Business Management 3: Strategic Management Analysis of Patagonia

This report conducts a strategic management analysis of Patagonia, a prominent outdoor clothing company. It begins with an executive summary and introduction, then delves into environmental factors using PESTEL analysis, Porter's Five Forces, and SWOT analysis to understand the company's market position. The report also examines Patagonia's resources, competencies, and core competencies through VRIN analysis. The current strategic statements, including vision and mission, are assessed, and recommendations are provided to enhance profitability in the global market. The analysis covers political, economic, social, technological, ecological, and legal factors impacting Patagonia's operations, as well as the bargaining power of buyers and suppliers, competitive rivalry, and the threats of substitutes and new entrants. The report concludes with a summary of findings and recommendations for strategic improvement. It emphasizes Patagonia's commitment to quality products and environmental sustainability.

Running Head: Business Management 1
Strategic Management Analysis of Patagonia

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Executive summary
This report will analyze the marketing strategies and tactics used by famous company
Patagonia in the clothing industry. Company Patagonia is the subsidiary of VF corp. the report
will focus on the strategies adopted by the company to attract the customers in the market. This
report will focus on the environmental analysis by various methods i.e. PESTEL analysis,
Porter’s five forces analysis, SWOT analysis and the analysis of resources and capabilities.
Further, by all these analyses, report will provide an understanding of the company in terms of
company in the market. Along with this, some recommendations will be provided to the
company so that more profit can be earned in the global market.

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Contents
Executive summary.........................................................................................................................2
Introduction......................................................................................................................................4
Task 1...............................................................................................................................................4
Environmental analysis................................................................................................................4
PESTEL analysis......................................................................................................................4
Porter’s five forces analysis.....................................................................................................6
Task 2...............................................................................................................................................7
Resources.....................................................................................................................................7
Competencies Analysis................................................................................................................8
Core competencies...................................................................................................................8
Threshold competencies...........................................................................................................8
VRIN analysis..............................................................................................................................8
Task 3...............................................................................................................................................9
Current strategic statement...........................................................................................................9
Vision statement.......................................................................................................................9
Mission statement.....................................................................................................................9
Task 4.............................................................................................................................................10
SWOT analysis..........................................................................................................................10
Recommendations......................................................................................................................11
Conclusion.....................................................................................................................................12
References......................................................................................................................................13

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Introduction
This report is focused on the strategic management analysis of the famous outdoor
clothing company named Patagonia. The analysis of the report is done based on the given case.
Patagonia is popular company in the outdoor clothing industry which is focused on providing
quality clothing products to the customers based on their requirements. Patagonia was started its
operations in 1973 in US market and now it is the well-known brand among the customers. This
report basically focuses on the situational analysis of the company along with the resources and
capabilities for the effective business operations (Patagonia, 2017).
Task 1
Environmental analysis
PESTEL analysis
Political factors-
Company Patagonia is operating in US market and now the company is seeking for the
business expansion. In the UK market, company might face some issues and barriers in UK
market while expanding and growing the business (Roger, 2013). There might be some political
challenges for Patagonia because of Brexit issue in the country. Along with this, political
stability is also an issue in UK for new countries. There are uncountable factors in the political
conditions of the country which will impact on the various trades of operations of Patagonia. The
unpredictable political condition in UK might challenge the capability of Patagonia in order to
get success in the market.
Economical factors-
In case of economic factors, the sales of the clothing products are wonderful and
companies have large profits in their business. It is observed that inflation and exchange rates
also impact the profits of the clothing industry. Along with this, clothing companies are also
facing the issues of credit crisis which impact on both buyers and sellers in the operating market.
Social factors-

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It is observed that the demographic factors of UK are different as compared to USA. The
choice and preferences of the clothing products of the customers are different. People in UK are
interested towards the products of current fashion trend. There are cultural differences in the
country and they have different perceptions for the clothing products which impact on the
business operations of the companies in the market. Further, cost of labor also affects on the
production of the companies as it depends on the sales of the products. There are various social
causes in the UK market so government of the country has imposed some rules against child
labor. These rules have to be followed by the company Patagonia to make its business ethical
(Lovelock, 2011).
Technological factors-
Technology is important for the success of any business and the clothing industry is also
affected by the technological innovations. To cope-up with the technological factors, Patagonia
is using some material in the products named Gore-Tex (Schilling, 2010). This material in the
clothes is lightweight, waterproof and perfect for the sports persons who are interested in rowing
and cycling. Along with this, company has invested lots of amount in the research and
development to provide innovative products (Peñaloza, Toulouse & Visconti, 2013).
Ecological factors-
Recycling is always a issue for the environment and clothing companies have to deal with
these issues. For the environmental sustainability, companies have to adopt various rules of the
environmental protection. Along with this, the clothing industry is also focusing on various
initiatives for the welfare of the society while manufacturing the products for the customers.
There are some uncontrolled factors in the environment and to deal with those factors,
companies are adopting effective strategies in terms of environmental protection.
Legal factors-
There are some rules and regulations imposed by the US government so that the issue of
child labor can be reduced. Clothing industry has to follow those rules to ensure legal and fair
practices in the production of clothing products. Along with this, there are some legal practices
while operating the business outside of the country.

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Porter’s five forces analysis
Bargaining power of buyers-
In the outdoor clothing industry, the bargaining power of the buyers or customers is high
as they always seek for the products at the low prices. If they do not get the products at low cost
from one company, then they can switch to other companies. So, bargaining power of the
customers in clothing industry is strong. Along with this, shoppers of the clothing products have
direct bargaining power in the industry. The reason is that they have alternatives of different
brands of the clothing products in the market (Martínez, 2012).
Bargaining power of suppliers-
In case of outdoor clothing industry, the bargaining power of suppliers is low. Reason of
low bargaining power is that the clothing companies are sourcing raw material from the third
party for the production purpose but they get very small fraction of the profit. Along with this,
suppliers do not have control on the industry and they are not important for the clothing
manufacturing companies all the time. So, suppliers experience low bargaining power in the
outdoor clothing industry.
Competitive rivalry-
In the clothing market, there is strong competition in terms of quality products and prices.
There are various brands that are selling same clothing products at the low costs. The low cost
products are capable enough to attract the customers in the market. So, the clothing industry is
saturated with the same products and there is strong competition in the market (Brumfitt, 2001).
Threats of substitute-
Although each and every industry has to deal with the threat of substitute products but
there is low threat of substitute products in the outdoor clothing industry. Customers cannot
choose any other product to replace the clothes so; force of substitute of products is small in this
industry. All the similar products in the industry only increase competition in the market.
Threats of new entrants-

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As described above, in the clothing industry, companies have to deal with the strong
competition. So, new companies are trying to find out new ways to enter in the market. They
have new ways like social media and e-commerce to make themselves popular in the industry.
But, they also have to face high risk while dealing with well-established companies. So, it is little
difficult for new companies to enter in the clothing industry (Cavusgil, 2012).
Task 2
Resources
In the company Patagonia, there are two types of resources identified in its business
operations. Those resources include tangible and intangible resources which are important to
achieve competitive advantage in the market. Based on the given case scenario of Patagonia, it is
analyzed that in the internal perspectives, there are various resources and organizational
capabilities which are used by the company with the fullest potentials. The company is providing
additional values to the customers with the primary and secondary activities.
Physical-
In the physical resources of the company, there are unique and effective products,
favorable manufacturing locations and innovative process of production etc. Along with this,
Patagonia has various resources by which the company is able to maintain its competitive
advantage in the market (Boone & Kurtz, 2013). The company provides effective buying
experience to the customers with additional values in the products. For this manner, Patagonia
has maintained the management system including some main areas of production process i.e.
safety of the customers, high productivity by resources, water emission, air emissions and health
and safety of the employees (Claudio, 2007).
Financial-
It is observed that company Patagonia is listed in any stock bur it is a capable company in
terms of profit and revenue. The company has strong financial company in the United State
market which is helpful for the company to gain competitive advantage over the competitors in
the clothing industry. The revenue of Patagonia was 8.1% in the last year. Along with this, the

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company has maintained a sustainable growth in the market of United State. This strong
financial position will be helpful for Patagonia to expand the business in the UK market.
Human Resource-
The Human resources of Patagonia include environmental activism, strong brand name
and the internal business operations of the company. Both the internal and external resources of
the company are key sources for achieving competitive advantage in the outdoor clothing
industry (Turnbull & Valla, 2013).
Competencies Analysis
Core competencies
In case of organizational competencies, Patagonia has some effective competencies by
which the company is able to provide innovative clothing products to the customers. The
company has outstanding organizational capacities in terms of customer service, manufacturing,
product development, and innovation. In the process of product manufacturing and development,
the company has capacities to provide quality clothing products. Along with this, company has
leadership position in the market with its environment friendly process (Fifield, 2012).
Threshold competencies
The threshold competencies can be described as the capabilities of the company to deal
with the competition in the market. Patagonia has threshold competencies like company always
use organic cotton in order to produce eco-friendly clothing products. This practice of the
company is helpful in achieving competitive advantage in the UK market.
VRIN analysis
By the VRIN analysis, the competitive advantage of Patagonia can be analyzed. The core
competency of the company is to provide value to the customers in the market. The company is
using organic cotton in order to manufacture eco-friendly clothing products. This shows that the
company is focused on the sustainability of the environment. Along with this, the company is
also focusing on recycling the used products with the help of online giant such as e-bay in the US
market. Further, company spends 10% of its turnover in order to enhance the product quality by
spending on the R&D process.

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Task 3
Current strategic statement
Vision statement
Mission statement
Based on the analysis of given case, it is observed that Patagonia is the famous, designer,
retailer and distributor of the outdoor clothing materials to the customers. In current time, this
company is famous among the customers for the quality clothes. Based on the give case scenario,
it is analyzed that company has some values to operate the business in the market. Along with
this, company gives equal treatment to the employees and provides values in the shopping
experience to the customers. The business values of the company include quality products and
services, integrity and environmentalism. For the effective business operations, company has
strategic vision and mission to attain the organizational goals and objectives (Bainbridge, 2011).
Mission objective of the company Patagonia is “to provide best products and to motivate and
implement efficient solutions for the environmental crisis and reduce the impact of unnecessary
harms.”
Recommended changes in Mission statement
Being the outdoor clothing fashion industry, Patagonia has very unique and clear
business strategy along with the organizational objectives which are clearly depicted in the
mission statement of the company. Company has the objective to offer high quality products
according to the needs and demands of the customers in UK market who need outdoor clothing
products in daily basis. In the business expansion in UK market, there is the need of huge

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investment related to costing, supply chain expenses, recruitment and selection process,
marketing and sales and other activities also. In terms of successful business, it is important to
hold good returns on investment to make sure the growth and progress of the business in UK
market. This can be achieved by heading for profitability (Armstrong & Cunningham, 2012).
Task 4
Patagonia is the famous outdoor fashion clothing company operating in the market of
California. The company is basically operating in the business of clothing products. Along with
manufacturing and providing clothing products, company is also taking various initiatives for the
welfare of the society and environment. Company is operating at very big scale in the market and
famous for its unique outdoor clothing products. To observe the market situation and position of
the company in the market, there is the need to understand the market and company in terms of
their internal and external factors. For this way, SWOT analysis is effective tool for the
company.
SWOT analysis
Strengths-
One of the main strength of Patagonia is its high quality products which are famous
among the customers. Customers always seek for the quality clothing products at the minimum
prizes. So, company is meeting their demands by providing them affordable products. Along
with this, more strengths of the company is the strong brand image among the customers which
is helpful for the company to increase its profit. Further, innovative nature of the company is the
key factors that drive the company to success and growth. Company is also committed towards
the sustainability of the surroundings and environment. Company has done lots of investment in
the research and development department so that high quality products can be provided to the
customers along with the excellent store experience (Taleghani et al, 2011).
Weaknesses-
Although Patagonia has various strengths in its business process but there are some
weaknesses in the company which must be addressed on top priority. It is observed that
Patagonia has limited number of suppliers. Due to limited number of suppliers, customers
sometimes have to wait for their desired products. Further, company has limited lines of

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products. Company only has only outdoor clothing products for the customers. Next, Patagonia
has limited presence in the global market. This is the big weakness of the company. Company
does not have loyalty bonus or incentives for the regular customers. that is the reason , customer
switch towards other brands.
Opportunities-
There are various opportunities for Patagonia in the outdoor fashion industry. Company
can expand the business in the global markets to improve its profit and revenue. Further, to
become customers oriented, company can provide training to the employees and improve their
moral by providing them feedbacks. Along with this, company can use methods to motivate the
employees like various human resource models and 360 degree feedback. Managers in the
company are always accountable for the fair and transparent business with the customers. To
enhance the involvement of the employees, company can conduct various events for them. By
these practices, brand image of the company can be increased (Gilligan & Hird, 2012).
Threats-
For Patagonia, one of the biggest threats is competitors who are providing similar
products and services to the customers. Although the company has strong image in the market in
terms of famous brand but competitors are still trying to get the customers by providing
substitute products to the customers. One of the rivals of Patagonia is Columbia Sportswear
which is providing the products at low prices. Customers perceived low cost products more
affordable as compared to high cost products (Terpstra, Foley & Sarathy, 2011).
Recommendations
Based on the above discussed SWOT analysis of Patagonia, it is observed that the
company is doing very well in the business to provide quality products to the customers. It is
suggested to the company that there is need to impalement some changes in the company in
order to enhance the brand image of the company in various countries. There should be some
changes in the business level strategies of Patagonia. There are some recommendations for
Patagonia to enhance the brand image at the international level.
 Company should focus more on the television advertisements to attract the customers at
the global level. The advertisements will be effective for Patagonia. To enhance the brand

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image of the company, there must be strategic approach sued by the company (Pavlou &
Stewart, 2015).
 Company is relationship oriented but there is no proper communication between
company and the customers. So, company should do partnership with other companies to
grow in the global market. Along with this, company can do partnership with the local
companies in the international market to stay connected with the customers.
 Based on SWOT analysis, it is also advised that company should keep the prices of the
products low to attract more and more in the global market. All the recommended parts
are addressing the weakness of the company and will be effective for it to increase brand
image in the market (Peck et al, 2013).
Conclusion
In the conclusion part, it is analyzed from the above discussion that Patagonia is listed as
the famous company in the market in terms quality clothing products. From the analysis, it is
clear that company is focused on the initiatives to keep the environment safe along with its
business operations. Along with this, it is also recommended company should focus on more
countries to improve its brand image at the global level. Further, Company is also focused on
protecting the environment from the negative impact of the production. Company has innovative
business culture by which includes the actions towards environmental safety and security. But,
there is the issue that company has kept the prices high of the products as it is unable to
understand the perception of the customers completely towards the products. So, there is the
need to lower the prices of the company for the high sales and profit.

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Armstrong, G., & Cunningham, M. H., (2012), Principles of marketing, Australia: Pearson publication
Bainbridge, W., (2011), Leadership in science and technology: A reference handbook. US:
SAGE Publications
Boone, L., & Kurtz, D. (2013), Contemporary marketing, USA: Cengage Learning
Brumfitt, K., (2001), The Competitive Business Environment, UK: Nelson Thornes Ltd.
Cavusgil, S. T., (2012), International Business: The New Realities, Australia: Pearson Education.
Claudio, L., (2007), Waste couture: environmental impact of the clothing industry:
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Fifield, P., (2012), Marketing strategy (2nd edition), Berlin: Reed educational & publishing Pvt Ltd
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Lovelock, C., (2011), Services Marketing (7th edition), India: Pearson Education
Martínez, P., (2012), The Consumer Mind: Brand Perception and the Implications for Marketers, USA:
Kogan Page Ltd
Patagonia, (2017), Patagonia Outdoor Clothing & Gear | Free Shipping, accessed on 30th
October 2017 from http://www.patagonia.com/us/home
Pavlou, P. A., & Stewart, D. W., (2015), Interactive Advertising: A New Conceptual Framework Towards
Integrating Elements of the Marketing Mix, pp. 218-222
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Schilling, M. A., (2010), Strategic Management of Technological Innovation, New York:
McGraw-Hill Irwin

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Taleghani, M., Biabani, S., Gilaninia, S., Rahbarinia, S. A., & Mousavian, S. J.,(2011), Arabian Journal
of Business and Management Review :The Relationship between Customer Satisfaction and Relationship
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