Strategic Management Analysis: Patagonia's UK Market Expansion Plan

This report provides a comprehensive strategic management analysis of Patagonia, focusing on its potential expansion into the UK market. It begins with an executive summary and a table of contents, followed by a detailed PESTLE analysis, evaluating the political, economic, social, technological, legal, and environmental factors influencing Patagonia's UK business prospects. The report then applies Porter's Five Forces to assess the competitive landscape within the UK outdoor active lifestyle clothing industry. Resource analysis using the VRIO framework and competency analysis through a competency framework are conducted to evaluate Patagonia's internal strengths and weaknesses. The study critically assesses Patagonia's vision and mission statements in relation to its growth strategy, recommending potential changes. A SWOT analysis is presented, followed by suggested modifications to Patagonia's current business-level strategies for the UK market. The report concludes with a summary of findings and recommendations, supported by a comprehensive reference list.

Running head: STRATEGIC MANAGEMENT
Strategic Management
Name of the Student:
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Executive Summary
Strategic management is the process of analyzing the market environment of an organization and
getting setting strategies for achieving its major goals. This study will assess the strategic
management of Patagonia. The external market environment analysis and resource and capability
analysis of Patagonia demonstrate its huge opportunity towards expanding in UK market. The
mission statement of the organization should incorporate continuous innovation in their product
range. The study has also demonstrated the SWOT analysis of the organization and made
changed in the business level strategies through using cost leadership strategy.

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Table of Contents
1.0 Introduction................................................................................................................................4
2.0 Task 1.........................................................................................................................................4
2.1 PESTLE Analysis..................................................................................................................4
1.2 Porter’s Five Force Analysis.................................................................................................6
Task 2...............................................................................................................................................8
2.1 Resource Analysis through VRIO Framework......................................................................8
2.2 Competency Analysis through Competency Framework....................................................11
Task 3.............................................................................................................................................12
3.1 Vision Statement and Mission Statement............................................................................12
3.2 Support of Mission Statement in Current Growth and Expansion Strategy........................13
3.3 Recommended Changes in Vision and Mission Statement.................................................14
Task 4.............................................................................................................................................15
4.1 SWOT Analysis...................................................................................................................15
4.2 Recommended Changes in Current Business Level Strategies...........................................16
5.0 Conclusion...............................................................................................................................18
Reference List................................................................................................................................19

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1.0 Introduction
Strategic management is the formulation and implementation of major goals and
initiatives taken by an organization towards fulfilling those goals (Bettis et al. 2016). The
organization chosen for this study is Patagonia. It is a popular outdoor apparel company in USA
selling outdoor sports clothing and accessories (Patagonia.com 2017). The organization is going
to establish its business in United Kingdom. The study will analyze the external market and
industry competition within UK outdoor active lifestyle clothing industry. The study will also
analyze the resource and competencies of Patagonia towards gaining competitive advantage in
UK market. The study critically will assess the mission and vision statement of Patagonia
towards supporting its growth and expansion strategy. Apart from that, this study will also
demonstrate the SWOT analysis and current business level strategies of the organization required
for UK market.
2.0 Task 1
2.1 PESTLE Analysis
Political Factor
Political stability of United Kingdom can help in conducting business opportunity.
According to Ethiraj, Gambardella and Helfat (2016), Government support of United Kingdom
for industrialization can help the business growth of Patagonia. On the other hand, Chen, Delmas
and Lieberman (2015) Changing government rules and regulations can hamper the business
operation of Patagonia in UK. Reduced tax rate of United Kingdom can be helpful for the
business operation of Patagonia. It helps in reducing the cost of business operation. Furthermore,

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Certo et al. (2016) opined that free trade agreement of United Kingdom will facilitate in flexible
international business of Patagonia.
Economic Factor
Developed economic condition of United Kingdom can enhance the return on investment
of the organization. As per Mitchell and Leiponen (2016), fluctuation in inflation rate hampers
the pricing policies of the organization in this market. Growing economic condition of United
Kingdom has decreased the interest rate of the bank, which can be helpful for financial funding
of the organization.
Social Factor
Bergh et al. (2014) pointed out that Growing inclination of people in United Kingdom
towards outdoor sports can increase the business scope of Patagonia. On the other hand, growing
tourism arrivals in United Kingdom and their tendency towards ski driving, climbing, fly fishing
and others has increased the demand of cloths of Patagonia. Increasing favour of people towards
organic cloths can increase the business scope of Patagonia in UK market. Furthermore, Vogel
and Güttel (2013) opined that high disposable income of the people of UK can increase the
business potentiality of the organization.
Technological Factor
Technological advancement of United Kingdom can improve the manufacturing process
of outdoor sports clothing with advanced technical equipment. Sakas, Vlachos and Nasiopoulos
(2014) opined that advanced digital and social media can provide improved promotional
opportunity for the organization.

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Legal Factor
Patagonia can be abided by laws of United Kingdom for operating the business. Cheng
and Lin (2014) stated the organization must adhere to strict employment laws of United
Kingdom.
Environmental Factor
Engert, Rauter and Baumgartner (2016) stated that Patagonia can deal with
environmental standards through its organic clothing. Furthermore, Carbon emission from
manufacturing process can lead to threats for the business.
1.2 Porter’s Five Force Analysis
Threats of New Entrants
According to Shi et al. (2017), the investment cost in sports clothing industry is quite
expensive that can be barrier for the new entrants in this industry. On the other hand, the new
entrants also face great barriers in competition to high brand image of the reputed organizations
like Patagonia, The North Face and others. However, growing demand of sports clothing can
encourage the new entrants in starting up their outdoor sport clothing business. Therefore,
Patagonia can face moderate threats of new entrants in United Kingdom.
Threats of Substitute
The Substitute of Patagonia can be the traditional and normal cotton clothing products.
However, these clothing are not that much stylish and comfortable. Moreover, Yoo (2016) stated
that the qualities of the substitute products are quite low. Therefore, the Patagonia can face less
threat from the substitute products in the industry of United Kingdom.

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Competitive Rivalry
Sport clothing industry of United Kingdom has huge competition among the major
outdoor sport clothing companies. However, large industrial market size of the industry can help
in fitting the market share of each of the organizations. The organization can mostly face tough
competition from the outdoor clothing companies like Trespass, Keela and lots more (Strähle and
Wagner 2016). Therefore, it can be said that Patagonia can face tough competitive rivalry in UK
market.
Bargaining Power of Suppliers
As per Paek and Lee (2014), Patagonia can be highly dependent on the material provided
by the suppliers for manufacturing the outdoor clothing products. Moreover, less numbers of
quality suppliers in the industry can increase the bargaining power of suppliers on the
organization. Therefore, it can be said that Patagonia can face high bargaining power of the
suppliers in UK market.
Bargaining Power of Buyers
Limited numbers of high quality outdoor quality clothing can prevent the buyers in
bargaining with the organizations. However, Kwon, Jung and Lee (2015) opined that high price
war in the market can enhance the bargaining power of the buyers in shifting to other
organizations. Therefore, it can be said that Patagonia can face moderate bargaining power of
buyers.

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Figure 1: Porter’s Five Force Analysis of Patagonia
(Source: Kim, Oh and Jung 2015)
Task 2
2.1 Resource Analysis through VRIO Framework
Resources and
Capabilities
Valuable Rare Inimitabl
e
Organized Core Competitiveness
Extensive and
Worldwide
distribution
network
Yes Yes Yes Yes Sustained Competitive
Advantage
Advanced technical
Equipments
Yes Yes No Yes Temporary Competitive
Advantage
CompetitiveRivalryHighThreatsofNewEntrantsModerateBargainingPowerofSuppliersHighThreatsofSubstitutesLowBargainingPowerofBuyersModerate

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Financial Stability Yes Yes No Yes Temporary Competitive
Advantage
Brand Image Yes Yes Yes Yes Sustained Competitive
Advantage
Number of Stores Yes Yes No No Competitive Parity
Innovative
Consumer
Marketing
Yes Yes Yes Yes Sustained Competitive
Advantage
Dedicated Human
Resource
Yes Yes Yes No Temporary Competitive
Advantage
Table 1: VRIO Analysis for Patagonia
(Source: Armstrong et al. 2016)
Wang and Shen (2017) pointed out that extensive and worldwide distribution network of
Patagonia can foster its sustained competitive advantage. Such distribution network helps in
proper inventory management of the organization for efficient manufacturing process in UK
market. On the other hand, Jung and Oh (2016) opined that advanced technical equipment of
Patagonia can facilitate in developing better manufacturing plant and worn wear process in the
UK market. Such advanced equipment of organization can help them to provide unique quality
of outdoor sport clothing for the customers in UK market. In this way, such unique quality of
sports clothing can provide unique value to the UK customers and provide sustainable
competitive advantage.
Furthermore, Patagonia has strong and stable financial condition for smooth business
operation in UK market. Moreover, with stable financial condition, the organization can perform

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extensive market research on UK customers for understanding core customer needs and
demands. Moreover, stable financial condition of the organization can also help in investing in
research and development department for inventing innovative products. However, financial
stability can be imitated by any other organizations for the same reason. Therefore, it can only
provide temporary competitive advantage. High brand image of the organization can attract huge
customer group in UK market. Apart from that, Yoo (2016) stated that dedicated human
resources for the organization can form the foundation for its success. They can put their best
effort and skills level for making unique quality products in UK market.

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Interpersonal
Diplomatic Sensitivity
Customer Focus
Organizational Knowledge
Delivery Related Result
Analytical Thinking
Flexible Thinking
Achievement Focus
Managing Resources
Teamwork
Strategic
Developing Talent
Strategic Thinking
Strategic Networking
Organizational Alignment
2.2 Competency Analysis through Competency Framework
Figure 2: Core Competency and Threshold Competency of Patagonia
(Source: Strähle and Wagner 2016)
Paek and Lee (2014) pointed out that Patagonia has high level of analytical power for
forecasting the any critical issues and solving those issues immediately. In this way, such
analytical power of this organization can help the organization in gathering unique customer
information and meeting those needs in a customized way for fostering sustained competitive
advantage through threshold competency. On the other hand, Kwon, Jung and Lee (2015) opined
that achievement focus attitude of the Patagonia always engage the organization towards

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ensuring organizational achievements. In this way, such attitude of the organization will engage
the organization in achieving organizational success in UK market. As per Shi et al. (2017),
Patagonia is a highly customer oriented organization, which allows it to develop
customized outdoor clothing products. Therefore, such customized focus leads to core
competency for the organization. On the other hand, organizational knowledge of the
organization leads to threshold competency for the organization. Such threshold competency can
be used in forming innovation in the organization, which can drive competitive gain for the
organization. The employees of the organization are also having high level of diplomatic
sensitivity. Therefore, the employees can better recognize the sensitivities of the customers and
can offer customized products to the according to their sensitivity for unique customer value. In
this way, such threshold competitive advantage can lead to sustained competitive advantage for
the organization.
Task 3
3.1 Vision Statement and Mission Statement
Vision
Statement
To be the best outdoor apparel company in the world.
Mission
Statement
Build the best product, cause no unnecessary harm, use business to inspire and
implement solutions to the environmental crisis.
Table 2: Current Vision and Mission Statement of Patagonia
(Source: Patagonia.com 2017)