Costco is an American Fortune company with various membership houses countrywide and diverse products. Costco is the largest company of its kind. In 2010, Stores Org listed Costco as the third largest retailer in the U.S and it comes ninth in the world. Besides, Costco is the leading retailer of wine globally and is listed on NASDAQ as COST. This PESTEL analysis of Costco shows how the company utilizes its opportunities depending on the external factors within its macro-environment.
For Costco to keep pace and maintain its market niche, it must consider various prevailing threats and opportunities within its remote business environment. This analysis focuses on political, economical, social, technological, environmental and legal factors that are affecting Costco’s performance. Let us look at these factors in turn.
Political factors partly influence the performance of Costco within its remote environment. These factors refer to how government actions affect the company’s external environment. Here are the three political factors that have a bearing on PESTEL analysis of Costco.
- Political stability in its leading market regions
- Environmental policies that are complex
- Policies on animal rights
Since Costco operates in many countries with different political conditions, the three factors above offer opportunities for the firm. Thus, the political environment favors Costco’s growth and expansion in different aspects.
The economic scenario for Costco is consistent with similar consistency in the company’s sales under prevailing conditions. This is because of the moderate growth of the company’s warehouses coupled with a proper track for its membership.
Some of the economic factors that have a bearing on Costco’s performance are tax payment systems, the price of products, investment and allowances, rates of exchange, and fiscal and monetary policies.
It is important for Costco to align itself with the current economic situation in order to maximize on existing opportunities and counter threats within the market. Therefore, a PESTEL analysis of Costco shows more options of growth and business expansion in America and in other countries.
The social cultural environment also affects the performance of Costco, as this influence consumer and employee behaviors. Costco continues to perform well globally because the firm adheres to international trade policies. These policies have helped the company to establish and nurture good ties with its customers, staff and different governments around the globe.
Additionally, the variation in income level between developed and developing countries, which host its warehouses, affect the business. Thus, Costco must adjust to these variations in order to remain at the top.
In terms of cultural diversity, Costco is committed to empowering women, who account for more than half of its employees. The company also has to improve its Corporate Social Responsibility in order to strengthen its brands in the market.
Technology plays a major role in keeping Costco on track and ahead of its competitors in the market. The firm has an agreement with McKesson HBOC, to enhance its online pharmacy services, giving its advantage over other players.
Costco is also taking steps to reduce carbon emission to the environment through its operations. Today, it has virtual technology systems aimed at expanding IT related functions. Thus, Costco remains ahead in terms of information technology, a key player driving its sales.
Costco is establishing solar panels and skylights in Hawaii and California to improve its environmental safety. Costco is taking these steps because the external environment poses a wide range of challenges to the success of any business organization. Its main threats are climate change and collapsing bee colonies while its key opportunity is low-carbon lifestyle.
According to a PESTEL analysis of Costco, different laws in its host countries affect its business operations. The Foreign Corrupt Practices Act plays a major role in determining the company’s decisions in America and in other regions. This protects the company and its associates from unethical practices like corruption. It also follows the law in meeting the needs of its customers and employees.
These six elements of Costco’s PESTEL explain its performance and far reaching opportunities.