When an Organization Fails, and How to Fix It

Topic: BusinessCompany
Sample donated:
Last updated: April 2, 2019

Do you want to shop till you drop and still get a lot of items from a little shopping allowance? Do you want to see all the items that you need on shelves with the lowest price tag? Then visiting the nearest Costco supermarket would be best for you. Costco Wholesale Corporation, which was established in 1983 as a single store in Seattle, became the biggest membership warehouse club chain the world (Slatter, 2005). Costco realizes that business owners keep their personal credit card in the same wallet with their corporate credit card.

That’s why Costco sells cashmere sweaters, expresso machines, high priced patio furniture and $40,000 diamonds. That’s also why Costco shoppers – who may be there to stock up on computer paper and printer cartridges – can find seafood and artisan breads as well as products from exclusive vendors like Titleist, Thomasville and Elizabeth Arden. In fact, Costco is now the nation’s largest seller of wine – those business customers turned out to be pretty good consumers as well (“What is Costco?”, 2005).Business owners are perfect personal consumers for Costco because they tend to be affluent and value-driven shoppers who love the hunt and the thrill of a bargain. The additional benefit for Costco has been that other affluent consumers flock to Costco thanks to word of mouth. It’s similar to Home Depot’s attraction: Many people want to shop at Home Depot because it’s where the professionals (the contractors) shop. In some regards, business owners are professional consumers. Other consumers want to join the club – and shop where the professionals shop.

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Costco also has built up a great amount of integrity by staying true to its low-margin approach and refusing to sell items that can’t offer a demonstrable value. In addition to this, Costco emulates many of the same industry strategies as Wal-Mart’s SAM’s CLUB. Both initially targeted small businesses as their core constituency before expanding to individual consumers. They sell a limited number of goods in bulk quantities, use their huge volume to win better prices from suppliers, and sell membership both to earn more income and to encourage loyalty (Marquard, 2007).Like Sam Walton, Costco founder Jim Sinegal remains obsessed with lowering prices.

As a result, both SAM’S CLUB and Costco use advanced systems to order, ship and distribute products. They both press suppliers for the lowest possible cost. Cardinal rules number one at Costco is limiting the markup on products to 15 percent – compared with the supermarket convention of 25 percent and department store practice of 50 percent or more (Greenhouse, 2005).

Costco demonstrates how a big competitor in an industry with one dominant player can win its own place in the market by taking a somewhat different approach. To keep its cost structure down, Costco doesn’t advertise, has no public relations department and offers little sales help. Although price remains the most important element in Wal-Mart’s value proposition, value remains the cornerstone of Costco’s.

Costco also recognized years ago that its primary customer was the consumer – as opposed to the business member – and oriented its product selection accordingly. Lest the low prices of Costco goods by themselves fail to keep customers interested, Costco stresses the “treasure hunt” in its stores. It stocks only about 4,000 items and it rotates about 1,000. Every time a shopper visits, the store will have new and irresistible unadvertised deals (Ander and Stern, 2004).It sounds really interesting and perfect, isn’t it? However, on my last trip to a Costco supermarket and buying some goods, I have experienced dissatisfaction and was personally let down by Costco. Costco guarantee states that whenever a customer becomes dissatisfied with the products bought from their stores, we can simply return or exchange merchandise directly to Costco or at Costco.com.

In addition to this, their customer service department would look at the problem and solve it immediately and they can even be contacted through phone and the internet. I bought a desktop and notebook computers and after using the computers for the first time, I was not pleased with the performance. I checked the return policy on desktop and notebook computers. Their return policy is six months from the date of purchase, then after that, the services as well as the technical support would be coming from the manufacturer’s warranty and not from them. I called the customer service the following day and they said that they would be sending some personnel to get the items that I have bought and eventually give me a refund.

However, four months had already passed and there was still no sign of Costco. I called over and over but the customer service seems to ignore me. Alas, after six months, the return policy of Costco on the items I bought had already lapsed and I am still not pleased. Regardless of a successful claim or help from the manufacturer’s warranty, I still believe that I am not fully supported nor pleased by Costco.I think that Costco’s very low prices had hindered its capabilities to provide a maximum customer service or refunds. Due to this, Costco lacks the facilities and employees of Costco are not well trained to meet the complaints and needs of all the customers. Costco has attained a good stand on retailing and profit that it forgot to aim for customer satisfaction. In addition to this, their guarantee was not that good either.

A good guarantee should be easily invoked by customers and the process that a customer has to take should be simple, trouble-free and undemanding. The process of invoking a full return of a good or service should be straightforward and uncomplicated or understandable. This will help customers who are already displeased, to favor or buy again such goods or services by the business establishment. In addition to an easily-invoked guarantee, Hart states that “customers should not be made to feel guilty about invoking the guarantee — no questioning, no raised eyebrows, or ‘Why me. Lord?’ looks. A company should encourage unhappy customers to invoke its guarantee, not put up roadblocks to keep them from speaking up” (1989).If I were the big boss of the company, there are things which I could give, together with the product guarantees, and these are:1.

I would try to establish first warehouses where the customer can return or exchange the product and provide a list of these warehouses.2. I would personally see that the customers are well taken care of by my employees and that letters of apologies to unsatisfied customers would be given immediately after receiving complaints.3. I would see to it that the customer service is always manned 24 hours, 7 days a week and they are always customer friendly.4.

I would allot time for extension of the claims and invoking refunds or returns.5. As a manager, I would look at customer satisfaction as a goal to achieve profits and compensate for any loss due to returns or refunds.The list that I have mentioned can be attained through several methods. First, to build better infrastructures, I must first satisfy the stakeholder’s need for profit, and in return, provide me with more money or capital (Dettmer, 1997). Second, leadership trainings and seminars would be regularly conducted (once a month) to improve teamwork and manager-employee relationships, and in return be more customer-friendly. Third, I would create business proposals to improve guarantees or supplier warranties and still provide suppliers with a win-win situation.

As a manager, I would be sacrificing most of my time for my employees, stockholders, customers and suppliers. For the company, 20% of the wages would be allotted for the trainings and seminars of each and every employee. Improving the quality of customer service and the organization as a whole would result to an optimum level of quality averaging 3.

4 defects per million opportunities (Brue, 2002).ReferencesAnder, W. N., & Stern, N. Z.

(2004). Winning at Retail: Developing a Sustained Model for Retail Success. New Jersey: John Wiley and Sons, Inc.

Brue, G. (2002). Six Sigma For Managers.

New York: The McGraw-Hill Companies, Inc.Dettmer, W. (1997). Goldratt’s Theory of Constraints: A System Approach to Continuous Improvement. Milwaukee: ASQ Quality Press.Greenhouse, Steven.

“How Costco Became the Anti-Wal-Mart.” The New York Times, 2005.Hart, Christopher W.L. “The Power of Unconditional Service Guarantees.” The McKinsey Quarterly, 1989.

Marquard, W. H. (2007). Wal-Smart: What It Really Takes to Profit in a Wal-Mart World. New York: The McGraw-Hill Companies.Slatter, J. (2005).

The 100 Best Stocks You Can Buy. Avon, MA: F and W Publications Company.”What Is Costco?”  Japan, 2005.  Costco Wholesale Japan, Inc. and Costco Wholesale Corporation.

August 31, 2007. ;http://www.costco.co.jp/eng/costco.htm;.

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