Lululemon

Lululemon

Executive summary

Lululemon is a company that deals with athletic wear. It operates through company-based stores, and it provides high quality yoga fitness products. The firm experienced challenges in its leadership, which negatively impacted its performance in the textile clothing industry. Nonetheless, Christine Day offered a solution to the leadership challenge experienced by the company through inducing a new leadership style, which considerably revived the operations and the performance of the firm.

Lululemon Athletica Inc is a producer, supplier, and retailer of athletic wear. The firm operates through direct to consume along with company-based stores, which are its two main segments of operation. The direct to consumer sector of the company generates income to the company through the lululemon and ivivva e-business websites. The firm offers a variety of clothes and accessories for men, women together with teenagers. Moreover, the firm provides fitness-linked accessories, which include but are not limited to yoga mats, socks, and water bottles. In 2013, the firm launched an innovative lab where the scientists can perform a study regarding human development to allow them to develop new athletic products into the aggressive business market. The majority of the sportswear companies habitually focus on comprehending the physics of human development. Lululemon, unlike other firms, is specifically interested in comprehending how subjectivity figures into the equation. In 2018, the lab reported that it had established a way of locating the special pattern of movement of each person when they walk or run. The announcement fostered the production of new athletic wear products into the market to meet the needs of the customers. Furthermore, the announcement triggered Lululemon to install devices in stores to assist customers to better understand their patterns of movement together with the products which best suit their bodies. This case assignment, therefore, offers an analysis of Lululemon company.

External analysis of Lululemon company

Porters 5 pressure analysis

The risk of new entrants

The fresh entrant of the textile apparel clothing innovation offers a fresh way of doing things along with pressure on the Lululemon company through reducing pricing strategy, reduction of the cost along with offering a new value proposition to the clients.

Bargaining capability of the distributors

The majority of the companies in the textile clothing industry habitually purchase their raw resources from multiple distributors. The distributors in the top position can lower the margins the company can receive in the competitive textile clothing market. Superior suppliers in the customer products sector utilize their negotiation ability to extract higher costs from the corporations in the apparel clothing fields. The higher distributor bargaining capacity impacts the company by lowering the overall profitability of the Textile Apparent clothing. Lululemon company can handle the force of the bargaining capacity of the suppliers through developing committed distributors whose business relies on the firm and also experimenting with the product design through utilizing a variety of materials to enable the company shift on the materials in case prices for one material goes up.

Bargaining capacity of consumers

Customers are usually a possessive lot since they require to purchase the best offering present in the market by paying the least cost as possible. The bargaining capacity of the consumers usually piles pressure on the profitability of Lululemon company at the end. The more superior consumer base of the company makes the company experience extreme force of bargaining capacity of the consumers due to the enhanced seeking of increased discounts and offerings by the customers. Improved seeking of discounts and offers consequently impact Lululemon trough lowering its profitability. However, the company can enhance its profitability by tackling the force of the bargaining capacity of the consumers through building a massive customer base to lower the buying power of the customers along with innovating fresh goods since consumers usually look for discounts and offerings on the existing goods.

Threats of substitute products

The entrance of new products with similar needs into the market usually impacts the profitability of Lululemon, and this typically impacts the growth of the company in the textile apparel industry. The threat of substitute products is higher when the product provides a value proposition that is purely distinct from the current offering of Lululemon. The company can tackle the force by enhancing the switching prices for the consumers.

Competition among the existing rivals

The primary rivals of the company include traditional sports competitors like Nike. An increase in the rivalry with the traditional competitors usually impacts the princes of the company’s products, which in turn lowers the profitability of Lululemon. The company typically operates in an aggressive Textile Apparel clothing industry, and the competition usually tends to affect the overall productivity of the company in the competitive business environment. The firm can tackle the force through establishing sustainable differentiation to challenge the traditional sporting competitors in the market.

Internal analysis of Lululemon

VRIO analysis

Value

The value is habitually established by the products along with the services offered by the company. The product is high quality yoga apparel for yoga enthusiasts designed for the fabric and the age of people who like yoga. About 80 percent of the costs of the garments are in the fabric, and the company works with the best fabric mill in the clothing industry to produce yoga products that would help hep in value creation. Therefore, the company creates value through high quality products that attain the needs of the consumers in the market. For instance, the firm works with the best scientists to obtain special finishes of their products to help in value creation.

Rareness

The employees of the company moving forward with humility are rare resources of the company. Lululemon usually refers to its sale staff as educators, and the obligation of the sale staff involve educating the customers who are the guests of the company regarding the technical characteristics of the company’s garments. The association between the educators and the customers habitually forms the heart of the corporate strategy of the company. The strategy has enabled the firm to avoid wholesaling its products, but instead, it has opted for a vertical retail model to sell its merchandise. Therefore, the strategy makes the company rare compared to other companies in the textile clothing industry.

Imitability

The financial resources of the company are costly to imitate. Lululemon has acquired the resources through prolonged profit over the years. Thus, they offer a challenge to new entrants and the competitors to imitate the financial resource of the company since they require to accumulate similar profit for a long period to accumulate and imitate the financial resource of Lululemon. Competitors may not imitate Lululemon; however, they can engage in selling high quality yoga clothing due to the ease of copying clothing.

Organization

The financial resources of the company are well organized since they are strategically used in investing in the right places while also utilizing them to combat forces that might adversely impact the profitability of the company. For instance, they are used to tackle the threat of new entrants and competition from traditional sports rivals like Nike. Furthermore, the distribution channels of the company are well organized since the form effectively uses the channels to reach out to its customers in the various marketplace.

Evaluation of the fit amidst choices of the firm and the internal and external evaluation

The core competency strategies of the firm include the customer, the compensation program, the body-positive campaign, and the customer loyalty program. Lululemon creates a customer loyalty point system for the purchases. The program encourages the customers to buy the company’s products, and this, in turn, promotes the sale and profitability of the firm. Moreover, the loyalty program enhances the loyalty of the customers to the brand, which assists the company to earn more market shares. The firm also has new product technology, which has enabled it to create a fitness band that is specialized for yoga and running and branded by Lululemon.

Likewise, the strategic choices of the company encompass involved setting up the allocation functions and bringing the production team into the company to support the vision and the brand of the company. The current supply chain infrastructure brought to the company by Bob could not effectively support the growth of the company. Thus, it led to the making of strategic choice of setting up the allocation team to foster the growth of the brand. The company also made a strategic choice of recreating itself to foster the culture of integrity and responsibility to promote its performance and honesty in its business operations. The newly hired staff under Bob were not enrolled in the culture of responsibility and integrity of the company, and this adversely impacted the performance of the company. The company took the strategic choice of recreating itself to restore the culture of responsibility and integrity.

Discussion of Day’s decision and options not pursued

Christine Day made a decision to create a new administration team that was fully able to manage the future of the firm. Day arrived at the decision to assist solve the tension that was pilling up in the company following the leadership style left by Bob. Bob had a green team in which he was training on how to manage and run the business. Nonetheless, the training did not equip the team with the necessary skills of complex problem solving along with handling large scale business. The strategy and the leadership style Bob imparted on the team were not effective for the future growth and success of the company. Hence to change the leadership style to lead the future of the company, Day made the decision to create a new management team with new leadership styles and competencies. The option not pursued involves changing the locations of the stores to promote the success and performance of the company. The company encountered high rent resulting from leases on a bunch of wrong locations.