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Recreational Equipment Incorporated SWOT Analysis

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Recreational Equipment Incorporated SWOT Analysis
04.08.2020
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Recreational Equipment, Inc. (REI) was founded in 1938 by Lloyd and Mary Anderson and it is currently based in Kent, Washington. The founders were passionate climbers who understood difficulties that people encountered when seeking quality climbing gears; therefore, together with their peers, they decided to form a cooperative. The company has tremendously grown over the years from the initial one store in Seattle to more than 140 countrywide, and it has a global presence (Bloomberg). The key executives are Mr. Jerry D. Stritzke, the chief executive officer, Ms. Catherine Walker, the vice president and company secretary, Mr. Tim Sprangler, the vice president in charge of retail, Ms. Susan Viscon, the vice president responsible for merchandising, and Mr. Ben Steele who is the creative officer (Bloomberg). This assignment offers SWOT analysis for the company given the developments that have taken place over time.

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REI designs manufactures and retails outdoor gear and apparel for climbing, camping, fitness, cycling, travel, snow sports, and paddling. It offers tents, trekking poles, sleeping bags, backpacks, gadgets, lighting products, electronics, camp kitchen, water bottles, camp furniture, dog and climbing gears, health and safety products, climbing hardware, mountaineering, climbing accessories and clothes (Bloomberg). Other services that the company offers include canoeing, kayaking, paddle boarding, paddling footwear and clothing, skiing products, products for snowboarding, and travel products, including luggage and luggage accessories, among other services.

Recreational Equipment Incorporated SWOT Analysis

Strengths

REI views quality from the perspective of life and product. Its mission statement is to inspire, educate, and outfit its customers, as well as set the tone for the strengths that are associated with it (Recreational Equipment, Inc.). First, the company boasts of a strong connection with the communities that it serves, which has been a key factor behind its success in sales. It is notable that REI takes part in charity activities, which has helped to create a positive perception of it.

Furthermore, the company has garments that are made using green eco-friendly technology and awards those who support the use of green building materials (TransWorldNews). This strategy has portrayed REI as a company that cares about the lives of those around it. Aside from the green efforts, it has also assisted the communities with youth-focused programs that have enabled children to become involved in outdoor and other volunteer projects (TransWorldNews). Therefore, it is appropriate to report that REI does not discriminate its customers regardless of their age, size, or shape. Everybody can find products that suit ones needs.

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In addition, REIs strength comes from its strong brands. From the inception, the company has always focused on acquiring and providing quality products. For instance, Novara, which is a bicycle brand of the company, is considered a high-quality product that users always look for, particularly bike retailers in the United States (TransWorldNews). Apart from the brands being strong, the company guarantees after-sales services, which adds credibility to the products. Due to their high quality, the companys products have always been sold, guaranteeing profitability. Profitability also occurs because of the different classes of products and services. If products or services from one category do not make a profit, then other categories can offset the negative balance. Better customer services are also ensured because of the companys interactive website where customers concerns are addressed more effectively. REI provides expert advice online, which has served as a competitive advantage over other competitors in the industry. Finally, the company has a reward scheme for its employees and other stakeholders, which has led to more commitment and encouragement. The rewards have also resulted in increased employee satisfaction.

Weaknesses

Quality products and products made using green technology can be characterized by the rise in costs. Apparently, as costs rise, the possibility of employee layoffs also increases, especially if the company cannot meet the costs of maintaining them. Usually, new products, for instance, those that REI is making using green technology, may cost more with new processes (Recreational Equipment).

Loyalty and honesty are crucial for cooperative businesses to survive and remain strong in their operations. REI has not disclosed some of its useful information to the members, employees, and other stakeholders. Besides, the organization and presentation of information regarding business operations and governance should be considered. Lack of honesty and loyalty could be a major weakness of the company (Recreational Equipment, Inc.).

Lack of corporate backing or trust could be considered a serious weakness. Customers always prefer businesses with corporate backing. For instance, if anything goes wrong or customers are dissatisfied with a product of a company with a strong corporate backing, then the perception is that the product would be fixed easily. Additionally, REI does not have team sports; however, its competitors such as Big 5, Dicks Sports, and Sports Authority offer such services alongside other products that make REI popular (Recreational Equipment, Inc.). Therefore, some customers may opt to shop at other big chains because they do not trust and believe that REI has all the products that they want.

Opportunities

Like in any other business, REI has to identify the opportunities to use to become more valuable. However, the company has chosen to stick to its sales strategy, focusing on camping, climbing, skiing, and biking among others because of the target (TransWorldNews). First, there is an opportunity for the company to expand into the categories that it is not offering at the moment. A notable example is team sports such as football, baseball, and basketball. Besides, the company could consider providing hunting items and automotive products.

Second, REI has the opportunity to conduct research on the possibility of investing in fitness incentive. Such an incentive would be beneficial for customers and the company by creating value. For instance, an incentive that uses a phone application to track customers treks may enhance physical activity. This is an excellent opportunity for the company to consider because it fits its mission statement.

Moreover, REI has an opportunity to enhance its business relationships. Apparently, the company can significantly benefit from business-to-business related sales arrangements. For instance, REI can offer entertainment services to its business associates while getting the opportunity to promote its products in the course of entertainment (TransWorldNews). Besides, healthy snacks are also beneficial, and health conscious people would use them. Therefore, the company needs to consider them as a good opportunity for investment. Finally, REI can team up or cooperate with other retailers that are more specialized. Although the company has already specialized, it could still work in a team with other small businesses that specialize in scuba, kayaking, or fishing.

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Threats

There are significant threats that can affect the operation of the business. Firstly, the company indicates in its mission statement that it seeks to promote healthy living, but this can be threatened by its products such as videos and TV games that promote sedentary lifestyles and encourage laziness. It is because customers are likely to keep away from outdoor activities (Recreational Equipment, Inc.). With increased technology development, people are likely to stay indoors more; therefore, some of REIs products would be threatened. Besides, competition from other corporations, particularly those that offer similar products and services, can reduce the profitability of the company. Finally, product recalls may create a negative perception of the quality of the companys products and reduce profitability in the long run.

SWOT Table

Internal

Strengths

Charity

Health promotion

Green technology

Different class products

Better customer service

Profitability

Interactive website

Absence of discrimination based on age, size, or shape

Expert advice online

Employee satisfaction

Strong community connection

Reward scheme that acts as an encouragement for members

Strong brands

Weaknesses

Employee layoffs to meet the cost of green technology

Co-operative owner trust

Lack of honesty and loyalty

Lack of team sports

External

Opportunities

Expansion

Healthy snacks

Business-to-business sales

Close cooperation with specialized retailers

Fitness incentive

Threats

Corporate competition

Product recalls

Existence of entertainment devices such as movies, TV, and gaming consoles

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Conclusion

Since its foundation, REI has grown and witnessed an increase in the diversity of its products and services. The organization has been a major player in its area of operation because of the innovative products and services that it has developed. However, the company will have to take advantage of the areas of opportunities identified while also coming up with strategies to address its threats as a way of enhancing its profitability. Looking at the threats and taking advantage of the opportunities will enable the company to continue growing and enjoying a competitive advantage over its competitors.

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