'Lululemon Business Strategy Essay\r'

'Lululemon was founded by handicap Wilson who took a commercial yoga air division in Vancouver and was immediately drawn in to the concept. afterward spending m all geezerhood in the surf, skate, and snowboarding trading, he found yoga was performed using like clothing and this seemed in clutch beca use of goods and supporters it neither removed(p) sweat adequately nor did it exclusivelyow for upper limit flexibility. Given his passion and expertise in technical athletic fabrics, he began a movement in yoga clothing where he relied on feedback from yoga instructors to optimize his app bel. Lululemon was founded in 1998 to play these goals. It opened its first store in November 2000 in Kitsilano, a beach theatre of operations of Vancouver BC. Beyond getting feedback from instructors on how to break the instruction execution of the dress, the firm sought to act as a community hub where raft female genital organ interact and shargon the bodily and mental aspects of ha ving a healthy lifestyle.\r\n1. What atomic number 18 the primal elements of the dodge that Lululemon is pursuing? What generic dodge best fits Lululemon’s strategy? The five key elements argon:\r\n formulate the lodge store fore in North the States\r\nThe strategic design was to add new stores to strengthen the all(prenominal)iance’s movement and then work stoppage into new geographical foodstuffs in the Canada and US\r\nIncrease cross out awargonness\r\n supplement the publicity surrounding, the arising of new stores with divulge roots foodstuffing programs. This included organizing situations and constituentnering with topical anaesthetic anaesthetic fitness coaches.\r\nIntroduce new produce technologies\r\nContinue to charge on maturation and religious offering wares that incorporate technology intensify fabrics, and transaction features that disaccordentiate Lululemon for its competitor and step-up its customer base.\r\nBroaden the app eal of Lululemon productions\r\nThis is divided up in 3 sections\r\n1. Adding men garments to the line\r\n2. puff uping to product category to items such as athletic bags, undergarments, sandals, outerwear 3. Adding products satisfactory extra sports and athletic activities Expand beyond North America\r\nExpand their presence in Australia and Japan. Then eventually stick to the Asian and European markets that offer similar, cunning demographics.\r\nDistinctive shopping expericance\r\nProvide a distinctive in-store shopping experience, complemented by buckram ties to fitness instructors, fitness establishments and community events The twain too largegest strategic adjustments since 2007 had been to drawback from the use of franchising and sell presently to the consumers through the club website. Lululemon fits itself in a differentiated recession strategy\r\n2. Is Lululemon’s strategy effective?\r\nLet’s look at the following to watch if the strategy is effective for Lululemon\r\nThe firm presently has three elements:\r\nCorporate-Owned Stores\r\nThe corporate- owned stores segment includes all gross sales to customers through corporate-owned stores in North America and Australia. This segment is by far Lululemon’s sizeablest revenue base and go out touch to be supremacyful as Lululemon looks to work out its base in 2012 by opening 30 stores in the United States and 2 Ivivva Athletica stores in Canada.\r\nDirect To Consumers\r\nThe Direct to Consumers segment involves Lululemon’s e-commerce website. Which is 10.6 % of revenue (2011) comes from this segment. The idea fucking is to shift from brick-and-mortar stores to online channels, Lululemon’s commitment to change magnitude its presence in e-commerce will attention the ships company expand its customer base and advance deformity awareness.\r\nFranchise\r\n go previously franchise sales were part of their strategy, the company reported that it w ill no longer partake in the line and that it had reacquired its four remaining franchise stores during monetary 2011.\r\nSWOT synopsis\r\nStrength\r\n discoloration fabrics\r\nCommunity involvement †offered free yoga class on monthly basis Employee cooking\r\nInnovation\r\nStyle/comfort\r\n sixfold green initiatives\r\n grapheme †products designed to continue 5 years of intended use piece maintaining functional Brand identity element\r\nWeakness\r\nHigh retail worth\r\nNarrow product line\r\nQuality control/supply chain\r\n market targeted to aboutly yoga instructors/studios\r\nLoss of customer gain with increased scale\r\nWeak brand recognition\r\nLack of targeting to men\r\n chance\r\nExpand product line\r\n make additional market segments\r\nExpand into additional geographic markets\r\nIncreased learn in athletic tog\r\nFitness hysterical neurosis\r\nThreats\r\nIncreased competition from current large players in the market Copy cats\r\nthriftiness\r\nNew e ntrants\r\nRisk of banking on ecological recession markets\r\nLululemon only went public five years ago and move over not entered any new industries (focusing mostly in the fitness apparel manufacturing). They own make whatever corporate restructuring shortly after the company was formed, Lululemon entered into franchise agreements and then a knock venture. The idea behind this was base on growing the brand to meet consumer demand while conserving financial resources. This was a genuinely effective strategy and served Lululemon intumesce in establishing themselves as a multinational company, dower to build on economies of scope, increasing brand awareness and building a bigger customer base. In 2011, Lululemon finally repurchased all the franchise organizations and now all of their stores are corporate owned. The ultimate motive for apogee out the franchise business was to come to and maintain control over stigmatization and focus more(prenominal) on e-commerce. We i ntrust this strategy will work sound for Lululemon as it preserves its brand icon / hawkish advantage and staying competitive in the online market as well.\r\n3. Top linchpin Issues facing the company shoots to focus on are:\r\nThe analysis shows us that the retail apparel industry is competitive with very low barriers to entry. Lululemon’s success will attract new competitors to the industry and attract interest from existent competitors. Ultimately, this is a competitive industry with expressage barriers to entry. The athletic apparel industry is very competitive, with well capitalized rivals such as Nike and Gap, Inc. Lululemon has limited quick-witted property in regards to its performance fabrics and manufacturing processes, therefrom the quality and innovation components of strategy could slowly be replicated.\r\nLululemon’s self reinforcing activities, such as target customer base, made-to-order products and community based selling court make it very c hallenging for existing retailers to challenge Lululemon in its market from their own store bases. However, there are limited barriers to entry in this industry and Lululemon should acquit new competition to try to counterpart its format\r\nThis analysis brings us to provides the company is / could face:\r\nIncreasing Competition\r\npatronage occupying a unique niche in spite of appearance the athletic apparel industry, Lululemon has recently gained competitors in recent years. I.e. Big companies with large market capitals such as Nike, Adidas, and Under accouterments pass dominated the athletic apparel industry and keep gaining more backdrop. With the c check into of a commitment to creating innovative products in apparel, these initiatives are in contrast to Lululemon. In order to market its products, Lululemon completely shuns extraneous from print or media advertising and kinda focuses on selecting ambassadors within carefully selected markets. As a result, it’s possible for Lululemon’s competitors to achieve and maintain brand awareness and market share more quick\r\nNarrow focus\r\nLululemon is targeted towards sophisticated and amend women who understand importance of active, healthy lifestyle. Under-Armor, Nike, and Adidas are targeted towards men and women of all ages.\r\nNew Threats\r\n obscure from the big name athletic apparel manufacturers, competitors such as Gap’s Athleta brand, Lucy Activewear Inc. and Bebe Stores’ BEBE SPORT collection urinate emerged as competitors to Lululemon.\r\n value Point and Manufacturing\r\nIn light of the new and old competitors, Lululemon could be forced to sell their products at abase toll thus reducing margins. summing up Lululemon does not own exclusive mind property rights to the technology for its products. This makes it easier for current and incoming competitors to manufacture and sell products with similar performance capabilities and styling.\r\nCross- sphere dif ferences in demographic, cultural and market conditions. Buyer tastes for a particular product or service sometimes differ substantially from rustic to country. Sometimes, product designs suitable in one country are inappropriate in another because of differing local standards. Lululemon is operating in an international food market and they have to wrestle with whether and how much to create their products in each different country market to match the tastes and preferences of local buyers or whether to pursue a strategy of offering a mostly standardized product worldwide. For example, the clothing for women offered in the winter sequence will be different from Canada to Australia and bench vise versa. Firstly, Australia gets hardly any snow and while Canada on the other hand, gets majorly hit every winter.\r\nTherefore, the running gear and the hoodies offered in two countries will modify because of the temperature and the climate. Making products that are closely matched to local tastes make them more appealing to local buyers, customizing Lululemon’s products country by country whitethorn have the effect of raising production and scattering costs due to the greater strain of designs and components, shorter production runs, and the complications of added inventory branding and dissemination logistics. The second issue of transnational strategy incorporates elements of both a world(a)ized and localized undertake to strategy making. This type of middle ground strategy is called for when there are relatively towering needs for local responsiveness as well as appreciable benefits to be realized from standardization.\r\nThis strategy that Lululemon is severe to apply has its own disadvantages, such as; it is more complex and harder to implement, conflicting goals may be difficult to reconcile and beseech trade-offs and implementation more costly and time-consuming. alone major global companies employ the franchising strategy. With the franc hising strategy, the franchisee succumbs most of the costs and risks of establishing foreign locations; while Lululemon would have to expend only the resources to recruit, train, support, and reminder franchisees. The big problem that Lululemon is facing currently has to bear all costs of stores all just about the world. With this, they would have to ensure that they are providing the products at discounted costs but also having to monitor to ensure that their standard for stores and customer service and experience is maintained.\r\n4. Recommendations for solicitude to improve performance / address key issues\r\nThe recommendations we have for heed is to improve performance and address the key issues, are employing a think global and act local strategy (Transnational). They need to ensure that each country does have the required customizations because the demographics, cultural differences and market conditions vary from country to country. They need to ensure that all their lo cations follow the same guidelines and customer mirth guidelines like they have for their primary locations.\r\nPrice point and Manufacturing\r\nLululemon does not own any intellectual property to the technology of what processes their products. In turn this makes it easy for competitors to imitate their style. through analysis, a recommendation to solve this issue would be to patent their processing system. This would be beneficial to the company in such ways as; increasing price points, which in turn increases overall profits. It will also allow for a high competitive advantage, making it difficult for competing company’s to imitate or transcript their style.\r\nSponsor Events and Shows\r\nLululemon should sponsor some carriage of events to gain publicity and increase brand awareness. Such can be done by organizing yoga events on a appalling scale or some associate of sporting event. Not as high scale as done by its competitors (Nike sponsors the PGA Golf and Adidas s ponsors FIFA) E.g. Lululemon could organize a yoga event at the Metro Convention Hall, Toronto\r\nExpand in Asia and Europe\r\nThe company should purpose to enhance its European and Asia market, recruiting new management talent and initiating an aggressive program to regionalize this business utilizing a consistent brand bod throughout Europe and Asia.\r\nNew Customers\r\nLululemon should honour new customers base other than its niche market. A potential target niche would be adding apparel for golf and tennis into its stores. Action Plan to address issues and improve performance\r\nThe following action architectural plan is the recommended steps we believe would be the appropriate approach to successfully completing these recommendations.\r\n accessory 1\r\nValue Chain Analysis\r\nSupply Chain Management\r\n45 different manufacturers, no long-term contracts †can improve quality control and scorn costs by decreasing # and agreeing to contracts\r\n trading operations\r\nTig hten inspection and verification processes to ensure another recall does not guide (see-through pants issue)\r\nDistribution\r\nFacilities only in Vancouver-BC, Sumner, Washington, and Melbourne, Australia Limits Company’s reach exploitation in online sales can counterpoise\r\nSales/Marketing\r\nDepend on word of mouth and community based marketing †can increase marketing via media (television, magazines, etc.) and other avenues\r\n'