Case Study Description of Patagonia's Sustainability Strategy: Don't Buy Our Products
In 2005, Patagonia launched the Common Threads Recycling Program. The goal was to reduce the number of products Patagonia customers purchased through a two-fold effort. The first part was to encourage customers to fix damaged clothing. Patagonia began publishing do-it-yourself repair guides to assist customers in repairing their clothing. To provide an alternative for customers who were unable or unwilling to repair their clothing themselves, Patagonia charged an affordable fee to have garments shipped to their repair facility. The second aspect of the Common Threads program was to create a second-hand market for Patagonia garments that did not fit or that were no longer worn. Patagonia collaborated with eBay to develop a storefront and also created an online marketplace on its main website. Patagonia also offered to cover the shipping costs for garments that were beyond repair, which Patagonia would then break down and repurpose. To promote its Common Threads initiative, Patagonia created "Worn Wear," a program that highlights thousands of videos and pictures from customers around the globe who treasure their worn, patched-up Patagonia garments with pride. While most companies would encourage customers to repeat their purchases, Patagonia prides itself and its customers on waste-free purchases. Patagonia's next step was to launch a campaign in 2011 to dissuade customers from purchasing clothing that they did not really need. On the busiest weekend for retailers in the US, a 2011 New York Times ad from Patagonia featured a picture of one of Patagonia's highest grossing fleece jackets below the words: "DON'T BUY THIS JACKET." Underneath was a detailed description that defended Patagonia's rationale based on the negative environmental impacts caused by consumerism. Despite Patagonia's efforts, sales increased by approximately 30% in the nine months following the ad. The case concludes with the business dilemma facing Chouinard: What should Patagonia do?
Swot Analysis of "Patagonia's Sustainability Strategy: Don't Buy Our Products" written by Francisco Szekely, Zahir Dossa includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Patagonia Patagonia's facing as an external strategic factors. Some of the topics covered in Patagonia's Sustainability Strategy: Don't Buy Our Products case study are - Strategic Management Strategies, Transparency and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Patagonia's Sustainability Strategy: Don't Buy Our Products casestudy better are - – banking and financial system is disrupted by Bitcoin and other crypto currencies, talent flight as more people leaving formal jobs, challanges to central banks by blockchain based private currencies, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing inequality as vast percentage of new income is going to the top 1%, supply chains are disrupted by pandemic , increasing government debt because of Covid-19 spendings,
geopolitical disruptions, technology disruption, etc
Introduction to SWOT Analysis of Patagonia's Sustainability Strategy: Don't Buy Our Products
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Patagonia's Sustainability Strategy: Don't Buy Our Products case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Patagonia Patagonia's, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Patagonia Patagonia's 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 Sustainability Strategy: Don't Buy Our Products can be done for the following purposes –
1. Strategic planning using facts provided in Patagonia's Sustainability Strategy: Don't Buy Our Products case study
2. Improving business portfolio management of Patagonia Patagonia's
3. Assessing feasibility of the new initiative in Leadership & Managing People field.
4. Making a Leadership & Managing People topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Patagonia Patagonia's
Strengths Patagonia's Sustainability Strategy: Don't Buy Our Products | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Patagonia Patagonia's in Patagonia's Sustainability Strategy: Don't Buy Our Products Harvard Business Review case study are -
High switching costs
– The high switching costs that Patagonia Patagonia's 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.
Diverse revenue streams
– Patagonia Patagonia's is present in almost all the verticals within the industry. This has provided firm in Patagonia's Sustainability Strategy: Don't Buy Our Products case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Ability to lead change in Leadership & Managing People field
– Patagonia Patagonia's 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 Patagonia's in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Strong track record of project management
– Patagonia Patagonia's is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Innovation driven organization
– Patagonia Patagonia's is one of the most innovative firm in sector. Manager in Patagonia's Sustainability Strategy: Don't Buy Our Products Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Effective Research and Development (R&D)
– Patagonia Patagonia's 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 Sustainability Strategy: Don't Buy Our Products - 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 recruit top talent
– Patagonia Patagonia's is one of the leading recruiters in the industry. Managers in the Patagonia's Sustainability Strategy: Don't Buy Our Products are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Superior customer experience
– The customer experience strategy of Patagonia Patagonia's in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Organizational Resilience of Patagonia Patagonia's
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Patagonia Patagonia's does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Training and development
– Patagonia Patagonia's has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Patagonia's Sustainability Strategy: Don't Buy Our Products Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Low bargaining power of suppliers
– Suppliers of Patagonia Patagonia's in the sector have low bargaining power. Patagonia's Sustainability Strategy: Don't Buy Our Products has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Patagonia Patagonia's to manage not only supply disruptions but also source products at highly competitive prices.
Analytics focus
– Patagonia Patagonia's 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 Francisco Szekely, Zahir Dossa 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.
Weaknesses Patagonia's Sustainability Strategy: Don't Buy Our Products | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Patagonia's Sustainability Strategy: Don't Buy Our Products are -
High bargaining power of channel partners
– Because of the regulatory requirements, Francisco Szekely, Zahir Dossa suggests that, Patagonia Patagonia's is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Interest costs
– Compare to the competition, Patagonia Patagonia's 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Patagonia Patagonia's 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.
No frontier risks strategy
– After analyzing the HBR case study Patagonia's Sustainability Strategy: Don't Buy Our Products, it seems that company is thinking about the frontier risks that can impact Leadership & Managing People 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Patagonia's Sustainability Strategy: Don't Buy Our Products, in the dynamic environment Patagonia Patagonia's has struggled to respond to the nimble upstart competition. Patagonia Patagonia's has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Products dominated business model
– Even though Patagonia Patagonia's has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Patagonia's Sustainability Strategy: Don't Buy Our Products should strive to include more intangible value offerings along with its core products and services.
Lack of clear differentiation of Patagonia Patagonia's products
– To increase the profitability and margins on the products, Patagonia Patagonia's needs to provide more differentiated products than what it is currently offering in the marketplace.
Increasing silos among functional specialists
– The organizational structure of Patagonia Patagonia's is dominated by functional specialists. It is not different from other players in the Leadership & Managing People segment. Patagonia Patagonia's needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Patagonia Patagonia's to focus more on services rather than just following the product oriented approach.
Skills based hiring
– The stress on hiring functional specialists at Patagonia Patagonia's has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Low market penetration in new markets
– Outside its home market of Patagonia Patagonia's, firm in the HBR case study Patagonia's Sustainability Strategy: Don't Buy Our Products needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High cash cycle compare to competitors
Patagonia Patagonia's 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.
Opportunities Patagonia's Sustainability Strategy: Don't Buy Our Products | 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 Sustainability Strategy: Don't Buy Our Products are -
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Patagonia Patagonia's can use these opportunities to build new business models that can help the communities that Patagonia Patagonia's operates in. Secondly it can use opportunities from government spending in Leadership & Managing People sector.
Manufacturing automation
– Patagonia Patagonia's can use the latest technology developments to improve its manufacturing and designing process in Leadership & Managing People 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.
Building a culture of innovation
– managers at Patagonia Patagonia's can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Leadership & Managing People segment.
Developing new processes and practices
– Patagonia Patagonia's can develop new processes and procedures in Leadership & Managing People 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Patagonia Patagonia's is facing challenges because of the dominance of functional experts in the organization. Patagonia's Sustainability Strategy: Don't Buy Our Products 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.
Loyalty marketing
– Patagonia Patagonia's 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Patagonia Patagonia's can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Leveraging digital technologies
– Patagonia Patagonia's can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Creating value in data economy
– The success of analytics program of Patagonia Patagonia's has opened avenues for new revenue streams for the organization in the industry. This can help Patagonia Patagonia's to build a more holistic ecosystem as suggested in the Patagonia's Sustainability Strategy: Don't Buy Our Products case study. Patagonia Patagonia's can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Leadership & Managing People industry, but it has also influenced the consumer preferences. Patagonia Patagonia's 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 Patagonia's in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Leadership & Managing People segment, and it will provide faster access to the consumers.
Buying journey improvements
– Patagonia Patagonia's can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Patagonia's Sustainability Strategy: Don't Buy Our Products 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Patagonia Patagonia's 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 Patagonia's to hire the very best people irrespective of their geographical location.
Threats Patagonia's Sustainability Strategy: Don't Buy Our Products 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 Sustainability Strategy: Don't Buy Our Products are -
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Patagonia Patagonia's with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Stagnating economy with rate increase
– Patagonia Patagonia's can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Consumer confidence and its impact on Patagonia Patagonia's 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.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
High dependence on third party suppliers
– Patagonia Patagonia's 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.
Technology acceleration in Forth Industrial Revolution
– Patagonia Patagonia's has witnessed rapid integration of technology during Covid-19 in the Leadership & Managing People industry. As one of the leading players in the industry, Patagonia Patagonia's needs to keep up with the evolution of technology in the Leadership & Managing People sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
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 Sustainability Strategy: Don't Buy Our Products, Patagonia Patagonia's may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Leadership & Managing People .
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Patagonia Patagonia's 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 Sustainability Strategy: Don't Buy Our Products .
Regulatory challenges
– Patagonia Patagonia's 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 Leadership & Managing People industry regulations.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Patagonia Patagonia's in the Leadership & Managing People industry. The Leadership & Managing People 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.
Shortening product life cycle
– it is one of the major threat that Patagonia Patagonia's is facing in Leadership & Managing People 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 Patagonia's needs to understand the core reasons impacting the Leadership & Managing People industry. This will help it in building a better workplace.
Easy access to finance
– Easy access to finance in Leadership & Managing People field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Patagonia Patagonia's can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Weighted SWOT Analysis of Patagonia's Sustainability Strategy: Don't Buy Our Products 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 Sustainability Strategy: Don't Buy Our Products 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 Sustainability Strategy: Don't Buy Our Products 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 Sustainability Strategy: Don't Buy Our Products 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 Sustainability Strategy: Don't Buy Our Products 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 Patagonia's needs to make to build a sustainable competitive advantage.
