in and boost employee engagement

 Develop the abilities and potential of the workforce

 Assess and gauge job satisfaction

2 Diversity in organization

As was already said, Costco has a low turnover rate, which could work against it A lowturnover rate may make it difficult for the business to obtain accurate information Thischaracteristic restricts the innovative ideas that outsiders can offer a business

Diverse workforces provide companies with a competitive edge and help them performbetter This strategy can encourage innovation, boost creativity, and aid business growth.Costco must therefore find alternative ways to diversify its staff.

 Positivity : The corporate culture at Costco Wholesale places a strong emphasis onpoliteness and kindness This aspect of Costco's corporate culture helps to boostemployee satisfaction.

 High energy and quick tempo : Workers are inspired to maintain top output

 Service orientation : Costco promotes its staff' interaction with consumers throughthis trait systematically and profitably

 Teamwork : This organizational culture trait of the corporation uses the unity ofteams to maximize performance Employees achieve the flexibility that allowsCostco to respond to variances in client preferences through teamwork

Costco uses its corporate culture to raise customer happiness and employee morale Thepositive attitude that Costco's organizational culture fosters is also correlated with thestrength of its human resources It is anticipated that Costco would maintain the sameorganizational culture that has enabled the business to compete successfully againstWalmart and other formidable rivals

4 Understand working team

Why is a team vital?

 Teams can achieve feats an individual could never accomplish

 Teams are flexible and responsive to changing events

 Employees can quickly assemble, deploy, refocus, and disband

 The team is an effective means to democratize organizations Increase employee involvement

 The team introduces a collaborative mindset

5 Motivation

Figure 4: The hierarchy of needs

Costco pays its employees an exceptionally high rate of $20.89 per hour compared toother stores, whereas Walmart pays only $12.67 The majority of Costco employees areentitled to insurance provided by the business.

Higher-income indicates they need money for necessities like clothing, water, andphysiological requirements High wages translate into high output Higher salaries andthe purchase of insurance imply that they will require safety needs, be healthy, andeffectively contribute to the work Employee friendships and community are cultivatedand strengthened when turnover is minimal Employees arrive at work feeling loved andincluded by their coworkers The result for Costco is a highly motivated team However, the thing that keeps customers returning and members renewing theirmemberships is a consistently positive purchasing experience Costco outperforms itsretail competitors' thanks to the highly paid content staff