Competitive analysis of Costco Wholesale Corporation's general environment

Costco Wholesale Corporation is one of the membership warehouse chain operators across the globe. Costco Wholesale Corporation operates under the influence of the standards and regulations of the Wholesale Club Industry. The organization focuses on the distribution of the products with reference to fresh food, soft-lines, and ancillary as well as hard-line products. Costco implements various elements of marketing model with the aim of addressing the needs and preferences of the consumers as well as stakeholders and shareholders in the market of operation. Costco focuses on the provision of quality products and services at lower costs of procurement in comparison to other competitors in the market such as Wal-Mart. This research product will focus on the identification of the two segments of the general environment and the forces of competition affecting Costco Wholesale Corporation. It will also address issues in relation to improvement in tackling the forces in the near future as well as external and internal strengths and weaknesses of the organization as it seeks to achieve competitive advantage. Finally the research will address the issues of resources, capabilities, and core competencies with the aim of determining the company's value chain.

Two (2) segments of the general environment

There are six critical segments of the general environment: economic, political, technological, demographic, socio-cultural, and global segments (Jobber, 2001). In the case of Costco Wholesale Corporation, two segments would rank highly in relation to the influence on the operations of the organization in the context of the relevant industry. One of the essential segments of the general environment in the case of Costco Wholesale Corporation is demographic environment segment. It is the most important segment of the general environmental analysis of the corporation as some of the crucial bases include age structure, income distribution, gender, family size, occupation, social class, nationality, and race.

Operation at global level as in the case of Costco makes it ideal to focus on a critical examination of the population of the nations of interest. The organization has a very large population size because of its location in all the major countries with expression of large population mass. The corporation has to deal with diversity of languages and cultures in the development of policies and regulations as well as organizational culture. Costco operates in the context of developed and developing nations thus the ability to integrate elements of population growth in the decision-making process towards the achievement of competitive advantage. Legislations and ethical responsibility are essential in the ability of the corporation to address any discrimination that might arise from the demographic changes.

Another essential segment of the general environment is the political/legal segment. The political environment of the host nations of Costco Wholesale Corporation affects the business processes of the company. This has led to the increase in the wage rates as the organization focuses on raising the bar of the union contracts and new standards for the employees despite the existence of the political policies of the governments. The organization has the ability to enjoy high performance of the employees for realizing greater productivity levels for the fiscal year. Globalization indicates that the organization operates under the influence of diverse political systems (Jobber, 2001). In various circumstances, the organization adheres to the rules of the United States political parties. In other cases, the corporation has to face several risks under the influence of the political policies of the native country.

Strong growth expectations with reference to the Asian market

Towards the achievement of the above opportunities, Costco faces various external threats. One of the essential threats is the highest exposure to the low growth mature markets thus inability to maximize or exploit the available opportunities. Another external threat is the fluctuations in the foreign exchange rates thus affecting the profit levels as well as revenues at the end of the fiscal year (Costco Wholesale Corporation SWOT Analysis, 2012). Another external threat is the increasing costs in relation to labor and health care thus reduction in the profit levels and revenues at the end of the financial year.

Corporation's greatest strengths and most significant weaknesses

Costco Wholesale Corporation has diverse strengths and weaknesses. One of the major strengths of the organization is the ability to position its pricing mechanisms thus increase in the consumer loyalty. This is enhanced through the ability of the organization to integrate and incorporate low cost business model with the aim of achieving its competitive advantage in the market and industry of operation. The third critical strength is the ability of the organization to realize improved levels of revenues and debt position. These strengths suffer under the influence of the major weakness of Costco Wholesale Corporation in the form of limited product choice. The organization needs to introduce new product lines in order to maximize the available opportunities in the market and industry of operation (Costco Wholesale Corporation SWOT Analysis, 2012).

Company's resources, capabilities, and core competencies

The competencies of Costco Wholesale Corporation are in the form of high-value and high-quality products and services with the ability to integrate effective and attractive prices in order to attract new consumers while maintaining the existing ones. The organization has the ability to operate on large economies of scale thus an opportunity to reduce the cost of operations while maximizing the available opportunities. Another valuable resource of the organization is the essence of committed employees. Employees are motivated towards the achievement of the goals and objectives of the organization because of favorable working conditions and integrate human resource management (Costco Wholesale Corporation SWOT Analysis, 2012). The organization also has diverse outlets under the influence of globalization thus an opportunity to address the needs and preferences of consumers in the developed and developing nations. These competencies and resources enhance the ability and capacity of the organization to offer quality products and services at affordable (relatively lower) prices.

Company's value chain

According to the above capabilities, resources, and core competencies, Costco Wholesale Corporation focuses on the integration of support activities in the development of the value chain. These include components such as human resource management, technological development, and infrastructure essential in the provision of support to the primary elements in a transaction with the consumers. The value chain of Costco Wholesale Corporation is essential in the demonstration of the generic strategy of the organization. This is through integration of differentiation and cost leadership because of the ability of the organization to offer quality products and services at lower costs in comparison to other competitors.