Foundation of Large System Case Study

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Large System: Managing Strategic and Large Scale Systems Change

The objective of this study is to describe Patagonia's organization design or the Star Model and specifically the Galbraith Star Model. This study will assess the alignments among the elements of the design and explain how Patagonia integrates sustainability into its design.

Description of Patagonia's Organizational Design

Patagonia's organizational design is based on Jay Galbraith's 'Star Model', which is characterized by five categories including those of: (1) structure; (2) people; (3) strategy; (4) rewards; and (5) process. (Reinhardt, Casadesus-Masanell, and Freier, 2003, paraphrased) Patagonia is a privately owned company, which provides the leadership with a great deal of freedom since it does not have to answer to a public array of shareholders and investors. Two strategic decisions that were closely linked were addressed by Patagonia executives in 2003. Patagonia designs, markets and distributes high-performance wear for the outdoors. The first decision was centered on whether Patagonia should expand their product base, which included mountain and rock climbing clothing as well as clothing suitable for snow and ice activities including snowboarding, fishing, and other outdoor sporting activities. The question was how much expansion could be undertaken without sacrificing quality and reputation. As well, Patagonia's designs were very innovative enabling the company to charge 20% higher prices than their competitors charged.

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Patagonia hoped to be "a catalyst for social change" while providing an example for other firms in the clothing industry. However, the question of the impact of the company's stand on the environment and the effect on its bottom line was still in question.

II. Assessment of the Alignments Among the Elements of the Design

The entire product line of Patagonia was comprised by eight smaller lines with each representing a percentage of Patagonia's overall sales. Three factors were considered by the company during the design and development phases of its products, including quality, environmental impact, and aesthetics." (Reinhardt, Casadesus-Masanell, and Freier, 2003, p. 2) The search for higher quality informed Patagonia that this could be accomplished through improvements in raw materials, products designs that were better or higher attention to detail in manufacturing of the products.

Patagonia further surveyed world-class climbers and other professional athletes on its products and spends a great deal annually on testing products in the field. The company is highly innovative and has a high commitment to lessening the environment impact of the products and processes of the company. Patagonia further wanted to bring about a reduction in its supply chain and believed that customer demand should be the driver for production.

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