Costco Conversation Starter

Part:  1

a.) Organizational ethics audit is a systematic evaluation of the general behavior within the organization in order to establish the effectiveness of the programs and the stakeholders involved in the operation of the business (Eric, 2010). Some of the problems which might necessitate the management to conduct ethical audit might include: privacy and confidentiality of the clients, conflict of interest, services termination, impaired professionalism, self- determination, informed consent and staff development all of which comprise ethical dilemmas in an organization.

b.) The key assumptions with the organization’s management are that all the workers and staff shall maintain confidentiality and privacy of the clients they serve. The workers and the management shall be motivated to achieve the mission and the vision of the company (Eunice, 2009). There would be no conflict of interest among the management, workers or the clients being served. The aspects of self determination at the work place shall be the guiding principle in serving the goals and objectives of the organization. The key stakeholders whose behaviors and conducts are likely to be audited during the ethics audit process include: the management, workers and clients.

c.) Given the ethical issues of conflict of interest, confidentiality or privacy, self determination, impaired professionalism and informed consent, the reasonable alternatives for these issues are numerous and compelling. In order to avoid the cases of conflict of interest, the workers and the management should be compensated competitively (Horace, 2013). The staff members shall be encouraged to observe confidentially of the organizations plan and business trend with its customers.  The terms of service for the different customers and clients shall fall upon the right procedures and policies. The organization shall be necessitated to regularly provide guides and policies which will repair the impair professionalism of some of the workers of the organization.

d.) Ethical dilemma is the major source of success and failure of most organization across the globe in past. Organizations such as Wal-mart and Costco have been successful in the past because of strong ethical behaviors of all the stakeholders related with these organizations (Eunice, 2009). Nevertheless, organizations such as Enron and world.Com failed drastically due to inadequate ethical principles of the management and the workers.

e.) It would product to recommend that the staff of the organization to observe privacy and confidentiality of their relationship with the organization’s clients. The management should shun away from the issues of conflict of interest and at the forefront in assisting the company succeeds in the future. The term of service of the staff should be conducted using the appropriate procedures and process in order to avoid the risk associated with contract termination (Eric, 2010). Impaired professionalism should be solved through the use of the right communication channels where all the stakeholders are informed about the code of ethics and conduct expect from all the stakeholders associated with the organization.

f.) In conclusion, impaired professionalism, conflict of interest, informed consent, confidentiality and self determination are some of the ethical dilemma experienced in an organization. It is always hard for the management to establish whether ethical dilemma is occurring in an organization not unless the appropriate ethical audit is conducted. The implication of the ethical dilemma in Costco organization might lead to loss of customers, bankruptcy, and misappropriation of organization funds and improper termination of the staff contract (Horace, 2013). The consequences of unethical behavior for the organization is that it would hinder the management from attaining the expected goals and objectives, the relationship between the staff and the clients would be weakened and the organization resources would be mismanaged.


  • Costco Wholesale Corporation ethics program is established on the bases of obeying the law, taking care of the employees and members, respecting the suppliers and rewarding the shareholders. The Costco Wholesale organization has a code of conduct which prohibits violation of human rights in the supply chain (Eunice, 2009). Practices such as violation of the workers’ freedom, un-conducive working environment, failure to reward the workers competitively, excessive overtime and forced works are some of the unethical behaviors prohibited by the organization code of conduct and ethics of the Costco Company. The ethics program in the country is much more value based rather than compliance based. Despite the code of ethics and conducted within the Costco Corporation aims at ensuring that all the stakeholders comply with the policies and the procedures, the law and the rules within the company code of conduct aims at creating value for the customers and the suppliers based on the services delivered to them.


  • Code of conduct in Costco Corporation is to protect the rights and safety of the workers who produces the products and services it offers to the market while at the same time respecting the legal and cultural differences found throughout the globe. The Company usually prohibits compulsory slavery of labor, psychological and physical abuse of workers and illegal child labor. It expects all its vendors to comply with the applicable environmental and labor regulations and laws of the country in which all its vendors are located (Eric, 2010). The company makes sure that all the vendors are encouraged to work towards achieving beyond and above its goals. The company code of conduct is in line with its code of ethics which necessitates all its workers and vendors to obey the law, take care of the clients and employees and respect the suppliers at all the time. When the four code of ethics are observed and implemented it will be possible for the organization to reward all the shareholders competitively just like the other competitors in the world market.


Code of conduct in Costco Company is usually enforced by providing quality products in the market at best prices, making the shopping environment a pleasant experience, providing the customers with the best service and providing corporate social responsibility for the community. Since the workers are the greatest asset for the company, it important for the management to provide them with competitive wages and create a working environment that is free from discrimination and harassment (Eunice, 2009). The company is also dedicated in honor all the commitments which comes on its way, treating the suppliers with respect and avoiding the conflict of interest. It is also the role of the company to reward all its shareholders competitively whenever the company is profitable.

The vendors, suppliers, customers and the management of the Costco Corporation are responsible for business ethics in the company. The vendors have the responsibilities of ensuring that they maintain the environmental and safety precaution and laws of the countries in which they are located (Horace, 2013).  The suppliers are entitled to suppliers are required to supplier quality products and services and charge affordable and reliable prices from the customers. The customers of the company are required to be sincere and honesty while dealing with the company suppliers to ensure a smooth relationship. The management is expected to avoid the conflict of interest and to ensure that the company operates under a safe and secure business environment.

4.)  It is the role of the management to ensure that education; training and communication of code of conducts and ethics are disseminated and addressed to all the stakeholders of the company. Violation of the code of ethics and conduct has a great impact on the future operation of Costco Company (Eunice, 2009). Therefore, it is the role of the management to establish effective and efficient systems over which the code of conduct and ethics can be communicated to the rights parties. Given that training, education and communication of ethics and code of conduct is a necessity, the Costco Corporation usually document all its code of ethics and conduct and supply them to the relevant parties. Prior to the recruitment process of the workers, they are normally informed and oriented to the culture of the company. During the orientation process, the workers are informed the consequences they would face in case they violated the code of ethics for the company. The code of ethics and conduct are usually disseminated regularly to the vendors, workers and suppliers in order to remind them on the importance of obeying the law.


5.) The systems to enforce and monitor ethical standards in Costco Corporation would be: employees’ observation, internal audit, surveys, reporting systems, investigation and independent audits.  In order for the management to be in a position to understand whether Costco Company is performing its business under the expected code of conduct or ethics it is important to thoroughly monitor the behaviors of the employees from time to time. Violation of safe and environmental conditions by the employees of the company might bring some costly and dangerous consequences for the company. Therefore, the management should conduct internal audit of individual workers and employees to establish whether they work according to the organization goals and objectives. Regularly reshuffles, recruitment and firing of the workers should be encouraged in order to bring new energy in the company and to send off the workers violating the code of ethics and conduct for the Costco Company (Caitlin, 2012). The reporting systems should be dependable, reliable, resilient, safe, secure and accessible to all the stakeholders of the company in order to enable the workers and the suppliers report areas of operations where violation occurs and the necessary steps which need to be taken. Once the management receives the code of conduct and ethics violation information, it is important for it to conduct an investigation in order to establish the truth of the matter. It is important for the management of Costco Company to understand that not all reports from the suppliers and the workers might be genuine and it’s important to establish an independent audit committee that establishes areas which need to be transformed, changed and retained the way they are in order for the organization to remain in the market and operate successfully.

6.) Costco Organization ensures ethical performance through competitive remuneration of its employees making them loyal to the company.  The company ensures that all its employees are paid above average wages and are under comprehensive health insurance cover. The aspects make them happier than their peers and enable the company to make a difference in its business operation. The rewards and loyalty shown to the company’s shareholders makes them contribute enough capital to fund the company and it’s the main reason for Costco Company remaining profitable (Jackie, 2014). The support for quality in all the company processes has built a competitive advantage for the Costco Company in market which has enabled to build a strong market for it to operate in the future. The company will continue to use its facilities and vendors to strive beyond and above its goals by demonstrating a continuous commitment towards improving and protecting the rights of its workers and employees while at the same time observing their safety and that of the environment. Despite the fact that there are many business operating in the same line of Costco Corporation it has managed to build a strong competitive advantage over its competitors by being observant of the code of conduct and ethics of all of its stakeholders and maintain quality of service at all the time.






Eric, K. (2010). An ethics audit can reveal gaps in your ethics policies and practices. Society for Human Resource Management Journal. Vol. 55(4), 23-34.

Jackie, L.(2014). Audit Procedures for Ethical Behavior. Retrieved from:

Caitlin, A. (2012). The Costs of Being Costco: Why Ethics Matter. Oxford University Press.

Eunice, O. (2009). Costco Confidential Ethics Hotline for Suppliers. New York Publishers.

Horace, K. (2013). Costco Disclosure Regarding Human Trafficking and Anti-Slavery. Retrieved from:



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