Question

PESTLE for Costco

Answer 1

PESTLE analysis of Costco-

CostCo is a retail company which sells many categories of products like consumer products where customers has to take membership for purchase.so we would do its environmental analysis by PESTLE analysis-

Political Forces-

Political forces include major role of political parties, government agencies and how they can affect business operations of Costco.Government regulations on sale and purchase of land can affect decision of Costco to purchase a land in another country and open stores. these forces like unstable political environment, interfere of political parties in unions can also affect business of Costco like supporting unions can increase business cost and lower work in times like peak seasons. Political turmoil disrupts business and brings sales down.

Economic Forces-

Economy of a country helps to make or break any business because if Costco operate in a strong economy country then customers in such country have strong purchasing power and they would shop more in such retail stores. but if there is economic event like recession then it can impose a great threat because people tries to cut down cost even business tries to cut down labor cost so they lay off employees which can affect sales of Costco.

Socio-cultural forces-

Society and its culture has great role in business because Costco can not make business or marketing strategy if they ignore culture and social norms of its customers. in US there are many cultured people like Hispanic, Asian,American, afrincan etc so Costco has to make sure that it has good strategy to make available of products which satisfy needs of these people in society.

also image of Company in society has great role because positive social image means good business but if bad image is there then costco can forget of having loyal customers.

Technological forces-

Technological force is the most dynamic as it keeps change most often yet very beneficial for Costco because with technology, Costco is able to control its inventory, make customer records in system, handling payment of employees, customers can pay online. but it also has threat like with technology more online business has grown like amazon which pose threat to Costco.

Legal Forces-

Legal and political forces are quite the same. But there are some additional things to consider like Labor laws in countries differ so if Costco operate in other country. it has to comply with laws of another country. if Laws related labor like minimum wages increment occurs then it affect business cost because company has to pay such cost to labors per hour.Costco also has to focus on safety laws, discrimination laws,employment laws etc to prevent its business from legal suits

Environmental forces-

This factor include forces which are natural related to environment. Costco has to focus on reducing carbon footprints because increase pollution and waste of resources can lead to poor brand image and increase social responsibilities. also Climate of country, availability of natural resources can be criteria for choosing business in other places of other countries.

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