Business Case Study: Patagonia
Environmental sustainability plays an integral part of Patagonia’s business strategy. Patagonia is founded based on Chouinard’s vision to “do the right things” rather than focus only on the profits.1 His own experience as a mountain climber has made him realized the importance of protecting the environment. This has inspired him to bring in sustainable life-style into his business at Patagonia. This is also in line with Patagonia’s mission statement “build the best product, cause no unnecessary harm, and use business to inspire and implement solutions to the environmental crisis.2
In terms of business strategy on product development, Patagonia …show more content…
Based on Stakeholder identification theory3, the potential primary stakeholders are customers, communities and investors. Customers will benefit from PLI because the products they buy can sustain a longer lifetime. This also means that product price is driven down if distributed across a longer period of time. As demonstrated in Exhibit 74, PLI could benefit the environment of local communities especially areas close to the production …show more content…
If you don’t follow the herd, you may risk losing out especially in this competitive climate e.g. Kodak’s inability to cope with new technology. Also, there is a huge pressure from environmental groups such as NGOs to impose regulation on companies to go-green.
Besides, organization characteristics such as level of internationalization, firm size and reputation also play a huge role in influencing executives to adopt environmental management practices. There is an apparent gap between “objective” and “perceived” pressures, resulting in plant managers adopting practices by the parent companies.11 Both institutional and organization characteristics affects each other, which in turns influence management to adopt the practices.
Apart from implementing practices to meet environmental regulations, some firms volunteer to take on additional environmental practices because they see this as an opportunity to create a competitive advantage and for more business partnerships e.g. Patagonia partnered with eBay for its swap market. Just like Patagonia, other firms may adopt this Sustainable Value Framework to drive shareholder value.