1) In line with the mission statement – to build the best product, cause no unnecessary harm and use business to inspire and implement solutions to the environmental crisis – Patagonia’s values and principals lie at the heart of their corporate strategy. Sustainability is at the center of the business. Its success is based on organization’s high level of commitment and dedication to the environment, being involved in delivering business results with breakthrough ideas and helping to create a better future.
To make this possible, the company has three main areas of concentration, emphasis on quality, environmental impact and innovation. Patagonia’s green business strategy involves integrating it into all the company’s activities and its relationship with suppliers, customers and consumers. Instead of working with random suppliers or distributors, Patagonia demands its business partners to share the same environmental sensitivity and demonstrate it with tangible actions such as using 1% of their revenue in protecting environment.
As for the consumers, the company created a website and campaign through which consumers are advised to exchange and return used products in order to put them into recycling process and helped consumers to own the company values and be an advocate about it on social life. With this value chain Patagonia managed to differentiate itself from competitors and created visible and worthwhile point of differentiation and kept small number of point of parity with its competitors. Please see second page) 2) It is practically the core of the business and the glue that holds the company together. In contrast to the companies who have limited green strategies, Patagonia made its environmental position as the essence of the business and integrated it into every operation of the company from product development to marketing. Along the way, the company stands ready to even sacrifice its topline and bottom line growth in order to achieve its environmental program. )
Currently, Patagonia is growing at 6% in net sales and has a profit margin of 8. 1%. The main barrier that hinders growth is its dedication to quality, innovation and environmental values. As mentioned in the case, the company is able to charge 20% mark-up further to closest competition due to its innovative product line and differentiated brand image. However, the company should emphasize its brand equity bolder than the competitors and increase the perceived value of its products in the consumer’s eye.
This operation will help Patagonia to increase its like-for like growth. On the other hand, company should rely on organic growth as well by being more active in certain countries like the Middle East and Africa and should take advantage of the dormant potential in these countries. The company should grow more than its competitors to gain market share globally and should have better profit margin to feed its reason of existence, creating a better future and 4) The company will be pressured by financial markets more than it currently is.
This pressure from the investors, lenders and shareholders will eventually force the company to question its green strategy over and over again by re-evaluating its value chain of distributors, consumers and customers. The price-up and organic growth options may not be possible for Patagonia to continue further growth, which will eventually force the company to pursue cost cutting options and diverge from delivering best quality products and innovation and will make it less bold in environmental sensitivity. The 4 main objectives of the company are financial, customer related, internal and learning and growth objectives.