Costco Analysis Memo

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Costco Analysis Part 1


To: CEO John Sinegal

Cc: Dr. Birjandi

From: Stephen Collum

Date: 11/29/2009

Subject: Costco’s Business Analysis

Dear John Sinegal,

I’m writing you to give you my analysis of your company Costco. I’m impressed with your managerial skills used during your year-round warehouse visits. Also, the transition from the old workplace to the new workplace is incredible. Last I would like to praise your company’s high employee retention rate.

During your numerous visits to various local Costco warehouses I noticed that you used different managerial skills that exemplify why your company is so successful. Your conceptual skills are displayed as you allow each warehouse to act as their own company in a divisional structure, but you have a vision for the company as a whole. Your technical skills were displayed as you checked whether stocks were replenished and positioned to sell. In addition, you discussed sales strategies with warehouse management. Furthermore, you used your human skills as according to the article, “abandon the old-command-and-control mindset and emphasize coaching, motivation, and empowerment instead.” This allows your employees to feel empowered and helps with employee retention (which we will discussed more in-depth later).

On a day-to-day basis your warehouse managers draw upon many of the same skills that you have to use, because as the articles phrased managers are “local CEOs.” With the divisional structure of your company, the warehouse managers have more responsibility versus a functional structured company. The warehouse managers need technical skills as they make independent merchandising decisions, based on demographics of their area and customer wants/needs. Typically, most managers need the conceptual skills, because they are expected to make decisions guided by the company’s mission and values, in addition to being based on the inventory and sales information....
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