Organizational Culture and Costco

Topics: Geert Hofstede, Organizational culture, Costco Pages: 9 (3359 words) Published: April 29, 2013
Group 4 Jiaqi Ji, Kai Yang, Yuju Chien, Longyi Han, Uthum Kurukulasooriya – Wednesday section 24 Contents
Cultural context3
Organizational Culture4
Affects of Organizational Culture8
Team 4 Group dynamics10


We chose Costco for our term paper because of the high opinion each of us had towards it. We are all a part of the Costco generation; it is a household name and we look to it as one of life’s necessities. Furthermore we have all had positive experiences there; no one can beat Costco’s prices and its quality. What will we do without Costco? It’s an unimaginable thought. Given all of this we believed that it would be rather interesting to investigate the root causes of Costco’s success through an Organizational Behavior standpoint and we were fascinated with what we found. Below are the results of our investigation. Introduction

In this paper we will explore the Organizational Behavior components of Costco. Through laborious research, our findings had confirmed to us that Costco is composed of a very employee-centric communal corporate culture. With this in context we were able to understand exactly why job satisfaction was so high and why employee turnover was so low at Costco. With this information we were able to develop an even greater respect for Costco than we had previously. This report will first explore the cultural context of the organization, then it will look specifically at all the characteristics of the organizational culture and it will end with some words about Team 4’s group dynamics.

Cultural context

Costco is an expanding retailer with growing international operations every year. It is primarily based in the US, which is home to more than 400 of its stores. Other places of operation include, Mexico, Canada, the United Kingdom, Japan, South Korea, Taiwan and Australia. The cultural context therefore is not uniform. First and foremost, the cultural context of the United States which is once again the base of Costco's operations is an individualistic one. The American culture is defined by many specific characteristics which reinforces the concept of individualism. According to Geert Hofstede, an organizational culture and organizational economics/management researcher, the US has a low score when it comes to "Power Distance" (the extent to which the less powerful members of institutions and organizations within a country expect and accept that power is distributed unequally). This essentially means that there exists this notion of "equal rights for all" making US society less divided along rigid class-lines. Hofstede also asserts that there exists an established tradition of people looking after themselves and their immediate family in US culture, this further reinforces it individualistic nature. In addition he believes that the US is primarily a masculine society that is driven by competition and the quest for personal achievement/success. These values are reinforced in pop-culture, the media and in the education system. Finally, Hofstede claims that US culture is geared towards the acceptance of new ideas and innovation because of their low degree of "uncertainty avoidance" (extent to which members of a culture feel threatened by ambiguous or unknown situations), while also being short-term oriented in that US culture looks for short term results in its social and economic obligations. Canada, the UK and Australia also share similar characteristics to the US according to Hofstede's research mainly because of their shared European ancestry. Mexico however, stacks up differently. Hofstede assigns Mexico a high "power distance" score meaning that Mexican society is quite hierarchical. People accept their place and do not question their status. Hofstede classifies Mexico as a collectivist society because its citizens tend to prioritize taking care of in-group members and staying loyal to them; everyone takes...

Bibliography: 1. Colquitt, Jason. Organizational Behavior. 3rd ed. N.p.: McGraw-Hill, 2012. Print.
2. Ingram, David. "Why Is Teamwork Important in Retail?" Small Business. N.p., n.d. Web. 29 Nov. 2012. <>.
3. Housal, Morgan. "Charlie Munger 's Love Affair with Costco." MSNMoney. Motley Fool, n.d. Web. 29 Nov. 2012. <>.
4. "Jim Sinegal on Costco 's "Promote From Within" Strategy and Why It Needs to Think Like a Small Company." Jim Sinegal on Costco 's "Promote From Within" Strategy and Why It Needs to Think Like a Small Company. N.p., n.d. Web. 29 Nov. 2012. <>.
5. GOLDBERG, ALAN B., and BILL RITTER. "Costco CEO Finds Pro-Worker Means Profitability." ABC News. ABC News Network, 02 Aug. 2006. Web. 29 Nov. 2012. <>.
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