Please can you answer the discussion 3 questions.. Thank you CASE 10 Lululemon:
ID: 463732 • Letter: P
Question
Please can you answer the discussion 3 questions.. Thank you CASE 10 Lululemon: Encouraging a Healthier Lifestyle* INTRODUCTION Lululemon Athletica is an athletic apparel company intended for individuals with active lifestyles. The organization has deep roots in the yoga community and is one of the few businesses to offer apparel for this specific market. Lululemon is based in Vancouver, Brit- ish Columbia, Canada, and operates its clothing stores in numerous countries throughout the world. The apparel store offers product lines that include fitness pants, shorts, tops, and jackets for activities such as yoga, running, and other fitness programs. It operates in three segments. These segments consist of corporate-owned and operated retail stores, a direct to consumer e-commerce website, and wholesale avenues. As of 2015, the company operates 302 stores predominantly in the United States, Canada, Australia, New Zealand and Singapore. With more than 8,600 worldwide employees, Lululemon has grown rapidly in the last 20 years and is expected to continue its growth strategy well into the foreseeable future. It has also established a subsidiary geared toward youth called Ivivva Athletica. Store growth and expansion into other countries has allowed Lululemon to achieve financial success. The organization has seen continuous increases in revenue, with its 2014 annual revenue nearing $1.8 billion. While financially stable, the organizational structure has seen changes with the hiring of a new CEO. Lululemon hired Laurent Pot- devin in early 2014 hoping to appoint a worthy and experienced industry professional. The company also hopes to distance itself from negative headlines circling former CEO Denis "Chip Wilson. Potdevin was once the CEO at Toms and has worked in the industry for over 20 years. There is no question that Lululemon has seen great success in recent years. From its conception in 1998, the organization has grown tremendously in markets across the globe. inted by controversy, negative publicity, and However, Lululemon's success has also been ta questionable ethical decisions. This case will detail the issues and controversies circling this organization and identify how Lululemon has managed these issues. In addition, we provide information regarding the positive ethical decisions that have been made through- out Lululemon's history This case was prepared by Justus Adams, Kristen Bruner, Ivan Mora Juarez, and Jennifer Sawayda for and under the direction of O.C. Ferrell and Linda Ferrell 02015. It was prepared for classroom discussion rather than to illustrate either effective or ineffective handling of an administratie rthExplanation / Answer
Recommendations:
Producing most of its items in low cost countries like China and Taiwan requires certain attention to quality if the company wants to continue benefiting from high operating profit due to low costs of goods sold. That’s associated with certain risks.
Having company’s employed quality inspectors on payroll that clearly understands and comply with company’s standard is one way to address it.
Costs – average salary for US quality inspector: $31,000 x 45 facilities = $1.39M
Insulting potentials customers should not be company’s motto when they seek growth.
Asking Chip Wilson not to go on the record.
Costs - $0.
Recommendations:
Expand more into the men and children consumer segments & into fitness activities other than yoga and running
In 30 days:
Using current business processes gather information from ambassadors, r&d team members and market intelligence sources to identify fitness activities other than yoga and running for women, men or children
Stick to focused product strategy and premium positioning
Take advantage of patented fabrics and product technologies
Complete cost-benefit analysis for the top three fitness activities identified
Cost is negligible since processes and people are already in place
Expand more into the men and children consumer segments & into fitness activities other than yoga and running
In 31-150 days:
Introduce new products to market
Cost: Minimum (design occurs within; developed using existing fabrics; can use existing manufacturers and distribution system)
Projected Revenue: at least 5% of total sales within two years
Recommendations:
Markets chosen for expansion should be carefully selected to ensure the brand maintains its air of exclusivity and aspirational price point.
The social climate of potential markets should also be investigated to ensure the values of the upscale market segment are aligned with the company’s vision.
South Korea, Brazil, and Russia may be a better cultural fit than Western Europe
Because the value of the brand itself is built on a cultural connection with its North American consumer base, it will be difficult to translate these brand values to other cultures in Asia, Europe, and Latin America without altering the brand’s meaning.