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Running head: SWOT ANALYSIS: PATAGONIA

SWOT Analysis: Patagonia

Pacific Coast Time

College of Integrative Sciences and Arts, Arizona State University

OGL355: Leading Organizational Innovation and Change

Dr. B

November 4th, 2020

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SWOT ANALYSIS: PATAGONIA
SWOT Analysis: Patagonia

Businesses are often retrospectively critiqued on their business strategies. Once

the businesses experience the success or failures of their strategic decisions, they

experience the results, i.e. increase in stock price, decrease in sales, etc. Then, the

analytic professionals across television, radio, and the internet give their ‘expert’ opinion

on why a given strategy was good or bad. What is not often discussed is what comes

before the strategy, or rather, what factors determine what strategy a company decides to

execute. Companies need a process that looks at both internal and external factors and

weighs them against one another to determine what strategies they should work toward

developing. The analyses should focus on two categories of factors which are internal and

external. Internal factors can be defined as being capable of being controlled by the

company while external factors cannot. One terrific form of this process manifests itself

in the S.W.O.T. analysis.

S.W.O.T. Analysis

The S.W.O.T. analysis is an internal analysis of a business that involves

identifying four areas of interest related to the success or failure of a business: the

businesses strengths, weaknesses, opportunities, and threats. A S.W.O.T. analysis is

performed to identify a business’s current position before deciding on a business strategy

to proceed with. It is an honest evaluation of authenticating where a company is at, so

that it can best establish where it should be going. It is also an opportunity to reinvest in

the company’s purpose. In other words, it helps with redefining and strengthening the

company’s business, social, and moral positions by considering who they are, what they

are doing, what they are selling, and who they are trying to sell to. Before we begin, it is
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important to understand that the first two elements of S.W.O.T, strengths and

weaknesses, are internal factors that can be directly controlled by the company, while the

second two elements, opportunities and threats, cannot be directly controlled. This is a

vital factor in the analysis of the S.W.O.T. chart listed below:

Strengths Weaknesses
● Social Responsibility ● Price
● Unique Manufacturing Process ● Specialized Target Audience
● Quality Products ● Lack of Product Diversity
● Unique Loyal Market Share ● Low Market Presence

Opportunities
● Combating Planned Obsolescence
● Environmental Concerns Growing
● Capitalistic Concerns growing
● New Generation entering the
Marketplace and Workforce
Threats
● Travel & Adventuring Suspended
● Outside Competition
● Pandemic & Unemployment
● Global Supply Chain & Possible
Implications

Strengths

When conducting an internal analysis, analyzing the strengths and weaknesses of

an organization is imperative for determining the viability of an organization’s future.

Patagonia’s future is promising assuming they are able to capitalize on their strengths by
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(1) implementing innovative strategic planning, and (2) maintaining their market share.

The strengths of Patagonia lies in their willingness to engage in social responsibility,

ability to produce quality long lasting products, its unique manufacturing process, and

their appeal to a unique market share. In this section, we will break down the strengths of

Patagonia and how they are able to maintain a competitive advantage in such a highly

competitive industry.

One of Patagonia’s top strengths is its commitment to social responsibility.

Patagonia’s commitment to social responsibility has been an advantageous strength that

separates them from the competition. While becoming one of the largest organizations of

its kind, Patagonia has maintained its passion for producing environmentally friendly

products that help maintain a healthy environment for us all. This kind of approach has

contributed to a loyal customer base that is willing to pay a higher price because they

share the organization’s passion and perceived benevolence to this cause. Not only does

Patagonia strive to contribute to the revitalization of our environment, but they also make

commitments to progress in other areas that require social awareness. For example,

Patagonia is an organization that acknowledges the threat of inhumane working

conditions placed on workers outside America. In order to prevent this possibility,

“before placing an initial order with a factory, Patagonia has a member of its

social/environmental responsibility team visit to verify conditions” (Enviro, 2020). They

also favor providing livable wages for workers and refrain from taking advantages that

most organizations lobby for. In fact, when the organization received Donald Trump’s tax

cuts in 2017, Patagonia “announced that it will donate $10 million to help combat climate

change” instead of pocketing it for their own use (BBC News, 2018). They also made a
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commitment to strive to become an anti-racist organization. The focus of this

organization’s selfless agendas create an advantage that competitors have yet to

duplicate.

Another strength that Patagonia possesses is its unique manufacturing process.

When this organization creates and delivers a product that they’ve manufactured, they

participate in what they call, The Footprint Chronicles, which is, “a self examination of

how their products are made” (Enviro, 2020). It also is “a transparent method for anyone

to track the impact of an article of Patagonia clothing from design through delivery”

(Patagonia.com). They also work with an independent verification firm, Bluesign

Technologies, that works to minimize the environmental harm the organization may

cause. Most organizations are too concerned with profit to construct such a rigorous

system that is not required. This creates a unique approach that separates them from their

competitors.

Weaknesses

Patagonia’s clear target audience, namely those who enjoy the outdoors and are

eco-conscious consumers, is both a strength and a weakness. By having such a

specialized target audience, they are losing out on opportunities to market their brand to

individuals that do not fall into these categories. For example, someone who lives in Los

Angeles would be far less likely to purchase from Patagonia than one who lives in

Colorado due to their lack of fashionable warm weather apparel. Should Patagonia

expand their product line to be more inclusive and less seasonal, they could capitalize on

catering to a completely different market.

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Another weakness is their lack of physical market presence. Unlike their

competitors, Patagonia customers are hard pressed to locate a brick and mortar location.

With merely “37 stores spread across the US, 2 stores in Canada, [and] a few stores in

several countries around the world,” they are severely underrepresented (Business

Strategy Hub, 2020). For perspective, The North Face who is one of their main

competitors has 5,000 stores in the United States and abroad (VFC, n.d.). This disparity

clearly places Patagonia at an extreme disadvantage. In addition to their lack of physical

locations, Patagonia is ranked last when compared to its two top competitors in e-

commerce sales as well. “The North Face captured 8 percent of total online outerwear

buyers, followed by Columbia with 6 percent share of buyers, and Patagonia at 3 percent”

in 2018 (NPD, n.d.). Although they possess the highest brand loyalty of the three

organizations, Patagonia’s weak market presence has heavily impacted their sales (NPD,

n.d.).

Opportunities

As the many concerns for the environment and future of the planet increase,

Patagonia expects to seize these opportunities and concerns. Time.com references this in

an article stating that, “as a growing share of consumers worry about a planet that is

getting hotter, and the accompanying droughts, fires, and storms, Patagonia’s

environmental activism has been good for business” (Semuels, 2019). Patagonia expects

to address these concerns by contributing to the reduction of waste being produced in the

environment by the clothing industry. They also expect to add to this contribution by

promoting people to repair, recycle, and keep their outerwear for a very long time.

Creating products that are supposed to outlast much of the competition is not just good
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for business, but it also shows the concern for the environment that their customers share

a passion for. They take the opportunity to shine the light on the planned obsolescence of

the clothing industry which tends to have a huge impact on the environment. Not only is

the clothing industry adding huge amounts of waste to the landfills, but they are also

creating a huge amount of carbon emissions in the production of outerwear clothing.

Being that outerwear clothing takes a lot more material and labor to be produced,

organizations should be more aware of the environmental impact it has on society. As all

these concerns continue to grow around the globe, Patagonia really hopes to seize these

opportunities by showing the people that there is a different way of doing business. While

their products may be expensive in the beginning, they are really investment pieces. It is

an investment that will pay off for generations to come.

In addition to environmental concerns, they also take the opportunity to fight

capitalistic concerns around the world. In their opinion, they are fighting capitalism by

creating products that are meant to last a long time instead of attempting to profit off of

residually returning customers. This practice of theirs attracts customers and the growing

population that feel organizations tend to overemphasize capitalistic ideals as opposed to

the best interest of their customers.

Finally, Patagonia is in a position to hone in on the opportunity that Generation Z

entering the market and the workforce presents. Generation Z has shown that they are

concerned about the future of the planet and the negative effects that manufacturing and

capitalistic industries have. Patagonia’s ideals seem to mesh really well with many of the

ideals that Generation Z holds. Patagonia specializes in seizing opportunities to relate

with their target audiences and it seems as though they ensure that their ideals align with
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incoming generations. In the article The Success of Patagonia it's even mentioned that

“It seems that the company’s message has resonated with the sort of environmentally

conscious and upscale consumers that Patagonia sees as its target audience” (Thangavelu,

2020). As concerns continue to grow around the world, Patagonia plans to seize these

opportunities to continue spreading their ideals and products with the world in hopes of

making a difference everyday on the planet. Patagonia still “ strives to embrace risk by

acting “quickly and decisively,” but not by sacrificing the future” (Beer, 2018).

Threats

Patagonia, at its core, is an outdoor adventure company. Founded by a team of

mountain climbers, and evolving into what they are today, the draw of the adventure of

the outdoors looks like the lifeblood of Patagonia. What happens when a global pandemic

comes close to shutting the world down from travel and that adventurer? Just glancing at

some numbers from The Transportation Security Administration (TSA) website on the

number of travelers passing through security checkpoints, traveling around or from the

United States has been impacted by more than half (n.d.). Looking at the impact that the

ongoing pandemic has had on National Parks is also relevant. If people are unable to

travel and visit these national parks and monuments, why shell out upwards of $250 for a

down jacket? In Arizona alone, as of November of this year, according to the National

Park Service website still has at least ten park closures or limited access in effect (Active

Alerts in Parks, n.d.). The fact that travel, and adventure planning has been put

completely on hold, or cancelled for the majority of the year should be considered a

threat to Patagonia; if you are in the adventure business, and adventures are cancelled,

where are people going to take your products?

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Patagonia obviously does not hold a monopoly over outdoor performance wear;

there are many serious competitors to Patagonia out there in the world, with more and

more joining the ranks. Some larger very similar competitors to touch on would be

Arc’teryx and Recreational Equipment Inc. (REI). Arc’teryx is a very similar brand in

terms of the products that they provide and having a similar pricing point; cold weather

jackets, climbing equipment and other similar products place this company in a spot to be

a fierce competitor. The blog post by Norway Geographical pits the two companies

against each on a few different fronts: price, history, products, and manufacturing;

looking at the few comments there, a clear rivalry is present in consumers of both brands

(2020). One other brand that can be considered a competitor would be Recreational

Equipment Inc (REI). While REI does have a larger variety of products that they offer in

their stores like camping equipment, bicycles, snow sports equipment like skis and

snowboards, for the main competition let's look at the jackets and other outerwear that

REI offers that is similar to Patagonia’s products. The main competitive advantage REI

has over Patagonia on the jacket front is that their price point is a good bit lower than

Patagonia: based on the prices from REI.com, Patagonia’s Nano Puff Insulated Hoodie

runs at approximately $250, while REI’s similar product the Stratocloud Down Hoodie

runs at about $189; quite a significant difference for someone looking to buy a down

jacket for the first time.

Conclusion

Patagonia is a company that delivers quality products with great customer service.

Juxtaposed with their competitor’s implementation of planned obsolescence, they pride

themselves in providing their customer base with products that will stand the test of time.
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Patagonia does this while being morally conscious of environmental impacts of their

actions and attempting to reduce their footprint. Moving forward, some areas of

improvement for Patagonia include overcoming the niche market they serve so that they

are able to access new, larger markets as well as finding ways to remedy their low market

presence. These areas are holding Patagonia back and threatening their future foothold on

the market. Patagonia has stood the test of time by having a clear direction, vision, and

through adhering to their values. By adjusting their strategy and overcoming weaknesses

to capitalize on their strengths, there is no reason why they will not be able to continue

serving their customers for years to come.

Each team member must update the name to the those on the team and provide

initials, confirming and agreeing to “SWOT” stated above.

APPROVAL: (sign off with initials by 12pm AZ time 6/24/2020) - plan

to submit by 1-2pm 6/24/2020

Raymond R Jeremy Sandra Dominic Sarah Kibler James

Quesada III Bigler - Nicole R. prado - DP - SK Dixon- JD
- RRQ3 JMB Tucker -
SNRT
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SWOT ANALYSIS: PATAGONIA
References

Active Alerts in Parks (U.S. National Park Service). (n.d.). Retrieved November 03,

2020, from https://www.nps.gov/planyourvisit/alerts.htm?s=AZ

Arc'teryx vs Patagonia: Which Brand is Better? (2020, April 14). Retrieved November

02, 2020, from https://norwaygeographical.com/arcteryx-vs-patagonia/

BBC News. (2018, November 29). Patagonia's $10 million donation: Why they

gave away their US tax savings. Retrieved from

https://www.bbc.com/news/newsbeat-46386147

Beer, J. (2018, March 15). How Patagonia Grows Every Time It Amplifies Its Social

Mission. Retrieved November 04, 2020, from

https://www.fastcompany.com/40525452/how-patagonia-grows-every-time-it-

amplifies-its-social-mission

Business Strategy Hub. (2020, October 26). Patagonia SWOT Analysis. Retrieved from

https://bstrategyhub.com/patagonia-swot-analysis/

Enviro (Ed.). (2020, February 10). Patagonia Clothing: Made Where? How? Why?

Retrieved from https://www.patagonia.com/stories/patagonia-clothing-made-

where-how-why/story-18467.html

NPD. (n.d.). Almost 1/3 of Online Apparel Buyers Purchased Outerwear Online.

Retrieved from https://www.npd.com/wps/portal/npd/us/news/press-

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releases/2018/more-u-s-apparel-consumers-are-opting-for-online-when-it-comes-

to-outerwear-purchase/

Semuels, A. (2019, September 23). Patagonia CEO Rose Marcario Has a Plan to Fix

Capitalism. Retrieved November 04, 2020, from

https://time.com/5684011/patagonia/

Thangavelu, P. (2020, August 28). The Success of Patagonia's Marketing Strategy.

Retrieved November 04, 2020, from

https://www.investopedia.com/articles/personal-finance/070715/success-

patagonias-marketing-strategy.asp

TSA checkpoint travel numbers for 2020 and 2019. (n.d.). Retrieved November 03, 2020,

from https://www.tsa.gov/coronavirus/passenger-throughput

VFC. (n.d.). The North Face. Retrieved from https://www.vfc.com/brands/the-north-face

Women's Winter Jackets, Coats, & Parkas: REI Co-op. (n.d.). Retrieved November 05,

2020, from https://www.rei.com/c/womens-insulated-jackets