Please use the headings in bold to address the assignment requirements for your first case: Lululemon Athletica, Inc
Lululemon Athletica, Inc
Provide an introduction to the company and an overview of your analysis before beginning analysis with these headings.
Performance Criteria/Balanced Scorecard and Strategic Controls
·Establish criteria for judging strategic performance by considering successes and strategies. Use a balanced scorecard framework to make sure that both financial and strategic controls are used to assess performance.
Core Competencies and Sustainable competitive advantage
·Determine if the company has a sustainable competitive advantage. If you determine that a sustainable advantage exists, support your claim. If you find it lacking, recommend actions that would secure a sustainable competitive advantage.
Business Strategy Analysis
·Determine if Lululemon’s business strategy provides an integrated and coordinated set of commitments and actions that are based upon the company’s core competencies, guides behavior toward achieving performance goals, and fits existing external environmental conditions.
Strategy and Structure Evaluation
·Evaluate lululemon’s strategy and its use of strategies to achieve company objectives.
·Discuss the company’s organizational structure and if it effectively supports lululemon’s strategy.
CASE 22: Iululemon athletica Inc.
<pull.quote o=”33″ eid=”68698″>
Jenna Beyer, Leon Faifman, Eric Ho, Miso Kezunovic, and Lance Olian
Texas A&M University
Rachael Fowler ran cross-country and played tennis in high school. In college, she successfully completed two full marathons. After college, she remained active and health conscious. Now a 37-year-old mother of two boys, Rachael maintains her physical fitness through gym sessions with a personal trainer and by attending yoga classes twice a week. At the end of one yoga session, a friend of hers suggested she purchase some yoga apparel from lululemon. Overhearing the two women talk, the class instructor added that she was a lululemon ambassador and began to rave about the quality and style of lululemon’s products.
“This is how 80 percent of our guests come to know lululemon, through word-of-mouth. Guests are so pleased with the clothes we offer that they can’t help but tell all their friends about it,” explains Laci Levisay, a lululemon associate from a store in Austin, Texas.1 Levisay continues, “For the other 20 percent who walk into lululemon stores with no previous knowledge, store employees look to find out as much as possible about the guests’ lifestyle and then educate them on what products would best suit their needs.”
© Vividfour / Shutterstock.com
Choose a Positive Thought
Based in Vancouver, Canada, lululemon athletica provides premium quality athletic apparel at a premium price. One of lululemon’s signature items is its yoga pants, typically sold by competitors for between $25 and $50.2 Yoga pants available in lululemon stores and online range between $78 and $128 with its most popular pair priced recently at $98 – two to three times rivals’ prices.3 However, lululemon’s products sell and they sell fast. Demand for lululemon clothing is so high that stores have trouble keeping new lines in stock. Sheree Waterson, Lulu’s chief product officer conveyed this example, saying, “A hot-pink color named ‘Paris Pink’ that launched in December (of 2011) was supposed to have a two-month lifecycle but sold out its first week.”4 The question then arises as to why customers, or “guests” as lululemon refers to them, are willing to pay high prices for high fashion items that are destined to be soaked in sweat!
It seems the answer to this question resides in lululemon’s ability to connect with its guests on a deeper level than just the typical sales associate–customer relationship. After all, other companies such as Nike, Adidas, and Under Armour not only produce high-tech clothing with the same soft cotton feel, four-way stretch, and moisture-wicking technology that lululemon touts, but do so much less expensively for their end consumers. Ultimately, what competitors cannot duplicate is lululemon’s culture. It is lululemon’s deep understanding of its target market, close relationships with its communities, and an inimitable culture that transforms customers/guests into diehard loyalists.
This is not to say that lululemon does not uphold the highest quality standards in its products. Levisay states, “People will save up if they need to in order to afford our clothing because of the benefits they provide.” She goes on to explain, “It’s silly to spend that much on yoga 283284pants if they’re not going to live up to their promise.”5 Jennifer Black, president of an investment research firm confirms this sentiment saying, “lululemon won’t put stuff in its store just to sell it. They don’t compromise on quality.”6
Summarize key findings and provide insights for the future of this company.
Case Study—lululemon Athletica, Inc
Read the case study located on page 283 of the section titled Case Studies in your textbook and prepare a 3- to 4-page report in a Microsoft Word document concerning the following situation:
As the end of the year comes to a close, the CEO is evaluating lululemon‘s strategic approach and its ability to produce desired results for the company in the future. The CEO has asked you to prepare a report assessing the company’s current situation, reviewing its strategy, and making recommendations to maximize effectiveness.
Your report and overview should address the following key strategic issues:
- Establish criteria for judging strategic performance by considering successes and strategies. Use a balanced scorecard framework to make sure that both financial and strategic controls are used to assess performance.
- Define the company’s core competencies.
- Determine if the company has a sustainable competitive advantage. If you determine that a sustainable advantage exists, support your claim. If you find it lacking, recommend actions that would secure a sustainable competitive advantage.
- Identify any external environmental forces that have future strategic implications for lululemon athletica, Inc.
- Determine if lululemon’s business strategy provides an integrated and coordinated set of commitments and actions that are based upon the company’s core competencies, guides behavior toward achieving performance goals, and fits existing external environmental conditions.
- Evaluate lululemon’s strategy and its use of strategies to achieve company objectives.
- Discuss the company’s organizational structure and if it effectively supports lululemon’s strategy.