Management case study

Lululemon internal environment analysis features as it has many uniquely designed products that allow it to thrive in the present economy. It has extremely diversified its activities like for instance in 2012; Lululemon offered a diverse and growing selection of premium-priced performance apparel accessories for men, women, and female youths designed for healthier lifestyle activities. The extreme diversified activity of Lululemon allows create innovative products with multiple features through fusing different technologies.

The weakness evident with Lululemon is that its competitors are well-established companies. The companies are expanding their production and marketing of performance products and recent entrants attracted by the growth opportunities. Lululemon’s competitors are wholesalers of technical athletic apparel like Nike, Under Armour, and The Adidas Group. For instance, Nike is well-known and powerful brand globally. It was the world’s largest seller of athletic footwear and athletic apparel.

The company does business in countries like United States, Canada, Australia, and New Zealand having a total of 174 retail stores where customers can buy its products. Lululemon does not have production done internally in its value chain activity. The resource-based approach for Lululemon is quite different as it does not own or operate any manufacturing facilities producing fabrics or make garments. In the 2011 fiscal, all of its products were sourced from a group of total 45 manufacturing companies of which five of them produced up to 67 percent of Lululemon’s products. The company does not have a long-term contract with any of the manufacturing suppliers hence transacts business on an order-by-order basis. North American manufacturers give Lululemon the capability to speed select products to market and hence respond quickly to the dynamic trends and unexpectedly high demand for certain products. It is an advantage to the company as it boosts its operations hence improving its economy.

The financial growth of the company and success over the coming five years is impressive by any standards regardless of the stiff competition. Full-year fiscal for 2012 net revenues would be in the range of 1.3 billion to 1.325 billion. Hence, the diluted earnings per share would be in the range of 1.50 to 1.57 dollars. In may the same year, Lululemon stock traded in the range of 75 to 80 dollars. It was an improvement as compared to the previous 2010 stock trade of 15 dollars per share. Lululemon can finance new ventures with fewer risks. The company can further develop their technological capabilities to improve the quality of their products.

The resources and capabilities of Lululemon are unique that they cannot be imitated by other companies. The core competence of Lululemon’s is both scale and scope in its economies. The company design team collaborates closely with different international designers. The design team consists of athletes and users of the company’s products which embrace Lululemon’s design philosophy and dedication to premium quality. The team interacts and receives customers’ feedback directly. The team employs various marketing intelligence sources in identifying and tracking market trends. It gathers the ideas for product improvements and new products as they host meetings each year in different geographical markets. The ideas are incorporated to make fabric selection, develop new products and adjustments made in the fit, style, and function of existing products. Before the company launches new products with new materials, it uses the services of a leading independent inspection, testing, verification and certification firm to carry out a battery of tests on fabrics for various performance characteristics. Lululemon identifies opportunities to develop materials that it could trademark through its design personnel working with the leading fabric suppliers. Lululemon gains added brand recognition and brand differentiation through trademark.

Most companies lack the unique technological resources that Lululemon is possessing. The company has taken the initiative of protecting their technology through trademarks hence cannot be imitated. It may not be the case forever as the competitors may acquire knowledge. For the establishment of a long-term sustainable competitive advantage, Lululemon should continue to invest heavily in research based on newest technologies. In this way, it will have significantly differentiated themselves from rivals in some way or another.

Lululemon has the advantage of the competition that allows it to be successful. Its apparel products have the unique style, fit and performance women need who are embracing yoga and athletic related activities. Business-level strategy for Lululemon uses its retail store network to market their apparel products directly to the women. The management of the company has broadened the company’s market target to include the other population segments other than women only. It is currently designing and selling products for men and athletics female youths premium quality athletic apparel. Customers’ decision to purchase athletic, fitness and recreational clothing because of the need as well as the desire to create a particular lifestyle perception in the apparel they wear is a demand-enhancing factor. It can sustain the competitive advantage by the continuous growth of its operations and expand their business into new products.  A way to have a more sustainable competitive advantage is to enhance the product through incorporating the next generation fabrics and technologies to strengthen customers Association to Lululemon brand. It will enable Lululemon to command higher prices for its apparel products, unlike the traditional athletic apparel. If Lululemon can provide and protect the technology, it will be safe for years to come.

Lululemon’s generic business-level strategy is to grow the store base in North America, primarily the United States and to open additional stores outside North America. There is a need for advertising Lululemon brand and apparel line. Strengthening customer association towards Lululemon brand is through incorporating the next generation fabrics and technologies in the company’s products. It would command higher prices for its apparel products compared to the traditional athletic apparel. The product line would be broadened by designing Lululemon products for a bigger range of athletic activities. Establishing fitness by providing a distinctive in-store shopping experience complemented by strong ties to fitness the instructors, local athletes, and conscious.

On the functional level decision, Lululemon offers apparel and accessories diversely and growing selection of premium-priced performance for women, men, and female youth designed for healthy lifestyle activities. In the previous years, many of the products were intended for the growing number of people participating in yoga. For some years now, the company has broadened its products range to address the needs of other activities. Lululemon can price its high-quality technical athletic apparel above the prices of traditional athletic apparel because of their unique design elements and fabric technologies. Product design and development team are always looking for ways of enhancing their products to look more different from their competitors’.