Key Elements of Patagonias Strategy - Case Study Example

Patagonia Patagonia Strategy Three Key Elements of Patagonia Strategy The three key elements in Patagonia strategy are making it possible to develop the best products for its consumers, avoid unnecessary harm and use the business to solve environmental problems (Reinhard, Ramon, & Hyun 3). The quality of materials used, its efficiency and cost-effectiveness are the determinants of best products. The business focus of not causing unnecessary harm is pegged on the fact that the products are to be tested to prevent accidents or other harms among the consumers. The business aimed to solve environmental problems through its processes, inputs and outputs. It aimed to be eco- friendly in all its activities. Importance of Sheahan’s assertion The CEO asserted that "the most important part of the mission statement was to provide and implement solutions to the environmental crisis." The assertion was important since the business relied on the environment. It was, therefore, not only a show of social responsibility but also to ensure sustainability of the business itself. It was also a show that the business was giving back to the community through a more comprehensive focus (Reinhard, Ramon, & Hyun 7). 2. Strategy Support (a) Product Lines and Product Development It emphasizes quality through ensuring that the core users have products that are functional, simple and multifunctional. For example, it developed a ski jacket that could be used during boat sailing and winter rainstorms. The models were also improved to ensure that the products have distinct functions and are more reliable. For example, the products went through a field- test to determine its functionality, performance, fabric, performance and design before being released on the market. On environmental impacts, it was committed to ensure its products have least environmental impacts possible. For example, it ensured that the dye used for its products was a less negative impact on the environment, and the packaging was also reduced. It also engaged in the production of its organic cotton to prevent the conventionally grown cotton environmental impacts. On innovation, it invested $3 million each year to promote development and research (Reinhard, Ramon, & Hyun 4). The investment ensured that the goods produced were more ecologically friendly. (b) Production and Logistics It ensured that its suppliers meet its standards of environmental and social responsibility and quality. For example, in 2007, it signed a textile standard on to Bluesign Technologies relating to finish chemical and dye’s environmental impacts. It invested more on its raw materials source. For example, it outsourced approximately 85% of its raw materials outside North America to balance the ecosystem (Reinhard, Ramon, & Hyun 5). It also ensured that customer satisfactions are met. For example, it got the plan with Ironclad Guarantee to ensure that the products that do not meet the customers’ satisfaction are either replaced, refunded, or repaired. (c) Sales and Marketing The company used its 52 worldwide retail stores to pursue environmental initiatives like awarding the local environmental organizations. It also used its catalog to advocate for environmentally friendly activities. Besides it integrated educational messages to its consumers, such as the need for reduced consumption (Reinhard, Ramon, & Hyun 6) (d) Human Resources It ensures that the employees were selected using their environmental concern, the companies values, and entrepreneurial spirit mostly as opposed to business or academic credentials. The company spread the environmental values among its workers, for example, surf conditions were always written at the headquarters board to ensure efficiency. It also conducted its activities outdoors, linking the staff to the environment. For example, it conducted its meetings by the ocean or near mountains and had a nature travel to Patagonia, Chile in a weekend (Reinhard, Ramon, & Hyun 7). 3. Patagonia’s Success Evaluation Patagonia has been outstandingly successful in environmental matters. The good performance in environmental matters made it recognized, and its story be run by famous magazines like Fortune and Forbes. The company donated 1 % of its revenues on environmental matters. The balancing of the environmental concerns and profitability made it maintain an annual growth of approximately 6 %. Improvement of the revenue to 10% is a delicate balance if Product Lifecycle Initiative is to be implemented (Reinhard, Ramon, & Hyun 1). On the other hand, the initiative might increase the company’s popularity that can translate into more sales even though it might not meet the 10% set target. The company’s consumption restriction initiative will reduce the sales thus reducing the profit margin. Business- wise, the environmental concept will make the competitors have an upper hand in the industry. 4. Product Lifestyle Initiative Product Lifestyle Initiative is a good concept for environmental matters, but it is not good for business. The concept is not consistent with the company’s growth. Recycling, reusing, reducing and repairing of the old garments will translate to low sales of the company’s products (Reinhard, Ramon, & Hyun 1). Low sales mean that the business will not be able to meet its financial demands. 5. Applicability of Chouinard’s Ideas Chouinards idea is applicable in the general sense even though in his case, he tends to be overambitious (Reinhard, Ramon, & Hyun 1). The ideas will ensure that the business plan and implement its corporate social responsibility. If the company were a public entity, Patagonias strategy would differ from the annual target of sale. As a public entity, it would focus more on meeting the needs of the society as opposed to making profits. 6. Sustainability of the Strategy The overall strategy is not sustainable since the business will have to collapse in the long run courtesy of the environmental concern. The threats faced by the firm include reducing in sales, profit margin, and more competition in the market. Chouinard should drop some of the environmental initiatives integrated into the business. For example, a drop in the organic cotton farming will ensure a great reduction in the cost (Reinhard, Ramon, & Hyun 21). The Project Lifecycle Initiative should be used as an income generating activity as opposed to a free service. He should charge on the recycle, reuse, and repair services offered. Besides, he should drop the ‘reduce’ part of the initiative and let the customers consume the products to the maximum. Work Cited Reinhardt, Forest, Ramon Casadesus and Hyun Masanenell. “Patagonia.” Harvard Business School 711.20 (2010): 1-29. Print. Read More