[COSTCO - Project Report]

By

[Nirjhar Garg] [MBA: 506-SEC02] [Prof. Diane Impagliazzo]

TABLE OF CONTENTS
BACKGROUND PHILOSOPHY LEADERSHIP VALUES CONCLUSION & LEARNINGS CITATIONS & REFERENCES 2 4 11 12 13

1

BACKGROUND
Costco Wholesale Corporation operates an international chain of membership warehouses, mainly under the "Costco Wholesale" name, that carry quality, brand name merchandise at substantially lower prices than are typically found at conventional wholesale or retail sources. The warehouses are designed to help small-to-medium-sized businesses reduce costs in purchasing for resale and for everyday business use. Individuals may also purchase for their personal needs. Costco's warehouses present one of the largest and most exclusive product category selections to be found under a single roof. Categories include groceries, candy, appliances, television and media, automotive supplies, tires, toys, hardware, sporting goods, jewelry, watches, cameras, books, housewares, apparel, health and beauty aids, tobacco, furniture, office supplies and office equipment. Costco is known for carrying top quality national and regional brands, with 100% satisfaction guaranteed, at prices consistently below traditional wholesale or retail outlets. Costco is open only to members and offers three types of membership: Business, Gold Star (individual) and the Executive membership. Executive Members also receive a 2% annual reward on most of their warehouse purchases. Costco warehouses generally are open seven days per week for all members. Members can also shop for private label Kirkland Signature products, designed to be of equal or better quality than national brands, including juice, cookies, coffee, tires, housewares, luggage, appliances, clothing and detergent. The Company also operates self-service gasoline stations at a number of its U.S. and Canadian locations. Additionally, Costco Wholesale Industries, a division of the Company, operates manufacturing businesses, including special food packaging, optical laboratories, meat processing and jewelry distribution. These businesses have a common goal of providing members with high quality products at substantially lower prices. In addition to offering all of the usual benefits, it allows members to purchase a variety of discounted consumer services (auto and homeowner insurance, auto buying, mortgage, refinancing, boat and RV loans, high-yield savings accounts & CD's, identity protection, personal check printing, and/or business services

2

(business phone services, merchant credit card processing, health and dental insurance, payroll services, business check and forms printing, small-business 401(k) plans, small-business web sites ) at substantially reduced rates. Costco Wholesale Corporation and its subsidiaries (Costco or the Company) began operations in 1983 in Seattle, Washington, and is publicly traded under the Nasdaq ticker symbol "COST", with its home office in Issaquah, Washington. The average customer visits their local Costco 22 times a year. The company has about 449 locations in 41 U.S. States & Puerto Rico; with more than $99.1 billion in revenues (FY2012), and is also the largest membership warehouse club chain in the world with a total of 626 warehouses. Costco is now one of the largest retailers in the U.S., and seventh-largest in the world. More important than any ranking, however, is its ability to remain focused on the core values of its business: driving down expenses; offering their members great products and services at the lowest possible prices; and being a responsible corporate citizen. Costco takes pride to accomplish all of this while providing great wages and benefits to their employees. It is a model that will allow for continued growth and opportunities well into the future. All of this in spite of Costco’s unusual approach of requiring customers to pay for the privilege of buying things. Costco always strived to make it a priority to