Patagonia Case Study

2390 WordsApr 25, 201210 Pages
| 2012 | | PATAGONIA CASE STUDY | Table of Contents PART 1 Discuss the management control system in the Patagonia Company. Explain and discuss the nature, context, evolution, elements, processes, strengths, weaknesses/problems of the management control system at Patagonia (including a critical evaluation of the Workbook Process). Page 3 PART 2 Would you recommend to Patagonia’s management that they continue with or discontinue the Workbook process? Explain your reasons and make recommendations for any changes needed. Whether to enhance the existing process or to replace it? If you recommend continuing the process, what would you replace it…show more content…
Demand always exceeded supply in the earlier decades so financial measurement control was not considered important as there was a constant supply of money. Control was people orientated and behavioural in nature. There was little bureaucracy and an open system was encouraged. Senior management shared the same office space as everyone else and people were encouraged to participate, ask questions and provide feedback. There were frequent fortnightly open forums held by management where staff could participate. Everybody was valued and people were expected to contribute. The company delivered an incentive scheme and rewarded staff with pooled retained profits. On one incident the employees rejected and returned an $80,000 bonus scheme as they felt the distribution of it was unfair. The company did admit to having difficulty with measuring rewards in line with performance as so much of the company’s objectives were not financial in nature and therefore more difficult to measure. The temporary slump in sales in the early 1990’s prompted a new focus on the bottom line. The managers of Patagonia used personal controls to rectify the problem. Hiring professional managers with the expertise in financial control was required. The company was in the midst of a recession, with more competitors and employees who were frivolous with

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