Group project draft for the Costco company PDF

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This is a draft for the presentation based on Costco, it includes the background information about the company and other shortlisted ideas...

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GMGT 2060 Group project draft Part 5—organizational design and control ---explain the organizational structure and culture organizational structure: organization design: the process of ensuring that there is a “fit” between how an organization manages its four fundamentals of organizing and its culture, environment, technology and strategy

---describe performance standards and monitoring system Lombardo, J. (2017, February 5). Costco Wholesale’s Vision Statement & Mission Statement. Panmore Institute. http://panmore.com/costco-wholesale-vision-statement-missionstatement

B. (2017). Common Organizational Structures | Boundless Management. Lumen Learning. https://courses.lumenlearning.com/boundless-management/chapter/commonorganizational-structures/#:%7E:text=The%20divisional%20structure%20is %20a,organizational%20function%20into%20a%20division.&text=Each%20division %20contains%20all%20the,IT%2C%20and%20marketing%20departments)

Costco Wholesale Corporation’s management is exceptional. Their management constructs their goals and visions in ways that maintains the productivity and efficiency within the organization. According to their vision statement, their goal is “to provide a place where efficient buying and operating practices give members access to unmatched saving” (Lombardo, 2017) Costco’s organizational structures include three structures, with primary focus on the functional structure, followed by a secondary focus on the divisional structure. Overall, the corporation’s management operates with a weak matrix organizational structure. The management designed the structure of the corporation in such a way to ensure the success of their business in the United States and all around the world. Functional department Their strong emphasis on functional structure features the fundamental functions which are necessary to maintain the retail business. This structure type places members in the same department based on employee’s similar technical skills and using similar resources which are required to carry out their operation and tasks. The advantages of functional structure are that it groups various business functions into one defined unit, where there is a specific management for that unit. Moreover, members only have to report to one head in that specific unit, hence there is a clear direction of authority, as well as clear communication: both between members in the department and with their supervisors. To add on, there is economies of scale, effective environment monitoring, better employee satisfaction and engagement and the performance standards are better maintained. Although, the structure of the functional department seems rather captivating, it does have certain downsides to it. Firstly, members in the department may end up having different agendas; employees their own whereas managers their own, this may cause some diversion from the overall organization’s goal. Secondly, conflicts may arise within the department due to the close connection of members within the department, this may decrease the response time to customer, reducing customer satisfaction and risking the corporation’s relationship with the customer. Divisional structure The divisional organizational structure of Costco uses geographic divisions to increase their influence internationally. Today, Costco Wholesale operates in 18 different locations. This structure works by grouping each organizational function into a division which tends to contain all the necessary resources to support the organization in that specific location. Costco put secondary emphasis on divisional structure as management aims to provide the functional system they have created among various geographic locations. The benefits of this structure are that it allows Costco to enter different markets with more confidence as there is an abundance support provided by the departments in each location. Divisional structure, according to Don, provides greater flexibility for the corporation to adjust to different market conditions in various regions. However,

Research http://panmore.com/costco-wholesale-organizational-structure-analysis Costco’s organizational structure is based on the company’s current operations and locations (divisional?) Their structure reflects the company’s current market presence, it enables their effective management of operations in different markets. Their structure is designed to ensure successful management of its business in the US and overseas However, they must change it over time to suit its expanding global operations They have a weak matrix organizational structure ---describe matrix structure’s definition 

involves strong functional structure ---Costco groups employees according to business functions, such as accounting and marketing (primary feature) o this structure represents the basic functions to maintain the retail business o functions are carried out at the corporate level and affects the entire organization o have 12 different departments o supports the organization-wide control o company can easily implement new policies and strategies to take effect in all geographic divisions o offers limited flexibility, considering the corporate and organization-wide effects of the functional groups headed at Costco’s headquarters

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a secondary divisional structure ---Costco groups business component according to the location or the market (secondary feature) o geographic divisions are a feature of their business which relates to the strategic locations of its operations o currently there are 18 main geographic divisions o this structure presents the advantage of flexibility to adjust to regional market conditions

The functional characteristics apply to all geographical locations Extra information in case short of words: Costco's business model is to generate high sales volumes and rapid inventory turnover by offering members low prices on a limited selection of nationally branded and selected private label products in a wide range of merchandise. Costco's business model is built upon customer memberships, who join and renew annually Similarly, what is Costco's mission? "Costco's mission is to continually provide our members with quality goods and services at the lowest possible prices. To achieve our mission we will conduct our business with the following Code of Ethics in mind: Obey the law. Take care of our members. Take care of our employees

Beside above, is Costco centralized or decentralized? Costco Wholesale follows a decentralized decision making structure, because they recruit best and talented people....