Chapter 1, Problem 1C

Costco Wholesale Corporation is America’s largest membership retail company. According to its letter to stockholders:

For the first time [in 2011], four of our locations had more than $300 million in annual sales, including one which had more than $400 million in sales. This rate of top line revenue per building stands out in the retail industry and results from our ongoing focus on value—that winning combination of quality and price on every item we sell that, we believe, sets Costco apart from many of its competitors.

To achieve its strategy, Costco must organize its management by functions that relate to the principal activities of a business. Discuss the three basic activities Costco will engage in to achieve its goals, and suggest some examples of each. What is the role of Costco’s management? What functions must its management perform to carry out these activities?