Case Study Description of 2016 Patagonia Eco Innovation Case Competition
This case study examines the tensions that arise when Patagonia simultaneously pursues sustainability and quality objectives embedded within its mission statement to "Build the best product, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis." Specifically, this case study focuses on Patagonia's Durable Water Repellent (DWR) problem--DWR is a highly effective chemical treatment used to waterproof jackets (supporting the quality objective) but has by-products that are toxic and persist in the environment (undermining the sustainability objective). This case presents Patagonia's (and the industry's) challenges, its history trying to resolve the problem, including research, its temporary solution to use a less harmful but less effective option in C6, and its investment in Beyond Surface Technologies through $20 Million & Change, amongst others. The case also discusses external issues such as competitors and their efforts, pressure from Greenpeace, governmental involvement, and chemical industry actions. At the higher level, the case focuses on the question of how companies like Patagonia drive innovation down the supply chain to chemical and material suppliers, as well as how they think about innovation/disruption across the entire system, all the while grappling with internal tensions between performance, durability, and their commitment to cause no unnecessary environmental harm.
Authors :: Dara O'Rourke, Robert Strand
Topics :: Leadership & Managing People
Tags :: Social enterprise, Social responsibility, Sustainability, SWOT Analysis, SWOT Matrix, TOWS, Weighted SWOT Analysis
Swot Analysis of "2016 Patagonia Eco Innovation Case Competition" written by Dara O'Rourke, Robert Strand includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Patagonia Dwr facing as an external strategic factors. Some of the topics covered in 2016 Patagonia Eco Innovation Case Competition case study are - Strategic Management Strategies, Social enterprise, Social responsibility, Sustainability and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the 2016 Patagonia Eco Innovation Case Competition casestudy better are - – wage bills are increasing, increasing government debt because of Covid-19 spendings, there is increasing trade war between United States & China, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing household debt because of falling income levels, banking and financial system is disrupted by Bitcoin and other crypto currencies, technology disruption,
digital marketing is dominated by two big players Facebook and Google, geopolitical disruptions, etc
Introduction to SWOT Analysis of 2016 Patagonia Eco Innovation Case Competition
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in 2016 Patagonia Eco Innovation Case Competition case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Patagonia Dwr, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Patagonia Dwr 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 2016 Patagonia Eco Innovation Case Competition can be done for the following purposes –
1. Strategic planning using facts provided in 2016 Patagonia Eco Innovation Case Competition case study
2. Improving business portfolio management of Patagonia Dwr
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 Dwr
Strengths 2016 Patagonia Eco Innovation Case Competition | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Patagonia Dwr in 2016 Patagonia Eco Innovation Case Competition Harvard Business Review case study are -
Organizational Resilience of Patagonia Dwr
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Patagonia Dwr does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Training and development
– Patagonia Dwr has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in 2016 Patagonia Eco Innovation Case Competition 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.
Sustainable margins compare to other players in Leadership & Managing People industry
– 2016 Patagonia Eco Innovation Case Competition firm has clearly differentiated products in the market place. This has enabled Patagonia Dwr to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Patagonia Dwr to invest into research and development (R&D) and innovation.
High brand equity
– Patagonia Dwr has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Patagonia Dwr to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Strong track record of project management
– Patagonia Dwr is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Ability to lead change in Leadership & Managing People field
– Patagonia Dwr 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 Dwr in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Successful track record of launching new products
– Patagonia Dwr has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Patagonia Dwr 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.
Diverse revenue streams
– Patagonia Dwr is present in almost all the verticals within the industry. This has provided firm in 2016 Patagonia Eco Innovation Case Competition 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.
Effective Research and Development (R&D)
– Patagonia Dwr 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 2016 Patagonia Eco Innovation Case Competition - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Highly skilled collaborators
– Patagonia Dwr has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in 2016 Patagonia Eco Innovation Case Competition HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Low bargaining power of suppliers
– Suppliers of Patagonia Dwr in the sector have low bargaining power. 2016 Patagonia Eco Innovation Case Competition has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Patagonia Dwr to manage not only supply disruptions but also source products at highly competitive prices.
Innovation driven organization
– Patagonia Dwr is one of the most innovative firm in sector. Manager in 2016 Patagonia Eco Innovation Case Competition Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Weaknesses 2016 Patagonia Eco Innovation Case Competition | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of 2016 Patagonia Eco Innovation Case Competition are -
High dependence on star products
– The top 2 products and services of the firm as mentioned in the 2016 Patagonia Eco Innovation Case Competition 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 Dwr has relatively successful track record of launching new products.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Patagonia Dwr supply chain. Even after few cautionary changes mentioned in the HBR case study - 2016 Patagonia Eco Innovation Case Competition, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Patagonia Dwr vulnerable to further global disruptions in South East Asia.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Patagonia Dwr is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study 2016 Patagonia Eco Innovation Case Competition can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Increasing silos among functional specialists
– The organizational structure of Patagonia Dwr is dominated by functional specialists. It is not different from other players in the Leadership & Managing People segment. Patagonia Dwr needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Patagonia Dwr to focus more on services rather than just following the product oriented approach.
Lack of clear differentiation of Patagonia Dwr products
– To increase the profitability and margins on the products, Patagonia Dwr needs to provide more differentiated products than what it is currently offering in the marketplace.
High operating costs
– Compare to the competitors, firm in the HBR case study 2016 Patagonia Eco Innovation Case Competition has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Patagonia Dwr 's lucrative customers.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study 2016 Patagonia Eco Innovation Case Competition, it seems that the employees of Patagonia Dwr 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.
Aligning sales with marketing
– It come across in the case study 2016 Patagonia Eco Innovation Case Competition that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case 2016 Patagonia Eco Innovation Case Competition can leverage the sales team experience to cultivate customer relationships as Patagonia Dwr is planning to shift buying processes online.
Products dominated business model
– Even though Patagonia Dwr 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 - 2016 Patagonia Eco Innovation Case Competition should strive to include more intangible value offerings along with its core products and services.
Slow decision making process
– As mentioned earlier in the report, Patagonia Dwr 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 Dwr 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.
Low market penetration in new markets
– Outside its home market of Patagonia Dwr, firm in the HBR case study 2016 Patagonia Eco Innovation Case Competition needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Opportunities 2016 Patagonia Eco Innovation Case Competition | 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 2016 Patagonia Eco Innovation Case Competition are -
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Patagonia Dwr can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Building a culture of innovation
– managers at Patagonia Dwr 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Patagonia Dwr is facing challenges because of the dominance of functional experts in the organization. 2016 Patagonia Eco Innovation Case Competition 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Patagonia Dwr 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.
Manufacturing automation
– Patagonia Dwr 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.
Loyalty marketing
– Patagonia Dwr 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Patagonia Dwr 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.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Leadership & Managing People industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Patagonia Dwr can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Patagonia Dwr can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Learning at scale
– Online learning technologies has now opened space for Patagonia Dwr to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Patagonia Dwr 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 Dwr to hire the very best people irrespective of their geographical location.
Developing new processes and practices
– Patagonia Dwr 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.
Better consumer reach
– The expansion of the 5G network will help Patagonia Dwr to increase its market reach. Patagonia Dwr will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Buying journey improvements
– Patagonia Dwr can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. 2016 Patagonia Eco Innovation Case Competition 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.
Threats 2016 Patagonia Eco Innovation Case Competition External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study 2016 Patagonia Eco Innovation Case Competition are -
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Patagonia Dwr.
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 Dwr 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.
Stagnating economy with rate increase
– Patagonia Dwr 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.
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.
Consumer confidence and its impact on Patagonia Dwr 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.
High dependence on third party suppliers
– Patagonia Dwr 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.
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 Dwr can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Patagonia Dwr business can come under increasing regulations regarding data privacy, data security, etc.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Patagonia Dwr with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Regulatory challenges
– Patagonia Dwr 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.
Increasing wage structure of Patagonia Dwr
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Patagonia Dwr.
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 Dwr in the Leadership & Managing People sector and impact the bottomline of the organization.
Technology acceleration in Forth Industrial Revolution
– Patagonia Dwr 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 Dwr 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.
Weighted SWOT Analysis of 2016 Patagonia Eco Innovation Case Competition 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 2016 Patagonia Eco Innovation Case Competition 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 2016 Patagonia Eco Innovation Case Competition 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 2016 Patagonia Eco Innovation Case Competition 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 2016 Patagonia Eco Innovation Case Competition 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 Dwr needs to make to build a sustainable competitive advantage.