patagonia-organizational-structure

Patagonia Organizational Structure

Patagonia has a particular organizational structure, where its founder, Chouinard, disposed of the company’s ownership in the hands of two non-profits. The Patagonia Purpose Trust, holding 100% of the voting stocks, is in charge of defining the company’s strategic direction. And the Holdfast Collective, a non-profit, holds 100% of non-voting stocks, aiming to re-invest the brand’s dividends into environmental causes.

DepartmentType DetailsAdvantagesDrawbacks
Product TeamsTeam-Based– Self-managing, cross-functional product teams. Teams include designers, product developers, and marketers.– High collaboration and innovation. – Quick decision-making.– Potential challenges in coordinating across multiple product teams. – Possibility of overlapping responsibilities.
Retail StoresDivisional– Separate divisions for company-owned stores and e-commerce. Each division has dedicated leadership.– Specialization in retail and e-commerce operations. – Efficient management of different sales channels.– Potential variations in customer experience between retail and online. – Challenges in standardizing operations across divisions.
Environmental and Social ActivismFunctional– Functional department focusing on environmental and social initiatives. Functional managers oversee these activities.– Specialization in activism and corporate social responsibility. – Effective management of sustainability efforts.– Potential disconnect between activism initiatives and other business functions. – Challenges in aligning sustainability goals with profit-oriented activities.
Customer ServiceFunctional– Functional department responsible for customer service operations. Functional managers oversee customer support.– Efficient handling of customer inquiries and concerns. – Specialized expertise in customer service.– Limited integration between customer service and other operational departments. – Challenges in ensuring consistent customer experiences across channels.
Supply Chain and SourcingDivisional– Separate divisions for supply chain management and product sourcing. Each division is led by dedicated managers.– Specialization in managing the supply chain and sourcing activities. – Efficient sourcing and production processes.– Potential coordination issues between supply chain and product teams. – Risk of supply chain disruptions affecting production.

Patagonia History

Patagonia Business Model

Key Elements

  • Ownership Disposition:
    • Patagonia’s founder, Chouinard, placed the company’s ownership under two non-profit entities.
    • The structure is designed to align with the company’s values and mission.
  • Patagonia Purpose Trust:
    • Holds 100% of the voting stocks.
    • Responsible for defining the company’s strategic direction.
    • Ensures that the company’s decisions are in line with its purpose and values.
  • Holdfast Collective:
    • A non-profit entity.
    • Holds 100% of non-voting stocks.
    • Focuses on reinvesting dividends from the brand into environmental causes.
  • Mission Alignment:
    • Patagonia’s organizational structure reflects its commitment to social and environmental causes.
    • By involving non-profit entities, the company emphasizes its dedication to its purpose beyond profit.
  • Innovative Model:
    • Patagonia’s structure goes beyond conventional profit-driven ownership.
    • It exemplifies how an organization can embed its values into its ownership structure.
  • Holistic Approach:
    • This structure ensures that both strategic decisions and financial gains contribute to the brand’s mission.
  • Benefits:
    • Enables Patagonia to prioritize its purpose and allocate resources to causes it supports.
    • Demonstrates a unique way to create a lasting positive impact.

Read Also: Patagonia Business Model, Patagonia Mission Statement.

Read Next: ASOS, SHEINZaraFast FashionUltra-Fast FashionReal-Time Retail, Slow Fashion.

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Slow Fashion

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Fast Fashion

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Fash fashion has been a phenomenon that became popular in the late 1990s and early 2000s, as players like Zara and H&M took over the fashion industry by leveraging on shorter and shorter design-manufacturing-distribution cycles. Reducing these cycles from months to a few weeks. With just-in-time logistics and flagship stores in iconic places in the largest cities in the world, these brands offered cheap, fashionable clothes and a wide variety of designs.

Inditex Empire

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With over €27 billion in sales in 2021, the Spanish Fast Fashion Empire, Inditex, which comprises eight sister brands, has grown thanks to a strategy of expanding its flagship stores in exclusive locations around the globe. Its largest brand, Zara, contributed over 70% of the group’s revenue. The country that contributed the most to the fast fashion Empire sales was Spain, with over 15% of its revenues.

Ultra Fast Fashion

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The Ultra Fashion business model is an evolution of fast fashion with a strong online twist. Indeed, where the fast-fashion retailer invests massively in logistics and warehousing, its costs are still skewed toward operating physical retail stores. While the ultra-fast fashion retailer mainly moves its operations online, thus focusing its cost centers on logistics, warehousing, and a mobile-based digital presence.

ASOS Business Model

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ASOS is a British online fashion retailer founded in 2000 by Nick Robertson, Andrew Regan, Quentin Griffiths, and Deborah Thorpe. As an online fashion retailer, ASOS makes money by purchasing clothes from wholesalers and then selling them for a profit. This includes the sale of private label or own-brand products. ASOS further expanded on the fast fashion business model to create an ultra-fast fashion model driven by short sales cycles and online mobile e-commerce as the main drivers.

Real-Time Retail

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Real-time retail involves the instantaneous collection, analysis, and distribution of data to give consumers an integrated and personalized shopping experience. This represents a strong new trend, as a further evolution of fast fashion first (who turned the design into manufacturing in a few weeks), ultra-fast fashion later (which further shortened the cycle of design-manufacturing). Real-time retail turns fashion trends into clothes collections in a few days or a maximum of one week.

SHEIN Business Model

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Types of Organizational Structures

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Organizational Structures

Siloed Organizational Structures

Functional

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In a functional organizational structure, groups and teams are organized based on function. Therefore, this organization follows a top-down structure, where most decision flows from top management to bottom. Thus, the bottom of the organization mostly follows the strategy detailed by the top of the organization.

Divisional

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Open Organizational Structures

Matrix

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Flat

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In a flat organizational structure, there is little to no middle management between employees and executives. Therefore it reduces the space between employees and executives to enable an effective communication flow within the organization, thus being faster and leaner.

Connected Business Frameworks

Portfolio Management

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Kotter’s 8-Step Change Model

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Harvard Business School professor Dr. John Kotter has been a thought-leader on organizational change, and he developed Kotter’s 8-step change model, which helps business managers deal with organizational change. Kotter created the 8-step model to drive organizational transformation.

Nadler-Tushman Congruence Model

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McKinsey’s Seven Degrees of Freedom

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Mintzberg’s 5Ps

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COSO Framework

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TOWS Matrix

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Lewin’s Change Management

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Organizational Structure Case Studies

OpenAI Organizational Structure

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OpenAI is an artificial intelligence research laboratory that transitioned into a for-profit organization in 2019. The corporate structure is organized around two entities: OpenAI, Inc., which is a single-member Delaware LLC controlled by OpenAI non-profit, And OpenAI LP, which is a capped, for-profit organization. The OpenAI LP is governed by the board of OpenAI, Inc (the foundation), which acts as a General Partner. At the same time, Limited Partners comprise employees of the LP, some of the board members, and other investors like Reid Hoffman’s charitable foundation, Khosla Ventures, and Microsoft, the leading investor in the LP.

Airbnb Organizational Structure

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Airbnb follows a holacracy model, or a sort of flat organizational structure, where teams are organized for projects, to move quickly and iterate fast, thus keeping a lean and flexible approach. Airbnb also moved to a hybrid model where employees can work from anywhere and meet on a quarterly basis to plan ahead, and connect to each other.

Amazon Organizational Structure

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The Amazon organizational structure is predominantly hierarchical with elements of function-based structure and geographic divisions. While Amazon started as a lean, flat organization in its early years, it transitioned into a hierarchical organization with its jobs and functions clearly defined as it scaled.

Apple Organizational Structure

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Apple has a traditional hierarchical structure with product-based grouping and some collaboration between divisions.

Coca-Cola Organizational Structure

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The Coca-Cola Company has a somewhat complex matrix organizational structure with geographic divisions, product divisions, business-type units, and functional groups.

Costco Organizational Structure

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Costco has a matrix organizational structure, which can simply be defined as any structure that combines two or more different types. In this case, a predominant functional structure exists with a more secondary divisional structure. Costco’s geographic divisions reflect its strong presence in the United States combined with its expanding global presence. There are six divisions in the country alone to reflect its standing as the source of most company revenue. Compared to competitor Walmart, for example, Costco takes more a decentralized approach to management, decision-making, and autonomy. This allows the company’s stores and divisions to more flexibly respond to local market conditions.

Dell Organizational Structure

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Dell has a functional organizational structure with some degree of decentralization. This means functional departments share information, contribute ideas to the success of the organization and have some degree of decision-making power.

eBay Organizational Structure

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eBay was until recently a multi-divisional (M-form) organization with semi-autonomous units grouped according to the services they provided. Today, eBay has a single division called Marketplace, which includes eBay and its international iterations.

Facebook Organizational Structure

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Facebook is characterized by a multi-faceted matrix organizational structure. The company utilizes a flat organizational structure in combination with corporate function-based teams and product-based or geographic divisions. The flat organization structure is organized around the leadership of Mark Zuckerberg, and the key executives around him. On the other hand, the function-based teams are based on the main corporate functions (like HR, product management, investor relations, and so on).

Goldman Sachs’ Organizational Structure

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Goldman Sachs has a hierarchical structure with a clear chain of command and defined career advancement process. The structure is also underpinned by business-type divisions and function-based groups.

Google Organizational Structure

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Google (Alphabet) has a cross-functional (team-based) organizational structure known as a matrix structure with some degree of flatness. Over the years, as the company scaled and it became a tech giant, its organizational structure is morphing more into a centralized organization.

IBM Organizational Structure

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IBM has an organizational structure characterized by product-based divisions, enabling its strategy to develop innovative and competitive products in multiple markets. IBM is also characterized by function-based segments that support product development and innovation for each product-based division, which include Global Markets, Integrated Supply Chain, Research, Development, and Intellectual Property.

McDonald’s Organizational Structure

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McDonald’s has a divisional organizational structure where each division – based on geographical location – is assigned operational responsibilities and strategic objectives. The main geographical divisions are the US, internationally operated markets, and international developmental licensed markets. And on the other hand, the hierarchical leadership structure is organized around regional and functional divisions.

McKinsey Organizational Structure

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McKinsey & Company has a decentralized organizational structure with mostly self-managing offices, committees, and employees. There are also functional groups and geographic divisions with proprietary names.

Microsoft Organizational Structure

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Microsoft has a product-type divisional organizational structure based on functions and engineering groups. As the company scaled over time it also became more hierarchical, however still keeping its hybrid approach between functions, engineering groups, and management.

Nestlé Organizational Structure

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Nestlé has a geographical divisional structure with operations segmented into five key regions. For many years, Swiss multinational food and drink company Nestlé had a complex and decentralized matrix organizational structure where its numerous brands and subsidiaries were free to operate autonomously.

Nike Organizational Structure

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Nike has a matrix organizational structure incorporating geographic divisions. Nike’s matrix structure is also present at the regional and sub-regional levels. Managerial responsibility is segmented according to business unit (apparel, footwear, and equipment) and function (human resources, finance, marketing, sales, and operations).

Patagonia Organizational Structure

patagonia-organizational-structure
Patagonia has a particular organizational structure, where its founder, Chouinard, disposed of the company’s ownership in the hands of two non-profits. The Patagonia Purpose Trust, holding 100% of the voting stocks, is in charge of defining the company’s strategic direction. And the Holdfast Collective, a non-profit, holds 100% of non-voting stocks, aiming to re-invest the brand’s dividends into environmental causes.

Samsung Organizational Structure

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Samsung has a product-type divisional organizational structure where products determine how resources and business operations are categorized. The main resources around which Samsung’s corporate structure is organized are consumer electronics, IT, and device solutions. In addition, Samsung leadership functions are organized around a few career levels grades, based on experience (assistant, professional, senior professional, and principal professional).

Sony Organizational Structure

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Sony has a matrix organizational structure primarily based on function-based groups and product/business divisions. The structure also incorporates geographical divisions. In 2021, Sony announced the overhauling of its organizational structure, changing its name from Sony Corporation to Sony Group Corporation to better identify itself as the headquarters of the Sony group of companies skewing the company toward product divisions.

Starbucks Organizational Structure

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Starbucks follows a matrix organizational structure with a combination of vertical and horizontal structures. It is characterized by multiple, overlapping chains of command and divisions.

Tesla Organizational Structure

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Tesla is characterized by a functional organizational structure with aspects of a hierarchical structure. Tesla does employ functional centers that cover all business activities, including finance, sales, marketing, technology, engineering, design, and the offices of the CEO and chairperson. Tesla’s headquarters in Austin, Texas, decide the strategic direction of the company, with international operations given little autonomy.

Toyota Organizational Structure

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Toyota has a divisional organizational structure where business operations are centered around the market, product, and geographic groups. Therefore, Toyota organizes its corporate structure around global hierarchies (most strategic decisions come from Japan’s headquarter), product-based divisions (where the organization is broken down, based on each product line), and geographical divisions (according to the geographical areas under management).

Walmart Organizational Structure

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Walmart has a hybrid hierarchical-functional organizational structure, otherwise referred to as a matrix structure that combines multiple approaches. On the one hand, Walmart follows a hierarchical structure, where the current CEO Doug McMillon is the only employee without a direct superior, and directives are sent from top-level management. On the other hand, the function-based structure of Walmart is used to categorize employees according to their particular skills and experience.

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