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ENVIRONMENTAL FACTORS

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ENVIRONMENTAL FACTORS

Environmental Factors on Marketing Decisions of Costco Wholesale Corporation

Environmental factors are made up of all the factors and activities that have a significant effect on managing a business. These factors have a strong influence on operating any business, particularly in marketing options (Pagell & Halperin, 2000). Environmental factors cause risks to the achievements of any business and to deal with these factors, a firm must improve its main skills and create good methods (Staff, 2009). There are different components that would have a great impact on these latest services provided by the firm. After acknowledging these components, the firm must create a strategy. In his book, David jobber explains that with the support of this observation, the business becomes more successful in applying the different methods (Jobber, 2001).

One of the major organizations in the trade business is Costco Wholesale Corporation; this company was established by James Sinegal and Jeffrey Brotman (Costco Wholesale Corporation, 2009). On the start of the sales volume, the business is regarded to be among the world's major membership warehouses (Costco: About Company, 2009). This corporation has the rank of one of the 5 biggest businesses in the U.S. in retail industry. Issaquah (Washington) is where the H.Q. of the corporation is located in the U.S. (Costco Wholesale Corporation Reports January Sales Results and Comments on Earnings Outlook for Its Fiscal 2009 Second Quarter, 2009). The company manages it operations at the global level in various sections, covering roughly 60-70 billion US dollars as income (Costco: About Company, 2009).

The financial part of the outer environment has a great relationship with the scope of the corporation's business opportunities and methods of the companies to control the marketing environment (Chidrawar, Hatch & Kramer, 2009). These aspects are vital to observe the marketing blend methods of the corporation at a worldwide level. Commonly, these aspects can't be managed by the businessmen, thus, a thorough examination of the environment is vital in determining the issues and finding their solutions.

The financial state of the Costco Wholesale Corporation primarily stays reliable, as the company's development rate of the sales is steady, due to the development of the corporation's warehouses is average and the development of the membership of the company also operates on the right track (Taking Stock in Costco Wholesale Corp. (COST), 2008).

The financial aspects on which the efficiency of Costco is established, are the methods of tax payment, investment and allowances, complexity of transferring and raising capital, costs of merchandise, economic and financial regulations and rates of exchange, etc. (Staff, 2009).

Exchange practices and contracts fill an essential position when we conversate about global companies or global operations. Transferring goods and services across borders requires managing through practices or contracts. Therefore, they must be followed for better operations (Pagell & Halperin, 2000). Costco has been productively running overseas by following the different trade practices; and is able to develop its consumer relations, efficiently observe and control the threats, better its reputation plus avoid legal proceeding expense (Chidwar, Hatch & Kramer. 2009).

A vital part of the public environmental study is the Demographic environment. Age structure, gender, revenue sharing, family size, profession, knowledge, social class, faith, nation, nationality, etc. are vital demographic bases for demographic segmentation. (Staff, 2009).

Costco is operating its business in developed and developing countries. The society growth rate of the developed and developing countries are advancing, this gives an option to the corporation to expand its item line and its sales volume (Staff, 2009). The various profit levels of families of host countries impact the business process of the company at a high level (Hirji, 1999).

A business has to tolerate with individuals of various nationalities and languages. Hence, working in an environment of immense influential diversity is a challenge to any company (Herbst, 2005). In Costco, influential difference is offered the top priority; it has a multicultural workforce at all levels. It was discovered that up to 50% of its colleagues are women and the corporation also aids different establishments dedicated to women (Pagell & Halperin, 2000).

Business works with both the goal of creating income and with the goal of offering advantages to all those who are directly or indirectly combined with it (Hirji, 1999). So, every establishment has certain social duties that are obligated to accomplish and if it does, it then surpasses in other parts, too. Costco is a good example that has a stable decision to be the ruler in this field (Staff, 2009).

The corporation also organized the regulations and policies of balanced employment options and to cease discrimination and follow the righteous duties (Grant, 2005). The company follows certain regulations to achieve its legal responsibilities towards society and employees (Pagell & Halperin, 2000). Costco has forever been dependable in tolerating with all its legal responsibilities. This is the reason why it had a successful operation from the time of its establishment (Kristen, 2004).

The governmental environment of the host countries of Costco also impacts the business procedure of the corporation. The salary rate of the employees of the corporation is high; as the company has developed the bar of the union agreements and set improved standards for the employees, in spite of the political regulations of the Government (Herbst, 2005). The corporation offers better salaries to its union and non-union employees. It’s enjoying good performance from the employees for better work, due to its salary regulations (Herbst, 2005).

The corporation works in different political systems because it operates worldwide and organizes suitable connections with other establishments and countries, but the company builds its industrial policy, foreign capital and technological policy, fiscal policy, and the export import policy based on the U.S. regulations (Gilad, 2003). Due to the political policies of the native country, the company faces many risks.

Foreign Corrupt Practices Act also impacts the establishment’s marketing options to begin a new business or portray a new item. This act defends the home and host countries from different illegal practices (Norton & Myers, 2004). This act is vital for Costco, since it works in various countries.

The settled and worldwide environments hold various regulations. The administration of Costco acknowledges the legal practices of various countries before beginning their operations (Pagell & Halperin, 2000).

Costco’s technology part of the outer atmosphere is very solid. The trade pharmacies of Costco have made an agreement with McKessonhboc, for it to obtain an online pharmacy. It gave the industrialization technology to Costco for it to create successful workstations of the pharmacy (Grant, 2005). Costco is organizing solar panels and skylights at its warehouse’s club place in California and Hawaii.

The corporation has a great implementation of the data in technology. In 2006, virtualizations technology was accepted by the corporation through which the corporation extended its IT expenses; the IT improved and became capable of operating its virtualized sever benefits better (Costco Uses Virtualization to Save Space, Reduce Costs, and increase IT Agility, 2008). The corporations’ technology has helped the company to increase the adjustability of the information technology.

References

Chidrawar, A., Hatch, A. & Kramer. C. (2009, February 28). 5 Success Factors in Mastering the

Retail Balancing Act. Retrieved from



Costco: About Company (2009). Retrieved March 3, 2009, from

Costco Wholesale Corporation Reports January Sales Results and Comments on Earnings

Outlook for Its Fiscal 2009 Second Quarter (2009). Retrieved from



Costco Uses Virtualization to Save Space, Reduce Costs, and Increase IT Agility (2008).

Retrieved from

uses-virtualization-to-save-space-reduce-costs-and-increase-it-agility.aspx

Costco Wholesale Corporation (2009). Retrieved March 4, 2009, from



Grant, R.M. (2005). Contemporary Strategy Analysis: Concepts, Techniques, Applications (5th

Edition). Published by Blackwell Publishing.

Herbst, M. (2005). The Costco Challenge: An Alternative to Wal-Martization? Retrieved March

from

Hirji, N.K. (1999). Business Awareness for Optometrists: A Primer (eds.). Published by Elsevier

Health Sciences.

Jobber D. (2001). Principles and Practice of Marketing (3rd Editions). New York: McGraw-Hill

Publishing Company.

Kristen, M.B. (2004). A legal win for Costco: It can challenge rules on selling wine and beer.

Retrieved from

Norton, P.M. & Myers, M. (2004, November). The Foreign Corrupt Practices Act: A Minefield

for US Companies in China. Retrieved from

Pagell, R. A. & Halperin, M. (2000). International Business Information: How to Find It, How to

Use It (2nd Edition). Lessons Professional Publishing.

Taking Stock in Costco Wholesale Corp. (COST), (2008). Retrieved from



Staff, P.G. (2009). FEATURE: Current Events: Retail newsmakers. Retrieved from



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