Sustainability in Regional and Global Sports †MyAssignmenthelp.com

Question: Discuss about the Sustainability in Regional and Global Sports. Answer: Introduction Strategic management is the process for an organisation in formulation and implementation of the strategies. An organisation sets the strategies based on the resources and competencies it has (Bohlouli et al. 2017). In this report, strategic management of Patagonia will be highlighted with analysis of outdoor lifestyle industry. Patagonia is US-based outdoor lifestyle fashion clothing and sports clothing company. The scope of the study is to explore the strategic management initiatives of Patagonia and functional management policies of the organisation. In the first part of the report, external environment and industry competition of the organisation has been conducted. In addition, resources and competencies of the organisation have been produced. Moreover, the mission and vision statements of the organisation Patagonia have been evaluated. Finally, a SWOT analysis has been conducted with current business level strategies with recommending changes of it. Patagonia provides special consideration towards the environmental factors and environmental issues are associated with the political bodies. This organisation is trying to expand the business in European sector and the recent Brexit issue can create a problem for them. The factors of EU policies and political stability in Europe can impact on the business. Level of corruption and intellectual property protection of European countries are important factors for Patagonia. Industrial safety, taxation and employee safety issues are to be followed. Macro-environmental factors of the business in economic contexts are saving rate, inflation rate and interest rates in European contexts can create an issue for the business of Patagonia. In recent time, European outdoor clothing is flourishing as exchange rate and infrastructure quality are good (Plank 2016). In most of the European countries, aggregate demand and aggregate supply are the factors to be followed and GDP is going high in a European context. US-based company Patagonia has been trying to enter European market and European people's demographic factors are different from the US. The preference and brand awareness are different in Europe as well as class structure and hierarchy in society. European people provide importance in leisure interest and attitudes (Proctor 2014). The organisation uses social policies to support the initiatives to repair and extension of the life of existing products. In recent time, technologies play disrupting role in all industry. In outdoor clothing, the manufacturing process is getting change with marketing. Moreover, in transportation in the supply chain of the Patagonia has been changing the technological issues. Patagonia needs to consider the competitors' technological specification in the industry, technologies can impact product offering and it can impact on value chain as well. Patagonia has a strong set of values in their strategies and mission. The organisation has environmental values and it is offering the products that are environmentally friendly. Moreover, the organisation is using green supply chain. The firm does Common Thread Recycling Programme to reduce the environmental impact (Rousseau and Vranken 2013). The organisation does not want to harm the environment for any unnecessary reason and it is using organic cotton as well. Patagonia needs to follow the anti-trust law in the irrespective countries they are planning to invade. Moreover, the laws regarding employment and exporting should be followed. Copyright and patent related issues must be solved by the management. The environmental laws and Health and Safety of the employees must be carefully managed. Industry competition analysis Industry rivalry In the US market, Patagonia has three major competitors and they are North Face, Timberland and Low Alpine, these are from VF Corp. organisation. The organisation is planning to enter European context and the competition in the European market is also high. Patagonia can face the challenges from Eagle, Lafuma and Quechua, Columbia, REI and Solomon. Therefore, the organisation is in the highly competitive sector and it has been following higher cost operation process for its environmental policies in the supply chain, production and logistics. High Threats of new entrants 20 Years before, an organisation like Patagonia could not be imagined as the business style of environment-friendly way might not be needed (Svedlund et al. 2016). Therefore, the competitive advantage of the business is not in endangered. In recent time, the new entrant in the business has been seen in fashion or sports clothing industry as the example of the business could be Quechua, it is ranked 7th in global perspective in the selling of outdoor clothing. Most of the organisations are starting their subsidiaries in European sector also. Medium Substitutes In outdoor clothing, this brand produces sports products for Nordic Skiing, fly fishing, mountain climbing, trekking and snowboarding. The clothes offered by Patagonia are perfect; however, the trend of the clothing has been changing always. Patagonia does not need to go compete with all brands associated with sports clothing. Medium Bargaining power of customers The customers in this industry are unique and the organisation meets the specific criteria of the customers. Therefore, the customers are the lovers of the outdoor sports and customers are loyal to the organisation (Tansey et al. 2014). The range of the customers for the organisation is small and Patagonia is innovative and they attract the customers by quality products. Medium Bargain power of suppliers Patagonia has almost 160 suppliers of raw materials in the US and the management wants to trust and mutual governing in this respect. The organisation has cut its profit by assigning itself to take raw materials of organic cotton suppliers. Patagonia gives 10% turnover prices to RD to improve quality of the products. Low Table 1: Porters Five Forces (Source: Self-developed) Critically discuss Patagonias resources and competencies that can be utilized in competitive advantage Physical resources of an organisation are tangible resources and this type of resources can be touched (Tarhini et al. 2015). In addition, physical resources valuable assets and Patagonia has it headquarter in California. They have their own supply chain; moreover, they have manufacturing process. Physical resources of Patagonia include buildings, trucks, machines, equipment for manufacturing production. Raw materials of the organisation are physical resources. Patagonia has been observing growth in the market and it will grow in the market to cover up 396m annual turnover globally. Gross margin of the organisation was 50% average between 2010 and 2015. In the last year, Return on Assets was 8% and Return on Equity was 9.6%. Moreover, Return of Revenue touched 8.1% last year (Patagonia.com 2017). The organisation is expecting a high sales growth in the US market and they are expecting to continue their sales in the European market as well. Gellert, the CEO expected that the 20% of the total revenue should from the European section. Patagonia organisation values the honesty and integrity in the workplace and they recruit mainly the skilled employees. However, in case, any issue occurs, the management asks the local administration to check the problem. In addition, the number of people in the organisation working is not much; it is 1000 employees (Patagonia.com 2017). The management is trying to recruit more people to the retail stores in the US. Moreover, in the UK, they make a partnership with the retail stores in selling their products. In this section, they start recruiting sales executives. Organisation Competency Analysis Core competencies of an organisation must fulfil three major criteria, it provides access to most of the products, it must contribute it the consumers benefits and it must be difficult for the competitors to imitate the products in the market (Akkermans et al. 2013). Patagonia sells the outdoor products for the sports lover and they have to compete with competitors in the US and in the global market. However, the core competency of the organisation lies in the materials they are using. As the organisation uses environment-friendly products, it would be difficult for the competitors to copy the idea from them. Patagonia is doing well in the US and in Japan market. However, they are trying to enter the European market with the same products line as they think the market has billion-dollar potential. Competencies of Patagonia are doing the penance in society, clean up own act, support civil democracy and influence other companies (Armstrong and Taylor 2014). As stated by Gerve and Zhang (2017), threshold competencies mean the basic knowledge, self-images, skills, traits and social role of an organisation that is necessity in order to do a work. Moreover, without these competencies, the quality of the products and the performance may get decreased. Patagonia is doing the business in outdoor clothing on certain sports and VF Corp. is the competitors in this market. However, Patagonias environmental strategy is new in the market that would make them standalone in the global market as well. Competitive advantage of Patagonia Competency Valuability Rarity Imitability Non-substitutability Competitive advantage Physical resources Yes No No yes Competitive Parity Financial resources Yes Yes No Yes Temporary competitive advantage Human resources Yes No No No No competitive advantage Core competencies Yes Yes Yes No Competitive advantage Threshold competencies Yes Yes No Yes Temporary competitive advantage Table 2: VRIN analysis of Patagonia (Source: Self-developed) The major goals of the organisation are to use environmentally sustainable methods in using resources and Patagonia uses organic cotton and less damaging dyes and fabrics. In capabilities of the organisation, they strive to less consume and appeal to dirtbags'. Patagonia takes Product Life Cycle initiatives, 1% of the planet and they donate the revenue of the organisation and it is the leader in recycling and sustainability (West et al. 2017). Patagonia took the risks 20% companys stake in order to be an organic company and invested heavily in RD. In addition, competitive advantage lies in the expansion strategy in the European market and Patagonia sold 8% more organic products over competitors in US market. Mission Statement of Patagonia The mission statement of Patagonia clearly talks about environmental protection and sustainability. Patagonia's values reflect the idea that the organisation started by a band of surfers and climbers. The product design of the organisation is the sign of utility and simplicity. Patagonia believes that they are making pollution as a by-product, therefore they took a pledge to use recycled polyester and organic cotton. The core values of the organisation are environmental sustainability and product quality that help the organisation to be in the market for than 30 years. The main mission of the organisation is to make the best products for the environment; however, the expansion of the business is missing. The business should make a profit and it is needed to increase sales as well. The organisations try to introduce new products and expand the business in the different market as well. Developing new market segment and move into different geographical segment need strategies from manag ement (Tansey et al. 2014). Global market provides rising consumers and changing of business climate, however, Patagonia needs to follow the uniqueness itself being environment-friendly. Patagonia does not take the expansion into the different market in their mission statement. However, current CEO of the organisation Gillert takes the expansion into European region seriously. Therefore the mission statement of the organisation could be reframed as: Best products, cause unnecessary harm, solve environmental crisis and sustainable growth in overseas. SWOT analysis Strengths Environmental reputation Private Structure Patented innovative and quality products Strong community relationship Low employee turnover Manufacturing process Weaknesses The firm does not have customer loyalty incentives Less fashionable apparel Price of the products Political views Limited suppliers Limited products lines Present in a few countries Opportunities International markets Increasing retail stores Going public online spending of the customers Increase in environmental activities Threats Public companies Global expansion Competition in the market Table 3: SWOT analysis (Source: Self-developed) Corporate strategies of Patagonia Patagonia Is in consumer discretionary sector and this organisation's success depends on mainly on economic growth of the organisation. This organisation's business strategy depends on consumers' spending and payroll. The organisation has been facing the issue from the coalition and this is related to the high-end products. The growth and expansion are the major factors that enable the organisation to take the business strategy. In the tough economic condition, the diversification is another key of Patagonia to survive in the market. Most importantly, the organisation focuses environmental factors. Patagonia takes the expansion seriously and they hired new senior managers from Europe and they are trying to focus on storytelling to attract new customers. Patagonia is trying to decentralise the footprint in Europe by moving headquarter to Amsterdam (Patagonia.com 2017). The organisation is taking market development by opening new shops in the UK through retails and opens their new shop s. However, Patagonia can change the business strategy: Cost leadership strategy will be helpful for Patagonia as this provides a competitive advantage. Patagonia can lower the prices of the products and this strategy can increase the market share of the company in the European sectors. In the UK, the organisation has no outlet, using retail stores and supermarket will be helpful with low cost. The organisation needs to minimise the production cost and this would enhance the profitability. In emerging market, the strategy of the low cost will help Patagonia to create the large market share with exponential growth. In the UK, the organisation sees 60 million turnovers in the European market, cost leadership strategy will help it to have 20% of total turnover from European market as well. Diversification strategy would be helpful for an organisation when it sells its new product to a new market (Tanwar 2013). In this respect, Patagonia can start a new line of fashion clothing for men and women of the younger generation in order to expand into the European market. Their offerings of sports outdoor clothing can be changed into a little bit in fashion so that it looks different. Patagonia's concentric diversification in the fashion clothing industry would be a leap into the European market and they could expand in another part as well. Technological specification, manufacturing process and environment-friendly design all can remain same. The development of market can be made through opening a few franchises in the UK and another part of Europe as well. Conclusion It has been observed that Patagonia does the business for environmental sustainable purposes and it has a favourable external environment to do the business. The competition in the market is high; however, they can expand the business in European sector by changing some strategies in business. The organisation has been doing good using physical human and financial resources. Moreover, VRIN analysis proves the competitive advantage of the organisation in the environmental standard. 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