Costco: Strategic Management Research Paper

Pages: 5 (2272 words)  ·  Bibliography Sources: 2  ·  Level: College Junior  ·  Topic: Business  ·  Buy This Paper

SAMPLE EXCERPT:

[. . .] It would be costly for Sam's Club to imitate such strategies because Wal-Mart's reputation in regard to employee treatment is far from perfect.

Stakeholder Categories and Their Contribution to Overall Success

The term stakeholder refers to organizations, groups, or individuals "who can affect the firm's vision and mission, are affected by the strategic outcomes achieved, and have enforceable claims on the firm's performance" (Hitt, Ireland & Hoskisson, 2008, p. 19). If managed effectively, stakeholder relations can be a source of competitive advantage (Hitt, Ireland & Hoskisson, 2008, p. 19). Costco's stakeholders are captured in the company's mission statement and code of ethics. The company's mission is to continually provide members with quality products at the lowest possible prices; a mission that it seeks to achieve by conducting business with four codes of ethics in mind -- obedience for the law; caring for members; caring for employees; and respecting suppliers. Stakeholders can be categorized into three; "capital market stakeholders; product market stakeholders; and organizational stakeholders" (Hitt, Ireland & Hoskisson, 2008, p. 19).

Capital Market Stakeholders: these include lenders and shareholders, and are considered the most important stakeholders (Hitt, Ireland & Hoskisson, 2008, p. 19). Lenders contribute capital to the firm and continually monitor its performance so as to determine its solvency, and hence, its qualification/disqualification for subsequent borrowing. By keeping its lenders satisfied, a firm increases its chances of obtaining leverage when the need for growth arises. Shareholders, on the other hand, are the owners of the firm, having invested their finances and time. If shareholders are kept satisfied, the firm's stock performs well on the exchange market; but if the opposite is the case, stockholders dispose off their investments, the share price falls, and the company performs dismally (Hitt, Ireland & Hoskisson, 2008).

Product Market Stakeholders: this category includes unions, host communities, suppliers, and customers (Hitt, Ireland & Hoskisson, 2008). Product market stakeholders gain significantly when companies engage in competitive battles; for instance, intra-industry battles and the tendency of firms to undercut each other could see customers benefit from increasingly low prices; and at the same time, have suppliers benefit from higher supplier prices (Hitt, Ireland & Hoskisson, 2008). However, customers can be considered the most important of the four, because without them, the rest are of little significance. To this end, firms must strive to always meet the needs and expectations of customers, who will more often than not "demand reliable products at the lowest possible prices" (Hitt, Ireland & Hoskisson, 2008, p. 21). Suppliers will always opt for firms that "are willing to pay the highest sustainable prices for the goods and services they receive" (Hitt, Ireland & Hoskisson, 2008, p. 21). Host communities will always expect a firm to behave responsibly, and give back to the community; and unions will expect it to provide suitable working conditions for represented employees (Hitt, Ireland & Hoskisson, 2008). In the end, success for a firm such as Costco depends upon its ability to address the needs interests, and expectations of all these groups.

Organizational Stakeholders: this group comprises of employees, managers, and non-managers (Hitt, Ireland & Hoskisson, 2008). A firm's employees are its ambassadors who play a critical role in marketing it to customers and potential stockholders (Hitt, Ireland & Hoskisson, 2008). A firm that treats its employees right is able to reap their capabilities more than one that does not value its employees. Happy employees would often be motivated to improve their company, even as they seek to achieve their individual goals. Managers are responsible for the day-to-day running of the firm, as well as strategy formulation, and play a fundamental role in its success (Hitt, Ireland & Hoskisson, 2008). They ought to be kept satisfied and appeased, failure to which the agency problem would be inevitable.

Conclusion

Strategic management has to do with the identification of opportunities and the formulation of strategies through which the firm can capitalize on the identified opportunities. Globalization and technology changes affect a firm's strategy in both positive and negative ways -- meaning that, to reap the benefits of such developments, managers have to maximize on the positives, while minimizing the damage caused by the negatives.

References

Calstalela. (n.d.). Sample Case Study: Costco -- Five-Forces Analysis of the Competition in the Wholesale Club Industry. California State University Los Angeles. Retrieved 8 July 2014 from http://web.calstatela.edu/faculty/klai/Course/497Costco.pdf

Global Business Environment. (n.d.). Part 1: Global Business Environment: Globalization. Pearson Inc. Retrieved 8 July 2014 from http://catalogue.pearsoned.co.uk/assets/hip/gb/hip_gb_pearsonhighered/samplechapter/0273752634.pdf

Hitt, M.A., Ireland, R.D., & Hoskisson, R.E. (2013). Strategic management: Concept and cases: Competiveness and Globalization (10thed.).… [END OF PREVIEW]

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