Question 1
Patagonia makes use of the concept of strategic control as one of the main tools for monitoring and correcting the strategy as well as performance in the industry. The company offers environmentally friendly products and focuses on changing the behaviors of the employees. It also has a strong organizational culture that emphasizes environmental conversation. There is also a strong work ethic. The organizational culture and work ethics are two of the examples of how the company makes use of behavioral control (Dossa, 2015). The effective controls used by the company means that there is reduced unethical conduct amongst the employees.
The company’s corporate governance plays a major role when it comes to strategic management. Corporate governance helps in forming relationships between the stakeholders involved in the company’s operations. These stakeholders include the company’s shareholders, the suppliers of the various materials, the current board of directors, and the company’s management. For instance, the company allows the board of directors to have the legal protection to consider social as well as an environmental benefit over the shareholder returns. The implication is that the shareholders cannot sue the company for not trying to maximize the profits. The aim is to ensure that there is an alignment of the interests of the company’s stakeholders in the process of conserving and protecting the environment.
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Question 2
Patagonia is one of the companies that have been able to achieve growth by being profitable and minimizing their ecological expenses. The company has based its business model on the need to minimize the environmental impact along its value chain. The company’s value proposition is sustainability, which acts as the source of competitive advantage and the basis of the differentiation strategy (Dossa, 2015). The company has always positioned itself as one of the suppliers of superior quality products that have little impact on the environment.
The supply side of the business is usually made of those activities and relationships that occur along the value chain while providing finished goods and creating value. The company has successfully created value through the process of creating integrity in all its products and the product’s performance. There is also effective signaling of customers through warrants and replacements. The company also uses quality inputs and links its value chain with that of the suppliers.
Patagonia also creates a social and psychological factor through advertising. This includes educational messages, environmental grants, campaigns, and the green benefits for the employees. This differentiation has increased the willingness of the consumers to buy quality products from a company that cares for the environment (Dossa, 2015). The consumers are also willing to pay more for the company’s products. The company has an aspiration of building a sustainable business model that is not only profitable but also one that solves the environmental crisis. The success of the company comes from its ability to distribute these values to the suppliers, competitors, employees, and external environment.
Question 3
When the company is developing new products, it has to consider innovation and environmental impact. The company makes business decisions based on the impact that they have on the environment. The company aims to reduce its environmental impact at every level of production. For example, in 1996, the company made an expense switch to the use of organic cotton. The company was able to remain committed to its decision despite the loss it had in profit in after the change. One of the main propositions is sustainability distributed to all the stakeholders such as suppliers and employees (Dossa, 2015). The company’s board of directors is free to make decisions based on the need to maintain sustainability at the expense of profit. The implication is that the shareholders cannot sue the company for not working towards maximizing the profit. The company’s focus is on reducing the impact on the environment by using materials and production processes that have minimized the impact on the environment. The company is also strict on how suppliers conduct themselves with regards to environmental conservation. All the suppliers have to ensure that they provide the company with quality products such as cotton. The implication is that that the proposition of sustainability is distributed across the company’s value chain.
Question 4
The world faces numerous economic downtowns as well as increasing stakeholder pressure. This has led to businesses embracing the complexity and look for ways to attain effectiveness. Patagonia has been developing sustainability-driven innovation. It has enabled the company to overcome some of the conflicts in the economic and social aspects of the company. The company’s competitive advantage comes from its ability to develop quality products based on innovation, and quality products. Patagonia is one of the companies that have been able to pursue economic, social, as well as environmental objectives while at the same time creating shared values (Dossa, 2015). The company has effectively been able to balance the business and social impacts on the market.
When implementing a business-level strategy, the company operates with a differentiation strategy in mind. The company creates and sustains a competitive advantage through positioning itself as a company that focuses on environmental conservation and the provision of quality products. The brand image of the company and the innovative product designs attract the customers to its products, which creates a loyal customer base. The company has effectively been able to implement good prices based on the materials used in the production process.
The company also uses cutting-edge technology in making its products. This helps in sustaining an effective differentiation strategy in the marketplace. For example, the company’s products have wind and water resistant capabilities that help in giving the consumers an effective outdoor experience.
Question 5
Based on Whole-Pyramid Strategic Thinking, the company has been able to generate income through its strategies. Patagonia has undergone major changes in the past that have made it possible for the company to raise the prices of its products and the consumers are willing to pay more for their products. For instance, in 1996, the company made a switch in the type of cotton used (Dossa, 2015). This led to the company’s sales decline in the first two years, but despite this, the company did not change its commitment to environmental conservation.
The strategy used by the company has been to use a product lifecycle that challenges the marketing principle of maximizing the consumer repeat purchases. The focus of the company has always been to sell less and make more. Selling less of the physical products means that their use is extended through reuse and repairs. To make more, the company aims to charge more through the process of differentiating its products through quality as well as value addition. The value addition happens by adding environmental benefits to the products by recycling and reducing the use of materials. Reduction of consumption happens through the extension of its model on reduce, repair, reuse, and recycle. For example, the company works closely with the retailers to recycle some of the tattered clothes that consumers cannot use. The product lifecycle is in line with the positioning adopted by the company.
References
Dossa, Z. (2015). Patagonia’s Sustainability Strategy: Don’t Buy Our Products. International Institute for Management Development
