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 - – competitive advantages are harder to sustain because of technology dispersion, increasing transportation and logistics costs, supply chains are disrupted by pandemic , customer relationship management is fast transforming because of increasing concerns over data privacy, banking and financial system is disrupted by Bitcoin and other crypto currencies, cloud computing is disrupting traditional business models, digital marketing is dominated by two big players Facebook and Google,
there is increasing trade war between United States & China, increasing government debt because of Covid-19 spendings, 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 -
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.
Successful track record of launching new products
– Patagonia Patagonia's has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Patagonia Patagonia's 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.
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.
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.
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.
Cross disciplinary teams
– Horizontal connected teams at the Patagonia Patagonia's 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.
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.
Sustainable margins compare to other players in Leadership & Managing People industry
– Patagonia's Sustainability Strategy: Don't Buy Our Products firm has clearly differentiated products in the market place. This has enabled Patagonia Patagonia's to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Patagonia Patagonia's to invest into research and development (R&D) and innovation.
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.
Learning organization
- Patagonia Patagonia's is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Patagonia Patagonia's is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Patagonia's Sustainability Strategy: Don't Buy Our Products Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
High brand equity
– Patagonia Patagonia's has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Patagonia Patagonia's to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
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 -
Slow decision making process
– As mentioned earlier in the report, Patagonia Patagonia's 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 Patagonia's 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.
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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Patagonia's Sustainability Strategy: Don't Buy Our Products, it seems that the employees of Patagonia Patagonia's 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Patagonia's Sustainability Strategy: Don't Buy Our Products 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 Patagonia's has relatively successful track record of launching new products.
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.
Need for greater diversity
– Patagonia Patagonia's has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Patagonia's Sustainability Strategy: Don't Buy Our Products, is just above the industry average. Patagonia Patagonia's 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.
Aligning sales with marketing
– It come across in the case study Patagonia's Sustainability Strategy: Don't Buy Our Products 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 Patagonia's Sustainability Strategy: Don't Buy Our Products can leverage the sales team experience to cultivate customer relationships as Patagonia Patagonia's is planning to shift buying processes online.
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.
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 Patagonia's supply chain. Even after few cautionary changes mentioned in the HBR case study - Patagonia's Sustainability Strategy: Don't Buy Our Products, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Patagonia Patagonia's vulnerable to further global disruptions in South East Asia.
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 -
Better consumer reach
– The expansion of the 5G network will help Patagonia Patagonia's to increase its market reach. Patagonia Patagonia's 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.
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 Patagonia's 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.
Learning at scale
– Online learning technologies has now opened space for Patagonia Patagonia's 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.
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.
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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Patagonia Patagonia's can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Patagonia's Sustainability Strategy: Don't Buy Our Products, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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 Patagonia's can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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.
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 Patagonia's 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 Patagonia's 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.
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.
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.
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.
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.
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 -
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.
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 Patagonia's in the Leadership & Managing People sector and impact the bottomline of the organization.
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.
Increasing wage structure of Patagonia Patagonia's
– 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 Patagonia's.
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.
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 .
Environmental challenges
– Patagonia Patagonia's 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 Patagonia's can take advantage of this fund but it will also bring new competitors in the Leadership & Managing People industry.
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.
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.
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.
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 .
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.
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.
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.