PATAGONIA CASE

 leader of environmental responsible business - 1% to environmental causes

 make the company more socially responsible

history
 started from Chouinard passion and desire to make stronger, better climber equipment
 just to pay the bills and go climbing
 Patagonia: mountainous region in Chile and Argentina
 during 90s recession, Patagonia sales still grew

business philosophy
 business has the potential to alleviate economic, social, environmental problems
 responsible business
 focus on the all the individual movements
 applied important lessons he learned by climbing —> risk free decisions, study the conditions
 MISSION: build the best product, cause no necessary harm, and use business to inspire and implement
solutions to the environmental crisis
 private company —> could pursue better environmental sustainability
 it was difficult to find a CEO that grows with the company
 Chouinard had a decisive role in the company - visionary of the company
o responsible for new ideas
o his friend Shehan translated his vision and executed them
 2000: target goal of 10% annual growth in sales for the next 5 years

 Competitors: North Face, Marmot Mountain, mountain hardware, ArcTeryx

 Product line - 4 products
o sportswear (47%)
o technical outerwear
o technical knits
o hard goods
 Gross margin 50%-55%

 3 fundaments:
o quality —> simplicity, functional, multifunctional. ONLY VIABLE, EXCELLENT PRODUCTS,
MULTIFUNCTIONAL (wear for every occasion). 100 k annual spent on field-testing
o environmental impact —> reduce environmental damages at every step of production process.
Used organically produced cotton (higher prices and limited availability)
o innovation —> 3 million annually in R&D. develop more durable fabrics or making zippers 100/
recyclable

 customers: median age of 38 years

Production and logistics

 choice of business partners driven by values
 expects dealers and suppliers doing business with it to join one percent for the planet and cooperate on an
environmental project
 Bluesign tech
 1/3 of the costs came from manufacturing. 2/3 from raw materials
 85% of manufacturing in north America- cheaper labor costs
 ironclad guarantee: repair, refund, replace any product

Sales
 4 sales channels: Wholesale, retail, catalog, internet

Marketing
 less than 1% spent  against using its environmental position as a marketing tool to encourage customers
to increase consumption

HR
 all the employees have to share the company values. Selected them according to the values of dirtbag, and
environmental issues
 environmental benefits to employees
 the company is like a family
 less than 5% turnover

ENVIRONMENTAL PHILOSOPHY
5 ideas
1. lead an examined life
2. clean up our own act
3. do our penance
4. support civil democracy
5. influence other companies
 almost 4 million donations in 2009 (1% of the planet)

PRODUCT LIFECYCLE INITIATIVE

 unique environmental initiative
 mutual contract between company and customers: reduce, repair, reuse, recycle
 buy only essential products and repair them as many times as possible to lengthen their lifetime
 online swap market
 profitability and growth were still important
 increased the repair department capacity
 further investment in R&D
 also wanted to repair other brands’ products

the environmental commitment gave the company its competitive advantage but also it obligated the company to
share broad sustainability practices

it is impossible to get down to 0 environmental impact, but Patagonia tries to do its part in reducing it as much as
possible