Lululemon Business Strategy Essay Essay Example

Lululemon Business Strategy Essay Essay Lululemon was founded by Chip Wilson who took a commercial yoga category in Vancouver and was instantly drawn in to the construct. After passing many old ages in the breaker. skate. and snowboarding concern. he found yoga was performed utilizing cotton vesture and this seemed inappropriate because it neither removed perspiration adequately nor did it let for maximal flexibleness. Given his passion and expertness in proficient athletic cloths. he began a motion in yoga vesture where he relied on feedback from yoga teachers to optimise his dress. Lululemon was founded in 1998 to run into these ends. It opened its first shop in November 2000 in Kitsilano. a beach country of Vancouver BC. Beyond acquiring feedback from teachers on how to better the public presentation of the dress. the house sought to move as a community hub where people can interact and portion the physical and mental facets of holding a healthy life style. We will write a custom essay sample on Lululemon Business Strategy Essay specifically for you for only $16.38 $13.9/page Order now We will write a custom essay sample on Lululemon Business Strategy Essay specifically for you FOR ONLY $16.38 $13.9/page Hire Writer We will write a custom essay sample on Lululemon Business Strategy Essay specifically for you FOR ONLY $16.38 $13.9/page Hire Writer 1. What are the cardinal elements of the scheme that Lululemon is prosecuting? What generic scheme best tantrums Lululemon’s scheme? The five cardinal elements are: Turn the company shop base in North America The strategic aim was to add new shops to beef up the company’s presence and so tap into new geographical markets in the Canada and US Increase trade name consciousness Leveraging the promotion environing. the gap of new shops with grass roots marketing plans. This included forming events and partnering with local fittingness managers. Introduce new merchandise engineerings Continue to concentrate on developing and offering merchandises that incorporate engineering enhanced cloths. and public presentation characteristics that differentiate Lululemon for its rival and increase its client base. Broaden the entreaty of Lululemon merchandises This is divided in 3 subdivisions1. Adding work forces apparel to the line2. Expanding to merchandise class to points such as athletic bags. unmentionables. sandals. outerwear 3. Adding merchandises suited extra athleticss and athletic activities Expand beyond North America Expand their presence in Australia and Japan. Then finally prosecute the Asian and European markets that offer similar. attractive demographics. Distinctive shopping expericanceSupply a typical in-store shopping experience. complemented by strong ties to fitness teachers. fittingness constitutions and community events The two biggest strategic accommodations since 2007 had been to drawback from the usage of franchising and sell straight to the consumers through the company web site. Lululemon fits itself in a differentiated niche scheme 2. Is Lululemon’s scheme effectual? Let’s expression at the following to find if the scheme is effectual for Lululemon The house presently has three sections: Corporate-Owned Shops The corporate-owned shops section includes all gross revenues to clients through corporate-owned shops in North America and Australia. This section is by far Lululemon’s largest gross base and will go on to be successful as Lululemon looks to spread out its base in 2012 by opening 30 shops in the United States and 2 Ivivva Athletica shops in Canada. Direct To Consumers The Direct to Consumers section involves Lululemon’s e-commerce web site. Which is 10. 6 % of gross ( 2011 ) comes from this section. The thought buttocks is to switch from brick-and-mortar shops to online channels. Lululemon’s committedness to increasing its presence in e-commerce will assist the company spread out its client base and better trade name consciousness. Franchise While antecedently franchise gross revenues were portion of their scheme. the company reported that it will no longer partake in the concern and that it had reacquired its four staying franchise shops during financial 2011. SWOT Analysis StrengthTrademarked clothsCommunity engagement – offered free yoga category on monthly footing Employee preparationInventionStyle/comfortMultiple green enterprisesQuality – merchandises designed to prolong 5 old ages of intended usage while keeping functional Brand individualityFailingHigh retail monetary valueNarrow merchandise lineQuality control/supply concatenationSelling targeted to largely yoga instructors/studiosLoss of client service with increased graduated tableWeak trade name acknowledgmentLack of aiming to work forcesOpportunityExpand merchandise lineServe extra market sectionsExpand into extra geographic marketsIncreased demand in athletic dressFitness fadMenacesIncreased competition from current big participants in the market Copy catsEconomyNew entrantsHazard of banking on niche markets Lululemon merely went public five old ages ago and have non entered any new industries ( concentrating largely in the fittingness dress industry ) . They have done some corporate restructuring shortly after the company was formed. Lululemon entered into franchise understandings and so a joint venture. The thought behind this was based on turning the trade name to run into consumer demand while conserving fiscal resources. This was a really effectual scheme and served Lululemon good in set uping themselves as a transnational company. assisting to construct on economic systems of range. increasing trade name consciousness and edifice a larger client base. In 2011. Lululemon eventually repurchased all the franchise organisations and now all of their shops are corporate owned. The ultimate motivation for shuting out the franchise concern was to continue and keep control over stigmatization and concentrate more on e-commerce. We believe this scheme will work good for Lululemon as it prese rves its trade name image / competitory advantage and remaining competitory in the online market every bit good. 3. Top Key Issues confronting the company needs to concentrate on are: The analysis shows us that the retail dress industry is competitory with really low barriers to entry. Lululemon’s success will pull new rivals to the industry and attract involvement from bing rivals. Ultimately. this is a competitory industry with limited barriers to entry. The athletic dress industry is really competitory. with good capitalized challengers such as Nike and Gap. Inc. Lululemon has limited rational belongings in respects to its public presentation cloths and fabrication procedures. therefore the quality and invention constituents of scheme could easy be replicated. Lululemon’s self reenforcing activities. such as mark client base. tailored merchandises and community based selling attack make it really disputing for bing retail merchants to dispute Lululemon in its market from their ain shop bases. However. there are limited barriers to entry in this industry and Lululemon should anticipate new competition to seek to copy its format This analysis brings us to issues the company is / could confront: Increasing CompetitionDespite busying a alone niche within the athletic dress industry. Lululemon has late gained rivals in recent old ages. I. e. Large companies with big market capitals such as Nike. Adidas. and Under Armor have dominated the athletic dress industry and maintain deriving more land. With the exclusion of a committedness to making advanced merchandises in dress. these enterprises are in contrast to Lululemon. In order to market its merchandises. Lululemon wholly shuns off from print or media advertisement and alternatively focal points on choosing embassadors within carefully selected markets. As a consequence. it’s possible for Lululemon’s rivals to accomplish and keep trade name consciousness and market portion more rapidly Narrow focal point Lululemon is targeted towards sophisticated and educated adult females who understand importance of active. healthy life style. Under-Armor. Nike. and Adidas are targeted towards work forces and adult females of all ages. New Menaces Apart from the large name athletic dress makers. rivals such as Gap’s Athleta trade name. Lucy Activewear Inc. and Bebe Stores’ BEBE SPORT aggregation have emerged as rivals to Lululemon. Price Point and Manufacturing In visible radiation of the new and old rivals. Lululemon could be forced to sell their merchandises at lower monetary value therefore cut downing borders. Plus Lululemon does non have sole rational belongings rights to the engineering for its merchandises. This makes it easier for current and future rivals to fabricate and sell merchandises with similar public presentation capablenesss and styling. Cross-country differences in demographic. cultural and market conditions. Buyer tastes for a peculiar merchandise or service sometimes differ well from state to state. Sometimes. merchandise designs suited in one state are inappropriate in another because of differing local criterions. Lululemon is runing in an international market place and they have to wrestle with whether and how much to custom-make their merchandises in each different state market to fit the gustatory sensations and penchants of local purchasers or whether to prosecute a scheme of offering a largely standardised merchandise worldwide. For illustration. the vesture for adult females offered in the winter season will be different from Canada to Australia and vise versa. First. Australia gets barely any snow and while Canada on the other manus. gets majorly hit every winter. Therefore. the running cogwheel and the hoodies offered in both states will change because of the temperature and the clime. Making merchandises that are closely matched to local gustatory sensations make them more appealing to local purchasers. custom-making Lululemon’s merchandises state by state may hold the consequence of raising production and distribution costs due to the greater assortment of designs and constituents. shorter production tallies. and the complications of added stock list stigmatization and distribution logistics. The 2nd issue of multinational scheme incorporates elements of both a globalized and localized attack to scheme devising. This type of in-between land scheme is called for when there are comparatively high demands for local reactivity every bit good as appreciable benefits to be realized from standardisation. This scheme that Lululemon is seeking to use has its ain disadvantages. such as ; it is more complex and harder to implement. conflicting ends may be hard to accommodate and necessitate tradeoffs and execution more dearly-won and time-consuming. All major planetary companies employ the franchising scheme. With the franchising scheme. the franchisee bears most of the costs and hazards of set uping foreign locations ; while Lululemon would hold to use merely the resources to enroll. train. support. and proctor franchisees. The large job that Lululemon is confronting presently has to bear all costs of shops all around the universe. With this. they would hold to guarantee that they are supplying the merchandises at discounted costs but besides holding to supervise to guarantee that their criterion for shops and client service and experience is maintained. 4. Recommendations for direction to better public presentation / reference key issues The recommendations we have for direction is to better public presentation and turn to the cardinal issues. are using a think planetary and act local scheme ( Transnational ) . They need to guarantee that each state does hold the needed customizations because the demographics. cultural differences and market conditions vary from state to state. They need to guarantee that all their locations follow the same guidelines and client satisfaction guidelines like they have for their primary locations. Price point and Fabrication Lululemon does non have any rational belongings to the engineering of what processes their merchandises. In bend this makes it easy for rivals to copy their manner. Through analysis. a recommendation to work out this issue would be to patent their processing system. This would be good to the company in such ways as ; increasing monetary value points. which in bend additions overall net incomes. It will besides let for a higher competitory advantage. doing it hard for viing company’s to copy or copy their manner. Sponsor Events and Shows Lululemon should patronize some kind of events to derive promotion and increase trade name awareness. Such can be done by forming yoga events on a expansive graduated table or some kind of featuring event. Not as high graduated table as done by its rivals ( Nike sponsors the PGA Golf and Adidas patrons FIFA ) E. g. Lululemon could form a yoga event at the Metro Convention Hall. Toronto Expand in Asia and Europe The company should be after to heighten its European and Asia market. enrolling new direction endowment and originating an aggressive plan to regionalize this concern using a consistent trade name image throughout Europe and Asia. New Customers Lululemon should happen new clients base other than its niche market. A possible mark niche would be adding dress for golf and tennis into its shops. Action Plan to turn to issues and better public presentation The undermentioned action program is the recommended stairss we believe would be the appropriate attack to successfully finishing these recommendations. Appendix 1Value Chain Analysis Supply Chain Management45 different makers. no long-run contracts – can better quality control and lower costs by diminishing # and holding to contracts OperationssTighten review and confirmation procedures to guarantee another callback does non happen ( diaphanous bloomerss issue ) DistributionFacilities merely in Vancouver-BC. Sumner. Washington. and Melbourne. Australia Limits Company’s reach Growth in on-line gross revenues can countervail Sales/MarketingDepend on word of oral cavity and community based selling – can increase selling via media ( telecasting. magazines. etc. ) and other avenues