Strategic Management Report: Patagonia's Competitive Advantage

This report provides a comprehensive strategic management analysis of Patagonia, a prominent outdoor clothing retailer. It begins with an executive summary outlining the importance of strategic management in achieving competitive advantage, followed by an introduction that defines strategic management and its three key schemes: Corporate, Business Unit, and Functional strategies. The report then applies the PESTLE model to analyze the external environment of the outdoor clothing industry, considering political, economic, socio-cultural, technological, legal, and environmental factors. It uses Porter's Five Forces model to evaluate industry competitiveness and Patagonia's resources. The report also details Patagonia's mission statement and appropriate strategies, along with a SWOT analysis to assess its strengths, weaknesses, opportunities, and threats. The Employability Skills Self-Assessment Survey is also included. The report concludes with recommendations and references.

STRATEGIC MANAGEMENT

Executive Summary
This report will be explaining about the strategic management and its significant in order to
gaining competitive advantage in the market. There are various tactics such as SWOT, PESTEL,
Porter 5 Forces which plays a prominent role in the success of a company. The present study will
provide a relevant information in the context of Patagonia which is a fashionable clothing retail
firm and provide a high quality products and services. This report also describing mission and
vision statement of cited in order to attaining their shorty and long term targets.

Table of Contents
INTRODUCTION...........................................................................................................................4
TASK 1 ..........................................................................................................................................4
P1 Analysing the external environment and industry competition in context of outdoor
clothing industry. ...................................................................................................................4
P2. Critically evaluating the resources and development of Patagonia by using Porter's Five
Forces Model :........................................................................................................................6
P2 Describe mission statement of the company and make appropriate strategies.................7
P4 SWOT analysis..................................................................................................................8
P5 The Employability Skills Self-Assessment Survey.........................................................10
CONCLUSION..............................................................................................................................12
RECOMMENDATIONS...............................................................................................................13
REFERENCES .............................................................................................................................13

INTRODUCTION
Strategic Management means identifying the long term goals and objectives of an
organisation such that it can increase the productivity of overall performance of employees and
to gain competitive advantage over their rivals (Hitt and et. al., 2012) It is a bundle of planning
and analysing the actions of the managers and allocate resources to them to implement the task.
It can be formulated in three different scheme which are Corporate strategy which deals with
selection of concern in which company chooses accurate enterprise according their skills and
capabilities (David, 2011). Business Unit level deals with subdivision of organisation in the form
of product line, differentiation etc. Under this, firm is more focused towards positioning and
foresee changes in the demand. The last is Functional strategy which deals with the business
process and value chain by providing input to the entire process.
TASK 1
P1 Analysing the external environment and industry competition in context of outdoor clothing
industry.
Business firm does not operate solely in market. They have to deal with several kinds of
factors in terms of micro and macro which affect its operations. Such factors are discussed below
by applying PESTLE Model on Patagonia.

Political Factors: The main reason behind the rise and fall of any organisation is political
instability. The economy has to deal with various laws and policies of government which results
in higher cost structure and decrease their market share. Garment industry also influenced by
taxation policy and these rules changed according to the current economic position of the country
which can be affected by some uncertainty such as Brexit, import export laws etc.
Economic Factors: The market of this industry is growing very rapidly. The rate shifts
from 5% to 20 %. Patagonia is currently doing its operation in UK which holds the largest
consumer of outdoor clothing gain competitive advantage over their competitors (Hair and et. al.,
2012). Patagonia can also face the issue related to the credit crisis, because large number of
people in UK is using these brands but there can also be the possibility of increase in inflation
rate.
Socio-Cultural Factors: Patagonia is also influenced by the social factors in terms
donating 1% of its revenues to charity who is working on sustainable development. Westerners
are aware of environmental related issues. Therefore, many firms in UK donates a bit of their
revenue proportion for generating the growth and development of economy. Also another factor
which can be considered here is Patagonia is mainly for the high income group of people. They
serve average group with the mission statement of “Worn Wear” but after the niche market of
rich people.
Technological Factors: With the changing world scenario, organizations are adapting
themselves according to the latest technology, which has boost up their speeds in terms of
satisfying their customers. Also it leads to utilise the resources in most effective and efficient
way. The Research and Development of Patagonia is using techniques which are making
products keeping in mind the issues which has a negative impact on the society (Hodgkinson and
Healey, 2011). The company has a great hold on its sub-contractors which builds greater sense of
trust among them.
Legal Factors: Patagonia faces problem in the context of import export policy, UK
government limits the control of using organic cotton. Also faces problems in regard with the
labour laws as this sector contains huge employment level.
Environmental Factors: Eco-Friendly and Sustainability are the two important terms in
any industry. In garment, buyers focus on buying such product which are not harming the
environment in any of the either way. Patagonia focuses on building the best goods and do not

use business practices in order to unnecessary harm the society. They claimed to be the first
company to launch pesticide-free organic cotton clothes (Ackermann and Eden, 2011). But, they
have to face problem regarding that as the price of organic cotton is going high during that time
which act as a barrier for them. Also they make their footprint in the section of organic food as
well. They also need to relocate its production in order to become environmentally friendly.
P2. Critically evaluating the resources and development of Patagonia by using Porter's Five
Forces Model :
This model is used to understand the competitiveness of business environment or to
determine the intensity of its competitors. This force defines the industry structure and the level
of present rivalry in the market. Organization with higher competing forces seems to have lesser
return in terms of productivity and profitability (Keupp and et. al., 2012). Patagonia used this
model so as to utilise their resources in most effective and efficient way in gaining emulating
advantage over their challengers.
Threat of new entrants: This force determines that it is not easy for a industry to enter
into a particular market or shift from one market to another. Patagonia is using organic cotton for

their products which was not so common during 90s. But, the demand for outdoor sports clothing
is growing tremendously.
Bargaining Power of Suppliers: Strong negotiation power defines the suppliers market
input. In case of, Patagonia which are using organic cotton for their products pays higher charges
to the UK government so as to have large hold of that.
Bargaining Power of Buyers: Patagonia usually serve the higher income group of people
not for lower or average range. This is generally because the price of their products are quite
high which middle class unit cannot afford.
Threat of Substitute: This force is used when can buyers can easily find the competitor or the
substitute product for the same which offers lower cost for the product that attracts the customer
very easily and make them to switch (Priem and et. al., 2012). It may weaken your position and
profitability in the market.
Rivalry among Competitors: The North Face, was the biggest rival of Patagonia that is
the holder of various brands such as Lee, Wrangler and Timberland. They have large number of
financial resources which gives competitive edge over Patagonia. They have a unique model in
which they operate their business activity which are doing things other than just thinking about
growing. Patagonia cannot copy their framework, in-fact they only focuses on running the
company as the way they are doing it which makes them different from their competitors.
P2 Describe mission statement of the company and make appropriate strategies
The mission statement of Patagonia is “to create the best product, because no necessary
harm, use business to inspire as well as implement solutions for the environmental crisis”.
The above statement is able to generate market growth and expansion of the company. As
the clothing, the firm is required to produce new and innovative so to compete with its
competitors. Its products and services are always able to attain and retain customers and satisfy
their needs in an effective manner. In the context, the clothing industry is focusing on optimum
utilisation of available resources, i.e. employees by providing them training and development
assistance.
Another mission statement of the company can be related with achieving high
competitive advantage and increase market share through fulfilling corporate social
responsibilities (Molina-Azorin, 2012). For this purpose, the firm can adopt new product
development strategy; which is accessible in providing some new and innovative to society that

can fulfil its needs and demands in a pervasive manner. If Paginate will be produce new
products, then it can easily gain high competitive advantage and easily reach a large group of
customers in a certain time period. Due to technological advancement and developing innovative
tools in production process, Patagonia can assist its goals and objectives in an effective way.
P4 SWOT analysis
Patagonia Inc. is a California based company that is basically deals in outdoor clothing. It
was founded in 1972. The firm is offered a wide range of clothing products in international
market. In addition, the main goal and objective of the company is to provide qualitative and
value added products and services to its customers so as to gain high competitive advantage. In
addition, Patagonia has also offered a time flexibility policy which allows employees to work as
per their suitability and reliability (Killen and et. al., 2012). The main product line of the
company is Capilene base layer clothing. The firm has recently started manufacturing surf-
specific products and different models of swim trunks.
The firm is focusing on managing its working activities in an effective manner through
developing various strategies and policies. Strategic management is process which is generate to
achieve all goals and objectives of the company. While preparing any business strategy it is
essential for managers to determine all future aspects that would hamper firm's market position
and performance (Travis and Rekhtman, 2011). It can be done through SWOT analysis of the
company, which involves strength, weaknesses, opportunities and threats. Below mentioned the
brief description of SWOT analysis: -
SWOT analysis of Patagonia
STRENGTH
 The main strength of Patagonia is, it
has high qualitative and value added
products which are liable for its growth
and success. In order to improve
production level, the firm uses effective
and innovative techniques which gives
strengthen to its operations.
WEAKNESSES
1. In this competitive era, the number of
rivals is being increased day by day that
can hamper growth and vitality of a
business organisation.
2. It is very tough for companies to attain
and retain customers for long term.
Therefore, another weakness of

 The core business activities of the firm
are environmental friendly; it also
generate different programmes and
activities in order to generate
awareness among people regarding
environment. It can improve the
number of loyal customers towards a
company.
 In order to make effective
manufacturing process, Patagonia is
continuously emphasis on
technological advancement that gives
strengthen to assistance to its staff
members so as to improve efficiency
level of employees. It can reduce
employees turnover rate every year
(Travis and Rekhtman, 2011). Because
if a firm has well qualified and skilled
staff members then it can easily
achieve its goals and objectives in an
effective manner. Its functions and
activities. The firm is focused on providing
training and development assistance to
its staff members so as to improve
efficiency level of employees. It can
reduce employees turnover rate every
year. Because if a firm has well
qualified and skilled staff members
then it can easily achieve its goals and
objectives in an effective manner.
Patagonia is few customer loyalty
incentives.
3. Few high performance finishes.
4. Less fashionable apparel compared to
competitors.
5. Rapid changes in external environment.
6.

OPPORTUNITIES
 There is an increment in online
shopping marketing. Due to
globalisation, it is a great opportunity
for business entities to expand their
operations in international market.
 Enhancement of environmental
activism Expand towards new countries as well
as the target market of the company.
THREATS
 Market competition
 Ageing target market
 Changing business activities and
working bodies.
Recommendations - As per above analysis, it has been described that an organisation has
various strength and opportunities and it also has different weaknesses and threats. Strength are
assistive in achieving business goals and objectives whereas weaknesses can reduce the market
position. Therefore, in order to maintain an equilibrium in both of them firms are required to
conduct a market research so as to analyse all those factors which can influence firm’s growth
and vitality. They need to develop an effective marketing plan so as to recognise customers'
needs and wants.
P5 The Employability Skills Self-Assessment Survey
While there will ever be job-specific acquirement that a leader is sounding for, most
employment will also privation to have some unspecific skills. These all-purpose job skills are
former called "employability skills". Having employability acquisition can help to get a job.
They can also help them stay in job and employment in way to top. If score a job group
discussion, chances are that will be asked questions about their job- particular power and your
employability skills.
Communication: - Depending on their job, communication is all about being good
speaker either a good writer. It pertains being assured about public speaking to people (face-to-
face or over the phone). It also involves writing well enough to be understood in emails and
memos.
Examples of ways that you can develop or improve your communication skills include:
 writing assignments and reports as part of your studies

 blogging or using social media
 making oral presentations as part of your class work
Teamwork: - Cooperation means being good at working with people either both of the
people with work with and another grouping that semen into connection with their arrangement
(Killen and et. al., 2012).
Examples of ways that can germinate or amend cooperation skills consider: -
7. doing group assignments as part of your studies
8. volunteering for a community organisation
9. thinking about how you can work better with other people at your workplace
Problem solving: - Problem solving is all about being capable to figure out the solvent
when featured with travail or occurrence. Even if they can’t conceive of statement aligned
inaccurate which demands to have an analytical cognition for calculation things out.
Examples of ways you can develop or improve your problem solving skills include:
 doing research assignments as part of your studies
 dealing with complaints at your workplace
 doing a study skills course that looks at problem solving
Initiative and enterprise: - Initiative and endeavour are active being capable to
advisement make over and to kind ameliorate to way belongings are (Molina-Azorin, 2012).
They're also close to perception at the larger representation and how the way their works fits into
that.
Examples of ways you can develop or improve your initiative and enterprise skills include:
1. approaching organisations and businesses about work placements or internships
2. setting up a fundraiser in your community
3. making or proposing changes to the way a group you belong to does things.
Planning and organising: - Planning and organising are roughly property like running
out what is mandatory to get a job done, and then operative out when and how that will ll do it.
They're also about property like development project chronology and gathering point in time.
Examples of ways you can develop or improve your planning and organising skills include:
 developing a study timetable and sticking to it
 organising some independent travel

 managing your time around work, study and family commitments
 helping to organise a community event
Self-management: - Self-management is approximately acquiring on with their own
work without organism individual to check up on them in every five minutes (Travis and
Rekhtman, 2011). They also need to be also be competent to stay on utmost of their own point
and which might be unable to assign undertaking to opposite people to make sure material
possession get done on time.
Examples of ways that they can develop or improve themselves-management skills include:
 doing a work experience placement or internship
 asking for new responsibilities at work
 developing a study schedule and sticking to it
CONCLUSION
From the above mentioned report, it has been summarised that strategic management
plays an important role within workplace; it aids companies to achieve growth and advancement
in target market. In order to overcome from market competition, the firm needs to analyse
external environment through PESTLE analysis, so as to increase the market share of clothing
industry. Porter's 5 forces are used for effective implementation and allocation of resources. It
focuses on optimum utilisation of available resources in order to gain high competitive
advantage. In order to attain and retain customers for long term period, it is essential for
Patagonia to improve its production processes and make its more effective. SWOT analysis is
conducted so as to examine strengthen, weaknesses, opportunities and threats of the firm in order
to make impressive strategies and policies which are liable to achieve goals and objectives.
RECOMMENDATIONS
As per above discussion, it is recommended to managers to use effective and innovative
strategies for accomplishing their goals and objectives. While developing any business strategy,