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Impact Of Environmental Factors On Marketing Decisions Of Costco Wholesale Corporation

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Autor:   •  July 11, 2011  •  1,554 Words (7 Pages)  •  1,121 Views

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Environmental factors consist of all the factors and activities which have a considerable impact on the running of the business. Environmental factors have a powerful impact on the normal functioning of the any business, especially in the marketing decisions (Pagell & Halperin, 2000). These factors pose challenges and threats to the success of any business. In order to deal with such environmental factors a firm should enhance its core competencies and make sound strategies (Staff, 2009). There are various factors which would have deep impact on these new services offered by the firm. The firm should make a strategy after considering these factors. David Jobber describes in his book that with the help of this analysis, the company becomes more competitive and effective to implement the various strategies (Jobber, 2001).

Costco Wholesale Corporation is one of the biggest organizations in the retail industry, which operates at the global level. The company was founded by James Sinegal and Jeffrey Brotman (Costco Wholesale Corporation, 2009). On the basis of the sales volume, the company is considered among the world's largest membership warehouses (Costco: About Company, 2009). The company has taken the position of the five largest companies in the United Sates in retail Industry. The Headquarter of the company is situated at Issaquah (Washington) in the United States (Costco Wholesale Corporation Reports January Sales Results and Comments on Earnings Outlook for Its Fiscal 2009 Second Quarter, 2009). The company runs its operations at the international level within different segments and covers about 60-70 billion US dollars as revenue (Costco: About Company, 2009).

The economic segment of the external environment has a great interaction with the scope of the company's business prospects and business strategies of the companies to handle the marketing environment (Chidrawar, Hatch & Kramer. 2009). These factors are essential to evaluate the marketing mix strategies of the company at the global level. These factors usually cannot be controlled by the businessmen and therefore, a careful analysis of the environment is essential to discover the problems and find their possible solutions.

The economic condition of Costco Wholesale Corporation mainly remains consistent, as the growth rate of the sales of the company is consistent. This is because; on the yearly basis, the growth of the warehouses of the company is moderate and the growth of the membership of the company also runs on the proper track (Taking Stock in Costco Wholesale Corp. (COST), 2008).

The economic factors on which the performance of Costco is based are the systems of tax payment, investment and allowances, sophistication of moving and raising capital, prices of the commodities, fiscal and monetary policies and rates of exchange, etc. (Staff, 2009).

Trade practices and agreements occupy an important place whenever we talk about international business or international operations. Moving of goods and services across borders needs to be controlled through some practices or agreements. Hence, they need to be followed for peaceful operations (Pagell & Halperin, 2000). Costco has been successfully operating overseas by adhering to the various trade practices. Through this, it has been able to improve its customer relations, effectively evaluate and manage the risks, improve its reputation and avoid legal proceeding cost (Chidrawar, Hatch & Kramer. 2009).

Demographic environment segment is the most important segment of the general environmental analysis of the company. The important demographic bases for demographic segmentation are age structure, gender, income distribution, family size, occupation, education, social class, religion, race, nationality, etc. (Staff, 2009).

In international operations, the problem of diversity arises and this is because in every country, there are people of different nations and languages. Doing business at a global level requires a careful analysis and study of the population of those countries where the business has to perform its operations (Hirji, 1999). Costco Wholesale Corporation's population size is very large. The company has its locations in all the major countries of the world with large population mass. The countries, in which the company operates has millions of people who demand for the company's products in bulk. Thus, due to its expanded business in the most populous countries, the company has large volume of sales (Pagell & Halperin, 2000).

Costco Wholesale Corporation is running its business in both developing and developed countries. The population growth rate of both the developed and developing countries is quite increasing, which provide an opportunity to the company to expand its product line, as well as, its sales volume (Staff, 2009). The income level of families of both developed and developing countries in which the company operates is different. This difference in the income level of the families of host countries affects the business process of the company at a


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