Session 5 · Internal Analysis & Resource-Based View
A retailer publicly discouraging its own best-selling product on Black Friday should be a disaster. Instead it deepened customer loyalty and sales grew. Something about Patagonia's internal resources made that possible for them and nearly unthinkable for a competitor to copy.
First Principle Question
We reject the perfect-competition assumption that all firms in an industry are identical. Why do two outdoor-apparel companies, selling similar jackets at similar prices, earn very different returns? The resource-based view's answer: because they are unique, non-tradeable bundles of resources — and the "Don't Buy This Jacket" campaign only works if the underlying resource (decades of environmental-credibility capital) is real, not just a marketing claim you can copy this quarter.
The Campaign, Taken Apart
The resource: decades of consistent behavior
"Don't Buy This Jacket" (2011) only landed because it followed decades of Patagonia actually repairing customers' old gear through its Worn Wear program, donating 1% of sales to environmental causes since 1985, and publishing its own supply-chain footprint. The ad was a single execution of a resource built over 40 years — a rival running the identical ad copy tomorrow, without that history, would be correctly read as a stunt.
Collis & Montgomery's five tests
Run Patagonia's "environmental credibility" resource through the five tests from the assigned reading: is it hard to copy (yes — takes decades)? Does it depreciate slowly (yes)? Who captures the value — Patagonia itself, since it's privately structured. Can it be substituted (imperfectly, by other B-Corps)? Is it truly superior — reflected in premium pricing customers accept willingly.
New Tool
Name a resource your own firm (or a firm you know) has. Answer Valuable → Rare → Inimitable → Organized in sequence.
First Principle Question