Business Model and Overall Strategy Patagonia’s value proposition is based on embedding environmental sustainability in every business decision it makes. Its core strategy is differentiation by focusing on durability and quality of products whilst minimising its carbon footprint and use of synthetic ingredients (what). The business model revolves around developing innovative technologies and influencing competitors and suppliers alike to adopt environmentally-friendly processes (how). Commitment to these causes while maintaining quality has allowed it to develop a loyal customer base amongst high income groups and athletes (who) and significantly increase customer’s willingness to pay.
Another weakness of Patagonia has to do with an extremely high premium price that they charge for their products. The specific focus on the environment limits many options in the production cycle, therefore making the production costs outrageously high, which forces the company to charge a high price for it’s products. In an interview with GreenBiz last year Patagonia declared that they are planning to limit growth of the company in order to serve the environment better (Ryan, 2017). This means that Patagonia purposely decided to produce less products and generate less revenue in order to better complete their mission statement that focuses on going green rather than making more revenue. This decision disables Patagonia from becoming a larger company, which means the consumer awareness of the company will not be as great as it could’ve been if the company focused on the revenue. Patagonia’s annual revenue was 570 million last year compared to their competitor North Face who generated over 2 billion (Ryan, 2017).
Patagonia has been teaming up with environmental protection agencies since their business started. They have donated money to many environmentally and socially responsible companies and nonprofit organization. These groups use the grant money to take down dams, restore rivers and forests, protecting threatened plants and animals, supporting local organic and sustainable agriculture and many other ways to help preserve the environment. They donate a lot of money to help protect the environment which is why many customers choose their business over cheaper competitors who don’t try to protect the environment. Patagonia also donates to their own
3. Competitive advantage: Another key criterion is that of competitive advantage. Fashion industry is highly competitive and Burberry is facing competition from all brands i.e. from lower end to higher end, and from lifestyle to fashion. Therefore, maintaining competitive edge in this market is very important and hence, we would take this factor into account in reaching the final recommendation.
Robert Swan once said “the greatest threat to our planet is the belief that someone else will save it.” Two companies that understand this concept are Patagonia and Nike. How they address these issues regarding sustainable business practice vary, however. Both have made it their mission to deliver excellence and make the best quality products within their industries, Patagonia focussing more on outdoor active wear, while Nike is more sports oriented. Part of this process has been developing products from sustainable sources. Patagonia, for example, actively took a stand against chemical intensive cotton in 1994, and has since switched to less harmful means of organic cotton within all their cotton-based products. They are even going the extra
Patagonia determines how its possible ventures will be both business practical and environmentally friendly by turning their company into a eco friendly environment. It clearly states this in their mission statement. “ Build the best product, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis” Their main focus is going “green” to help the environment but also using business as a
Patagonia began to reduce their role as a corporate polluter. They began donating regularly to smaller groups working to save and restore the natural habitat, and with that they also began to recycle paper waste and conducted an intensive search for paper that had a higher percentage of recycled content for their catalog. They also researched and established the use of recycled, reused and less toxic materials in their construction of projects. The company began to grow even more rapidly after these changes were
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• Female • 18-25 years old • Single • College education • Part-time job • Aware of quality & price • Regular shopper • Sociable • Enjoys nightlife • Active in the community • Stylish/Fashionable • Full-time Student V. Consumers’ Perceptions Our consumers’ perception of the brand, J.Crew, usually entails the style they advertise in commercials and television. J.Crew can be seen as a style with practical women in finely cut business suits and overcoats. When most people visualize the company they visualize classy and professional clothing. The problem is they are not seen as the standard, like Gap, for instance, they lack the basic necessities to attract young college students. J.Crew just wants to maintain its professional status, but attract a younger crowd who are establishing their position in the real world applying and interview for jobs. When walking into the store, consumers see bright lights and a variety of fabrics and styles. The dresses range from simple around the house to dressy date-night dresses. The one-thing consumers’ can expect to see when entering J. Crew is the variety of clothing. Consumers’ can perceive clothing brands based on what they see on
4. Differentiation, provide customers with quality environmental friendly products and quality customer service Management Controls 1. Patagonia uses personnel and cultural control to apply this strategy. For personnel control, the company hires people who are as passionate about environment as Yvon.
Strategically, a company is made up of multiple components that are geared towards their success but can also lead to their downfall. By having a strategy, companies like Patagonia are able to create and sustain a competitive advantage in the corporate world (Burrus, 2003). As a high end American sportswear
1. Strategy: Patagonia’s product differentiation as their strategy, through CSR, which involves sustainability, philanthropic initiatives, moral obligations, and reputation. They operate in ways to secure long-term economic performance by avoiding short-term behavior that is socially detrimental or environmentally wasteful. They do this all while keeping their quality high and having their core consumers in mind.
Many firms are learning that being environmentally friendly and sustainable has numerous benefits. (O.C Ferrell, Fraedrich, Ferrell, 2015). This could enable them to increase goodwill from various stakeholders and also save money in the long term. This will mean that they are being more efficient and less wasteful of resources, which will enable them to be more competitive by satisfying stakeholders. The CEO of
The idea of running a for-profit business implies operating at the lowest cost, growing financially,and maximizing financial returns to stockholders. A commitment to the environment can raise costs and hurt margins, environmentally-friendly policies are not cheap.