Costco is led by President and CEO Ron M. Vachris with CFO Gary Millerchip and chief operating officers for warehouse operations, merchandising, international and depots. It reports three geographic segments: the U.S. ($219.8B of revenue in fiscal 2026), Canada ($40.6B) and Other International ($42.8B). Costco had 939 warehouses and about 355,000 employees.
Correction (11 Oct 2026): the earlier text said Costco operated โ829 storesโ as of March 2022 and generated โ$242.29 billionโ in 2023. Its fiscal 2026 10-K reports 939 warehouses and $303.2B of revenue (10-K).
How we source: figures on this page come from the company’s own filings (SEC 10-K, 10-Q and earnings releases, or its annual report), with the period stated next to each number. Last refreshed October 2026. Our methodology.
Costcoโs structure: functional COOs, three segments. Source: Costco Form 10-K, fiscal 2026 (52 weeks to 30 Aug 2026), SEC EDGAR: Executive Officers (names and titles), segment revenue and operating income, warehouses by country. Shares calculated. Bars to scale. Analysis by The Business Engineer.
Leader
Role
Ron M. Vachris
President and CEO
Gary Millerchip
EVP and CFO
Caton Frates
Senior EVP, COO – Warehouse Operations, U.S. and Canada
Functional leadership. The 10-K lists chief operating officers for warehouse operations (U.S. and Canada), merchandising, the international division, depots and traffic, and regional divisions, all reporting into the CEO (10-K).
Lean headquarters. The 10-K says about 95% of employees work in the membership warehouses (10-K).
Earlier analysis and background (pre-2026 figures)
The text below is the earlier version of this page. Its figures refer to earlier periods and some were corrected above; the current, sourced figures are in the sections above.
Correction (10 Oct 2026): an earlier section on this page showed unsourced figures; it has been removed.
Costco has a matrix organizational structure, which can simply be defined as any structure that combines two or more different types. In this case, a predominant functional structure exists with a more secondary divisional structure.
Costcoโs geographic divisions reflect its strong presence in the United States combined with its expanding global presence. There are six divisions in the country alone to reflect its standing as the source of most company revenue.
Compared to competitor Walmart, for example, Costco takes more a decentralized approach to management, decision-making, and autonomy. This allows the companyโs stores and divisions to more flexibly respond to local market conditions.
Department ยท Type of Structure ยท Structure Details ยท Advantages ยท Drawbacks
Warehouses
Type of Structure: Divisional Structure
Structure Details: – The core of Costco’s organizational structure is its warehouses. Each warehouse operates as a standalone unit with its own management and staff.
Advantages: – High local autonomy allows warehouses to adapt to specific market conditions. – Efficient inventory management and control. – Strong focus on customer service.
Drawbacks: – Limited central coordination may lead to inconsistencies in operations across warehouses. – Challenges in ensuring consistent branding and customer experience.
Regional Divisions
Type of Structure: Geographic
Structure Details: – Warehouses are grouped into regional divisions based on their geographic location. Regional divisions oversee the operation and management of multiple warehouses within a specific area.
Advantages: – Facilitates coordination and resource sharing among warehouses in the same region. – Allows for localized decision-making.
Drawbacks: – Potential for duplication of efforts and competition among regional divisions. – Balancing consistency and local adaptation can be challenging.
Corporate Headquarters
Type of Structure: Functional
Structure Details: – Costco’s corporate headquarters, located in Issaquah, Washington, provides centralized leadership and support functions such as finance, marketing, human resources, and global procurement.
Advantages: – Efficient centralized control over critical functions. – Ensures consistency in branding and corporate policies. – Streamlines decision-making at the corporate level.
Drawbacks: – Limited local autonomy for critical functions. – Potential for communication challenges between corporate and warehouse levels. – May lead to slower response times for certain decisions.
Buying Offices
Type of Structure: Functional
Structure Details: – Buying offices are responsible for global procurement and vendor relationships. Costco’s buyers negotiate directly with suppliers to secure high-quality products at low prices.
Advantages: – Leverage Costco’s buying power to secure cost-effective products. – Centralized procurement expertise. – Ensures consistent product quality and pricing.
Drawbacks: – Limited local autonomy in product selection and procurement. – Potential challenges in maintaining supplier relationships and quality standards.
Costco Business Model
History of Costco
Introduction
Costco is an American multinational company that operates a chain of membership-only bulk retail stores. The company was founded by James Sinegal and Jeffrey Brotman to take advantage of the emerging warehouse club industry, with the first Costco store opening in Seattle, Washington in 1983.
As of March 2022, Costco operates 829 stores around the world with a presence in countries such as Australia, Canada, Mexico, Japan, South Korea, the United Kingdom, and Taiwan. So far, the company has a limited presence in Europe.
So how is the company structured?
Costco has a matrix organizational structure, which can simply be defined as any structure that combines two or more different types. In this case, a predominant functional structure exists with a more secondary divisional structure.
Functional groups
Functional groups, as the name suggests, group the important functions that are essential to maintaining business operations. Each group is led by an Executive or Senior Vice President who reports to current CEO W. Craig Jelinek.
Group examples include:
Diversity.
Information Systems.
Ancillary Businesses, Manufacturing and Business Centers.
Costcoโs geographic divisions reflect its strong presence in the United States combined with its expanding global presence.
Geographic divisions in the United States are more numerous since this is the nation where Costco derives most of its revenue. Divisions include:
Northeastern.
Southeastern.
Midwestern.
South-Central.
Northwestern, and
Southwestern.
For international markets, these are Costcoโs divisions:
Eastern Canada.
Western Canada.
United Kingdom.
Australian.
Japan.
Taiwan.
Mexico, and
Korea.
It is important to reiterate that geographic divisions are a secondary characteristic of Costco’s organizational structure โ as explored in the new organizational architecture for the AI era โ , with each functional group able to be applied to any division. For example, the Merchandising group can influence any division with a new promotional strategy.
Decentralization
Compared to competitor Walmart, for example, Costco takes more a decentralized approach to management, decision-making, and autonomy. Indeed, the company has looked for ways to reduce bureaucracy and encourage employees at the store level to generate innovative ideas to increase motivation and buy-in.
In addition to increasing staff morale, decentralization means each Costco store can better respond and adapt to local market conditions. Instead of having to run important decisions up the chain, lower-level managers can make decisions quickly and in confidence that they will not be reprimanded for using initiative.
Comparison with Top Related Companies
Walmart: Walmart uses a hierarchical divisional structure. This structure is characterized by a strong central command with clear roles and responsibilities that are distributed among various business divisions such as Walmart U.S., Walmart International, and Sam’s Club. Compared to Costco, Walmart has a more centralized approach to decision-making, which can sometimes slow down the responsiveness to local market changes but ensures a consistent strategy across its global operations.
Target: Target operates with a functional organizational structure. This structure focuses on business functions like marketing, human resources, and operations being centralized at the corporate level, similar to Costcoโs functional groups. However, Target lacks the same level of geographic divisional structure that Costco employs, which may limit its flexibility in tailoring offerings to diverse regional markets.
Samโs Club (a division of Walmart): Sam’s Club, being part of Walmart, shares the same overarching organizational structure but operates semi-autonomously within that framework. Similar to Costco, Samโs Club uses a mix of functional and divisional structures, particularly focusing on the wholesale club format. However, Sam’s Club does not have as extensive a geographic division as Costco, which limits its adaptation to local markets compared to Costcoโs more decentralized approach.
Similarities and Differences
Similarities: All these companies, including Costco, use a combination of functional departments to centralize expertise and management in specific areas such as finance, marketing, and human resources. This centralization helps in maintaining consistency and control over corporate-wide policies and strategies.
Differences: Costco’s use of a matrix structure with strong geographic divisions allows greater local autonomy compared to Walmartโs more centralized model and Targetโs functional emphasis. This structure at Costco facilitates quicker local decision-making and adaptation to market conditions, which can be a significant advantage in the retail industry.
Implications
Responsiveness: Costco’s decentralized approach enables its local managers to make decisions that are immediately relevant to their markets, increasing the company’s overall responsiveness and agility. This can lead to higher customer satisfaction and better alignment with local consumer trends.
Innovation and Employee Morale: By empowering local managers and employees, Costco fosters an environment of innovation and high employee morale. This decentralization encourages initiative and can lead to more creative solutions to market challenges.
Scalability and Control: While decentralization increases flexibility, it can also pose challenges in maintaining uniform standards and control, which are critical for brand consistency. Costcoโs matrix structure aims to balance this by integrating functional oversight with local autonomy.
Key Highlights:
Matrix Organizational Structure: Costco employs a matrix organizational structure that combines functional and divisional aspects.
Functional Groups: Costco’s functional groups are led by executives or senior vice presidents and cover crucial areas such as Diversity, Information Systems, Ancillary Businesses, Ecommerce, Merchandising, Administration, Finance, Human Resources, and more.
Geographic Divisions: Costco’s geographic divisions reflect its substantial presence in the United States and its expanding global operations. The divisions are numerous in the U.S. and include Northeastern, Southeastern, Midwestern, South-Central, Northwestern, and Southwestern. Internationally, divisions cover regions such as Eastern Canada, Western Canada, the United Kingdom, Australia, Japan, Taiwan, Mexico, and Korea.
Secondary Divisional Structure: While divisions exist, Costco’s organizational structure primarily revolves around functional groups that can be applied across divisions. For instance, the Merchandising group can influence any division with new strategies.
Decentralization: In contrast to competitors like Walmart, Costco follows a decentralized approach to management, decision-making, and autonomy. Decentralization empowers store-level employees to generate innovative ideas, adapt to local market conditions, and make quick decisions without excessive bureaucracy.
Employee Morale: Costco’s emphasis on decentralization enhances staff morale by encouraging initiative, innovation, and local decision-making.
Global Presence: Costco’s matrix structure supports its operations in numerous countries around the world, allowing it to adapt to regional markets effectively.
Innovative Approach: Costco’s approach to decentralization fosters an environment where lower-level managers can make swift decisions that align with the company’s overarching strategies.
Flexibility and Adaptability: The matrix structure, with its combination of functional and divisional elements, offers Costco the flexibility to operate efficiently at both functional and regional levels.
Costco’s strategy can be summarized as primarily a selection of high-quality items sold in bulk in warehouses around the US and Canada, with a substantial part of its business focused on selling merchandise at a low-profit margin. Costco also uses a single-step distributionstrategy to sell its inventory before it gets paid to suppliers. Costco generated almost $242.29 billion in revenue in 2023, of which $4.58 billion came from 71 million paid members.
Costco is a large American multinational corporation with a focus on low-cost, membership-only retail warehouse clubs. Costco is the 4th largest retail operator in the world, operating 785 warehouses in 10 different countries. Indeed, it has enjoyed rapid success growing from zero to $3 billion in sales within six years.
Costco runs a high-quality, low-priced business model powered by its memberships that draw customers’ loyalty and repeat purchases. Top institutional investors comprise The Vanguard Group, 8.98%, and BlackRock, 6.76%. Top individual shareholders include Craig Jelinek, Chief Executive Officer of Costco, and Charles T. Munger (Warren Buffet partner and co-owner of Berkshire Hathaway).
The wholesale model is a selling model where wholesalers sell their products in bulk to a retailer at a discounted price. The retailer then on-sells the products to consumers at a higher price. In the wholesale model, a wholesaler sells products in bulk to retail outlets for onward sale. Occasionally, the wholesaler sells direct to the consumer, with supermarket giant Costco the most obvious example.
Costco generated $242.29 billion in revenue and $6.29 billion in profits in 2023, compared to almost $227 billion in revenue in 2022, nearly $196 billion in revenue in 2021, and over $166 billion in revenue in 2020. Costco also generated $5.84 billion in net income in 2022, compared to $5 billion in 2021 and $5 billion in 2020.
Costco generated $4.58 billion in membership revenue in 2023, compared to $4.2 billion in membership revenue in 2022, compared to $3.87 billion in 2021 and $3.54 in 2020.
In a functional organizational structure, groups and teams are organized based on function. Therefore, this organization follows a top-down structure, where most decision flows from top management to bottom. Thus, the bottom of the organization mostly follows the strategy detailed by the top of the organization.
In a flat organizational structure, there is little to no middle management between employees and executives. Therefore it reduces the space between employees and executives to enable an effective communication flow within the organization, thus being faster and leaner.
Project portfolio management (PPM) is a systematic approach to selecting and managing a collection of projects aligned with organizational objectives. That is a business process of managing multiple projects which can be identified, prioritized, and managed within the organization. PPM helps organizations optimize their investments by allocating resources efficiently across all initiatives.
Harvard Business School professor Dr. John Kotter has been a thought-leader on organizational change, and he developed Kotter’s 8-step change model, which helps business managers deal with organizational change. Kotter created the 8-step model to drive organizational transformation.
The Nadler-Tushman Congruence Model was created by David Nadler and Michael Tushman at Columbia University. The Nadler-Tushman Congruence Model is a diagnostic tool that identifies problem areas within a company. In the context of business, congruence occurs when the goals of different people or interest groups coincide.
McKinseyโs Seven Degrees of Freedom for Growth is a strategy tool. Developed by partners at McKinsey and Company, the tool helps businesses understand which opportunities will contribute to expansion, and therefore it helps to prioritize those initiatives.
Mintzberg’s 5Ps of Strategy is a strategy development model that examines five different perspectives (plan, ploy, pattern, position, perspective) to develop a successful business strategy. A sixth perspective has been developed over the years, called Practice, which was created to help businesses execute their strategies.
The COSO framework is a means of designing, implementing, and evaluating control within an organization. The COSO framework’s five components are control environment, risk assessment, control activities, information and communication, and monitoring activities. As a fraud risk management tool, businesses can design, implement, and evaluate internal control procedures.
The TOWS Matrix is an acronym for Threats, Opportunities, Weaknesses, and Strengths. The matrix is a variation on the SWOT Analysis, and it seeks to address criticisms of the SWOT Analysis regarding its inability to show relationships between the various categories.
Lewin’s change management model helps businesses manage the uncertainty and resistance associated with change. Kurt Lewin, one of the first academics to focus his research on group dynamics, developed a three-stage model. He proposed that the behavior of individuals happened as a function of group behavior.
OpenAI is an artificial intelligence research laboratory that transitioned into a for-profit organization in 2019. The corporate structure is organized around two entities: OpenAI, Inc., which is a single-member Delaware LLC controlled by OpenAI non-profit, And OpenAI LP, which is a capped, for-profit organization. The OpenAI LP is governed by the board of OpenAI, Inc (the foundation), which acts as a General Partner. At the same time, Limited Partners comprise employees of the LP, some of the board members, and other investors like Reid Hoffmanโs charitable foundation, Khosla Ventures, and Microsoft, the leading investor in the LP.
Airbnb follows a holacracy model, or a sort of flat organizational structure, where teams are organized for projects, to move quickly and iterate fast, thus keeping a lean and flexible approach. Airbnb also moved to a hybrid model where employees can work from anywhere and meet on a quarterly basis to plan ahead, and connect to each other.
The Amazon organizational structure is predominantly hierarchical with elements of function-based structure and geographic divisions. While Amazon started as a lean, flat organization in its early years, it transitioned into a hierarchical organization with its jobs and functions clearly defined as it scaled.
The Coca-Cola Company has a somewhat complex matrix organizational structure with geographic divisions, product divisions, business-type units, and functional groups.
Costco has a matrix organizational structure, which can simply be defined as any structure that combines two or more different types. In this case, a predominant functional structure exists with a more secondary divisional structure.
Costcoโs geographic divisions reflect its strong presence in the United States combined with its expanding global presence. There are six divisions in the country alone to reflect its standing as the source of most company revenue.
Compared to competitor Walmart, for example, Costco takes more a decentralized approach to management, decision-making, and autonomy. This allows the companyโs stores and divisions to more flexibly respond to local market conditions.
Dell has a functional organizational structure with some degree of decentralization. This means functional departments share information, contribute ideas to the success of the organization and have some degree of decision-making power.
eBay was until recently a multi-divisional (M-form) organization with semi-autonomous units grouped according to the services they provided. Today, eBay has a single division called Marketplace, which includes eBay and its international iterations.
Facebook is characterized by a multi-faceted matrix organizational structure. The company utilizes a flat organizational structure in combination with corporate function-based teams and product-based or geographic divisions. The flat organization structure is organized around the leadership of Mark Zuckerberg, and the key executives around him. On the other hand, the function-based teams are based on the main corporate functions (like HR, product management, investor relations, and so on).
Goldman Sachs has a hierarchical structure with a clear chain of command and defined career advancement process. The structure is also underpinned by business-type divisions and function-based groups.
Google (Alphabet) has a cross-functional (team-based) organizational structure known as a matrix structure with some degree of flatness. Over the years, as the company scaled and it became a tech giant, its organizational structure is morphing more into a centralized organization.
IBM has an organizational structure characterized by product-based divisions, enabling its strategy to develop innovative and competitive products in multiple markets. IBM is also characterized by function-based segments that support product development and innovation for each product-based division, which include Global Markets, Integrated Supply Chain, Research, Development, and Intellectual Property.
McDonaldโs has a divisional organizational structure where each division โ based on geographical location โ is assigned operational responsibilities and strategic objectives. The main geographical divisions are the US, internationally operated markets, and international developmental licensed markets. And on the other hand, the hierarchical leadership structure is organized around regional and functional divisions.
McKinsey & Company has a decentralized organizational structure with mostly self-managing offices, committees, and employees. There are also functional groups and geographic divisions with proprietary names.
Microsoft has a product-type divisional organizational structure based on functions and engineering groups. As the company scaled over time it also became more hierarchical, however still keeping its hybrid approach between functions, engineering groups, and management.
Nestlรฉ has a geographical divisional structure with operations segmented into five key regions. For many years, Swiss multinational food and drink company Nestlรฉ had a complex and decentralized matrix organizational structure where its numerous brands and subsidiaries were free to operate autonomously.
Nike has a matrix organizational structure incorporating geographic divisions. Nike’s matrix structure is also present at the regional and sub-regional levels. Managerial responsibility is segmented according to business unit (apparel, footwear, and equipment) and function (human resources, finance, marketing, sales, and operations).
Patagonia has a particular organizational structure, where its founder, Chouinard, disposed of the company’s ownership in the hands of two non-profits. The Patagonia Purpose Trust, holding 100% of the voting stocks, is in charge of defining the company’s strategic direction. And the Holdfast Collective, a non-profit, holds 100% of non-voting stocks, aiming to re-invest the brand’s dividends into environmental causes.
Samsung has a product-type divisional organizational structure where products determine how resources and business operations are categorized. The main resources around which Samsung’s corporate structure is organized are consumer electronics, IT, and device solutions. In addition, Samsung leadership functions are organized around a few career levels grades, based on experience (assistant, professional, senior professional, and principal professional).
Sony has a matrix organizational structure primarily based on function-based groups and product/business divisions. The structure also incorporates geographical divisions. In 2021, Sony announced the overhauling of its organizational structure, changing its name from Sony Corporation to Sony Group Corporation to better identify itself as the headquarters of the Sony group of companies skewing the company toward product divisions.
Starbucks follows a matrix organizational structure with a combination of vertical and horizontal structures. It is characterized by multiple, overlapping chains of command and divisions.
Tesla is characterized by a functional organizational structure with aspects of a hierarchical structure. Tesla does employ functional centers that cover all business activities, including finance, sales, marketing, technology, engineering, design, and the offices of the CEO and chairperson. Tesla’s headquarters in Austin, Texas, decide the strategic direction of the company, with international operations given little autonomy.
Toyota has a divisional organizational structure where business operations are centered around the market, product, and geographic groups. Therefore, Toyota organizes its corporate structure around global hierarchies (most strategic decisions come from Japan’s headquarter), product-based divisions (where the organization is broken down, based on each product line), and geographical divisions (according to the geographical areas under management).
Walmart has a hybrid hierarchical-functional organizational structure, otherwise referred to as a matrix structure that combines multiple approaches. On the one hand, Walmart follows a hierarchical structure, where the current CEO Doug McMillon is the only employee without a direct superior, and directives are sent from top-level management. On the other hand, the function-based structure of Walmart is used to categorize employees according to their particular skills and experience.
Gennaro Cuofano is a CRO and tech executive who has worked in AI since late 2015, starting with bringing NLP, natural-language generation, voice and chatbot products to the marketing industry. His background is in law and finance: he holds a Master's degree in Law and an International MBA with an emphasis on corporate finance (LUISS Business School and the University of San Diego, 2012), and worked as a financial analyst at a real-estate investment firm in San Diego and as an assistant controller. His work focuses on business model strategy, business engineering and, more broadly, structural analysis: how companies make money, read from their own filings. He created FourWeekMBA and leads research there and at The Business Engineer, his newsletter on AI and business strategy, with over 95,000 subscribers and more than 1,000 published analyses. His writing has also appeared on Entrepreneur, HackerNoon and Search Engine People. Find him on LinkedIn and Substack. See how we source.
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