Economics of Organization PATAGONIA Case * Introduction Corporate Social Responsibility (CSR) is a broad-based movement in business that encourages companies to take responsibility for the impact of their activities on customers, employees, communities and the environment. Patagonia is a manufacturer of high quality outdoor and adventure sport clothing. Patagonia have found unambiguous ways to couple their products’ function and the brands environmental values.
Their business model raises major sums for environmental causes and their technological innovation reduces the environmental impact of their products. * How Patagonia turned CSR into a competitive advantage ? One important issue for a balanced management has been the willingness of the company to create a profit business but with the desire to respect the environment. We might think that this commitment to the environment is not an internally competitive advantage because it can raise costs and hurt margins. Indeed environmentally-friendly policies are not the most financially savy.
This issue is important because Patagonia’s entire brand and business is associated with preserving the environment. However, externally, this gave Patagonia a competitive advantage because of the brand loyalty it developed. For example, Patagonia’s existing customer base rose in median age to approximately 44 years old in 2002. Externally, this proved to be a significant strategic issue because competition brands like Columbia and North Face were able to attract younger demographics, which represented a significant source of future income.
Secondly, we may state that social responsibility is the corporations response to the requirements of the environment, in the sense that the companies’ own actions and goals should be linked to the common interests and major tendencies of the reference environment. It also gives a competitive advantage to the corporations themselves, helping them ensure a sustainable development.