Task 1: PESTLE Analysis

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.

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, 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.

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.

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.

Task 2: Resource Analysis through VRIO Framework

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.  

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.

Figure 1: Porter’s Five Force Analysis of Patagonia

(Source: Kim, Oh and Jung 2015)

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 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.  

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 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.

Table 2: Current Vision and Mission Statement of Patagonia

(Source: Patagonia.com 2017)

Market Penetration

According to Certo et al. (2016), market penetration strategy seeks to gain business growth with existing products in the existing market. This strategy helps in enhancing the market share of an organization, when the competitor organizations reach its capacity limit. The current mission of the Patagonia drives it towards producing best quality products and implements solution for environmental crisis through producing outdoor clothing with organic cotton. Such mission can help the organization in beating the domestic market competition and enhancing market share.

Market Development

According to Sakas, Vlachos and Nasiopoulos (2014), market development strategy seeks for business growth through offering existing products and services in the new market. The mission of Patagonia towards producing best quality and environment friendly outdoor sports product can be highly accepted in the new market. However, the mission statement does not express anything about uniqueness and innovation in the product ranges, which can be a hindrance for the organization in entering UK market.

Product Development

Cheng and Lin (2014) pointed out product development strategy suggests for developing new products in the existing market. The mission statement of Patagonia provides best way of offering best quality products to the customers. Such mission can form a loyal set of customer network in its existing market, who will be easily interested in accepting the new set of products offered by the organization.

Diversification 

Strähle and Wagner (2016) stated that diversification strategy suggests an organization towards developing new products and services in the new market. The mission statement focuses more on producing best quality and environment friendly products. However, the mission of the organization does not support the continuous innovation in the product category. Therefore, such mission can be little bit ineffective in diversifying their products in UK market.

Table 3: Changes in Mission and Vision Statement

(Source: Created by Author)

The new mission statement of the organization will support in expanding UK market. Moreover, the innovative and unique outdoor sports clothing will be highly accepted in the UK market. The previous mission statement was not made for fostering uniqueness towards driving core competencies. Therefore, the mission statement of the organization should be changed for incorporating innovation towards fostering competencies in UK market. Apart from that, the new mission statement of the organization will help in diversifying their product range in UK market. Furthermore, the vision of becoming industry’s leading outdoor apparel company will help in getting quick success in UK market.

Table 4: SWOT Analysis of Patagonia

(Source: Kwon, Jung and Lee 2015)

Cost Leadership

The undercurrent message of Patagonia for the consumer is that they should buy high quality outdoor apparel, which will last for longer time. Therefore, the apparel of the organization is commanded with high prices as compared with low quality substitutes. Armstrong et al. (2016) pointed out that cost leadership strategy suggests for reducing price of the products for gaining higher market share in industry. Likewise, the Patagonia should use low prices for their outdoor apparel for gaining high market share in UK market.

Differentiation

According to Wang and Shen (2017), differentiation strategy suggest for adding unique features to the products and services for providing unique value to the customers. This strategy helps in creating competitive advantage over the rival company. Patagonia is already providing unique value to the customers through manufacturing their outdoor clothing with organic cotton. Therefore, the organization does not need changes in the product quality. However, the organization has lack of product diversification, where it has to improve itself for getting more success in UK market.

Focused Cost Leadership

Focused cost leadership strategy focuses on a narrow customer segment and within that segment achieves cost leadership for gaining competitive advantage over rivals. Patagonia has focused on athletics and other customer groups interested in outdoor sports. However, the organization charges little bit higher prices for the premium quality of products (Jung and Oh 2016). In this way, it cannot be affordable to all kinds of people, which can limit the sales volume of the organization. Therefore, the organization should use lower prices for their outdoor apparels for making them affordable to all kind of people in UK.

Focused Differentiation

Focused differentiations strategy focuses on a narrow segment and within that segment achieves differentiation for providing unique value to the customers. Patagonia has selected athletic and other customer groups interested in outdoor sports (Yoo 2016). Furthermore, the organization is already providing unique value to the customers through using organic cotton in their clothing products.

Integrated Cost Leadership/Differentiation suggests providing desired quality of products while beating rivals on prices (Kim, Oh and Jung 2015). Patagonia should incorporate this strategy in their business for balancing between the quality of their products and prices. It would help the organization in gaining high level of competitive advantage in UK market.

Conclusion

While concluding the study, it can be said that it can be said that Patagonia can effectively enhance their business in UK and get quick success in this country. Political stability of the United Kingdom can be helpful for business expansion of this organization in UK. On the other hand, developed economic condition of UK can enhance the scope of the organization towards increasing their profit potentiality.  Growing tendency of people towards ski driving, climbing, fly fishing and others has increased the demand of cloths of Patagonia. The organization can face tough competition in UK market from the competitors like Trespass, Keela and lots more. The unique quality of outdoor sports clothing products can help the organization in getting success in UK market. The organization should change its business level strategy by incorporating cost leadership strategy in business model for its UK market.

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