Patagonia

Statement of the need for change

Environment preservation has always been in the DNA of Patagonia. Everything they do take this aspect into consideration, from raw material producer to the final products.

They don’t claim to have no impact on Nature (which denote a certain level of wisdom and humility), but they do spend a lot of time and money to make sure they leave as little print as possible.

That approach, while extremely praiseworthy, is also very challenging.

Indeed, it gives you a lot of additional constraints to deal with, in top of all the classic challenges every business encounter.

What’s even more challenging is the fact that they’re the only one to play with those self-imposed rules: they donate 1% of their revenue to environmental causes; they won’t use a technology that unlock important features to remain competitive if it uses harmful chemical products; and they encourage their customer to buy what’s really necessary, and nothing more.

The question is, how Patagonia can better reconcile the economic pressures and sustainability with its environmental agenda and commitment.

Business Environment

The competitors of Patagonia include multi billions dollars’ companies such as Nike and V.F. Corporation. When those companies target a very broad customer range and are focusing on volume and massive advertisement campaigns, Patagonia focus on a specific segment of the market.

Their average consumer has a median age of 38 years and an average household income of $160,000. They offer very high end products, but more importantly, they bring a sense of community. When a customer buys a Patagonia product, it’s not just for the product itself, he does it because he belongs to the community.

Market

In 2010, Patagonia owned less that 1% of the market. However, the company has been growing consistently over the last years.

The market is still in a growing stage. That can be explained by the emergence of the China and South America markets.

The risk of seeing the market declining is extremely low as it responds for a fundamental need.

Organization

Patagonia has three main missions:

• Make as little impact as possible on the environment.

• Convert the others companies to adopt the same environmental charter.

• Target a 10% annual growth in sales for the next five years

Diagnosis

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