Patagonia Case Study PDF

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Patagonia Case Study...

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Patagonia Case Study Agenda This case study is an in depth look into the sustainable clothing company Patagonia. This study will provide a background to Patagonia’s success and practices, and provide insight into three key questions about how the company has and continues to succeed: 1. How have they balanced sustainability and profitability in their product selection? 2. How can they continue to push sustainability going forward? 3. How can they ensure greed never overtakes ethics in company management? Background Patagonia is one of the leading companies in outdoor gear for activities such as rock climbing, hiking, fly fishing, and skiing. Their top of the line gear is sold at top of the line prices for outdoor enthusiasts, all the while focusing on protecting our planet Earth. The founder and former CEO Yvon Chouinard started the company in hopes that his commitment to the environment would be translated into a company. Using a utilitarian management style, Chouinard grew his company to what it is now, gaining the respect of people from all over with his vision. Current CEO Rose Marcario has taken Chouinard’s visions and continued to implement them every day. She has helped Patagonia partner with various companies and activists, started a $35 million fund to create and install solar panels, and stated that “I hope that other companies that are interested in having a positive impact will look at [Patagonia] as a model” (Schermerhorn & Bachrach). The company follows four core values that represent their triple bottom line focus. The first is to build the best product possible using durable materials that are also healthy for the environment. Second, cause no unnecessary harm, which has patagonia working towards limiting

light emissions in stores to changing the kind of dye used in their clothing. Third, use business to protect nature. Patagonia has decided to use their popular brand as an example for others to follow and a media for others to learn how to help. Finally, their fourth core value is not bound by convention, as they are always seeking new and innovative ways to help the planet, use less waste, increase the quality of products, and teach others. Discussion Patagonia has a history of putting sustainability ahead of profits. But must also face everyday business realities and the need for operating capital. Patagonia needs to decide which products to offer so the outcome will be both business profitable and environmentally friendly. Patagonia has found a balance between profitability and sustainability by using a differentiation strategy to distinguish themselves from the competition. It is important to understand that the cost of the apparel or outdoor item is not as important to Patagonia as good quality is. They have positioned themselves as very high quality and high prices, but not compromising on this strategy and maintaining their pledge for sustainability has earned them the reputation they have today. Patagonia has been using cutting-edge technology in developing their products to offer top quality while staying environmentally friendly. Many Patagonia jackets and pants feature wind and water resistant technologies to give their customers the best experience imaginable. Patagonia’s technical systems are always connected into the conditions of the environment, which gives Patagonia their uniqueness and makes it extremely hard for competitors to imitate. For Patagonia they recognize that they are not perfect, but as a company they are transparent about that and actively try to make positive changes. Patagonia’s new mission statement is, “we’re in business to save our home planet.” They are planning to make positive changes to our planet and from a business view they are more focused on saving the planet than

making a profit. By doing this it will help build up their brand name as well as their products. Planning to focus more on the environment helps their clothing and products stand out from the competition. Problem Solving Patagonia has gotten to their success today by a collection of key actions that further a social purpose of sustainability while staying financially profitable. A crucial aspect of a new sustainability agenda needs to continue the things Patagonia has done to get here such as allowing employees to volunteer under paid leave, and their self-imposed ‘environment tax’ of 1%. However, this agenda is intended to drive Patagonia’s sustainable future not just celebrate its past. The company will need to continue the practices that give it their reputation and success, but will also have to innovate new ways to push their positive environmental impact. The first part of this agenda should be a yearly review of all company practices to ensure continued sustainability and avoid potential bad press. It was a review like this that caught the use of synthetic fibers as well as how harmful cotton production is to the environment. More reviews and checks will result in more knowledge and bigger impact, as well as accountability. Now that Patagonia is a large company, they have the power to make much larger impacts given their resources and profitability. The second part is building new projects and innovations that push sustainability to other sections of the world. The solar panel fund was a great idea that has a positive impact. Patagonia could do funds like these for things like sustainable textile manufacturing. Where they use their knowledge and resources to help other companies to produce in a more environmentally-friendly way. We also think they should do a new collection of clothing that focuses on different core environmental problems. For example, they could make 3 unique designs, one that focuses on ocean contamination, one for trees and forests, and one for

coral reefs. If someone purchases the ocean contamination design, it results in a pound of garbage removed from the ocean, and so on for the other designs. This would be not only a new product line and marketing opportunity, but it covers a variety of causes and allows people to choose what they want to contribute towards. Further Research Patagonia was faced with a dilemma when management commissioned an external audit of the environmental impact of their four major fibers the company uses. To their surprise, cotton had more of a negative impact on the environment than either of the other three fibers. Negative impacts included “destructive soil and water pollution, unproven but apparent health consequences for field workers, and the surprising statistic that 25% of all toxic pesticides used in agriculture are used in the cultivation of cotton.” Instead of sticking with the cheaper original source, Patagonia decided to source a more expensive organic fiber. Even when Patagonia could have chosen the cheaper option, they decided to go with the more expensive, low environmental impact, organic fiber. Companies such as Volkswagen have responded differently to ethical dilemmas. In 2015, Volkswagen was accused of installing a “defeat device” in diesel engines that could detect when the vehicle was being tested for emissions, allowing the vehicle to change performance accordingly to improve results for the test. Volkswagen was faced with a dilemma to either release a vehicle that did not abide by emission regulations and make a profit, or not release a new vehicle until technology was created to allow the vehicle to run normally as well as meet emissions standards. Sadly, Volkswagen chose to make a profit instead of protecting the environment. By making this decision, it is clear that Volkswagen’s leadership values profit over ethics and doing what is right. This decision also

cost Volkswagen $30 billion and a drop in value after the company admitted to cheating emissions tests (Riley, 2017). While Volkswagen made this poor decision to make money, they lost more than they could have imagined trying to fix it. Patagonia has avoided dilemmas like this because it’s in their code to put the environment before profits and that is executed and prioritized from the top down. Final Recommendations As Patagonia continues their success of preserving the positive environmental values of their company, they should be maintaining innovations that can further push their impact in new ways. They should start their sustainability agenda by keeping up with a yearly review that is on top of their production practices, ensuring that each and every production process of Patogonia clothing are mere reflections of what they hold true in their value statements. The second part of a new agenda should include ambitious, innovative plans to push sustainability and positive environmental impact to new areas. As a large corporation they are in a position to do this through new product lines, spreading awareness through social media and helping other companies through funds like their solar panel project.

References Riley, C. (2017). Volkswagen’s Diesel scandal costs hit 30 billion. Retrieved from https://money.cnn.com/2017/09/29/investing/volkswagen-diesel-cost-30-billion/index.html. (n.d.). Core Values. Retrieved from https://www.patagonia.com/core-values/

Schermerhorn, J. R., & Bachrach, D. G. (2017). Exploring management. John Wiley & Sons, Inc....