Costco Wholesale Corporation must devise strategies that can exploit the opportunities and can address the threats to the company. These opportunities, along with threats, are revealed by the PESTLE Analysis of Costco Corporation. The Analysis examined the externally acting factors that were responsible for shaping the macro or remote environment of the company. Costco must consider these threats and opportunities to uphold its leading spot as the principal membership warehouse club based on an extensive chain across the US. This Analysis specifies that the company has several opportunities for growth besides expansion prevalent in its corporate environment. Nonetheless, the company must devise strategies to shield itself against the rising competition in the retail market industry.
This PESTLE/PESTEL analysis revealed that Costco could realize growth in its macro or remote industry environment, providing it devise some strategic goals to accomplish based on the opportunities.
Political Factors Prevalent in the Business Environment
The effectiveness and performance of this company are hooked on the political factors which are playing a role in the working environment of the industry. This section of the PESTLE analysis reveals the effect of governmental regulations and activities on the macro or remote environment of the company. The following discussed political factors are exerting influence on the business environment:
- Political stability in the markets (opportunity)
- Complicating environmental approaches (opportunity)
- Trending Animal rights regulation (opportunity)
The company can exploit the opportunity in terms of growth and expansion as the political spheres of the markets are stable. Moreover, the company further advances its growth by realizing the environmental also animal regulations and policies. Therefore, this section revealed the opportunities available for the company to realize growth, stabilization, and development based on the political factors.
Economic Factors Affecting Costco Wholesale
The company requires an alignment with the economic conditions to realize development and growth. The economic factors include the external economic influences which are affecting the economic conditions of the company. The company is facing the subsequent economic factors playing significantly in the external environment:
- Growing free trade treaties among the nations(opportunity)
- Rapidly growing markets of developing states (opportunity)
- Sluggish growth of the US market
The trade treaties that support trade without the imposition of heavy taxes allow the company to grow its business operations beyond boundaries. Moreover, Costco has the chance to grow and expand in growing markets of developing states which have huge populations. Even more, the company can improve its business and growth in the US market despite the low economic indicators of the US economy. Thereby, this part of the Analysis revealed the opportunities for growth, expansion, and stabilization exerted by the economic factors.
Social/Sociocultural Factors impacting Costco Corporation
Many social or socio-cultural factors contribute to the business environment of the company. These factors affect the company’s external environment and are mainly related to the behavior of employees or consumers. This section of the PESTLE/PESTEL analysis determines the socio-cultural factors and their interaction with the external working conditions of the company. These factors which are acting on the macro or remote environment of the firm are enumerated below:
- Social responsibility perception (opportunity)
- Wave of animal rights (opportunity)
- Environmental preservation (opportunity)
These factors are responsible for shaping the working conditions of the company. The demand for social responsibility in the business has increased, and it has allowed the company to enhance its brand recognition and consumer satisfaction by adhering to these social responsibility programs. Furthermore, the company has a growth opportunity by adhering to animal rights in addition to environmental preservation. Thereby, the company can grow its business and stability by exploiting these opportunities.
Technological Factors influencing the business
Costco Corporation is facing influences by certain technological factors which are prevalent in the firm’s external working environment. This dimension of PESTLE/PESTEL analysis determines the contribution of technological factors to the macro-environment of the company. Technological revolutions have shaped the new business realities within the past few years. Technological innovation has led to steady progress in business development and growth. The next discussed factors are exerting influence on the firm.
- Rising E-commerce business transactions (opportunity)
- Automated businesses (opportunity)
- Intensified technological innovation and advancement (opportunity)
The company can attract a greater customer base through the use of e-commerce. In the same way, the implementation of new automation processes into the business can significantly increase the operations as well as the effectiveness of its business. The outcomes would be greater as there would be a reduction in loss due to human negligence or error. Moreover, Costco Corporation has the opportunities to grow the business processes by undergoing more innovative techniques such as management tools, HR practices, or information processing abilities. Therefore, technological factors have considered opportunities for the growth and expansion of the business.
Impact of Environmental/ecological Factors
The company is functioning as a major retailer in the US market. The film, therefore, needs to consider the ecological or environmental factors to foster long-term growth. This section of the Analysis refers to the remote factors which contribute significantly to influencing the remote or macro-environment of the company. The ensuing factors covered contribute mainly to the influence of the company’s working.
- Climate variations (threat)
- Imposition of low-carbon footprints (opportunity)
- Reduction in bee colonies (threat)
The company is prone to the effect of climate change mainly because the retail business is dependent on production and sales. The variation in the climate can greatly affect the sales of the company as it could become severe in the production process. Moreover, Costco must adhere to new norms of carbon footprints to carry the long-term sustainability of the business. In addition, the devastating colony collapse disorder has severely affected the bees that influenced the supply that the company required for its food production. Nonetheless, the company cannot take many measures to address the threat of CCD. Therefore, the company must adopt measures to adjust itself to new norms to effectively conduct the business operations by providing the products.
Legal Factors affecting the Business
Legal systems around the globe impose certain conditions on businesses of all sorts. Costco is no different in this manner. This section of the PESTLE/PESTEL analysis reveals the impacts of legal laws and regulations on the business of Costco. The legal factors which are present in the macro-environment of the business of the company are discussed below:
- Emerging employment laws (opportunity)
- Reforming the taxes (opportunity and threat)
- GMO regulations and policies (opportunity)
The company can improve its growth and stabilization by adopting employment practices that are more suited to the employees of the company. Costco must adjust itself to the newer strategies and policies to better adapt to the working environment. Even more, the company can focus more on GMO labeling for food items. Thereby, this segment of the Analysis reveals that the Costco Corporation must adopt the legal dimensions to exploit the opportunities for better growth and development.
Recommendations.
The company has many opportunities to grow its finances, performance as well as growth. Nonetheless, the Analysis revealed that the company needs to address numerous threats to sustain long-term development. Moreover, the company can further expand its supply chain. In the end, the firm must form a way to utilize the growth opportunity available in the developing world.
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