Strategic Management Report: Patagonia's UK Market Entry Analysis

This report provides a comprehensive strategic analysis of Patagonia's potential entry into the United Kingdom market. It begins with an executive summary outlining the key areas of investigation, including an analysis of the external business environment using PESTLE, and the competitive landscape using Porter's Five Forces. The report then examines Patagonia's internal resources and competencies, assessing its physical, financial, and human resources, as well as its core and threshold competencies. A SWOT analysis is conducted to identify Patagonia's strengths, weaknesses, opportunities, and threats in the UK market. Furthermore, the report evaluates Patagonia's current strategic statements and recommends potential changes to its vision and mission statements. Finally, the report suggests market entry strategies for Patagonia in the UK, considering the unique challenges and opportunities presented by the market. The analysis considers factors like Brexit's impact, consumer behavior, and the competitive landscape to inform the recommendations.

Running head: STRATEGIC MANAGEMENT
Strategic Management
[Patagonia, the United States]
Name of the student:
Name of the university:
Author note:

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Executive summary
The study presents an educative research on the few essentials of contemporary business. The
paper informs the measures, which is required while planning an expansion in a target foreign
country. The target foreign country in this assignment is United Kingdom. It is one country
where Patagonia has not even a single store outlet. Additionally, the condition is not any fairer in
other parts of Europe. One of its biggest rivals has comparatively performed better in the
European market. The study depicts the approaches to consider for Patagonia entering the UK
market. It presents PESTLE analysis done on the external business environment in UK. It also
presents Porter’s five forces to check the industry competition in UK. Moreover, SWOT analysis
is also there to analyze the competitive advantage of Patagonia in the United Kingdom. The
paper also suggests some useful market entering strategies, which are not only helpful to
Patagonia but, this will help others as well.

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Table of Contents
Introduction....................................................................................................................................3
TASK 1:.........................................................................................................................................3
1. PESTLE, Porter’s five forces to examine the external environment and the industry
competition.................................................................................................................................3
2. Based on findings, opportunities and threats for Patagonia entering the UK market............6
TASK 2:.........................................................................................................................................6
1. Resources analysis of the company using relevant framework.............................................6
1.A Physical resources...........................................................................................................6
1.B Financial resources..........................................................................................................7
1.C Human resources............................................................................................................7
2. Competencies analysis using relevant framework.................................................................7
2.A Core competencies..........................................................................................................7
2.B Threshold competencies..................................................................................................7
3. Explaining the competitiveness of the existing resources & competencies in the UK market
...................................................................................................................................................8
TASK 3:.........................................................................................................................................9
1. Current strategic statements of the company........................................................................9
a. Vision statement.................................................................................................................9
b. Mission statement..............................................................................................................9
2. Recommendations for the change in the vision & the mission statement.............................9
TASK 4:.......................................................................................................................................10
SWOT analysis and implications for Patagonia.......................................................................10
Conclusion...................................................................................................................................11
References-.................................................................................................................................12

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Introduction
This study is aimed at highlighting many useful business strategies, which are important
for various benefits for innumerous numbers of organizations across the globe. Those benefits
can include but are not limited to such as a sustainable business practice, profitability venture in
the local & the international market, competitive resources and many others (Goldman,
Nienaber and Pretorius 2015). This particular study tries to figure out such benefits by giving the
business example of Patagonia in the United States largely. Patagonia is not as big like other
companies belonging to the same industry, which is also evident in the fact that it is yet to be
listed in any stock market across the globe. However, the company is unique for its creative
marketing strategies, which they consider as part of their values. One of such strategies that
caught a large attention was “Don’t buy this jacket”. Additionally, “Worn Wear” and “Replacing &
Repairing the Worn Wear” are the other few marketing stunts that created ample of buzz in the
market. Nevertheless, all such marketing strategies have helped the sales only. Despite the
success in the United States and in Japan, it is yet to deliver a convincing performance in the
European countries in particular in the United Kingdom. The company has not a single store
outlet in UK. It was in the market through local retail outlets (patagonia.com 2017). The main
purpose of this assignment is to analyze the competition in the UK market. Additionally, the
report also analyses the competitive advantage of Patagonia in the United Kingdom. This also
supports the expansion through appropriate marketing strategies.
TASK 1:
1. PESTLE, Porter’s five forces to examine the external environment and the
industry competition
PESTLE analysis-
Political-
The expansion of Patagonia in the United Kingdom might face an unexpected challenge
from the political circumstances in the country. The Brexit issue is expected to deliver its impact
on the political situation in the country. Many business experts are confused over what could be
the level of complexities in the politics of future. The unexpected political behavior might also
influence the business in UK. Patagonia needs to play cautiously while they expand into the
United Kingdom market (Dhingra et al. 2016).

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Economic-
The economic status in UK is very stable, which is good for Patagonia. However, this is
also expected to be influenced from the Brexit effect. Patagonia needs to consider the saving
rates, interest rates and inflation rates. There is also a need to carefully look into the behavior of
GDP performance. Supply and demand of goods will be the other challenges. Despite all the
mentioned challenges it has opportunities there as well such as the country has a very good
infrastructure system. Technological advancement is widely accepted in the country (Dhingra et
al. 2016).
Social-
The demographic factors are different to the United States. Customers have different
perceptions for preferring a particular brand. People living in UK have in them a high passion for
leisure and attitude related factors. This will be a real test for one of the kinds of marketing
strategies that has been successful in the United States. The marketing strategy to sell the used
products to those who are not the customer of Patagonia might be challenged in UK (Rees,
Wohland and Norman 2013).
Technological-
Technological advancement has redefined the style of contemporary business. This has
also influenced the outdoor sport clothing industry. Technology indeed is a very decisive factor
in establishing the much needed brand awareness into a mass customer base. This should not
be a barrier for Patagonia in the United Kingdom. The company has already shown its potential
in the United States by working with the e-Bay to form a network of people to recycle the used
product (Bolton and Foxon 2015).
Environmental-
Patagonia is highly concerned with the environmental values. It is one of the three
mission statement that it has. They give high values to a sustainable business. The company
has proved its loyalty by using organic cotton to manufacture the products. This is a very rare
feat, which is yet a new concept to many. Such strategy will probably add values to its business
in the United Kingdom. Customers are getting increasingly aware with global warming and the
reasons behind it. This is why it might be beneficial for Patagonia as it delivers on the committed
words (Arts et al. 2012).

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Legal-
Patagonia will be required to follow the anti-trust law while operating in the United
Kingdom. Laws and policies related to export & import and environmental factors will also be
required to be followed. Patent and copyright related issues will also be a barrier. Additionally,
Patagonia needs to be careful in following the laws related to the health & safety of employees
(Collison et al. 2014).
Porter’s five forces analysis-
Industry rivalry-
Competition is high in the clothing industry in the United Kingdom. Patagonia is
expected to get challenges from many different companies such as Primark, M&S, H&M, and
New Look etc. The company will need to use better technologies from manufacturing process to
the supply chain operation in order to gain the competitive advantage. Good relationship with
the selected suppliers will also be a key to the success (Serra, Pointon and Abdou 2012).
Threat of new entrants-
It is there but will be categorized in the medium range. Challenge is there because of
the potentiality that the UK market provides for a foreign direct investment. Many established
brands from the different parts of world gets attracted to the UK. Many startup companies do
also get attracted to the market. However, the luxury of making investments in the United
Kingdom has been affected by the Brexit issue. Companies might be little skeptic in making the
investments (Di Minin, Zhang and Gammeltoft 2012).
Threat of substitutes-
It will also be categorized in the medium category. The changing behavior of customers
is one of the threats, which test the strategic capabilities of different firms. They get easily
motivated from different kinds of advertisements. They have a tendency to use the product
advertised by the celebrities across the globe. This is what it gives importance to be flexible with
the product line. It should be less predictable and more creative (Rapp et al. 2015).
Bargaining power of customers-
This will also be categorized in the medium category. Customers of outdoor sporting
clothes are very unique to other customers. They are very loyal with their trusted brands. This is

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why it is very challenging to attract customers who are a regular shopper of other brands (Rapp
et al. 2015).
Bargaining power of suppliers-
It will be rates as low in the United Kingdom. This is because of the industry behavior in
UK and also because of the unique strategies of Patagonia. Patagonia spends 20% of its entire
turnover on improving the capability of R&D process. Spending extra sum of amount on the
R&D will mean a narrow down in the profitability margin, which is not safer in the early days.
However, they can experiment with the same strategy once they are settled with good customer
base to their credit (Ramanathan, Bentley and Pang 2014).
2. Based on findings, opportunities and threats for Patagonia entering the UK
market
Opportunities-
 Competitive infrastructure in UK
 Loyal customers who prefer quality products
 Relationship with the suppliers is controllable
 Customers respect organizations those have valued policies for environmental cause
Threats-
 Expected political disruption in UK post Brexit
 Expected fluctuating behavior of GDP especially after Brexit
 Tough competition from industry giants such as Primark
 The business and environment laws
TASK 2:
1. Resources analysis of the company using relevant framework
1.A Physical resources
Patagonia is an established brand in the United States. It has its own supply chain
operation in the country. This means it has the capabilities to control the operations, which have
challenged many big brands. Physical resources include such as machines used for

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manufacturing process, transportation means, R&D laboratory and the distribution centers
(patagonia.com 2017).
1.B Financial resources
It is not yet listed in any stock market across the globe; however, it is still a very unique
and capable company. It has already proved its worth in the United States market. The return
on investment (ROI) touched a very significant figure 8.1% last year. It has maintained its
healthy growth in the United States (Patten and Zhao 2014). The financial resource capabilities
will help Patagonia in positing its brand in the United Kingdom.
1.C Human resources
The company has been operating largely in the United States and in Japan. It is also
present in Europe; however, it has failed to impact the market as did by “the North Face”, its
biggest rival in the United States. The company has approximately around 1000 employees
working for it in its different store outlets across the United States, Japan and some part of
Europe. it believes in working with skilled and committed professionals. This strategy might work
as well in the United Kingdom. Customers are very educated in UK, which is why it is extremely
required to have such professionals in the different store outlets (patagonia.com 2017).
2. Competencies analysis using relevant framework
2.A Core competencies
Core competencies can be defined to have three factors such as to think for customer’s
benefits, providing access to a large product line and to produce a hard to imitate image in the
market (Saebi and Foss 2015). Patagonia is firm strong in this regard as they have been unique
in delivering the surprising strategies. The advertisement “Don’t buy this jacket” is one of such
examples that show their valued concerns for the customers. They have tried to prove that
customers should only buy the products that are valuable. The use of organic cotton by
Patagonia is still a new concept to many (patagonia.com 2017).
2.B Threshold competencies
These are such competencies that help in survive in competition. Patagonia has also
displayed the use of threshold competencies through its use of organic cotton to manufacture
an environmental friendly product. This is indeed necessary to have such strategies as this will
guide a safe entrance into a foreign market (Saebi and Foss 2015).

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3. Explaining the competitiveness of the existing resources & competencies in
the UK market
VRIN framework-
Competency Valuability Rarity Imitability Non-
substitutabilit
y
Competitive
advantage
Physical
resources
Yes No No yes Competitive
Parity
Financial
resources
Yes Yes No Yes Temporary
competitive
advantage
Human
resources
Yes No No No No
competitive
advantage
Core
competencie
s
Yes Yes Yes No Competitive
advantage
Threshold
competencie
s
Yes Yes No Yes Temporary
competitive
advantage
Figure 1: VRIN framework analysis of Patagonia
(Source: Talaja 2012)
The above analysis shows that Patagonia’s main strength is its unique marketing strategies and
its environmental friendly works. The company has steered the competition in the United States
market through its unique and appealing marketing stunts such as “Don’t wear this jacket” and
“Worn Wear”. Such strategies have tried to capture the attention of even those customers who
were not even a regular buyer of Patagonia. Additionally, to use organic cotton in the
manufacturing process just shows their valuable addiction to one of the three mission
statements of the company. They are strategically an efficient company as they have proved by
working in collaboration with e-Bay to reach to a wider network of people to recycle the used
products. The spending of 20% of the entire turnover on improving the capabilities of R&D is

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another asset that will ensure a good business in UK. These are some rarest strategies, which
are core competencies and are challenging to be imitated (patagonia.com 2017).
TASK 3:
1. Current strategic statements of the company
a. Vision statement
Figure 2: Vision Statement of Patagonia
(Source: patagonia.com 2017)
b. Mission statement
Figure 3: Mission Statement of Patagonia
(Source: patagonia.com 2017)
The company has its vision to move to other parts of world such as the emerging and the
developed markets. The existing CEO of the company Mr. Gellert has already shown its
concern to decentralize the company in Europe and relocate this to Amsterdam. The mission
statement put emphasis on three things. They have their mission to build the best product,
which they have so far successfully done in the United States and in Japan. The strategy such
as “Worn Wear” just to recycle the used products is one of such examples that show their
concerns for unnecessary harms done to the products. The use of organic cotton to
manufacture environmental friendly product is one example that proves the validity of the third
part in the mission statement.

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2. Recommendations for the change in the vision & the mission statement
The mission statement has so far been proved successful largely in the United States.
However, there is a need to have an addition to put an emphasis on profitability as well. The
venture will not be able to experience a long run in the United Kingdom if it does not build up a
very solid financial resource in the country.
TASK 4:
SWOT analysis and implications for Patagonia
SWOT analysis (patagonia.com 2017) -
Strengths-
 Environmental reputation of Patagonia
 Innovation in product line
 Superior relationship with the target community
 Use of creativity in the manufacturing process such as the use of organic cotton
 Turnover rates of employees is lower in the company
Weaknesses-
 Suppliers are in limited number
 Limited product line
 Presence in very few global countries
 Does not give any loyalty schemes to the customers
Opportunities-
 Emerging and developed markets such as the United Kingdom
 Growing popularity of retail outlets in different formats such as discounted stores
 The industry has loyal customers in UK
 The country has a very sound infrastructure
Threats-
 Expected competition from reputed brands such as Primark
 Unexpected political circumstances post Brexit
 Unexpected GDP behavior in the influence of Brexit