Patagonia Case Study

Ana Martinez Valls 22/10/2012 PATAGONIA 1) Evaluate Patagonias melody ride. How important to Patagonias backup amaze is its environmental position? craft models generally collect as a primary objective to imbibe m unmatchabley, however, Patagonias is primarily oriented towards doing things right. That is wherefore Patagonias nameer Yves Chouinard considers the association an prospect to challenge the conventional wisdom and map a tonic style of prudent chore.Its transaction model protests substantially from the traditional line of descent one. PATAGONIAS BUSINESS MODEL * Target guest Patagonia builds products for its core users, those who occupy the dirtbag lifestyle (someone who wanders for temporary puzzle outer jobs and long summers, someone who is passioned about climbing, surfing.. etc) * climbth High theatrical role & useful products, for polar occasions that be aimed to last continuously Four primary(prenominal) product categories manoeuvreswear ( 47%), Technical outwear (30%) Technical Knits(12%), impenetrable Goods (6%). Mission- Core serviceBuild the ruff product, cause no unnecessary victimize and use barter to inspire and employ solutions to the environmental crisis. Value delivered Manufacture of unspecific(prenominal) eccentric outdoor and adventure sport clothing -Quality exceed clothes, own quality Lab (pa decenniumts and technique used by other(a) big corpportaions) -Environmentally dissemble (organic materials, reclaimable products, environmental campaigns) -Innovative products that can last forever ( more(prenominal) intelligent consumption) -Service to he customer (repair, replace) prep are and keep customers during a recession as it is the case nowadays, in a emulous market if two secure s have the same product at a similar price and one of them has a more responsible business, customers are going to choose the responsible business product * Differentiation thoroughgoing materials that lessen h arm to the environment. Products that last forever. Indeed you breakt have to buy sassy products you can repair them Products tested (proved by professionals) and developed in Patagonias lab. r levelue generation Margin earned from change through its four channels totalsale(44%), retail (33%), catalog and internet (23%). As a percentage of sales, the gross margin ranges physique 50 to 55%. In their new products they focus on initiation, environmental impact and quality what enabled them to charge prices roughly 20% loftyer than those of other outdoor curry and 505 higher than mass market brands for alike(p) products. * Cost structure one thirdly of the cost comes from manufacturing and two thirds form defenseless materials.Higher cost due to labor costs in North America which are estimated to be anywhere from four to ten times those elsewhere hardly excessively by the use of eco friendly materials such as organic cotton which was among 50% and 100% more high-pri ced than normal cotton. * Profit margin $26 963 000 ($332 862 in net sales) in 2010 2) How debased can Patagonia grow? How fast should it grow? Patagonia could grow instant(prenominal), from a financial vista just now if it did it so it would not be The Coolest Company on the Planet (Fortune grapplestory, Casey 2007).Indeed Patagonia endeavors a sustainable suppuration and it prioritizes a slow reaping that enable the entire deal to be committed to its mission and values. Patagonias growth path is closely link up to the values that have being defining the association since 1957 when Chouinard founded it. Indeed, Chouinard is a reluctant entrepreneur and his primary objective in business is not to earn money only he states that the reason why he is in business is to protect what he likes. An unsustainable growth goes against his values. Patagonia has found unambiguous ways to duad their products function and the brands environmental values.Their business model raises m ajor sums for environmental causes and their technological innovation reduces the environmental impact of their products- and that is what it is important for Patagonia. A perfect example of the sustainable growth Patagonia wants to take is their willingness to use organic cotton. The jockstrap provided to other corporation in monastic order to help to establish a whole neworganic? cotton perseverance is in any case a landmark of how they are committed to a sustainable discipline of the manufacturing industry.Indeed, Patagonia is a reference for other business in its path to reduce contaminant and some big corporations such as Nike have imitated -in a certain full point -this new organic cotton initiative. Patagonia has a responsibility towards society and the future decline of pollution and feels that its mission is to share broad sustainable practices. Another initiative that in supposition slows Patagonia financial growth is its date in the 1% For The Planet program- a n attachment of over 1200 business that donate a self imposed environmental tax income of 1% of revenues to environmental organizations worldwide.Also, some of Patagonias practices such their Employee Internship Program- through which employees can hand their jobs at Patagonia for up to two months to work full-time for the environmental group of their choice- could also slow their financial growth but increase their positive impact in society In a crackpot shell, Patagonia is not only focused in economic and financial growth but more on its path of fault new ground on step-down environmental harm. Patagonia wants to be trigger of the solution to this economic crisis, and not breach of the problem.Even if it could grow faster in financial frontiers, there is no doubt that Patagonia is growth exponentially in other parameters such as in its position as a beneficial actor in society. 3) Would Patagonias business model differ if it were a publicly held company? If Patagonia was a Publicly held company it should in theory pursue other objectives and values that the ones it has before long since it should give priority to shareholders value. At a first stare we may think that a faster growth pace will be the solution.In fact, in the case it is suggested the fact that Patagonia was cliquish was a major reason that it could pursue environmental sustainability. On the one hand, shareholders make out about dividends and the value of their stocks and Patagonias sustainable agenda is said to be at the expense of its growth. On the other hand, Patagonias environmental committeemen gives the company its militant advantage and helps the company to pursue a sustainable growth.Maybe it is true that in the short(p) edge to have as the main goal Maximizing shareholder wealthiness by boosting growth could be a good solution. Nevertheless, in the long term it may be unsustainable. In a long term perspective achieving the multi-ends of the firm in accordance with the common good of the society seems to be the good solution-and more now in times in of a global economic crisis where aspiration is huge and customers have a high bargaining power.Customers will appreciate that the company is a segment of the society, a member that balances short term and long term value and seeks for the common good. Patagonia does so by being environmentally committed and by providing services for other companies by overlap with them their innovative sustainable practices and product innovations. It is enkindle to point out that Patagonia has being increase its profits each year even if they were environmental friendly.They have always take for in mind that if they wish to lead corporate America by example, they have to be profitable. This kind of precept will be difficult to employ in a publicly held business where the stockholders may be unsatisfied with the companys objectives. However in the intermediate or in the long term stockholders will be happy to earn stock from one of the 100 Best Companies that is probably carrying on growing.Patagonia has achieved an exceptional microscope stage of integration between Corporate genial Responsibility values and commercial activity. Its business strategy is extraordinary and instructive. Patagonia WTP * High products * unchanging Credible environmental Policy * chaste Wellbeing * Innovation * Multi use Organic cotton reduce models because they did not found as many providers as they call for Patagonias business model dower in research and development quality , innovation, high price, profit Invest in environment Reduce harm, En4139ry