Patagonia's Path to Carbon Neutrality by 2025 SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Innovation & Entrepreneurship
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Patagonia's Path to Carbon Neutrality by 2025
This case study describes Patagonia's goal to become carbon neutral by 2025 in an absolute sense -- that is to reduce emissions to zero while still growing the company. Patagonia also wants to achieve absolute carbon neutrality in such a way that other interested companies can replicate. The case explores aspects of this goal through the eyes of a number of Patagonia employees who work on different teams within the apparel and gear business. Patagonia is attempting to both address its own emissions and act as a leader on a complex, global problem.
Authors :: Daniel M. Kammen, Paul Hendricks, Seren Pendleton-Knoll, Vincent Stanley
Swot Analysis of "Patagonia's Path to Carbon Neutrality by 2025" written by Daniel M. Kammen, Paul Hendricks, Seren Pendleton-Knoll, Vincent Stanley includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Patagonia Carbon facing as an external strategic factors. Some of the topics covered in Patagonia's Path to Carbon Neutrality by 2025 case study are - Strategic Management Strategies, Innovation, Policy, Social responsibility, Supply chain, Sustainability and Innovation & Entrepreneurship.
Some of the macro environment factors that can be used to understand the Patagonia's Path to Carbon Neutrality by 2025 casestudy better are - – customer relationship management is fast transforming because of increasing concerns over data privacy, supply chains are disrupted by pandemic , increasing government debt because of Covid-19 spendings, there is backlash against globalization, central banks are concerned over increasing inflation, geopolitical disruptions, banking and financial system is disrupted by Bitcoin and other crypto currencies,
increasing transportation and logistics costs, technology disruption, etc
Introduction to SWOT Analysis of Patagonia's Path to Carbon Neutrality by 2025
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Patagonia's Path to Carbon Neutrality by 2025 case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Patagonia Carbon, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Patagonia Carbon operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Patagonia's Path to Carbon Neutrality by 2025 can be done for the following purposes –
1. Strategic planning using facts provided in Patagonia's Path to Carbon Neutrality by 2025 case study
2. Improving business portfolio management of Patagonia Carbon
3. Assessing feasibility of the new initiative in Innovation & Entrepreneurship field.
4. Making a Innovation & Entrepreneurship topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Patagonia Carbon
Strengths Patagonia's Path to Carbon Neutrality by 2025 | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Patagonia Carbon in Patagonia's Path to Carbon Neutrality by 2025 Harvard Business Review case study are -
Successful track record of launching new products
– Patagonia Carbon has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Patagonia Carbon has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Superior customer experience
– The customer experience strategy of Patagonia Carbon in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Effective Research and Development (R&D)
– Patagonia Carbon has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Patagonia's Path to Carbon Neutrality by 2025 - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Ability to lead change in Innovation & Entrepreneurship field
– Patagonia Carbon is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Patagonia Carbon in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Low bargaining power of suppliers
– Suppliers of Patagonia Carbon in the sector have low bargaining power. Patagonia's Path to Carbon Neutrality by 2025 has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Patagonia Carbon to manage not only supply disruptions but also source products at highly competitive prices.
High brand equity
– Patagonia Carbon has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Patagonia Carbon to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Strong track record of project management
– Patagonia Carbon is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Operational resilience
– The operational resilience strategy in the Patagonia's Path to Carbon Neutrality by 2025 Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Organizational Resilience of Patagonia Carbon
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Patagonia Carbon does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Analytics focus
– Patagonia Carbon is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Daniel M. Kammen, Paul Hendricks, Seren Pendleton-Knoll, Vincent Stanley can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
High switching costs
– The high switching costs that Patagonia Carbon has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Cross disciplinary teams
– Horizontal connected teams at the Patagonia Carbon are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Weaknesses Patagonia's Path to Carbon Neutrality by 2025 | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Patagonia's Path to Carbon Neutrality by 2025 are -
No frontier risks strategy
– After analyzing the HBR case study Patagonia's Path to Carbon Neutrality by 2025, it seems that company is thinking about the frontier risks that can impact Innovation & Entrepreneurship strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Interest costs
– Compare to the competition, Patagonia Carbon has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Patagonia's Path to Carbon Neutrality by 2025, is just above the industry average. Patagonia Carbon needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Patagonia's Path to Carbon Neutrality by 2025 HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Patagonia Carbon has relatively successful track record of launching new products.
Slow decision making process
– As mentioned earlier in the report, Patagonia Carbon has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Patagonia Carbon even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Patagonia's Path to Carbon Neutrality by 2025, it seems that the employees of Patagonia Carbon don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Patagonia Carbon is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Patagonia's Path to Carbon Neutrality by 2025 can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Workers concerns about automation
– As automation is fast increasing in the segment, Patagonia Carbon needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Low market penetration in new markets
– Outside its home market of Patagonia Carbon, firm in the HBR case study Patagonia's Path to Carbon Neutrality by 2025 needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High cash cycle compare to competitors
Patagonia Carbon has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Increasing silos among functional specialists
– The organizational structure of Patagonia Carbon is dominated by functional specialists. It is not different from other players in the Innovation & Entrepreneurship segment. Patagonia Carbon needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Patagonia Carbon to focus more on services rather than just following the product oriented approach.
Opportunities Patagonia's Path to Carbon Neutrality by 2025 | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Patagonia's Path to Carbon Neutrality by 2025 are -
Loyalty marketing
– Patagonia Carbon has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Patagonia Carbon to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Patagonia Carbon to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Patagonia Carbon to hire the very best people irrespective of their geographical location.
Manufacturing automation
– Patagonia Carbon can use the latest technology developments to improve its manufacturing and designing process in Innovation & Entrepreneurship segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Innovation & Entrepreneurship industry, but it has also influenced the consumer preferences. Patagonia Carbon can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Patagonia Carbon in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Innovation & Entrepreneurship segment, and it will provide faster access to the consumers.
Using analytics as competitive advantage
– Patagonia Carbon has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Patagonia's Path to Carbon Neutrality by 2025 - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Patagonia Carbon to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Developing new processes and practices
– Patagonia Carbon can develop new processes and procedures in Innovation & Entrepreneurship industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Low interest rates
– Even though inflation is raising its head in most developed economies, Patagonia Carbon can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Buying journey improvements
– Patagonia Carbon can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Patagonia's Path to Carbon Neutrality by 2025 suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Patagonia Carbon can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Creating value in data economy
– The success of analytics program of Patagonia Carbon has opened avenues for new revenue streams for the organization in the industry. This can help Patagonia Carbon to build a more holistic ecosystem as suggested in the Patagonia's Path to Carbon Neutrality by 2025 case study. Patagonia Carbon can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Patagonia Carbon is facing challenges because of the dominance of functional experts in the organization. Patagonia's Path to Carbon Neutrality by 2025 case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Threats Patagonia's Path to Carbon Neutrality by 2025 External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Patagonia's Path to Carbon Neutrality by 2025 are -
Easy access to finance
– Easy access to finance in Innovation & Entrepreneurship field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Patagonia Carbon can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Patagonia Carbon in the Innovation & Entrepreneurship sector and impact the bottomline of the organization.
Consumer confidence and its impact on Patagonia Carbon demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Patagonia Carbon in the Innovation & Entrepreneurship industry. The Innovation & Entrepreneurship industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Patagonia's Path to Carbon Neutrality by 2025, Patagonia Carbon may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Innovation & Entrepreneurship .
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Patagonia Carbon will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Patagonia Carbon can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Patagonia's Path to Carbon Neutrality by 2025 .
Environmental challenges
– Patagonia Carbon needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Patagonia Carbon can take advantage of this fund but it will also bring new competitors in the Innovation & Entrepreneurship industry.
Shortening product life cycle
– it is one of the major threat that Patagonia Carbon is facing in Innovation & Entrepreneurship sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Patagonia Carbon needs to understand the core reasons impacting the Innovation & Entrepreneurship industry. This will help it in building a better workplace.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Regulatory challenges
– Patagonia Carbon needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Innovation & Entrepreneurship industry regulations.
High dependence on third party suppliers
– Patagonia Carbon high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Weighted SWOT Analysis of Patagonia's Path to Carbon Neutrality by 2025 Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Patagonia's Path to Carbon Neutrality by 2025 needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Patagonia's Path to Carbon Neutrality by 2025 is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Patagonia's Path to Carbon Neutrality by 2025 is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Patagonia's Path to Carbon Neutrality by 2025 is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Patagonia Carbon needs to make to build a sustainable competitive advantage.
