Patagonia Strategy Management : Complete Assessment Answer

h and development of the company is completely secured. It disclose the commitment which is shared by the management team and they believed in the vision of the company and the strategies and activities are both important in the business plan (SMI. n.d.)..

The business logic which is the path of the business plan is fully secured if the company has no financial problems, if the company takes right action regarding the development of the vision, if the company is planning various activities in order to achieve its goal in time. It recognizes the requirement of the company in order to make changes in the business plan along with the business. It is categorized into two parts and these are strategic risk audit and strategic process audit. Strategic risk audit involves risk which is the result of achieving the organizational goal strategically. A strategy process audit is the judgment or deciding the value of the strategic management process as well as creating strategy methodically (Mahlich&Schneider,2013).

Strategic risk audits

Risk-based auditing

It is commonly used by the various corporations. It is not important to imply the strategic risk based auditing, as they focus in their objectives. The strategic risk is commonly used or practiced which is considered as a risk based auditing. There is no need to change for the application of the strategic audit.

Strategic risk project auditing:

It is the planned piece of work. It includes the marked changes in the finance program of an audit for a correct position of an organization for the organization growth and development. It is executed by the current program and by the methods of the project auditing and are mostly used by the IAFs. Moreover these methods are linked with the most involving types of auditing except the formal type of audit. Because of this, the assurance activities are not provided and the other activities are considered as a consultant. In order to audit these projects, the person should have the good knowledge and maximum experience for project auditing with specialization. The concept of strategy and to implement it should be clear. The expectations of IAFs stakeholders should be properly managed which includes that they should not be known about the limitation of internal audit.

 Decentralized strategic alignment

It does not need any changes for its appearance comparing with various activities of IAFs. Internal audit is a set of tools for group management which provides the further assurance on alignment along with the along with strategic decision and warn the organization, if there is any risk. It is not easy for an internal audit to find out that the decentralized strategy has a correct position along with organization strategy. Their relation is not easy to understand as they always required a local initiative which is dependent upon local circumstances.

COSO ERM approach:

It consist the course of action of an audit regarding the objectives and the risk associated with it. For this the judgment is made for the audit work regarding to achieve objectives strategic, operational, financial, compliance. It consist the relevant objectives along with the risk. Audit procedures are based on the relevant information which is addressed by the management for the reduction of various risks.

Strategy process audit

Strategy formulation process auditing

The strategy process audit is appeared in this phase and strategy also. It is most difficult phase. Most of the IAFs has a reservation regarding the formulation of strategic auditing is that it should be decided by the senior management not by the employees or any staff. It is also applicable for the assessment of the content for the right strategy. For adopting the new strategy, a non-executive board member specifies that the internal audit must have the good opinions and knowledge about the company, procedures, IT infrastructure and has the capabilities for performing the work (KPMG, 2015).

Auditing of decentralized strategy

The issues for the process of formulating of strategy are not so strong, when it reaches to decentralized organizational strategy. Because of this the business unit management has shown but not an executive management.

Strategy implementation auditing

It focuses on transferring the company’s strategy into an objective and determines the performances and put them into action for operational plan and budgets. The strategy are created by the management which is treated as ‘given’ through which the program is changed and started the strategic projects on a tactful level.

Strategy process program auditing

It is the form of the procedures and projects which make the strategy which meant that the program and the projects have the direct impact on the strategy. It is similar with the previous organization. It makes the use of the program project auditing methodology.

Strategy evaluation and control auditing

Internal audit organized the evaluated strategies which are done by the company or determine the organizational strategy for an audit. It may take help of the previously two phases of the strategy process for formulating the strategies and to implement it. It focuses on the content and procedures of the strategic decision making (SMI, n.d.).

Goals of Patagonia

Its main goal is to create or make a quality based products without causing any harm and encourage business to give solutions related to environmental problems. After this Patagonia’s begins to find its place and taken away from pitons, the top-most products was facing problems like landmarks climbs. Patagonia’s profit was declining, the next year they broke even. But after that, profits were above the level. The company faces this problems for so many years but Patagonia know that how to make profit at large. Patagonia donates 1% of sales to a environmental non-profit, which cannot generate revenue, but it does. Patagonia’s success is they providing the good quality products and services to the customer. They believe that profit is not a goal, when you do right things profit automatically generates.

Patagonia’s product life cycle initiative

Patagonia implementing the new product lifecycle initiative, which encourage customer consume less and thus generate waste less. PLI is a 4-R e.g., reduces, repair, reuse and recycle. Patagonia encourage its customer to consume less, facilitate the repair of the damaged products, encourage the reuse of products through swap or resale and recycle a product if it could no longer be used

Increase price

If the PLI strategy is adopted, sales volume might decrease. In order to increase revenue, the company should increase the prices of the products. On the basis of the customer’s income, there is no adverse impact for increasing the prices of the products, but they may lose some customers who are price conscious.

Recycling

It is one of the 4-R and a key component of the PLI. By accepting clothes that are beyond repair and recovering reusable components, Patagonia can recycle that component in their own supply chain.

Resale

If the recycle products can reuse, they could also sell that product to other manufacturers. If a color or style was discontinued by Patagonia, but is now used by the north face.

Third party repair services

Patagonia should not bear the burden for repairing the products that is returned. In some cases, an expert is also needed. In other cases third party repair a service is required which manages logistics for shipping and reduces overall expenses.

Charge for repair and recycle services

If Patagonia unable to meet the revenue goal, the company have to charge for services such as repair and recycling.

Customer engagement

The company must launch a strong marketing campaign which includes either incentives or discount for customers who become frustrated. This could occur could occur if the items are lost, or take too long to repair. (Dartmouth,2007)

Referances

Dartmouth.(2007).patagonia-sustainability and the product lifecycle initiative.

Gunderson.H.(2012).Patagonia’s code of ethic. Patagonia strategic management.United States.

KPMG.(2015).Discussion paper strategy- related auditing, retrieved on 12 August 2016 from https://www.iia.nl/SiteFiles/Publicaties/IIA_Bro%20A4%20Strategy%20Related%20Audits%20DEF.pdf

Mahlich.J.&schneider.M.(2013).Patagonia defining the organisation’s strategic direction.

Marcario.R.(2014).You should build a product that last. Environment  the global edge.

Patagonia.(2016).”Build the best product, cause no unnecessary harm”retrieved on 12 August 2016 from https://projectjust.com/brand_patagonia/

RMIB.(2008).Doing well by doing good:why patagonia make a profit naturally,retrieved on 12 August 2016 from https://www.treehugger.com/corporate-responsibility/doing-well-by-doing-good-why-patagonia-makes-a-profit-naturally.html

SMI. (n.d.). Strategy audit – an introduction, retrieved on 12 August 2016 from https://www.s-m-i.net/pdf/Strategy%20Audit%20introduction.pdf