1.1 Industry Analysis
Porter’s five forces analysis is presented as below for industry analysis of Kathmandu: Industry Competition→High| * Leadership in clothing and equipment retail in Australia and New Zealand. * Competitors within this area include | Barriers of entry→Medium-High| * Relatively low level of product design differentiation * High barriers for technically credible products| Threat of substitutes→Medium-High| * A wide variety of other substitute to choose from * The popularity of indoor activities| Bargaining power of customers→Medium| * A broad customer base and the customer spans a wide range of ages and demographics * High customer loyalty to the brand, especially from Summit Club, Kathmandu’s successful customer loyalty * Few switching costs| Bargaining power of suppliers→Medium| * Kathmandu is reliant on suppliers. The Company’s top 10 supplier’s account for approximately 58% of its product and 45 suppliers account for 90% of the Company’s product. The order may take three to six month to delivery. * Kathmandu has relatively strong relationships with the suppliers over a long time period. This is the low bargaining power.|
1.2 Internal and Core Competence Analysis
Internal environment is also evaluated from different perspectives: Resource| Examples| Capabilities| Core competence|
Financial| -Sales Revenue and cash flow increase 11.8% and 9.2% respectively compared with last year-reduce existing debt levels to pro forma net debt (as at 31 July 2009) of NZ$70 million (A$57.4 million)| Strong financial capabilities| Yes| Organizational| -Strong and efficient board of directors-Summit Club, Kathmandu’s successful customer loyalty program. had over 285,000 members at 31 July 2009| | Yes| Physical| -Kathmandu had 82 stores at 31 July 2009 across Australia, New Zealand and the United Kingdom-There are 70 locations in Australia and New Zealand to assess -9,200m² of warehouse space for distribution centre| Strong resources| Yes| Technological| -New merchandising -technically credible products-new transactional website| Enhanced IT system | No| Human| -Proven and experienced delivery team-Qualified sales team| Wide experience in human resources| No| Innovation| -innovative products-Strong, clear growth strategy| Innovation| Yes| Reputational| -Strong Brand names-Significant loyalty customer support-A leading retail loyalty program| Iconic and highly reputable brand| Yes|
1.3 SWOT Analysis
The results of the evaluations above can be summaries in the SWOT table for Kathmandu: Strengths| * Highly recognition of its brand and reputation across Australia and New Zealand * Wide geographic coverage: Kathmandu had 82 stores at 31 July 2009 across Australia, New Zealand and the United Kingdom * Product innovation skills * Increasing market share in Australia * Very good relationship with suppliers * High barriers for the industry to entry * All the stores are profitable in Australia and New Zealand * High customer loyalty in Summit Club members| Weaknesses| * Weakness in UK market * Weakness in Electronic Commerce * Lack of improved inventory management * Need to improve the supply chain improvement in Kathmandu * A rapid expansion will result poor cash flow| Opportunities| * The market’s customers span a wide range of ages and demographics and a broad customer base * AUD has appreciated against other currencies which lowers the cost of importing * Unique products may still provide an advantage over their competitors * The benefits that new retail technologies bring * The developed distribution for Electronic Commerce * High barriers of entry for the technology products| Threats| * Deterioration in the retail environment * Kathmandu is still in its baby steps in e-commerce * Highly competitive business * Customer preferences may...