Kathmandu Holdings: Strategic Management Analysis Report

This report provides a comprehensive strategic management analysis of Kathmandu Holdings Limited, focusing on its operations as an online outdoor and camping store specializing in outdoor supplies, clothing, and equipment. The report begins with an introduction to strategic management, emphasizing its importance in adapting to rapid changes and achieving organizational goals. It then delves into the application of PESTEL analysis to evaluate the external environment of Kathmandu Holdings in New Zealand, examining political, economic, social, technological, environmental, and legal factors. Following the PESTEL analysis, the report conducts a SWOT analysis, assessing the company's strengths, weaknesses, opportunities, and threats in the New Zealand market. The analysis covers various aspects, including market performance, revenue generation, distribution networks, research and development, technological advancements, and financial planning. The report concludes with a summary of the findings and implications for Kathmandu Holdings' strategic direction.

Running head: STRATEGIC MANAGEMENT
STRATEGIC MANAGEMENT
Name of the Student:
Name of the University:
Author note:

1STRATEGIC MANAGEMENT
Table of Contents
Introduction......................................................................................................................................2
Discussion........................................................................................................................................2
Understanding PESTEL Analysis in the context of Strategic Management...............................2
PESTEL Analysis to analyse external environment of Kathmandu Holdings Limited, New
Zealand........................................................................................................................................3
Understanding SWOT Analysis in the context of Strategic Management..................................6
SWOT Analysis of Kathmandu Holdings Limited in New Zealand...........................................7
Conclusion.......................................................................................................................................9
References......................................................................................................................................11
Appendix........................................................................................................................................14

2STRATEGIC MANAGEMENT
Introduction
Strategic management is the continuous planning, supervising, monitoring, evaluation
and assessment of all that is essential for an organization to accomplish goals and objectives.
Rapid-paced innovation, advanced technologies and consumer expectations compel
organizations to think and undertake decision-making judgements to remain effective. Authors
have noted that strategic management process facilitate organizational leaders measure their
company’s current situation, develop strategies, efficiently develop them and analyse the
efficiency of implemented strategies and approaches (Villar, Alegre & Pla-Barber, 2014). The
strategic management process mainly entails measuring functional business decisions before
implementing them. According to Bailey et al. (2015), strategic management requires an
assurance to strategic planning, which corresponds to an organization's capacity to establish short
as well as continuing goals and objectives and subsequently establishing the decisions and
actions that must be implemented in order to attain those goals. The aim of the report is to
analyse external and internal analysis of Kathmandu Holdings Limited, operating their
businesses as online outdoor and camping store and providing services of Outdoor Supplies,
Clothing & Equipment. The report will analyse internal and external analysis environment of the
company and evaluate concepts, model and techniques of Kathmandu Holding’s strategy.
Discussion
Understanding PESTEL Analysis in the context of Strategic Management
PESTEL Analysis is identified as a method used to comprehend business environment
from a broader perspective. This incorporates understanding external and internal factors that

3STRATEGIC MANAGEMENT
have the implications of affecting the business. PEST analysis partially covers the distant
environment and the results which must be considered in combination with other
fundamental factors. PESTEL is amalgamation of establishments of a range of factors that not
only influence Kathmandu Holdings Limited but the entire industry as a whole. Kathmandu
operates its business as a primary retailer of quality clothing as well as equipment designed for
travel and exploration in New Zealand as well as Australia (Samuel, 2015). According to
reports, the company established its first retail channels in Australia whereas the company
manufactures majority of its original clothing collection in New Zealand
(Kathmanduholdings.com, 2019). Kathmandu at present comprises of around 137 stores; 45
in New Zealand, 87 in Australia in addition to 5 in the United Kingdom.
PESTEL Analysis to analyse external environment of Kathmandu Holdings
Limited, New Zealand
Political Factors
In order to accurately evaluate the regular political risk which Kathmandu Holdings have
the propensity to be exposed to, the following factors must be taken into account prior to any
business investments. Reports of Buchan (2014) have revealed that the uprightness of the
selected officials and their readiness to involve in illegal or corruption cases due to consequential
ramifications tend to result to potential accusations or resignations of government officials
positioned in top hierarchies.
The regulations and laws such as contract law and employment agreements are enforced
in New Zealand particularly in accordance to business. These agreements primarily state types of
business operations and laws Kathmandu Holdings Limited must adhere to. Furthermore, trade

4STRATEGIC MANAGEMENT
barriers of countries of New Zealand safeguards Kathmandu Holdings business operations. As
per reports of authors, NZ has agreed to a range of conventions and treaties which influence the
country’s international trade. These principles protect and aid companies like Kathmandu
Holdings Limited in executing business internationally in accordance to the Anti-Counterfeiting
Trade Agreement.
Economic Factors
Reports of Villar, Alegre and Pla-Barber (2014) have noted that the expected economic
growth of NZ is around 3% for 2018 and has been estimated that the export growth is anticipated
to be slow. However, the overall growth of GDP of NZ is expected to continue to rise.
Furthermore, the area of exportation is diversifying as the exporters increasingly incline towards
value-added products. This GDP growth tends to influence the way Kathmandu Holdings is
expected to expand in near future. NZ Business PMI has witnessed a significant decline to Six-
Year Low; Pound Sterling New Zealand Dollar (GBP or NZD) Exchange Rate Flat has affected
the revenues of Kathmandu Holdings Limited, specifically as Kathmandu Holdings Limited
engages in global trade (Bailey et al., 2015).
Social Factors
New Zealand comprises a considerably small population in relation to land mass which
aided the country and its people to uphold their interest towards travel and adventure and
exploring its natural beauty and resources. According to reports, as New Zealand in recent times
constitutes around 4.4 million New Zealanders informally known as Kiwis and around 69% are
of European descent along with 14.8% are Indigenous Māori, 9.3% Asian in addition to 6.9%
non-Māori Pacific Islanders (Herndon, Ash & Pollin, 2014). These factors serve decisive role in

5STRATEGIC MANAGEMENT
influencing the business operations of Kathmandu Holdings Limited. New Zealanders Kiwi
uniqueness and high inclination towards exploring nature has enabled the company to adapt
expertise of accepting diverse terrains and ever altering requirements of travellers. On the other
hand, to certain degree, the disparities in educational setting between the marketers in NZ as well
as the target market tend to pose critical challenges to relate to as well as draw in the target
market efficiently (Buchan, 2014). Thus, at this juncture, Kathmandu Holdings Limited must
draw utmost vigilance not to mislay the relationship to the target market's benefits, welfare and
priorities.
Technological Factors
The recent technological trends in NZ and advances made by competitors show an
implication to pose challenges for Kathmandu Holdings Limited. Authors have noted that the
company encounters advanced technology in the retail industry, thus it is imperative for
Kathmandu Holdings to observe the level of recognition and rapidity with which it is expanding
and disrupting its competitor Outdoor Adventure’s revenues which is recognized as a Private
company founded in regions of Mid and East Antrim and Northern Ireland (Russell et al., 2015).
The company with implementation of new technologies has listed outdoor clothing and
equipment retailer and set up its new national Distribution Centre at Portlink in Christchurch.
Such a strategy has increased its warehouse competence to develop effectiveness of managing
stock in New Zealand (Bollweg et al., 2016).
Environmental Factors
According to Fabling and Sanderson (2014), companies which tend to produce
substantial amounts of waste must work in accordance to environmental regulations of NZ to

6STRATEGIC MANAGEMENT
manage their environmental habits. These regulations tend to include pollution fines and shares
which may position a monetary strain on Kathmandu Holdings Limited. Regardless of major
domestic sources of funding, industrial New Zealanders in several industries especially retail has
put significant efforts to get their modernization to market. As per the WWF report, New
Zealand comprises of high-quality infrastructures in terms of innovation. However, Buchan
(2014) has noted that if Kathmandu Holdings Limited intentionally or unintentionally supply to
the additional endangerment of an rare species it might have a propensity to encounter not only
the penalties from the NZ law but further encounter a repercussion from the public who may
decide to prohibit Kathmandu Holdings Limited in retaliation.
Legal Factors
New Zealand has introduced effective Health and safety laws after witnessing the awful
conditions whereby workers have been compelled to engage to work during as well as directly
following the Industrial Revolution. Thus, effectively implementing the accurate regulations and
laws tend to be expensive. However, Nillesen and Pollitt (2016) have noted that Kathmandu
Holdings Limited must align to regulations and laws primarily because of ethical and social
responsibilities of Kathmandu Holdings Limited's towards nature and human beings.
Understanding SWOT Analysis in the context of Strategic Management
SWOT analysis is referred as a strategic planning instrument which can be implemented
by Kathmandu Holdings Limited in order to perform a situational analysis of the organization.
Kathmandu Holdings Limited primarily maintains its prevailing position in the New Zealand
market by vigilantly analysing as well as evaluating the SWOT analysis. According to authors,
SWOT analysis is referred as an immensely interactive procedure and necessitates effectual

7STRATEGIC MANAGEMENT
coordination amongst a range of departments within the organization related to selling, finance,
operations, administration, management information systems and strategic planning (Gürel &
Tat, 2017).
SWOT Analysis of Kathmandu Holdings Limited in New Zealand
Strengths
Excellent Performance in New Markets- Nillesen and Pollitt (2016) have mentioned that
Kathmandu Holdings Limited has built immense proficiency and skills in penetrating into new
markets. The UK market has represented major growth prospects for Kathmandu Holdings and is
identified as an important part of the potential growth story of the company. The development
has aided the company to construct new revenue flow and expand the monetary succession
threats in the markets in countries where it operates.
Good Revenues on Capital Costs- Kathmandu Holdings Limited comparatively attained greater
degree of success in implementation of new assignments and produced products returns on
capital expenses by structuring new revenue streams.
Strong distribution network- According to Elder, Listern and Dauvergne (2014), over the
years, Kathmandu Holdings has established a dependable distribution system which can attain
greater part of its potential market.
Strong Free Cash Flow- Meanwhile, McDowell et al. (2016) have claimed that Kathmandu
Holdings Limited has robust unlimited cash flows which offer capital in the hand of the
organization in order to increase into new assignments.
Weaknesses

8STRATEGIC MANAGEMENT
Investment rate in Research and Development- Although, Kathmandu Holdings has been
spending substantial financial resources above the industry standard on Research and
Development, the company has shown incompetence to deal with the major rivals in the industry
in relation to innovation. The company with its thriving expertise has been manufacturing
products on the basis of demands of customers in the market (Buchan, 2014).
Inadequate funding in promoting new technologies- Considering the degree of expansion and
diverse geographical regions where Kathmandu Holdings has penetrated, the company requires
to offer substantial amount of funds in promoting technology in order to incorporate the
processes across the board. Authors have claimed that the current rate of investment in
promoting expertise and technologies by Kathmandu Holding do not align to the vision and
mission of the company.
Ineffective financial planning- As per report of Kelsey (2015), the current asset ratio and liquid
asset of Kathmandu Holdings suggest that the business can use the cash more professionally and
strategically refurbish its current approaches and methods of financial investments.
Opportunities
Establishments of new markets as per government regulations- The implementation of
advanced technology standard in addition to administration free trade harmony has offered
Kathmandu Holdings Limited prospective avenues to penetrate into a new rising market
(Kathmandu.co.nz, 2019).
New environmental policies- Russell et al. (2016) have noted that the newly developed
prospects will efficiently create strategic domain for all retail players in the NZ retail market.
Such an opportunity signifies a great opening for Kathmandu Holdings Limited in order to drive

9STRATEGIC MANAGEMENT
greater number of benefits and advantage in new technology and further achieve market
distribution in the new product grouping.
New customers from e-commerce services- Studies of Samuel (2015) have mentioned that over
the past few years, Kathmandu Holdings has provided substantial monetary investments into the
e-commerce domain. Such a financial investment has opened new marketing networks for its
business. According to Villar, Alegre an Pla-Barber (2014), it has been estimated that the
corporation can influence this prospect by understanding its clients better and further proficiently
allocating heir demands and requirements by implementing big data analytics.
Threats
Lack of skilled workforce- Significant lack of accomplished workforce in certain international
market exhibits a risk to consistent increase of profits for Kathmandu Holdings Limited in those
markets (Samuel, 2015).
Replication of the counterfeit- On the other hand, authors have noted that reproduction of the
fake and reduced quality product tends to act as a danger to Kathmandu Holdings Limited’s
product range particularly in the rising markets of Kathmandu which typically comprises of low
income markets.
Conclusion
Therefore, from the above discussion it can be concluded that being one of the leading
retail organizations in the New Zealand retail sector, Kathmandu Holdings Limited mainly
comprises of various strengths which facilitate it to flourish in the industry. These areas of
strengths further help the company to safeguard the market share in current markets and further

10STRATEGIC MANAGEMENT
helps in making an entry into new markets. Furthermore, PESTEL analysis in the context of
strategic management offers inclusive insight regarding the working challenges that any business
in the business tends to encounter. Thus, understanding of the competitive setting in general will
avert shareholders as well as entrepreneurs from engaging in any uncertain or dicey business
ventures if the risk emerges due to an unbalanced political regime or unexpected fiscal
recession.

11STRATEGIC MANAGEMENT
References
Bailey, J., Price, R., Pyman, A., & Parker, J. (2015). Union power in retail: Contrasting cases in
Australia and New Zealand. New Zealand Journal of Employment Relations, 40(1), 1.
Retrieved from https://eprints.qut.edu.au/75923/2/75923.pdf
Bollweg, L., Lackes, R., Siepermann, M., Sutaj, A., & Weber, P. (2016, June). Digitalization of
Local Owner operated Retail outlets: the Role of the perception of Competition and
Customer Expectations. In PACIS (p. 348). Retrieved from:
https://www.researchgate.net/profile/Lars_Bollweg/publication/313649872_Digitalizatio
n_of_Owner_Operated_Retail_Outlets_The_Role_of_the_Perception_of_Competition_a
nd_Customer_Expectations/links/5a7ae13a0f7e9b41dbd6a5d3/Digitalization-of-Owner-
Operated-Retail-Outlets-The-Role-of-the-Perception-of-Competition-and-Customer-
Expectations.pdf
Buchan, J. (2014). Deconstructing the franchise as a legal entity: Practice and research in
international franchise law. Journal of Marketing Channels, 21(3), 143-158. DOI:
10.1080/1046669X.2014.917015
Edenhofer, O., & Kowarsch, M. (2015). Cartography of pathways: A new model for
environmental policy assessments. Environmental Science & Policy, 51, 56-64.
http://dx.doi.org/10.1016/j.envsci.2015.03.017
Elder, S. D., Lister, J., & Dauvergne, P. (2014). Big retail and sustainable coffee: A new
development studies research agenda. Progress in Development Studies, 14(1), 77-90.
DOI: 10.1177/1464993413504354