Business Management Evaluation: The Lululemon Case

The Case of Lululemon

The Business management sphere is but an operational process involving risks; those may appear from different functional or procedural elements. The case in hand is of the brand Lululemon, where the business seems to be in a damage control mode. The integrity of strategy formulation is under critical evaluation from marketing and product point of views. Thus being a Marketing management consultant the case is evaluated in context of the situations involved along with relevant solutions for those problems in accordance to different theories and models in use to link the business objectives to the business processes, thereby integrating a action based solution to the current issue, targeting 2015’s survival strategies. Thus steps like planning, implementation and evaluation along with deficit identification would be done in the case involving 4 distinct objective based tasks, in this assignment.

The case of Lululemon is based upon the brand called Lululemon Athletica Inc of Canadian origin inspired by Yoga-inspired athletic apparel and accessories manufacturer created in 1998. However, the 2007’s New York Times Business section contained a negative message for the brand’s VitaSea product line, upon which the value of the entire brand was built. Therefore the strategy was to embark upon the damage control processes as the integrity, marketing strategy ethics and suppliers relation were at stake. The CEO along with the Chairman of the brand decided to establish to lost value and equity in the market so that the future survival and reputations involved can be rebuilt. Therefore the strategies and marketing methodologies have to be re-evaluated to interpret the current position and its effects there off.

Business strategies can be viewed as the planned process involving ideas and techniques for implementation those ensures that objectives of the business is fulfilled (). The overall objective of the brand Lululemon is to attract consumers, who are accustomed to athletic lifestyle those are based upon cultural lifestyle selection that has overall health sustained practices involved and integrated in their systems. The goal of the brand was created upon the capacity of integration of its visions with hard working people with ethical lifestyle practices. Nevertheless, the vision and mission statement guided the brand to focus and develop products for healthy living, environmentally conscious, disciplined life style practices like exercises, diet practices with ethical values for nature and natural resources. The brand thus developed an image of Super Girl that had the elements like hard working, gender conscious, self respecting, disciplined life style oriented female, that elaborated the character of the brand. Thus this communication was strategized and proceeded with to create an image that both the brand and its consumers would associate with. The product VitaSea was claimed to be made out of sea weed linens that in contact with the body of the consumer would have positive health effects for the users. However, the claim was demolished by the news paper report that had adverse effect upon the brands image that it sustained upon.

However, due to the report the image got a mark of negative reputation that affected the entire basis that the business was built upon. However the strategic re-engineering of the market and marketing planning was thought necessary to have market sustainability factors alive for the business. The future of the business was under great threat so the strategic drift was necessary to maintain and upkeep the survival in the market. () observed that Strategic drift occurs when a company, even one that has enjoyed considerable success, responds far too slowly to changes in the external environment and continues with the strategy that once served it very well. This is despite the fact that the company is obviously increasingly out of touch with external trends. () observes that there are countless examples of companies that continue to persevere with their once successful business model when it is overwhelmingly evident that the model is increasingly inappropriate in terms of future trends. Thus the strategic drift seems to be added in Lululemon’s case to make it more appropriate for a different market and segment those have different outlook and product attribute projections.

Business Strategies and Goals

Therefore, the case suggests that strategic outlook needs to changed thereby accommodate and associate new ideas for product promotion and development. Nevertheless, strategic drift also can be included after investigation of internal factors like performance management and evaluation those would be evaluated upon the benchmarks resultant upon which the business objectives were set to achieve. However, an effective performance system needs to be implemented prior to evaluation and furthermore the performance measurement systems are designed as per the organizational Business Objectives and Goals, interpreted in its vision and mission statement. The Goals can be said to the business’s long term effect expectations that the promoters perceive upon which the vision or goal statement is developed. Again, the mission statement can be stated as the pathway for achievement of desired objectives. The vision states the business and its selection of market share client like factors. Mission depicts those visions in a way that ensures that all stakeholders are guided upon a common path for objective fulfilment. Thus in the case the current strategies of promotion, the brand has failed to achieve the objective to establish itself as a brand with difference to the clients it targeted. Therefore the change of the strategy is required so that the brand develops upon a new image that is associated with the product qualities other than the current image that the brand established. A new image building, positioning and value system needs to be generated in order to re-establish the brand image that may have new set of objectives, build upon different product attribute other than the current one.

Thus the process would associate itself with the change in its business planning thus reformulate the goals, if needed be. Therefore the Vision in terms of market reestablishment and new market venture is needed that would associate different mission statement as the new strategies would be focus upon a new goal altogether, for Lululemon.

While processing the organizational goals and value processes of the Lululemon’s current state of business environment a need has been created where re-formulation of goal statement and value processes required. The goal for Lululemon had been to incite the idea about the clothes they wear and its relation to our intrinsic beliefs and life style that have close connection to nature and the healthy lifestyle values and systems. The use of phases and words like athletic induced endorphins, power to take better decisions, I will, Successful people, peace with yourself like phases had been the key to the success story for the brand. Again, the targeted Super Girl image portrays the Power Women Concepts. Bothe the communiqué that were designed by Lululemon portrays the level of value processes in the organization. However, that image was shattered by the news reports and subsequent lab-testing reports.

Ethical: The involvement of people with a brand from ethical point of view can be associated with people’s belief systems which have ethical values involved with the way they choose to live and stay like. The segments of the Lululemon were expected to behave as audience were involved with a lifestyle that had enough elements of healthy values and practices involved. The Yoga clothing concept was the kind of image that had the factor of flexibility, style, comfort, health consciousness like elements involved. Further the brand has incorporated the effects of natural ingredients those have health benefits for the users.

Strategic Drift

Cultural: The sporting spirit that involves the health benefits awareness, development of nature friendly habits, involving the exercise as daily routine, positive assertion like elements that encompass the cultural beliefs of an individual is mixed in effective proportion at Lululemon’s brand messages to the segment with similar cultural beliefs.

Environmental: The environment friendly attitude of people that is associated with care and mutual respect to the resources that are available to human for healthy living were incorporated in the product of Lululemon which in turn made the brand familiar and awareness much higher among people who are closer to nature and the natural resources for self development.

Objectivity: Thus, the objectivity encompasses all the aforesaid factors those makes the brand image of Lululemon more keenly observed by people who the business targets to accompany as loyal consumers for the brand.

Resource allocation is a major management activity that allows for strategy execution in the best ways possible. Those organizations that do not use a strategic-management approach to decision making, resource allocation is often based on political or personal factors, those have no vision and goal. Strategic management enables resources to be allocated according to priorities established by annual objectives. Nothing could be more detrimental to strategic management and too organizational success than for resources to be allocated in ways not consistent with priorities indicated by approved annual objectives. The real value of any resource allocation program lies in the resulting accomplishment of an organization’s objectives. However, effective resource allocation does not guarantee successful strategy implementation because programs, personnel, controls, and commitment must breathe life into the resources provided. Strategic management itself is sometimes referred to as a resource allocation process.

For the case of Lululemon, right from the start of the business where the goal was formulated for the business that had the futuristic impression about what the business needs to achieve. Thus was done with Vision and Mission statements. The Start of the strategic formulations needs objective wise procedural formulations for organizational success. The manpower, finance, marketability segmentation knowledge, product innovation knowledge are all identified for planning them as required in achieving the targets it has set for itself. However, the case portrays that to create the core elements of the formulation was people’s health knowledge awareness and practice oriented. The Yoga would suggest what exactly the components for such fabric needs. The image developed in communication portrays it as a business that helps people have a longer lifespan by creating a healthier, fun centric lifestyle those ensures a disease free healthy lifestyle. In accordance to the objective the core values were improvised those featured the organizational culture and were executed along the policy lines.

The strategic focuses was refined and were redefined along the target lines that were recreated in order to associate the brand with culture and ethics of the market segment. Allocation of finance, manpower, capacity production devises in accordance to the objectives to ensure that the right set of outputs are received with the maximum efficiency that would ensure the right outputs as targeted. The allocation were done in the case of Lululemon by a larger extend based upon the projected outcomes. The marketing communication and the brand image that the product ensured was a healthy energetic lifestyle with the use. In accordance the content was created based upon the kind of segment the business targeted. The targeted audience were the one who associated their ethics, beliefs and values in the way that equates with a belief system embracing Natural resources and People living in it finds harmony of togetherness.

New Vision for Lululemon

The contents stating that the product have effects those are positive for the user generating health benefits associated with strength, decision making power, Quality attributes needed for a healthy living. However, the goal posts changed post the report was published. The market communication media portrays what about what offerings the strategies have in order to achieve a result oriented communication with the stakeholders and customers alike. A strategy that businesses use to determine whether all of their operational expenses are necessary and if they could be operating more efficiently. Process value analysis looks at what the customer wants and then asks if each aspect of operations is necessary to achieve that result. The goal of process value analysis is to eliminate unnecessary expenses incurred in the process of creating a good or service without sacrificing customer satisfaction.

The micro environment refers to the business itself and to all the challenges that come from inside the business. Businesses can therefore take control over all the challenges and influences in the micro environment. Sometimes, the micro environment is also known as the internal environment. The micro environment refers to the forces that are close to the company and affect its ability to serve its customers. It includes the company itself, its suppliers, marketing intermediaries, customer markets and public. The company aspect of micro-environment refers to the internal environment of the company. This includes all departments, such as management, finance, research and development, purchasing, operations and accounting. Each of these departments has an impact on marketing decisions. For example, research and development have input as to the features a product can perform and accounting approves the financial side of marketing plans and budget in customer dissatisfaction. Marketing managers must watch supply availability and other trends dealing with suppliers to ensure that product will be delivered to customers in the time frame required in order to maintain a strong customer relationship.

The goals represented the target clients and vision was to involve the client’s life processes and beliefs with the product offerings that Lululemon produced. Now with the PESTLE analysis the business managers precede with the job of identification of the objective based relationships in business. The tool is used to determine the following factors for the case of Lululemon:

Political: The specified political environment in the case is designed to state the effects that it has on the business process of Lululemon. Canadian government along with LEEDS support stopped the uses age of the Brand’s claims of product offerings as is the case of Vita Sea. The challenge to the entire existence from ethical point of view had been put under the scanner for the case. The effects were such that the strategic reformulation and product specification redesign process has to start along with new innovation as the copy right infringements were detected.

Economical: Lululemon has always placed itself on a higher side of price quotes compared to its competitors. Thus the value addition or the differentiation factor that the brand had was dismantled. Thus as in any other case Economy is hit first and the sustainability comes under threat in this case. Help for better future would also depend upon the economic strength that the business has both in revamping and product based Research and Development.

Social: The case elaborates the kind of social influence it had and the dependence of the brand’s existence was involved with Social Development values among the clients. The value system that the brand developed was shattered which clients must have perceived as a lie that’s a crime in social relations. The society as a whole is a diversified and dynamic body in nature. The segment in the society that Lululemon targeted was the one that had deep seeded values and ethics and respect towards

Technological: The technology change is a factor in business that had driven the business processes since its inception. The ease of product development and the quality of product involvement with specification along with measures and tools of evaluation had been technology driven. For the case of Lululemon the technological involvement had been the basics of its product mix. The use of marine science, bio-chemistry, innovations in linen making and evolution of personal development for the clients in very scientific principles based models made the Business choices for existence altogether. At Lululemon, even the linen used for clothing material making was a technological innovation in itself called Lunon, which was sea weed based durable flexible, suited for sportive nature of life style for people was involved. The entire Technology cal superiority claims in regard to product technology was threaten in the case having the choices to portray technological superiority were discredited.

Environmental: The factor of environmental awareness and dependence was the core for the business at Lululemon. The relationship that human have with the surrounding nature was key to the brands strategy building measure. The adoption of Environment both in natural and market terms for a competent personality was shattered in this case. Thus the present business environments were challenged as the competing edge to the product was in its association with environment conscious audience. Again, the the reduction in volume of waste generation and Green principals were in use and was maintained somehow. Since the allegation do not change the consumer’s environmental beliefs or the products environment friendliness. The aspect can be better looked into for Strategy formulation for the next set of activities.

Legal: The role of Canadian legislations and the reflections that the Authorities had towards the report made the business change its claims and thus dismantle the marketing and product mix the business generated. Workplace codes of conduct along with the actions those are to be taken are to be made liable. The LEED guidance (Energy and environmental Design) norms have shaped the way to develop future infrastructure such those have “Green” effects with nearly nil carbon emission, no huge expenses of electricity long with Zero waste policies has made the business a new factor to deal with in its infrastructure capabilities and also shaped the strategic issues like legal norms are considered..

Based upon these the process developed its strategies for future existence thus reframing the aims and objectives that the business had.

The stakeholder’s are those who are involved in the business processes in different capacities that have its own objectives related with the business, mutually beneficial, the consequences.

The start of any stakeholder engagement process is stakeholder mapping. Stakeholder mapping identifies the target groups and pulls together as much information as possible about them. ‘Stakeholders’ are by definition people who have a ‘stake’ in a situation. Stakeholders can be described in organisation terms as, those who are maybe internal’ (e.g. employees and management) and those ‘external’ (e.g. customers, competitors, suppliers etc.). However, the internal customers or employees too are considered as Stakeholders depending upon the nature of the business and the cultural values those have more involvement of the employees in the business processes.

For the case, Lululemon’s supply side was handled by different agencies, may it be raw material, product sourcing or Finance Sourcing and other industrial bodies associated with their business. In Stock exchange denominations Lululemon had been a good performer with a record being in a gross profit margin of 51.7% in place of in respect to the overall Sector’s being at 34.1%. Thus the selection of this equity option for Stakeholders became easier at NASDAQ in 2007 becoming a star performer. However, the news report had shattered the broader Brand Appeal thereby in a state of strategic drifts. The case suggests that in 2007 itself the price sensitive market with price elasticity was on decline if compared with 2002, a five year term to analyze the changes. When its 0.4 to 3.8% in few cases for the Athletic Accessory production sector, Lululemon was not bothered with it and had 18.2% on its own, proving the capacity of the segment that the brand serves. The consumers were more sensitive to the price but the level of trust and comfort and faith was the key to it. Again from supply side Lululemon outsourced its linen material from Smartfiber AG SeaSell named German Based small business unit (Supplier). The firm or the supplier in this case specialized in fiber manufacturing process out of Marine Biology research depended innovations, the one unique in itself. The Lyocell cell system technology they used to form Seacell, a patented composition for Fiber manufacturing. The joint strategic alliance provided the material which was declared to have qualities to keep skin firm and smooth, Prevent skin dryness kind of benefits. However, the New York Times destroyed this claim making the ingredient in the promotion communication of Lululemon a hoax. However, the firms cae up with their thesis and lab reports to argue it out technically.

The employees of the Business acted as Educators who communicated the offerings of the product to consumers in grass root level with a lot of relationship marketing components involved. Since the most valued item of the brand and its equity was lost, the ethics made the story more problematic to the equity market of the business where the price decrease was a record fall of 8% in value. The report of media made the Canadian Toronto based equity markets loose upon Lululemon’s values. Thus the strategy to select the right stakeholder was the raise that the business grew from 36.87 USD to 58 USD in just 7 weeks during its lifecycle since its inception. Nevertheless, the press conference with the Swizerland based lab as independent evaluator gave a declaration stating the SeaCell is found to be effective thus helping the brand some of what was left in terms of product superiority. All prties in the process gave example of stake holder’s strategic importance and participation in the business process.

For a business manager it is the imperative of detecting long-term financial risks (). For professionally judging the risks lesson of the recent financial crisis requires a heightened perception for unconventional, long-term risk. Nevertheless, () predicts that which can be informed by the better tools and methodologies that the sustainable finance grid of analysis provides, for a manager to make informed decisions. This strategic finance is the job that has been the key of prediction about the financial health of the firm. Further, long-term but steadily growing risks include climate change, resource depletion, social upheaval, and other risks stemming from environmental, social, and governance phenomena. Each one is both the independently or in correlation can be all of which are seldom identified. Thus assessed by financial analysts, and therefore needs the overall market variance criteria involved. For the case of Lululemon the prediction is not based upon totally, however was given in hint perspective by NASDAQ, which dipped 8% on its market Holdings, thereby influencing the future strategic allocations in jeopardy too. Since the financial personnel may not be a market o reviewer in a futuristic sense but effectively a team effort, on strategic grounds, re-engineer the strategies as off the current period. The solution can be got by Lulelemon about how the future is going to be. For the reason they view the future is to make an assessment of the predictability of sustenance and on what grounds those evaluations are to be made.

The UK based news daily The Guardians’ survey on an international level in 2013 of the strategic planning process in future sustainability is suggesting that consumers of developed nations ore keen on product value over price when it comes to lifestyle and nutrition to avail the best. Thus the awareness of consumers in the digital age has grown in leaps and bounds. However, the Lululemon had been the brand that was lesser towards price dependent competency, and more on the value side of consumer’s perceptions. Furthermore, historically, marketing and consumer insights were driven by majorly broad based survey quantitative techniques such as survey analysis and segmentation studies. However, these techniques have not effectively designed the required models for consumer attitudes and behaviours analysis findings around these highly complex issues related to sustainability for a business in long term.

Nevertheless, () argues that statistics-driven segmentation is still the practice in majority. Thus the brands have discovered the value of augmentation techniques built upon the latest social and cognitive science process innovations. Qualitative methods like those used in demographical research, empathy interviews, and applied psychometric science. Thus with more and more factors are getting involved, evolving the ideas surrounding the Lululemon;s brand essence like climate change to understand how they prevent or encourage people to engage with the issue, was successfully achieved as the 2006-2007 FYI (Financial Year) Annual Report indicates. Again when the sustainability issue is recalled the past episodes, engaging employees in sustainability has been the domain of volunteer employees, working through green teams and environmental awareness events, like Lululemon efforts comes to view. However, there’s been a shift to more formal initiatives that embed sustainability into organizational cultures and specific job functions. Alongside this shift has also been a growing realization of the positive impacts of such engagements on HR metrics like recruitment, employee satisfaction, and long-term retention. As a result, HR and sustainability leaders are teaming up to meet shared goals and address the critical need to build a workforce that can adeptly navigate important domestic and global trends to not only sustain but grow alongside.

Again, the strategic approach has to integrate for additions to a more qualitative approach to understanding the target consumer, and new dimensions those can be evolved. Consumer’s purchase patterns, priority movements and purchasing decisions are few qualitative inputs required prior to strategic formula making. This analysed data will allow the Consultant and the Business leaders to understand its target audience or consumers on a highly personal level and modify products and services to fit your preferences. This positivity of Lululemon still exists as the case suggests, within the personalized Educator named sales personnel. The strategy would may have to start from there.

() defines, risk management is a systematic process of identifying and assessing company risks and taking actions to protect a company against them. Some risk managers define risk as the possibility that a future occurrence may cause harm or losses, while noting that risk also may provide possible opportunities. However, by taking risks, companies sometimes can achieve considerable gains. Nevertheless, a business would need risk management abilities to analyze possible risks in order to balance potential gains against potential losses and avoid expensive mistakes. () comments that risk management is best used as a preventive measure over a reactive measure, for business of profit making nature. Companies benefit most from considering their risks when they are performing well and when markets are growing in order to sustain growth and profitability. Over the past decade, large companies have become increasingly adept and competent at analyzing their supply chains values for environmental and social risks. Therefore, in turn they have been extending their responsibility more deeply into the supplier relationship building with consumers. The consumer feedback procedure is of immense importance when judged from a strategic view to predict risks based upon heir discontents. However, a shift has emerged in which companies are upgrading the search for hidden risks in their supply chain. Thus in process is making wider search for shared value via new partnerships, product and process innovations. Nevertheless, the basic objective of cost and profit-sharing models are incorporated for mitigation of risks, measurement calculations. It’s been only a decade that the corporate leaders became aware of and devoted attention towards how best to determine the environmental impacts of products and over their entire business cycle. For long term planning thus then made a major shift and drifted towards sustenance. Thus social and environmental benefits regularly considered in new product and service design via Life Cycle Analysis (LCA). Lululemon may use it as technique to assess environmental impacts associated with all the stages of a product's life from business lifecycle view. Initiating the process from on, raw material extraction through materials processing, manufacture, and distribution like contains. Nevertheless, use, repair and maintenance, and disposal or recycling too needs focus. Lululemon’s Green Initiatives and Supply chain management information from the case sites so user’s comfort and valuation review too would be the mitigation tool.