CALIFORNIA STATE UNIVERSITY, SACRAMENTO

College of Business Administration

MGMT 170 – Fundamentals of Business Strategy

CASE STUDY QUESTIONS

(Case: Lost Arrow Corporation Patagonia: A, B, and C)

1. Please state in (bullet-point format) what the numbers tell us in this case.

VISION
Numbers	Implication
Contribution to social change by donating 10% of profits to causes.

INTERNAL
Numbers	Implication
1986 sales = $13 million.
1989 sales = almost $100 million.
1990 sales = almost $150 million.
30% annual growth in profits 1986 to 1989.
3x head count growth 1984 to 1989.
Inventory up from $12 million in 1987 to $21 million in 1989 (from 50% to 65% of assets).
Long-term debt up from $581 thousand to $6.2 million.

EXTERNAL
Numbers	Implication
Competitors such a L.L. Bean and Land’s End are entering the market with products that are priced at about ½ those of Patagonia.

2. What are the core elements of Lost Arrow’s success from 1957 to 1991?

3. Now turn your attention to the other side of the coin. Evaluate mistakes that the company made and weaknesses and/or threats to Lost Arrow’s future. Keep in mind all “three legs” of the VIE framework.

4. How could Kris and Yvon build LAC into an enduring organization? What specific steps could the company take to preserve its core and stimulate progress? Make sure that your answer includes tangible mechanisms that the LAC management could do.

5. If you were offered the CEO job of this company, would you take it? Why or why not? Are there any prerequisites you would impose before accepting the job?

336 MGMT 170 LOST ARROW CASE