Patagonia Case Study
Key Strategic Issues (Why Important / Summary of Internal / External Analyses)
1) Balancing Commitment to Business with Commitment to Environment
A key issue facing management was balancing the company’s desire for environmentalism with its existence as a for-profit business. The idea of running a for-profit business implies operating at the lowest cost, growing as rapidly as financially feasible, and maximizing returns to financial stockholders ( I think it should be stockholder since it is financial return). A commitment to the environment can raise costs and hurt margins because environmentally-friendly policies are not the most financially savvy. This issue is important because Patagonia’s entire brand and
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This is practice enables Patagonia to make decisions with positive environmental effects.
Attracting Younger Demographic without Alienating Existing Aging Customer Base
Patagonia has refrained from focusing on attracting the next generation customer for fear of diluting the brand and chasing fashion trends. We recommend that Patagonia explore the opportunity to either:
1) Create a subsidiary and a new brand that tailors specifically the “dirtbag” customer in the ages of 21-30.
2) Create a new product line that appeals to the previously mentioned demographic. In order to avoid cannibalization of sales, Patagonia should ensure that the new line has that same “dirtbag” ethos but should just appeal to the younger generation. Patagonia should then focus on transitioning the younger generation’s demand into the classic style as they get older.
- For example, the products should maintain all the functionality of the Patagonia system (Capilene base layer, Synchilla over that and breathable outerwear on top) but there is a perceived style difference between the two product lines.
3) Maintaining Quality while reducing Turnaround Time and Costs
1) In order to reduce costs, Patagonia should enter into agreements with more suppliers to allow for more competitive bidding for supplier contracts.
2) In order to cut down on
During dissection, carried out in the anatomy laboratory, we found an absent right internal carotid artery (RICA) with an extremely rare branching pattern. The specimen consists of a brain from a male cadaver with the absence of the right internal carotid artery.
It\ 's five years later, and sales have reached a plateau. The product is clearly in the maturity stage. What should you do to increase sales?
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
“Build the best product, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis.” Patagonia's unique mission statement shows what they stand for and proves to competitors that their products will always be high quality without harm to the environment which is very important to the target market that the brand sells to. With a mission statement this bold consumers know that they are buying products from a company that cares which is rare to find because how competitive the market is. What propelled Patagonia into the limelight as a premier outdoor clothing brand was its high quality and sustainably produced line of products. Patagonia was the leading company to pave the way in waste reduction. Patagonia's iconic design and high tech materials allowed for the brand to gain significant market share amongst consumers.
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.
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
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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.
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.
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
While Patagonia is a good role model, I think there are many other companies that are environmentally friendly. For example, Ikea has around 700,000 solar panels to power its facilities. They also purchase “close to 50 per cent of [their] wood from sustainable fosters” (Viles, Aaron) along with many other things. Ikeas goal is to be able to return as much energy back into the power grid as it consumes. (Howard,
I think the key fact was that Patagonia decided to focus on its customers to make a difference in the world; they are a company that is a member of several environmental movements. They are well known around America, Europe and Japan. The critical issues that were presented are that the company did not have an up to date software system. This did not help as many industry-specific software tools were not integrated, so employees had to enter information several times (Microsoft, 2010). The company had finally decided to update their business technology with a new system called Enterprise resource planning (ERP). Although Patagonia was a well-known company, in 1991, with the US economy having a recession, Patagonia had slow sales that created
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.
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
There Is a similar relation among the clothes. Several customers shop there based on the quality and prices as well as the features associated with the products. An advantage of the store is that it has a wide product mix and various offering in different categories and all these can be located at one place. This attracts a wide variety of customers. In line with their positioning of offering quality, trendy products, the brand is consistently updating its product line. The brand does not focus on innovation but rather on always leading trends. In relation to the product life cycle, clothing has a short life span from the first to last stage as tastes change easily. For this reason, it is important to constantly anticipate consumer tastes and preferences prior to launching a product so as to retain and possibly build customers loyalty. It is also necessary to develop a successful marketing strategy to display product offerings.