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Patagonia Discussion

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    Patagonia

    Corporate Environmental Strategy

    Professor Doug Cerf

    Donald Bren Graduate School of Environmental Science and Management

    Corporate Environmental Management (ESM 281)Winter 2009

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    Facts/Issues

    Patagonia can command price premiums from its affluentcustomers

    Explore the question of non-market strategy and the costs

    and benefits of social activism in the firm Non market strategy is strategy with respect to activists, regulators,the media and other actors who do not have direct economicrelations with the firm but whose behavior may affect the firmsopportunities

    How has Patagonias positioning as a champion ofenvironmental preservation contributed to shareholdervalue?

    Is Patagonia selling a public good as part of their product?

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    Patagonia Activity System

    Page 20 of TN

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    Questions

    1. Evaluate Patagonias strategy. 2. How important to Patagonias strategy is

    its environmental position?3. How fast can Patagonia grow? How fast

    should it grow?4. How would Patagonias strategy differ if

    the company were publicly held?

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    Patagonias strategy

    Pillars of Patagonia strategy Quality Design Environment Core customer

    Increase customer willingness to pay (aboveclothing retailer specialist average)

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    Patagonia Strategy

    Why does Patagonia own stores? How doesthis enhance customer willingness to pay?

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    Patagonia Strategy

    Why is Patagonia the most innovativespecialist? How does this enhance customerwillingness to pay?

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    Patagonia Strategy

    Why is Patagonia the only specialist to owna fabric lab? How does this enhance

    customer willingness to pay?

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    Patagonia Strategy

    Why does Patagonia build long-lastingrelationships with suppliers? How does this

    enhance customer willingness to pay?

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    Patagonia Strategy

    Why does Patagonia sub contract production?

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    Patagonia Strategy

    Why does Patagonia offer the all-encompassing ironclad guarantee? How

    does this enhance customer willingness to pay?

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    Patagonia Strategy

    Why does Patagonia have 90% lessmerchandise defects than their competitors?

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    Patagonia Strategy

    Why is Patagonia is Patagonia located inVentura and Reno?

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    Patagonia Strategy

    What is the role of Chouinard in thestrategy? How does he enhance the

    willingness to pay?

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    Patagonia Strategy

    What do the numbers tell us?

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    Patagonia Strategy

    Is the environmental positioning an integral part of the strategy?

    Three possible answers: Its integral and helpful to the companys

    positioning and profit. Its integral, but it is a tax from a profitability

    standpoint It is not integral, its irrelevant

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    Patagonia Strategy

    Are Chouinards ideas applicable more generally? Does the idea of selling public goods apply to

    publicly held companies selling other products tomiddle income customers?

    Can a company do this in other markets thanoutdoor wear?

    What are the product or market characteristics that permit the success of this kind of strategy?

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    Is the strategy successful?

    I may be a dirtbag, but I am a rich dirtbag Chouinard quote not mentioned in the case

    Arguments that the strategy is successful Arguments that the strategy is not successful What threats do they face?

    How should they grow? What should Chouinard do?

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    Patagonia and Wal-Mart

    Compare and contrast Customer willingness to pay

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    Conclusion

    Is Patagonia successful because orenvironmentalism or quality?

    Has Patagonia helped to define quality withenvironmentalism?


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