Lululemon Athletica: A Company That Creates Essay For People To Live Longer, Healthier Lives.

About Lululemon Athletica

Question:

Discuss about the Strategic Management and Lululemon Competitive Environment.

Lululemon Athletica is a clothing company that does business in athletic and yoga clothes. It is situated in Vancouver, Canada and it has 211 branches in all over world. The mission statement of Lululemon is “Creating components for people to live longer, healthier, fun lives.” This statement reflects the commitment of Lululemon towards customer happiness. The organization culture of this company is comfortable for its employee. The vision of Lululemon is to make an environment for their customer that they love. Lululemon believes to provide good quality products and services to their customers. Company encourages their employee through providing incentive and motivation and knows the value of employee satisfaction and needs.

Competitive advantage is a process or condition in which company manufactures or produces goods and services at lower rate. This condition enhances the sales of particular company or country. Lululemon Athletica provides good quality of athletic apparel at a premium price. The yoga pants of Lululemon are 3 times more expensive in comparison to its competitors. The customers of Lululemon are very loyal. The trust of customers’ on Lululemon brand is high and that is why the sales of company have grown since 2000.It is achallenge for the company to maintain its position in sluggish economy. Lululemon runs their business in a specialized market where company sells personalized products to a certain market. The company is successful to achieve high range of profits over the past 15 years. To amplify the participation of females in sports, Lululemon was founded by Dennis Wilson in 1989. The excellent growth of company has been seen between the years 2000 to 2007, at that time company had an IPO which helped the company to trade publically. It was able to expand its business in North America and overseas. Lululemon launched ivivva and e-commerce channel in which it provides sales structure even at high range of channel. Company had decided to target customers by keeping base to females’ aged between 4 to 14 years old (Campos, 2013). 

Lululemon operates its business in highly competitive clothing industry. Nike, Under Armour and the Gap inc. are the main competitors of Lululemon Company. These all companies are larger and strong but Lululemon Company has broader distribution channel, financial resource, product mix and high range of sales. Lululemon Company has number of competitors such as Nike, gap and Nordstrom. These companies are also working in similar industry. The company’s value and reputation depends on the managing ability of Lululemon (Frynas&Mellahi, 2015). The company is capable to stand in the competitive environment due to its loyal customers and financial condition. However, there are so many companies that do similar business and provide clothes at lower rate but believe of customers on the brand of Lululemon is high than any other brands.

The core competencies of Lululemon demonstrates the capabilities that are helpful to differentiate Lululemon from other similar industries. Product and design quality is the main core competency of Lululemon. The quality of brand enhances the recognition of brand and its prestige among customers. The quality of working style of Lululemon is that it works closer with its suppliers and due to that the chances of mistake is being reduced in the company. In case of any issues and mistake, immediately action has been taken by the company. It does not compromise with its quality. The nature of company is very attentive and allows customer to give feedback so that as per their requirement and complaint, it could change products for making their customers happy (Schermerhorn, et. al., 2014).

Competitive Advantage of Lululemon Athletica

Brand loyal customers are one of the lulelemon’s core competencies. Company believes to keep strong relationship with their customers. Company attains more advantage due to brand loyal customers and the cost of market share of the company is increased. High level of sales occurs in business because of strong customer relationship. Lululemon has unique company culture that attracts customers to involve in it (Boutellier, et. al., 2016). The healthconscious customers and trained employee of company observes their involvement with brand deeply owing to existing unique culture and their healthy life style. Company culture has ability to modify their customers in to loyal ones. The unique culture has been assumed as a core competency because unique things are offered by company that comes into their online shop or stores (Thomas & Peters, 2015).

The weaknesses of the company is its marketing, Lululemon does not do any marketing regarding their products and to get the feedback from their customers and employees (Hsu, 2013). Company need to maintain its image and it should give proper information regarding query of the customers and do work on bad feedback. The condition of the company and growth can be affected by the general economic condition of the environment. However, the product of Lululemon is discretionary but is important for Lululemon to select the target market carefully (LululemonAthletica, 2013). Company needs to forecast the trend in customer voluntary spending. Company has to face adverse financial condition if it fails to recognize the fluctuation in the customerspending.

World population is increasing day by day and to take advantage of it many companies want to expand its business at higher rates. It would be profitable for Lululemon to take advantage from these markets and keep them in to consideration while making strategic planning (Roy & Banerjee, 2014). Company need to analyze political segment, economic segment, socio culture segment, technological segment, legal segment and demographic segment. Lululemon is the multinational company and it has so many branches in all over the world so it is important for the company to have the knowledge regarding international law relating to the business. Manufacturing sites of company is located in South Korea, Peru, Thailand, combodia and Vietnam. Company should be aware about the laws regarding bring back earned money from abroad to Canada.  (Suddath, 2013). The demographic condition will have a dominant influence on the firm’s strategic action. Population growth is increasing day by day. There are so many areas in the world that have high population such as china, India and United States. They are most populated country so the demand of products will be high in these countries. Lululemon needs to consider on distribution of inventory and start to evaluate population changes in terms to predict sales and growth in certain regions. Socio culture segment is one of the external factors which may influence the other external factors because it deals with the value in a particular area (Hirst, et. al., 2015). Technology is an environmental factor which may influence the firm’s strategic action. Technology is being considered as huge element of quality in lululemon’s product. Company needs to create a distinctive brand. With the help of white space Workshop Company can find the solution of some specific issues (Hill, et. al., 2014).

Lululemon Athletica's Core Competencies

The advantage of lululemon’s business strategy is product and quality development. It is the leader of athletic clothing industry. It enhances the revenue of the company. Customers of Lululemon buy sports dress for not wearing but for supporting the sports and trying to be a part of the game through wearing a outfit of sports. Plus size outfit is being offered by Lululemon and there are no recent competitors available who providing plus size outfit. The more advantage of this business level strategy is that outfit will be purchasing frequently due to weight loss by working out. The employees of the company are trained and represent company in a positive manner (Grant, 2016). The product of company is highly durable. The primary function of Lululemon’s including marketing and sales, supply chain management, customer relationship management and retail operations. Along with primary functions, there are supporting functions that are human resource management, strategic leadership, knowledge information system, research and development management and finance management (Sirianni, et. al., 2013).

The interaction between primary function and support function of Lululemon is a high level because the way of delivering the values of this company is different which is difficult for the competitor for reproduce. The strategy of Lululemon creates customer loyalty. The link between these functions are adding values which enhance the high range of margin for Lululemon and these activities are able to protect the company against the forces of competitors (Larcker, et. al., 2014). The bonding between the customers and company is the competitive strength for the company. With the help of knowledge based information system, Lululemon is able to know the desire of its customer and can fulfill it. The business strategy of Lululemon reduces the uncertainty in the company and increase the quality of decision making (Clifford, 2013).

In spite of these advantages, there are some risks exist in the strategy of lululemon’s business. Customers can compare the price strategy with its competitors. The company gets affected adversely if it unable to identify the changing fashion and trends of economic and due to this the sales of lululemon’s get influenced hugely. Company need to focus on the demand of yoga line and take initiate step to prevent itself from threats. Another risk can be constrained resourcing capacity, enormous competition and inflationary pressure (LululemonAthletica Inc. 2014).

Lululemon Company has become international company and it has so many stores in all over the world. Due to wide range of its business, company has to face so many challenges. It is required that company need to be prepared for challenges and make strategic planning so that company can prevent themselves from unwanted threats. Company has to face tough competitions because there are so many business that deals in same business. Suppliers are the main resource of the market and hold powers. Company can face the higher rate of products and low quality of materials. Substitute products can be the challenge for the company because many of the similar products are offered at various stores. Labor disputes, political controversy, trademark protection and variations in economic conditions can be the other challenges that company has to face while expanding its business.

Lululemon Athletica's Targeted Market

The recommendation for Lululemon is that Lululemon should appoint well known and established fashion designer for its company so that the latest design with ultimate ideas can produce within company and company can produce its own sports outfit for customers. New different designs of outfits of Lululemon can be able to attract the customers towards purchasing. It has been suggested that Lululemon need to come out from its comfort zone and enter in to new markets. For instance, Lululemon manufacture clothes especially for certain field but it can add other sports field such as golf wear, tennis clothing and casual wear as well. It would be the step to expand its business in to new fields. The company can add more designer clothes apart from yoga clothes so that women can get option of choosing. Lululemon should consider the prospective joint ventures with Adidas or Nike to manufacture a specific line of women. Production cost as well as risk cost of companies will be shared. Lululemon need to analyze the market and products should be designed as per current trends. It has been suggested that Lululemon should realize that its limited product mix only for certain area would take company at a point of saturation. The casual wear for women can help to make a sustainable business, casual clothes can attract those women who are not interested in sports and yoga but they are physically active. Lululemon is famous company and it has loyal customers so the idea of expanding the business definitely gives profit. Company can be success for not only in specific zone that is sport but also get fame in valuable women’s brand.

References

Boutellier, R, Gassmann, O, & Von Zedtwitz, M, 2013, Managing global innovation: uncovering the secrets of future competitiveness, Springer Science & Business Media.

Campos, A, 2013, How Selling Yoga Pants Became a Great Business, Retrieved on 5^th may 2017  from: https://www.fool.com/investing/general/2013/10/08/why-selling-yoga-pants-is-a-great-busi ness.aspx.

Clifford, S, 2013, Recall is expensive setback for maker of yoga pants, Retrieved on 5^th may 2017 from: https://www.nytimes.com/2013/03/22/business/lululemon-says-yoga-pants-mishap-will-be-c ostly.html.

Frynas, J, G, &Mellahi, K, 2015, Global strategic management, Oxford University Press, USA.

Grant, R, M, 2016, Contemporary strategy analysis: Text and cases edition, John Wiley & Sons.

Hill, C. W, Jones, G. R., & Schilling, M A, 2014, Strategic management: theory: an integrated approach, Cengage Learning.

Hirst, P, Thompson, G, & Bromley, S 2015, Globalization in question, John Wiley & Sons.

Hsu, T, 2013, Lululemon exec out: 'new level of uncertainty after pants fiasco, Retrieved on 5^th may 2017 from: https://articles.latimes.com/2013/apr/04/business/la-fi-mo-lululemon-waterson-rbc-20130404.

Larcker, D, F, Larcker, S, M, &Tayan, B, 2014, Lululemon: A Sheer Debacle in Risk Management.

LululemonAthleticaInc, 2014, Investment Thesis, Retrieved on 5^th may 2017 from: https://uoinvestmentgroup.org/wp-content/uploads/2014/04/LULU-written-report-.pdf.

LululemonAthletica, 2013,  Retrieved on 5^th May 2017 from: https://shop.lululemon.com/home.jsp.

Roy, D, & Banerjee, S, 2014, Identification and measurement of brand identity and image gap: a quantitative approach. Journal of Product & Brand Management, 23(3), 207-219.

Schermerhorn, J, Davidson, P, Poole, D, Woods, P, Simon, A, &McBarron, E, 2014, Management: Foundations and Applications (2nd Asia-Pacific Edition), John Wiley & Sons.

Sirianni, N, J, Bitner, M, J, Brown, S, W, & Mandel, N, 2013, Branded service encounters: Strategically aligning employee behavior with the brand positioning, Journal of Marketing, 77(6), 108-123.

Suddath, C, 2013, What Lululemon's Yoga Pants Recall Reveals, Retrieved on 5^th may 2017 from: https://www.bloomberg.com/news/articles/2013-03-28/what-lululemons-yoga-pants-recall-reveals.

Thomas, J, B, & Peters, C, 2015, LululemonAthletica and a Series of Bad Marketing Decisions, Journal of Critical Incidents, 8, 102.