Patagonia Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Patagonia Case Solution

Business Strategy

Patagonia has carried out its operations with the focused differentiation strategy for the business. It allocates product that provides environmental safety and the customers of the Patagonia are also able to buy products at premium prices that company offers.Patagonia is leading the high end of the outdoor apparel industry. There are four main categories of the products provided by Patagonia, they are Sports Wear, Technical Knits, Technical Wear, and Hard goods.

Value Chain of Patagonia

Information Technology

Patagonia invests$ 3 million to its research and development process annually. These researches involve maintenance of a laboratory to initiate tests; for example, to test the raw materials. Through the research procedures, engineers at Patagonia were able to formulate durable products and they were able to design 100% recyclable zippers.Through the technological advancement, Patagonia has incorporated numerous patents in the designs. Recycling procedures are also a part of its technological development. It has developed a recycled polyester fleece known as Synchilla, moisture-wicking polyester fabric known as Capilene, and chlorine-free wool for the increased insulation.

Logistics and operations

Patagonia has developed its suppliers by driving off values rather than commercial uses. In order to maintain its suppliers, Patagonia has held its own quality standards and the responsibility of environment. The reason for making its suppliers join the supply chain activities of Patagonia was to make its suppliers participate incorporate social responsibility to some extent. It is also involved in the project of Blue sign technologies to reduce the hazards of finished chemicals and dye.Manufacturing contributes to one-third of its costs whereas two third of its cost is associated with raw materials.

Patagonia had 41 suppliers in 2010. 85% of its outsourcing facilities are established outside North America. It has to tolerate significant cost of labors in those facilities. Moreover, the cost of buttons and zippers is high. Consequently, a significant raise in the products was estimated for its products, which was 10-15% greater than its peers.

Patagonia offers ironic guarantee or replacement, repair and refunding of its products, if customers are not satisfied by them; this costs Patagonia approximately $35,000 annually. The company allocates return rate of approximate% for its wholesale business,whereas, it allows 12.9% for its direct business. Both businesses are operating lower than the entire industry encompasses.

Marketing and sales

Marketing and advertisement estimations remain 1% of the sales of Patagonia. It spends less on advertisement than its competitors. The company however has established channel of sales and the social media activities, as the communication channels with its customers. Along social media channels, Patagonia has standardized the company’s website adequately.

It usually emphasizes on educational messages for its customers.Patagonia avoids incorporating marketing strategies involving environmental position of the company as a tool to convince customers to buy more. The company receives free publicity from media. For example, the press release published production of Synchilla Fleece in 1994 that was developed by recycled bottles of soda. Moreover, American Express Members Project also requested Chouinard to appear in a one minute video,which depicts history of Patagonia from the start.

Sales and distribution channels of Patagonia involve four major channels. These channels are wholesale and incorporate 44% of the sales of Patagonia, retail accounts for 33% of the sales, catalog &internet channels contribute 23% of the sales.

Human Resource

The corporate reflects ethics of Patagonia. The employees recruited for the company are usually dirtbag. They are the individuals who are passionate about environmental well-being and also exhibit spirit of entrepreneurship. The building of company it self is environmental friend,it includes energy efficient lighting, solar panels that are efficient and safe for environment along with natural cooling and heating systems. .........................

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