Case Study Patagonia

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The Case of Patagonia Company

Patagonia was founded in 1957 by Yvon Chouinard, an avid and renowned outdoorsman.
With the superiority of Yvon’s designs, by the late 1960s Chouinard Equipment had an estimated 80% of the US market for climbing hardware.In the late 1960s Yvon shifted his attention to the sale of quality outdoor clothes. His company continued to grow slowly until 1972 when the clothing line took off.(Merchant,Stead 2012)
We began to grow at a rapid pace; at one point we made Inc. Magazine's list of the fastest-growing privately held companies. That rapid growth came to a halt in the summer of 1991, when our sales crimped during a recession and our bankers, themselves in trouble and up for sale, called in our revolving loan. To pay off the debt, we had to drastically cut costs and dump inventory. We laid off 20% of our work force–many of them friends and friends of friends. And we nearly lost our independence as a company. That taught us a major lesson. We have kept growth – and borrowing – to a modest scale ever since.(Patagonia,2014)

"Rapid growth and maximization of corporate profits were not among Patagonia’s goals. Yvon
Chouinard explained publicly that the only reason he and Malinda had not sold the company was that they were “pessimistic about the fate of the world and felt a responsibility to do something about it.".(Merchant/Van der Stead/2013,pg.342)

1. The objective of Patagonia, Inc. seems not to be to maximize shareholder value. Patagonia company was started by CEO Yvon as an environmentally conscious company with employees who shared those values.
The budget matters were disregarded ,and were not consistent with maximizing shareholder value.
A former Patagonia CEO was quoted as saying:
"Yvon has no respect for banking and accounting people – people who wear coats and ties. It’s…...

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