Patagonia's Strategic Management Analysis

This assignment delves into the strategic management of Patagonia, a leading outdoor lifestyle clothing company. It examines both internal factors like strengths and weaknesses, as well as external influences such as political, economic, socio-cultural, environmental, technological, and legal (PESTEL) forces. The analysis includes assessing Patagonia's performance within the industry and identifying future opportunities and threats. The assignment concludes with recommendations to mitigate potential risks and enhance the company's strategic position.

STRATEGIC MANAGEMENT
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Executive Summary
Strategic management is an important function regarding the organisational performance. It is related
with the management of resources in a systematic way that helps the organisation to meet its
organisational objectives. This study has presented a detailed study on strategic management of
Patagonia. This includes different perspectives in this regard. An analysis of external factors related
with the industry of the outdoor clothing has been presented in order to determine strategic
conceptions in this context. Internal analysis of Patagonia has presented the strategic movement and
required development of the organisation. It also examines the strategic perspectives of the
organisation with the help of the analysis of Porter’s five forces. In order to perform the organisational
performance Patagonia is required to redesign their organisational strategies and a recommendation
has been provided in this study.
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Table of Contents
Introduction..............................................................................................................................................4
Body.........................................................................................................................................................4
Critical Analysis of external environment as well as competition of the industry of outdoor clothing
industry....................................................................................................................................................4
Competition of different industry............................................................................................................6
Porter's competitive forces.......................................................................................................................6
Critical discussion of Patagonia’s competencies and resources to gain competitive advantages...........7
Critical evaluation of Patagonia’s mission statement..............................................................................8
SWOT analysis and recommendation Patagonia.....................................................................................9
Self-Assessment Survey........................................................................................................................11
Conclusion.............................................................................................................................................12
Reference List:.......................................................................................................................................13
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Introduction
Patagonia is an organisation that deals in clothing industry. An American company offers outdoor
clothing. This study is intending to present strategic management of the organisation. This will
include different perspectives of the organisation in the context of the industry. Certain factors are
related with the performance of this industry. An analysis of the external factors related with the
performance of this industry will help to comprehend the situation in the context of both the clothing
industry as well as Patagonia. In order to achieve organisational growth and development Patagonia
requires certain analysis of its competencies along with its resources. This will also help the
organisation to achieve significant competitive advantages. Mission statement of an organisation
depicts the organisational objectives. Hence, this study is intending to present a critical analysis of the
organisational objectives of Patagonia and its impact towards achieving growth and development. The
learner will present an analysis of internal factors related with the development and growth of
Patagonia. Thus, the study is intending to analyse and evaluates the strategic functions of the
management of Patagonia in the context of outdoor clothing industry.
Body
Critical Analysis of external environment as well as competition of the industry of
outdoor clothing industry
Political Factors  Market nature
 Government Regulations
Economic Factors  Employee wages
 Discrimination of employee salary
 Economic fluctuation
Socio-cultural Factors  Demand of the consumer
 Different market factors
Technological Factors  New Innovations
 Resource management
Environmental Factors  Changing environment
Legal Factors  Labour law
 Minimum wages
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 Health and safety regulation
 Child labour
 Right of the employees
Market nature of US has been influenced by approach of the government. While, this market has the
capitalistic nature, they also entertained an economic system that is free market oriented. Government
plays a minimum role in this context. On the other hand, government of US has introduced several
legislations regarding the clothing industry. This also influences the performance of the industry. A
major factor related with the outdoor clothing industry is the discrimination with the wages of the
employee. As stated by Locke et al (2013, p. 539), wages of employees have been raised to 16
percent, employees of this industry have faced 69 percent reduction through 2012. This suggests the
level of discrimination faced by the employees of the clothing industry and this certainly put impact
on the organisational performance in this industry. According to Cucculelli et al.(2014, p. 1499),
certain economic fluctuation because of recessions is also an important factor regarding this industry.
This factor is related to employee motivation and organisational sustainability. Economic downfall
also influences the purchasing power of the customers. Hence, the organisations are required to adjust
their organisational policies in order to maintain their sustainability.
Choice of the customers is ever changing and this is continuing with the change of time. This change
is eventually affecting the organisational performance. These changes are subjected with the ages of
the customers along with their sizes and different seasons. Hence, this also influences the production
methods. Changing demands of the market is responsible to change the design of the product.
Customer’s demands are also changing based upon different factors including environmental changes.
Hence, change of environment forces to redesign the product as this change the demand and sense of
the people regarding their clothing. Advance technology has influenced the production strategy and
performance of the organisation. It has introduced automated machinery that put impact on the rate of
production, design and quality. Even advanced technology requires human resource to control the
system. Employee training and sustainability in technology is also required in order to get benefits if
modern technologies in the clothing industry. It is also related with the management of resources and
raw material, especially in the crisis period to continue production. Several legal reforms are related
with the performance of the clothing industry. This counts wages of the employees along with over
time to work, child labour issue, employee right act and health and safety regulation regarding the
health of the employee (employeerightsact.com 2017). In order to perform in profitable way,
organisations of clothing industry are required to follow those legal reforms in an attentive way.
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Competition of different industry
Based on the characteristics of the market different industry has different attributes that boost up the
competitions within. In the context of outdoor clothing industry, cost and customer is the main factors
that determine the level of performance and competitions. Customers are free in this industry to
choose the product according to the personal choice. This is a clear sense of conflict in the context of
pharmaceutical industry. There the customers have not much option but to select the prescribed
product. Organisations within clothing and food and beverage industry are required to provide
products according to the demand of the customers. They are required to consider the customer
relevant factors in order to develop or change the design of the product. On the other hand,
pharmaceutical industry has the freedom to determine the product. They are required to consider the
influence of the product. While determining the price of the product, clothing and food and beverage
industry is forced to consider customers preferences and their purchasing power, while
pharmaceutical industry is not subjected with this condition as this industry offers product related
with the emergency service. In general, competitions in clothing and food and beverage industry is
related with the customers’ requirements, while in context of pharmaceutical industry, it depends on
the efficiency of the product.
Porter's competitive forces
Bargaining power of the suppliers is one the major factor that determines the level of competition
faced by different organisations within the industry. As suggested by Dobbs, (2014, p. 41),
availability of suppliers is the regulating factors of this power and this is a weak power in the context
of the clothing and food industry. There is numerous suppliers hence, the organisations are free from
such force. On the other hand, in context of other industry, this force turned out in other way. For
example, bargaining power of the suppliers is the strong force in pharmaceutical industry as the
organisations within this industry has limited option regarding their raw materials and resources.
According to Porter, and Heppelmann, (2014, p. 71), another important factor is the bargaining power
of the customers. Pharmaceutical industry is free from such challenges and this is a weak force for
this industry. On the other hand, organisations of clothing and food industry are required to consider
this force as strong factor as this determine the organisational policies. Trends of these industries are
determined based upon the customer's choice.
Threats of substitutes is another factor which is considered as strong force in the perspective of both
industries as there are many substitutes for the customers regarding the service or product offered by
the organisations within this industry. In the context of outdoor clothing, Helly Hansen, Mammut
Sports Group and VF Crop are such organisations. In context of food and beverage industry,
McDonald's and Domino's are the major option for the customers.
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Threats of new entrants are also a strong force for the organisations of all industries. Difference
factors are responsible to determine the competition level among the different industry.
Critical discussion of Patagonia’s competencies and resources to gain competitive
advantages
Resources:
There are two types of resources regarding the competencies of the organisation. These are tangible
and intangible resources. Tangible resources suggest physical assets of the organisation. This includes
land, equipment, vehicles, inventory, furniture, machinery, stocks and cash of the organisation. €60 m
is the organisational turnover for the European section of Patagonia. The organisation deals in
different countries and this suggests the large amount of intangible resources of the organisation. In
the context of UK, the organisation has presently 140 outlets. On the other hand intangible resources
suggest nonphysical assets of the company including goodwill of the organisation, patents, franchises,
trademarks and copyrights. As Patagonia deals within the online business domains, domain names
and different computer, software is the intangible resource of the organisation. Permit, licensing
agreements, secrets of the trade, blueprints and manuscripts of the organisation is the intangible
assets.
Capabilities:
Organisational capability to compete other organisations in order to achieve sustainability and growth
is an important factor. This is also considered important function regarding competencies of the
organisation. Patagonia is successfully dealing in different countries for long period. They are
performing until 1973 and this suggests the capability of the organisation to compete successfully.
The organisation have complete €60 m in the context of European market and also suggesting that it is
one fifth of the total turnover of the organisation in the context of global market.
Core competencies:
Core competencies suggest the level of the organisation regarding its market place. Organisation
could find competitors based upon their performance as competition always rise at same level. Hence,
core competitors suggest the level of the performance. Based on the core competencies, the
organisation is required to determine the organisational strategies that help to earn significant
competitive advantages. The North Face of VF Corporation is the core competitor of Patagonia. They
have $31 billion market capitalisation (vfc.com 2017). It has been recorded that the organisation is
more successful than Patagonia in the context of European market. In order to seek competitive
advantage over The North Face, Patagonia is required to develop their product in more efficient and
attractive way. This is the benefits of competitions.
Competitive Advantages:
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Competitive advantage is the major factor regarding the growth of the company. Patagonia has been
performing for long period since 1973 and this creates goodwill for the organisation. They have
numerous shops in different geographical areas. They have 140 outlets in UK only
(patagoniaworks.com 2017). On the other hand, the organisation is intending to expand their
market. They are already selling their products in Spain, Munich, Milan and Dubai. This suggests the
level of competitive advantages for the organisation. This creates a great value for the brand and
expands the goodwill of the company. Based upon this the organisation could determine their policies
that could help the organisation regarding their sustainability and development.
Strategic Competencies:
Strategic competencies suggest the strategic approach of the company regarding the competence and
core competitors. In order to win competitive advantages, organisations are required to consider the
competitors and level of competencies they are subjected to. In the context of Patagonia, expansion of
the business, recycling strategy are the major strategic competencies of the organisation.
Critical evaluation of Patagonia’s mission statement
Mission statement of Patagonia suggests different approach of the organisation regarding their
business. The organisation encourages their customers to their products to those people who are
looking for it. This creates an additional place in the market and increase the market base of the
organisation. Mission statement of the organisation is to create the best quality product for their
customers, reduce the level of unnecessary harms during organisational performance, apply the
business in the large context to inspire people and solve the crisis in the environmental situations
(patagonia.com 2017). This suggests the large context of the organisational performance. Reducing
the level of unnecessary harms and solve the environmental crisis is helpful for the organisation to
increase the goodwill of the organisation that influence the market base of the company. Application
of the venture to inspire people suggests the intention of the organisation regarding the larger context
stands for the CSR of the company. Best quality products also help the organisation to increase the
market value and earn competitive advantages. Hence, the mission statement of the organisation is
suggesting the organisational policies in the context of larger scope.
SWOT analysis and recommendation Patagonia
Strength Weakness
 Quality products
 Environment friendly practices
 Minimum incentive for customer loyalty
 Limited high performance finishes
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 Process of manufacture
 Low turnover of employee
 Less fashionable outfits comparing to the
competitors
 High price of the product
Opportunities Threat
 Development in offline expenditure
 Enhancement in environmental
activities
 Expansion of target market
 Increasing competition
 Changing activities
 Ageing target market
SWOT analysis of Patagonia suggests the potential strengths of the organisation along with
its weaknesses. This suggests that the organisation offers quality product to the customers,
which is the major strength of the organisation as the customers are looking for quality
products. Eco -friendly approach of the organisation is also an advantage of Patagonia. On
the other hand, price of their product remains always at high level and this suggests the
weakness of the company. It is important to offer products to the customers related with their
purchasing power. Patagonia takes limited initiatives towards the customer loyalty. This is a
major weakness of the organisation. Patagonia is intending to expand their target market and
this could be an additional option for the organisation regarding the expansion of their
business. Rising competition in the outdoor lifestyle clothing market is the major threat for
Patagonia.
The organisation is required to consider these factors while determining the organisational
policies. In order to achieve certain competitive advantages, the organisation is required to
put emphasis on the weaknesses while mitigate the potential threat. High price of the product
is a major weakness for the organisation. Thus, the organisation is required to consider the
price of the product based upon the purchasing power of the customers. High performance
finish and initiatives towards customer loyalty is also important function in this context.
Application of innovative conception is an important factor in order to handle the rising
market competition of the outdoor lifestyle clothing industry.
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Self-Assessment Survey
This study is intending to obtain input based on the quality of the education of management program of xxxxx University. This
survey is regarding to xxxxx graduates of xxxxx University employed at Patagonia. Your cooperation will assists us to enhance
the quality of the graduates according to the requirements.
Name of the Institute:
Address of the corporate office:
Email: Website:
Self-Assessment for Weak 1 and Weak 10
Questionnaire Rating
How important was this assignment? 6
Do you have sufficient knowledge to perform the task? 4
Regarding the gathered knowledge, what is the value of the task? 7
How much helpful it was regarding performance development? 7
How much development do you receive through this task? 8
Comments:
This project helps the learners to gather additional knowledge. Strategic management has different perspectives. Learners are able
to learn those perspectives during the study. It also helps them to improve their analytical knowledge while interpreted the
relevant factors of Patagonia.

Conclusion
This report has presented a detail study about the strategic management. This has revolved
around the Patagonia during the study. Analysis of the external factors is important in order
to determine the performance of the industry. Different factors are influencing the
organisational performance of the outdoor lifestyle clothing industry. This includes political,
economic, socio-cultural, environmental, technological and legal factors. This study also
presents internal analysis of Patagonia including the potential strength and weakness of the
organisation. It also presents the future opportunities for this company. There are certain
threats for Patagonia and the study has presented certain recommendations for the
organisation in order to mitigate those threats. Hence, this study has presented a detailed
study based upon the organisational factors of Patagonia regarding the strategic management
of the organisation. In order to express the development of the learners, this study has
presented a self-assessment survey.
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Reference List:
Cucculelli, M., Bettinelli, C. and Renoldi, A., (2014). How small-medium enterprises leverage
intangibles during recessions. Evidence from the Italian clothing industry. Management
Decision, 52(8), pp.1491-1515.
E. Dobbs, M., (2014). Guidelines for applying Porter's five forces framework: a set of industry
analysis templates. Competitiveness Review, 24(1), pp.32-45.
employeerightsact.com (2017), Employee Rights Act From: http://employeerightsact.com/
Available At: 18th Nov, 2017
Locke, R.M., Rissing, B.A. and Pal, T., (2013). Complements or substitutes? Private codes, state
regulation and the enforcement of labour standards in global supply chains. British Journal of
Industrial Relations, 51(3), pp.519-552.
patagonia.com (2017), Patagonia’s Mission Statement From:
http://www.patagonia.com/company-info.html Available At: 18th Nov, 2017
patagoniaworks.com (2017), A LETTER FROM YVON CHOUINARD From:
http://www.patagoniaworks.com/#index Available At: 18th Nov, 2017
Porter, M.E. and Heppelmann, J.E., (2014). How smart, connected products are transforming
competition. Harvard Business Review, 92(11), pp.64-88.
vfc.com (2017), CALIFORNIA TRANSPARENCY IN SUPPLY CHAINS ACT DISCLOSURE
STATEMENT From: https://www.vfc.com/california-transparency-in-supply-chains-act
Available At: 18th Nov, 2017
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