Chapter 12: Costco's Initial Public Offering

Costco was founded in 1976, under the name Price Club. It originally was only open to small businesses, but realized it would have greater success allowing non-business customers to shop also. Costco went public with its initial public offering (IPO) on December 5, 1985, with a stock price of $10.00 per share. The first dividend of  $0.10 per share wasn't issued until May 31, 2004, nearly 19 years later. Since then, every dividend issues has been less than $1 per share with one exception. In December 2012, a dividend of $7.00 per share was issued. After this one incident the price went back to normal. The most recent dividend issued was $0.35 per share.

Chapter 11: Costco's Organization Structure

Costco has what we would consider a multidivisional structure for its company. It has a President and CEO, but it also has directors and Vice Presidents for different regions and different departments. Needless to say, its list of directors and executive officers is very, very long. It also has 6 committee members that are a part of 3 different committees: the Audit Committee, Compensation Committee, and Nominating and Governance Committee. All 6 people are members of at least one committee, but not all committees.

Chapter 10: No Acquisitions for Costco

Costco doesn't rely on mergers or acquisitions; it doesn't have to. As I mentioned in a previous post, Costco is like a one stop shop; there is something in there for everyone. It can offer deep discounts by selling in bulk. Because there are not many like it out there, there are fewer chances for mergers and acquisitions. It is a retail powerhouse and remains that way without mergers and acquisitions.

Chapter 9: Costco's "Alliance"

While Costco and Amazon may not have a true alliance between them, they do have mutual respect for one another. Costco founder Jim Sinegal bought a Kindle with a defective screen from Amazon in 2008 , and was remarkably impressed with its swift customer service and action in replacing the item. He wrote to Amazon CEO Jeff Bezos to let him know how impressed he was with the service. Rumor has it that Amazon Prime may have even been inspired by the membership factor of Costco's success, but that hasn't been confirmed.

Chapter 8: Costco's International Market

Over the last few years, Costco has been growing its international presence. It has multiple locations in the UK, Mexico, and Canada, with more to open as well. There are a newly opened stores in the lower income areas of Japan, Spain, and Korea, which will help the long term growth of the company. It will still have to compete with some of the same giants as it does in the Us such as Target and Wal-Mart, but it has done well nonetheless.

Chapter 7: Costco's Diversification

While Costco may not own several different businesses in different industries, it has its own version of a conglomerate. Inside of its warehouse store are several mini-industries under the same roof. They offer an optical center, automotive service, bakery, grocery, florist, pharmacy, photo center, cellular phone service kiosks, and a gas station. It is almost like a mini conglomerate under one roof. This allows it to compete in many different industries without having to have a separate storefront for each one.

Chapter 6: Sustaining Costco's Competitive Advantage

Despite a 6% rise in membership fees, Costco's membership renewal rate is at a whopping 90.6%. With its business doing so well in the United States, it has been focusing on establishing itself internationally. While they don't have as much presence overseas as they do in the US, margins are much larger overseas. Costco has adapted to the changing economy quite well, with its main focus being to increase foot traffic in the stores.