Costco Environmental Analysis Economic Conditions Currently in North America there are more than 1400 warehouse stores,

Costco operates 488 stores. Because of an unstable world economies, high levels of unemployment, and inflation these can have an adverse effect on demand for products and services offered by Costco, even though Costco had more than 12% growth rate from 2009 to 2010. During periods of an unstable economy prices of food and gasoline may increase, that can affect the companys sales and profit margins.

Legal Issues Costco has been plagues with numerous class action lawsuits over the years. The most current lawsuit is a $50 million class action lawsuit in California for failure to pay overtime to employees. The allegation was that the company has been accused of locking their employees in the store after clocking out until the supervisors finished closing the store. Other lawsuits have included gender discrimination as well as retaliation against a gay employee because he complained of being mistreated. In the 2010 annual report Costco stated they are involved in a number of legal proceedings and audits, including grand jury investigations, other government investigations, consumer, employment, tort, and other litigation (Costco.com, 2011). The outcome of some of these legal proceedings may require Costco to avoid taking actions, that could negatively affect their operations or force the company to pay considerable amounts of money. Legislative Issues

The present political climate toward large businesses is quite negative with an increasing amount of regulations being handed down- this over-regulation has businesses spending more to remain in compliance. The possibility of a tax increase for corporations has also slowed expansion of many large format stores as their fixed cost may increase dramatically (add to that the cost of new medical care insurance) (WikiWealth, 2011).

Technological Changes Costco Wholesale Corporation operates their website Costco. Com. After three years of activating online purchasing on the site, Costco.com made nearly $100 million in online revenue. This caused Costco to outgrow its e-commerce management system. Costco current system was could not handle the to handle increasing Web traffic volume, which resulted in Costco losing sales opportunities. In 2002, Costco.com updated their software to handle the increasing Web traffic. The new software easily handled the increasing volume and online sales more than doubled the first year. To make Costcos online sales successful, the company selects their merchandise to complement other goods found at similar warehouse stores. Costcos key to their online success is a limited product range. The company mainly focus on value-priced luxury goods. E-commerce growth has decreased during the current recession; the company expects their online sales to grow to $5 billion within the next several years. Social Concerns Costco is protecting the environment by using the green packaging technique. Instead of packaging their materials in not plastic clamshells, they are using renewable and reusable paper and cardboard. The company is also using environmental ways to conserve energy in the

warehouse by installing sky lights, putting lights on timers. The company has also paid their customers to carpool and ride the bus to work rather than drive separate vehicles. Costco is committed to the community by provide many community services as well as contributing to charities. Some community programs Costco has implemented is reading programs in schools as well as different scholarship programs. Costco is also concerned about their employee well-being. They are providing the best pay and benefits to the employees and their dependents to include domestic partnerships.

References Investor Relations. (2011). Retrieved from http://phx.corporateir.net/phoenix.zhtml?c=83830&p=irol-reportsannual

WikiWealth, Costco Swot Analysis, 2011 retrieved from http://www.wikiwealth.com/swotanalysis:cost