James D. Sinegal: Revolutionizing an Industry

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  • Topic: Costco, James Sinegal, Sol Price
  • Pages : 18 (6178 words )
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  • Published : February 13, 2011
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James D. Sinegal: Revolutionizing an Industry

Table of Contents
Biography of Jim Sinegal…………………………………………………………………………………...3

History of Costco…………………………………………………………………………………………...6 Management Strategy……………………………………………………………………………………..11 Costco’s Performance……………………………………………………………………………………..20 References
Biography…………………………………………………………………………………………25 History…………………………………………………………………………………………….26 Management………………………………………………………………………………………27 Performance………………………………………………………………………………………28

Biography of Jim Sinegal
“We want to build a company that will still be here 50 and 60 years from now." This is a quote from the famous CEO Jim Sinegal, who is best known for his benevolent style of management. He is known to offer employees high benefits and rewards and has debunked the myth that retail employers must pay their workers poorly. With a total annual compensation of just $425,000, he contradicts the boardroom notion that CEOs of billion-dollar corporations require pay packets to match1. Under his leadership and guidance, Costco has become the top warehouse-club retailer in the nation, with more than four hundred stores in the United States and abroad1. Jim Sinegal is the CEO and co-founder of Costco Wholesale Corporation. He was born on January 1, 1936 into a Catholic working-class family in Pittsburgh, Pennsylvania. He attended Helix High School in La Mesa, California, where he dreamed of going to medical school. However, due to his mediocre grades, he was advised to attend San Diego Junior College, where he earned an associate's degree in 1955. While at school Jim met his future wife Jan who he would later marry in 1962, together they have three children: Michael, David and Suzanne. Michael is currently head of Costco’s Japanese operations and could be seen as Jim’s replacement sometime in the near future2. Since moving to Seattle in 1983, following the birth of Costco, Jim and Jan have been well known contributors to various community and civic organizations such as Children’s Hospital. Jan is also an active trustee in Children’s Hospital’s Guild Association, Foundation and Hospital Boards, becoming the first person to simultaneously serve on all three.11 At the age of 18, Jim started as a bagger at Fed-Mart, a membership discount store Sol Price founded in San Diego9. He was a protégé of Price, who originated the concept of a warehouse store that sells high volumes of a small variety of goods to members only. Costco later accepted this concept and has become extremely profitable by keeping inventory cost down. When Jim turned 26, Price put him in charge of Fed-Mart’s flagship store in San Diego. He was in charge of rescuing the unprofitable store by narrowing down selection and removing troublesome items such as apparel. During his tenure as manager, Jim was able to simplify the process and get the store “back into the black.”2 Jim worked with Price for 24 years and, under his guidance, worked his way up to executive vice president in charge of merchandising and operations. Jim gives all the credit to Price for teaching him not only the basics of retailing, but also the importance of establishing relationships with customers based on trust. He was also a vice president of merchandising for Builders Emporium from 1977-1978, and an executive vice president for the Price Company from 1978-1979. In 1983, Jim left Price Company to found Costco Wholesale Corporation with fellow entrepreneur Jeffrey Brotman4. In the famous words of Jim, “Sol was angry…His erstwhile protégé had now become his biggest rival.”11 The first Costco store was opened in a Seattle warehouse in Washington7. They decided to start their new venture ‘Costco’ in the Pacific Northwest because Seattle and Portland were the least competitive markets on the West Coast9. Before acquiring Price Club in 1993, the working style of Costco was based on that of Fed-Mart and Price Club. Like Price Club, Costco also used the concept of membership, limited...
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