University Strategy Management Report: Patagonia's Business Strategies

This report provides a comprehensive analysis of Patagonia, an outdoor clothing company, focusing on its strategic management and competitive advantages within the industry. It begins with an executive summary and an introduction that highlights the company's commitment to sustainability and its position in the growing performance apparel market. The report then delves into the external environment, examining political, economic, social, technological, legal, and environmental factors impacting the outdoor active lifecycle clothing industry. It assesses industry competition, including key rivals like The North Face and Columbia Sportswear, and critically discusses Patagonia's resources and competencies, employing Porter's Five Forces to analyze competition intensity, new entrants, substitution products, and the power of customers and suppliers. The report evaluates Patagonia's mission statement, assessing its role in supporting growth and expansion strategies. A SWOT analysis is conducted to determine the company's internal strengths, weaknesses, opportunities, and threats, providing a holistic view of its strategic position. The report concludes with a summary of key findings and recommendations for the company's future strategic direction.

Running head: STRATEGY MANAGEMENT
Strategy Management
Name of Student:
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Author’s Note:

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Executive Summary:
This report has taken in the case of Patagonia, an outdoor clothing company based in
California. The company has been playing it tactically in the industry of outdoor apparel to
stay in competition with some of the best through attracting more and more customers and
showing responsibility towards the environment. The company has been able to stay ahead
for the strategies it has been able to implement over the years. Moreover, the mission
statement has been evaluated along with SWOT analysis of the company to determine the
internal analysis of the company.

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Table of Contents
Introduction:...............................................................................................................................4
External environment and industry competition within outdoor active lifecycle clothing
industry.......................................................................................................................................4
Political:.................................................................................................................................4
Economic Factors:..................................................................................................................5
Social Factors:........................................................................................................................5
Technological Factors:...........................................................................................................5
Legal Factors:.........................................................................................................................6
Environmental Factors:..........................................................................................................6
Industry Competition:............................................................................................................6
Critically discuss Patagonia’s resources and competencies for gaining competitive
advantage................................................................................................................................7
Porter’s Five Forces:..............................................................................................................7
Competition Intensity:........................................................................................................8
New entrants:.....................................................................................................................8
Substitution Products:........................................................................................................9
Power of customers:...........................................................................................................9
Power of Suppliers:..........................................................................................................10
Core Competencies:.............................................................................................................10
Patagonia’s current mission statement can support its growth and expansion strategies........10

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Patagonia’s Mission Statement:...........................................................................................10
SWOT evaluation of Patagonia................................................................................................12
SWOT analysis of Patagonia...............................................................................................12
Strengths:..........................................................................................................................12
Weakness:........................................................................................................................13
Opportunities:...................................................................................................................13
Threats:.............................................................................................................................13
Conclusion:..............................................................................................................................14
References:...............................................................................................................................15

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Introduction:
The market of Patagonia is essential in understanding their necessity for the principle
of driving sustainability across the organization. It generally sets the background for seeing
reasons on why any organization operating within the outdoor market segment should
endeavour in protecting the planet and performing business activities. The segment of global
apparel and outdoor industries have been on the rise since 1960s, with the market analysts
estimating the fact that the present segment of performance apparel has been growing at
double the pace of the total sector if sports apparel. Performance apparel is stated to grow at a
rapid rate for men than that of women in regions like East Asia, Europe and North America.
As consumers have been demanding clothing of multi-functional nature, new competitors
have been entering the market of performance apparel (Hvass 2013). This report would take
into account the external environment along with the core competencies of the company in
the outdoor clothing industry.
External environment and industry competition within outdoor active lifecycle clothing
industry
Political:
This mainly has to do with the political environment prevailing within a particular
country. It is generally being supposed that is the temperatures of politics are down, business
tends to thrive. Companies do suffer entry approach regulations, rights of intellectual
property along with certain taxation laws. One of the key reasons the outdoor active lifestyle
of clothing industry had been facing a rise and fall is for political unsteadiness. The economy
is generally intervened by the policies and laws that is issued by the government resulting in
several ups and downs within the industry (Sinha and Foscht 2016). The laws take in

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recycling of the waste materials, policies related to import, trade and export having major
impact on the outdoor clothing industry. The clothing industry is also being affected by the
regulations and rules related to the taxation with modifications in these rules existing within
the countries impacting the growth of the economy of the outdoor clothing industry.
Economic Factors:
The industry’s economic growth is generally seen in the high time, when the rate of
interest is much lower, the sales are stated to be superlative with larger profits been seen. Not
only this fact but the rate of inflation along with the exchange rate has also been influencing
the outdoor clothing industry. Another key factor is the credit crisis that is stated to be not
only an issue for the producer but for the buyer as well.
Social Factors:
The outdoor clothing industry is mainly being affected by people’s social behaviour
along with their attitude towards the product. The difference that exists in the culture along
with the people’s attitude towards factor of career affects the industry. The labour cost also
depends on the society, affecting the company’s sales. Many of the social causes like the
rules and regulations against the child labour have also been affecting the outdoor clothing
industry. Adding to that is the trend within fashion that is being changing ever so quickly has
been leading the outdoor clothing or apparel industry to take into consideration and alter their
products as per the need (Carroll and Buchholtz 2014).
Technological Factors:
With technological advancement, the approach that is being used by the outdoor
apparel industry has altered that has been able to speed up the development however
augmenting the cost factor as well (Keiser, Garner and Vandermar 2017). The technological
factor might also be affecting the outdoor apparel industry through defining of the

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accessibility of the resources along with their resources and their most favourable use. The
process that is being used currently is primarily automatic, though not every owner would be
able to use it for the amplification in the cost.
Legal Factors:
Many of the social activists were seen following the owners of the garments industry
for the issue of the child labour along with many of the legal activities that were being held
consequently. Some of the other legal issues have been related to the laws and policies that
were being held by the government.
Environmental Factors:
Issues related to product recycling have remained complex for the apparel industry in
helping keeping the environment clean. Other key issues that have been affecting the industry
are global warming and the clearance factor of some of the ordinary resources in producing
the clothes. In this present era, organizations need to have stricter store policies of the waste
materials or the by-products. They need to issue a yearly or quarterly report on the activities
deemed environment friendly along with the processes. This provides government with the
assurance of the commitment of organizations in producing products that are environment
friendly.
Industry Competition:
Patagonia has been a successful company, though it has been facing stiff competition
from The North Face, Marmot and Columbia Sportswear. The North Face that was founded
by Doug Tompkins in the year 1968 is being stated to be the biggest competitor of Patagonia,
being able o builds a trusted name among the enthusiasts of outdoor recreation and other
trendy urban dwellers (Matzler, Veider and Kathan 2015). The line of products in the North
Face takes into account backpacking backpacks, something that has been missing from the

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lost of Patagonia. This item is what sets The North Face apart from Patagonia. Adding to that
is the fact that The North Face tags on with Patagonia when it comes down to environment
sustainability. However, Patagonia’s environment sustainability along with company
transparency is much more if compared to The North Face.
Columbia Sportswear has been another big competitor of Patagonia that was founded
in 1938 by Paul Lamfrom, a company that has been in the business 30 years prior to
Patagonia. This provides Patagonia with the opportunity of more customer loyalty across
multiple generations. Columbia Sportswear has been a public owned company and is much
bigger than Patagonia, though both the companies have varied target market. The products of
Columbia are stated to be more affordable, facilitating them in tapping into the markets that
consists of lower income group of people. As per Lee, Seifert and Cherrier (2017), both the
company matches in the fact that they manufacture top quality apparel, though it has been
seen that Columbia Asia is not that involved in the aspect of environmental sustainability
facet of designing products and developing the same.
Critically discuss Patagonia’s resources and competencies for gaining competitive
advantage
Taking into consideration Patagonia’s operations, it can be stated that the firm has
been operating making use of the resources and organizational potentials to their fullest.
Patagonia produces company value through their acquainted use of the primary along with
the secondary activities. Their efficient operations of plant have been adding value to their
business.
Porter’s Five Forces:
This study has been conducted in collecting efficiently within the marketplace that fits
Patagonia within the market of outdoor apparel. It is important to understand the industry’s

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competitive intensity, probable new entrants, and substitutes of those products, customers
influence and suppliers on the firm’s activities.
Competition Intensity:
Patagonia is generally present on many of the Strategic Business Unit, inclusive of the
outdoor clothing sale. This sector of outdoor clothing boasts of multitude of actors. Patagonia
thus face competition from three companies, with the main being Columbia Sportswear,
stated to be the leader in this market. Its activities are generally diversified in the outdoor
clothing industry (Carbonaro and Goldsmith 2014). Patagonia exists within an industry that is
highly competitive, along with the size of dozen firms that are either smaller or larger.
However the company does have a feature that differentiates it from the competitors,
providing it with stronger competitive advantage (Oeppen and Jamal 2014). The company
has aimed towards protecting the environment and it does not make use of the materials
generally used by its competitors like the organic cotton. Patagonia has been the first brand
that is being identified as making use of global ecological textile.
Potential customers have perceived the brand in varied ways from that of Patagonia
and in remaining a leader in generating environmental friendly clothing, Patagonia posed
entry barriers in the shape of patents over fashion designing methods and making use of
certain materials like Capilene (Kant Hvass 2014).
New entrants:
The instance of Patagonia begins steadily to be imitated. Companies like Nike have
been using 3 per cent of organic cotton in their T-shirt designing, however, Patagonia, the
specialist in outdoor clothing is more than ready in developing necessary funds for
environmental friendly clothing and performing actions on the environment as being done by

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them for the past 20 years. So, it can be stated that the competitive advantage of Patagonia is
generally not jeopardized by the over potential new entrants.
The outdoor clothing market has generally remained open. For over 50 years the
sector of outdoor clothing has been of extensive nature in the field of sports, and only signs
offering clothing to quality acting and utility of sport within the market. But presently the
situation has altered along with the detonation of the market for the outdoor activities for
augmentation in free time, bringing in the companies that are new for providing products
outside the sports genre (Ward 2017).
Substitution Products:
Patagonia manufactures outdoor clothing that is being dedicated to the 5 world of
sports that are skiing, mountain climbing, hiking, fly fishing and climbing. Patagonia’s
offered clothes are perfectly being suited with the practice of the sport. However, trends
within the community of sports do change and so does the dress code. Patagonia needs to
fight against the various brands not only in the segment of sports but also within the clothing
segment “streetwear” in their outdoor clothing marketplace. These alternatives are often
stated to be cheaper than the products of Patagonia for weaker presentation, as it is generally
easy for people, particularly the backpackers in obtaining the substitute products from the
house of Patagonia (Carneiro et al. 2014). Within this the substitute products are real threat to
Patagonia, but as the competitive products and new entrants, they would not be affecting the
firm’s competitive advantage.
Power of customers:
Patagonia is an organization that is unique within the vast textile fields. This is why
the customer base of the company is stated to be specific in meeting the specific criterion.
The clients range is generally small and quite concentrated with most being loyal to the brand

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for most of the part, forcing the brand in properly evaluating their request for not
disappointing and weakening their loyalty. They are not in the habit of buying in larger
quantities, and given Patagonia’s quality product on time, it is essential for the brand in
innovating for maintaining the charm of its customers for the products.
Power of Suppliers:
Patagonia has been in association with more than 160 suppliers for producing the
wider range of outdoor clothing. Relationship existing between the firm and the partners has
not been frequent as Yvon Chouinard insists on the fact that trust and mutual govern these
reports. For instance, since the year 1996, Patagonia has been making real cuts in the profits
through recognized sympathetic relationships with the farmers producing organic cotton
struggling in selling their crops. Patagonia has been agreeing in allocating 10 per cent of its
turnover in the areas of research and development for exchange of constancy of some of the
suppliers.
Core Competencies:
The main desire of Patagonia has always been in building the best product while
continuing its major contribution towards the environment where they ‘play’. Their core
values consist of quality stating detection of ever-greater quality in everything they perform,
and integrity facilitating relationships that is being built on respect and integrity (Resta et al.
2016). Adding to that is environmentalism factor serving as a catalyst for corporate action.
Patagonia’s current mission statement can support its growth and expansion strategies
Patagonia’s Mission Statement:
The mission statement of Patagonia states, ‘Build the best product, cause no necessary
harm, use business to inspire and implement solutions to the environment crises’.

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Patagonia grew out from being just the small organization that was in the habit of
making tools for the climbers. Alpinism still remains at the heart of the global business
scenario still making clothes for climbing along with skiing, surfing and snowboarding, trail
running and paddling. These are all generally silent sports. None of these requires a monitor;
none distribute the cheers of the crowd. The values of the company have been reflecting those
of a business that was started off by a climber’s band and surfers, promoting the minimalist
style. The advancement taken by the company towards designing of the product illustrates a
bias for efficacy and minimalism.
Patagonia believes in saving the wild and beautiful places out of the love they have
for the same, helping reverse the sheer decline in the total environmental health of the planet.
As per Sinha and Foscht (2016), the company has been donating their time, services and
around 1 per cent of their sales to the existing hundreds of grassroots environmental groups
across the world who works in helping reverse the tide. The company understands that their
business activity ranging from lighting stores and dyeing shirts generates pollution as by-
product. The company has been working steadily in reducing those harms. They have been
making use of the recycled polyester in most of their clothes and only organic, instead of the
pesticide-intensive, cotton. The company has been able to stay true to their core values during
their thirty-plus years of business, helping them in creating a company that their employees
are proud to run and work. Their primary focus has been on making the best products that is
generally possible that has given them success within the marketplace. Patagonia strives hard
in lessening the harmful practices within the environment in every facade of production along
with clothing allotment (Lee, Seifert and Cherrier 2017).
Patagonia’s mission statement has been built exactly on the things they perform at
marketplace. While participating in the activities within extreme terrain and perfidious
weather, one requires quality products in keeping them safe and performing the same at the