Costco Wholesale Corporation Case

Costco Wholesale Corporation is the largest membership warehouse club chain in the United States. Costco was founded with a single store in Seattle in 1983 and within six years topped $3 billion in sales (Fortune 500, 2014). For the fiscal year ending on August 31, 2012, the company's sales totaled $97.062 billion, with $1.709 billion net profit. As of May 20, 2012, Costco had 581 warehouse locations in the United Kingdom, Canada, Australia, Mexico, South Korea, Japan, and the United States. They have continued to add stores annually averaging 13 stores a year (Investor Relations, 2014).

A majority of Costco stores are in North America, which is a market economy. All of the nations in which Costco operates are democratic meaning the laws support free trade. They provide higher than average wage rates to their employees as a result of their contract with the unions of the countries in which they operate (Daniel, Radebaugh, & Sullivan, 2011). In countries such as Mexico, South Korea, and Japan, Costco struggles to apply their labor and employment standards due to the government control of these areas. Due to the fact that all of these countries have different laws, Costco sometimes has to modify their code of ethics. They never break it but cannot always enforce it. Costco follows the rules and regulations of United States as well as the company's core values. The company forms its policy standards according to the business regulations of the United States (Morris, 2004). Sometimes the company faces risks due to the political policies of the native country.

To move products that are produced in the U.S., Costco must deal with international trade barriers. Once products finally get into Costco's overseas stores they must combat cultural differences such as language, attitude and values (Costco's Global Market Strategies, 2014). Costco prides itself in adapting to the customs and courtesies of the host nation. In some instances they have changed policies and items sold in order to adapt to the local customs. Costco has also had to overcome economic barriers in different countries as well as political and legal differences. They have realized that operating a business in markets, such as Asia or Mexico, calls for tailoring to the individual country's infrastructure and business laws. In some countries, such as England, competitors fought to keep the company from breaking ground (Costco's Global Market Strategies, 2014). In the Asian countries, issues surrounding real estate have forced the company to build skyscraper type buildings as opposed to the traditional warehouse style clubs that they build in the U.S. By sticking to their values, Costco has avoided some of the problems that Wal-Mart has encountered in Mexico (Barstow & Xanic von Bertrab, 2012). The retail industry in Mexico has undertones of corruption which Costco has refused to partake in. Short term this fact has hurt