Discuss about the Generic Strategies Patagonia and North Face Companies Case Study.
Define the Problem Situation
The management of the two companies faces critical problem whereby managers are selling the same products, and they have continued to maintain a close relationship despite them being competitors. From this observation, it is evident that the companies are suffering from inability to differentiate their product against those of the competitors as well as amongst themselves. For this case study, the two companies appear to lose sustainability development and corporate social responsibility. The two companies are keenly concentrated on making a profit without paying much attention to what is happening or what is going to happen to their competitors and environment. That is why the two managers uphold that they are entitled to do less bad to the environment (Meltzer, 2017).
Select A Strategic Analysis Model From Weeks 1-6 And Explain Why You Have Chosen To Apply This Model To The Problem Situation:
This model suits as the best to be applied in this case study. This can be attributed to its elements that appear to suit appropriately. First, differentiation model can be well applied whereby the company plans to develop a product that is different from the competitors (Bordean, Borza, Nistor, & Mitra, 2010). This can be perfected through the distribution channel. Patent protection, brand name, service levels, product innovation, product features, product reliability and product quality. Both North Face and Patagonia have applied only the aspect of quality to differentiate their products from those of the competitors. The amazing observation is that both the two companies are competitors but do not perceive the need of having different products (Meltzer, 2017). The two managers have transferred their lifelong friendship and relationship to business. Bearing in mind that businesses are termed as separate entities that are deemed to operate in the foreseeable future, the two managers should be more focused on designing products that are different from one another to establish a competitive advantage in the market (Bowman, 2008).
Application Of The Selected Model And Discussion Of Your Findings
Under differentiation model, the firm strives to be unique in its industry by abiding by some aspects that are largely valued and embraced by the customers (Porter, 2008). Both Patagonia and North Face have come about to apply this strategy to high-quality products. However, the challenge remains that both companies to differentiate their product from one another. Secondly, two managers are using the strategy of the high cost to target the market only in the urban centres. As much this may sound like a good strategy, it cannot supersede the benefits associated with the low-cost strategy.
The high price strategy used by the companies seem as a way to prevent low-income earners from purchasing their products. This contradicts the companies' profit goal because the aim objective of every business is to have a large market share by targeting as many customers as possible. In this case, both the Patagonia and the North Face uses differentiation strategy through manufacturing of high-quality products not to meet the needs of the as large target market as possible but to meet the requirements only small target market.
Patagonia and North Face can use differentiation strategy through application of several attributes such as product innovation, product features and brand name to reach as many customers as possible. On the aspect of product innovation, the companies can use it develop a different variety of products apart from gearing wears. Besides, the companies can use the element of innovation to manufacture different products that are affordable by the different classes of the people in the target market. This means that the company will produce products for the low-income earners, for the medium earners, and for the high-income earners. This is because the customers of these products do not only consume them for the sports purposes but they also use them during the day to day activities.
Again, the two companies can use the element product features to make goods that are different from the competitors. This will help them to create uniqueness in the market by having specific products that can be associated with their business. For example, today the red colour is largely associated with the Coca-Cola Company. Likewise, both Patagonia and North Face can use colour or product make up to differentiate their products from their competitors.
Provide Three Feasible Strategic Solutions
Recommendations Based On Your Findings
Differentiating the products between Patagonia and North Face
There is no existing different between Patagonian products and North Face products. The two companies are selling similar products and their CEOs have gone ahead to transfer their long term relationship into business. Therefore, there is a need for both Patagonia and North Face to establish differentiating strategies that will see each company design different products. However, this should not affect their relationship.
The best strategy to differentiate their products will be through distribution channels. This means one of the company should target a different market that is not within the geographical area of the other. The application of different distribution channels will allow the two companies to continue producing similar products but selling in different markets. The profits realized by the two companies will also increase through increased sales.
Merging both Patagonia and North Face Companies
From the analysis, it has come out clearly that the two companies are selling similar products and there is a very close relationship between the companies' CEOs. To avoid competition between the two companies, it would be appropriate for the two companies to merge and expand their business through increased business operations. The merging of the two companies will come across with the following benefits;
First, the merged company will increase its competitive advantage in the market from combined efforts of financial strength and innovativeness. The skills and knowledge attributable to the employees of the two companies will be integrated and used to develop products that have differentiating features from the “external “competitors. Secondly, the new company will use the marketing skills and strategies available for both companies to reach the new markets through the adoption of new distribution channels.
Product Differentiation from External Competitors
As much there is a problem of differentiation between Patagonia and North Face companies, the same problems exist with other external competitors. The two companies seem to only focus on amassing as much profit as possible without putting into consideration what are the activities of the competitors. Therefore, adopting the attributes of brand name, product features, and product innovation, the two companies can create a product that meets the needs of the customers even though different.
It is also important to note that, the business is always operating in a dynamic environment. Therefore, through the applicability of innovation, both Patagonia and North Face Companies will be able to improve their products and maintain their market competitiveness through improved product designs. This will enable them to overcome the competition offered by other competitors. Additionally, the company can apply innovation element to create a brand name that is different from the competitors.
Bordean, O. N., Borza, A. I., Nistor, R. L., & Mitra, C. S. (2010). The Use of Michael Porter's Generic Strategies in the Romanian Hotel Industry. International Journal of Trade, Economics, and Finance, 173-178.
Bowman, C. (2008). Generic strategies: a substitute for thinking? The Ashridge Journal, 1-6.
Meltzer, M. (2017, March 7). Patagonia and The North Face: saving the world – one puffer jacket at a time. Retrieved from Guardian News and Media Limited: https://www.theguardian.com/business/2017/mar/07/the-north-face-patagonia-saving-world-one-puffer-jacket-at-a-time
Porter, E. M. (2008). Competitive Advantage. New York: The Free Press.