Costco History

Costco Wholesale Corporation, founded in Seattle in 1983 by James Sinegal and Jeffrey H. Brotman, originated as a warehouse distributor for several retail outlets. After operating solely as a distribution hub for years, Costco is now the second largest retailer in the United States and the seventh largest retailer in the world. As of 2013, it is also the largest membership warehouse club chain in the United States, ahead of primary competitors Sam’s Club and BJ’s Wholesale. Although they may not be quite as instantly recognizable as their main competitors, Costco has attracted somewhat of a cult following due to their unusual business operations. In many financial analyses, Costco trumps all of their industry competitors. Even in the recent economic downtown, Costco still posted growth in their stock, as well as higher than industry average profits (Huffington Post, 2012). So what exactly makes Costco so successful? Many business analysts argue that Costco’s focus on corporate social responsibility is what sets them apart from other retailers such as Sam’s Club or BJ’s Warehouse. Their focus on doing “the right thing” for all of their stakeholders, as well as a vision that aims for long-term success, is a unique business model that has interesting implications for many debates within the business world today. Should a company’s main focus be profit? Do they have a responsibility to act in the best interest of all stakeholders? What are the effects of these decisions? Costco is a prime example of a socially responsible corporation that seems to be proving that acting in a socially responsible manner towards all stakeholders is ultimately more beneficial for a company than valuing profits above all.

A traditional view of business ethics is that is it acceptable, and even encouraged to operate only for maximum profit. Well-known American economist Milton Friedman argues that having any sort of other “social responsibility” will only hurt a company in the long run. As...