This report basically focuses on the outdoor clothing company Patagonia which is famous for the quality products in the USA market. Although Patagonia is not listed in any stock market but it has its strong presence in the market. The company has successful business operations by its innovative marketing strategies such as ‘Worn Wear’, ‘Don’t buy this jacket’ and ‘replacing and repairing the worn wear’. But, the company somehow was failed to leave its footprints in the European countries. The reason is that the company does not have its own stores in various parts of UK. Along with this, there is strong competition in Europe for Patagonia. So, company is now seeking for the business expansion in UK market (Patagonia, 2017). The objective of this report is to analyze the business capability of Patagonia based on various frameworks such as environmental analysis and resource and competencies analysis. The report also focuses on the business environment in UK. Along with this, the report also analyzes the competitive advantage that Patagonia will have in the UK market. The strategic solutions are also provided to minimize the negative impact of barriers in UK market so that favorable market can be created (Terpstra, Foley & Sarathy, 2011).
PESTEL Analysis
Patagonia is seeking for the business expansion in the European market especially in UK market. Company has to face some political barriers in the UK market while expanding the business. Company can face the challenges due to the Brexit issue. Further, political condition of UK is also not stable so, company has to deal with some challenges in terms of rules and regulations imposed by different governments. Along with this, there are various uncertain factors which will also impact on the different trades of operations of Patagonia in UK market. Unpredictable political condition of UK might be challenging for the capability of Patagonia to prove its worth in the new market (Dhingra et al, 2016).
The economic situation in UK is favorable for the business expansion of Patagonia. In UK market, the infrastructure quality is excellent. Along with this, there is the significant growth in the GDP rate in the country. There are some factors which must be managed by the company like savings rates, inflation rates and interest rates as these factors can be the cause of business issues. Further, there is the need to be cautious by Patagonia in terms of supply and demand for the outdoor products in UK market.
In UK market, the attitudes of the customers for the outdoor clothing products are different as compared to United States. Their preferences of the customers for various brands are also different as compared to the US market. People in UK market are much inclined to easy factors and attitudes. So, this will be actual taste of the customers in UK and company will focus on those customers in order to sell the products who are not the buyer of Patagonia.
Technology has important role in every industry in all over the world. So, outdoor clothing industry of UK is also affected by the technological factors. Technology has high level of involvement in the clothing industry in order to meet the needs and requirements of the customers. It is observed that Patagonia is working in the collaboration with e-Bay in United State market in order to replace and repair the worn clothes. The collaboration with e-Bay in the business shows the use of technology by Patagonia in the business process. This process will also be used by the company in the UK market (Schilling, 2010).
The environmental factor focuses on one of the mission which is followed by Patagonia in its business. The company is dedicated in order to minimize the negative impact of business on the environment. Company is using organic cotton in the production of eco-friendly clothes which proves that company is taking stand for the environmental sustainability. Such types of strategy adopted by Patagonia are also required in the UK market in order to settle down their first store in the UK clothing market (Thompson & Ke, 2012).
There are various laws and regulations imposed by the government of UK and Patagonia has to follow those laws regarding export of products. This will ensure less criticism which is basically a challenge for the company. It is important for the company to have control on the exporting practices in the global market. Enforcement tools can be used in the exporting practices including undercover operations, computer surveillance and monitoring the telecommunications. There are specific laws and legislations and authorities that are involved in such tasks. Patagonia has to follow to those laws. Along with this, there are some laws and rules in UK market related to health and safety of the employees which also need to follow by the company.
There is strong competition in the UK outdoor clothing industry. It is expected that Patagonia has to face high competition from existing companies like M&S, H&M, Primark, New Look and many other companies. So, it is clear that it is highly competitive sector. Along with this, the success of the company depends upon the use of better strategy, supply chain management, and technology in the manufacturing process. In UK market, Patagonia needs to establish strong relationship with the suppliers in order to meet the demands of the customers (Brumfitt, 2001).
In the clothing industry of UK, bargaining power of the suppliers is low. It is assumed by Patagonia that it will be beneficial to invest in the R&D process. Company tries to ensure that whether everything is there at the place. So, it is challenging for the company to find out more and quality suppliers for the business operations. So, the bargaining power of suppliers in the clothing industry is low.
The bargaining power of customers is medium in the UK outdoor clothing industry. Customer loyalty is the important factor for the successful which can anytime change in the market scenario. Customers always seek for the quality clothing products and switch to those brands which are affordable for them. Along with this, customers are founded quite loyal with their trusted brand. So, this can be significant opportunity for Patagonia as the company is focused on providing on quality products to the customers (Pavlou & Stewart, 2015).
In every industry, threat of substitute products is always available. For the UK outdoor clothing industry, the availability of substitute is categorized as medium and threatening. There is the threat of substitute products because of the changing attitude and preferences of the customers towards the brands. The customers are always motivated by the various modes of advertisements dome by various celebrities for the particular brand. Such advertisements influence the customers to purchase those specific products (Boone & Kurtz, 2013).
In UK clothing market, threats of new entrants is medium challenge. It is well-known that UK is the most suitable market for the business expansion. The UK market attracts various established brands along with potential new companies. So, this market is the center of attraction for the foreign investors. Although conditions are changes after the Brexit issue but UK is still first for the foreign investors. Investors are now more excited to make investment in the UK clothing market.
In the United State market, Patagonia is famous and established name among the customers. It has effective supply chain management which means company deploys everything of its own. The physical resources of Patagonia include manufacturing machines, transporting process, R&D centers and distribution centers (Lovelock, 2011).
It is observed that Patagonia is not stock listed company but company has strong presence in the market based on its revenue and profit. With the strong financial performance, company has strong brand image in the United State market. The company has maintained a sustainable growth in the clothing market of US. The financial resources of the company will be helpful to operate the UK market.
Patagonia is the limited name in the clothing business industry. The company has 1000 employees working in the United States. The company is operating with the skilled and dedicated professionals in the US market so that value can be added with the products. Same strategy need to be followed by the company in the UK market. Company should prefer local professionals with the working experience as this will be helpful in understanding the mind status of people in UK market (Roger, 2013).
Core competency of the company can be analyzed based on some factors such as providing wide range of products for the consumer’s benefits and dealing with the competitors. In this manner, Patagonia is standing strong in the market as the company believes in making quality products. Company has advertised ‘Don’t buy this jacket’ which reveals the concern of the company towards purchasing decision. Along with this, company is using organic products to support the environmental cause. So, it is difficult for the other companies to copy this core competency of Patagonia in the UK market (Fifield, 2012).
Mission statement of Patagonia is to build the best product, cause no unnecessary harms, use business to enhance and implement the solutions for the environmental crisis. The mission statement of the company shows its concerns towards product quality and environmental benefits. The mission is rightly served in order to achieve the organizational goals in the US market. Along with this, the company is focused on recycling the used clothes to reduce the harmful impact on the environment. The decision should be made for the valued products by Patagonia. Research and Development capabilities are the example which shows the concern of the company towards the manufacturing of best quality.
From the above description of mission statement of Patagonia, it is analyzed that the mission statement of the company is good and support with some effective strategies such as various types of marketing strategies. But, there is the need to focus on the profitability part also as the company is entering in UK market. Company has to focus on the revenue part as there is the need of huge investments for the effective business operations such as marketing and sales, supply chain expenses; infrastructure related costing, recruitment and selection process, and many other processes. Based on the business perspectives, it is important for the company to have good returns in the business at the global level. This can be possible for Patagonia if it is focusing on the profitability as well (McCormick et al, 2014).
Patagonia has environmental reputation in the operating market. Key strength of Patagonia is high quality products which are famous among the customers. So, company is focused on meeting the demands of the customers at the affordable prices. Along with this, company has strong brand image which is helpful in expanding the business in UK market. Company is also committed towards the sustainability of the environment which would also be beneficial to gain the trust of the customers in UK market.
Despite of various strengths, there are some weaknesses in the business operations of Patagonia. It is analyzed that Patagonia has limited number of suppliers. So, company has to face challenges in terms of providing products on time. Limited range of products can also be considered as the big weakness of Patagonia. Further, company does not have its presence in the global market. Along with this, company does not have loyalty reward for its customers and that might be a reason for customers to switch on other brands.
For Patagonia, there are various opportunities in the UK market. The company has opportunity to gain competitive advantage in the UK market in terms of profit and revenue. In order to become customer oriented company, Patagonia can provide training to the employees and motivate them by feedbacks. International market such as UK is an opportunity for Patagonia to expand the business. It is observed that the popularity of the retail stores is growing continuously which is beneficial for Patagonia in UK market. Further, infrastructure is strong in the UK market (Verbeke, 2013).
There are some threats in UK which can impact the business expansion of Patagonia. There is unexpected political condition in UK after the exit of Brexit. Along with this, after the Brexit issue, the GDP behavior is unpredictable in UK. These issues can be major threats for the business expansion of Patagonia in the country. Further, there is strong competition in the retail industry of UK and many established companies are creating tough competition for Patagonia. Changing behavior of the customers is also a threat for Patagonia as they are attracted from different advertisements (Gudgin et al, 2016).
Based on the above discussed SWOT analysis, there are some recommendations related to business strategy for Patagonia. Those recommendations are as follows:
Conclusion
From the above analysis, it is observed that Patagonia is doing well in the USA market. The company will get mixed experiences while expanding the business in the UK market. By all the analyses i.e. PESTEL, Porter’s five forces, SWOT analysis and VRIN analysis, various evidences are developed in support of the fact. It is analyzed that Patagonia has various opportunities in the UK market. UK market has great infrastructure and customers are loyal there. So, company will get success and growth in the global market.
References
Boone, L., & Kurtz, D. (2013), Contemporary marketing, USA: Cengage Learning Brumfitt, K., (2001), The Competitive Business Environment, UK: Nelson Thornes Ltd.
Dhingra, S., Ottaviano, G., Sampson, T. and Van Reenen, J., (2016), The impact of Brexit on foreign investment in the UK, BREXIT, p.24
Fifield, P., (2012), Marketing strategy, (2nd edition), Berlin: Reed educational & publishing Pvt Ltd
Gudgin, G., Coutts, K., Gibson, N. and Buchanan, J., (2016), The macro-economic impact of Brexit: using the CBR macro-economic model of the UK economy (UKMOD), Centre for Business Research Working Paper, (483)
Lovelock, C., (2011), Services Marketing (7th edition), India: Pearson Education
McCormick, H., Cartwright, J., Perry, P., Barnes, L., Lynch, S. and Ball, G., (2014), Fashion retailing– past, present and future, Textile Progress, 46(3), pp.227-321
Patagonia, (2017), Patagonia Outdoor Clothing & Gear | Free Shipping, accessed on 30th October 2017 from https://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
Roger, A.K., (2013), Marketing In Asia. (2nd). Columbus, OH: McGraw-Hill Education.
Schilling, M. A., (2010), Strategic Management of Technological Innovation, New York: McGraw-Hill Irwin
Terpstra, V., Foley, J., & Sarathy, R. (2011), International marketing, Naper Publishing
Thompson, B. and Ke, Q., (2012), Whether environmental factors matter: some evidence from UK property companies: Journal of corporate real estate, 14(1), pp.7-20
Turnbull, P. W., & Valla, J. P., (2013), Strategies for international industrial marketing, USA: Croom Helm
Verbeke, A., (2013), International business strategy. Cambridge University Press.
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