patagonia discussion
TRANSCRIPT
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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
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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?