Lululemon Athletica, Inc. in 2016: Can the Company Get Back on Track?

1. How strong are the competitive forces confronting lululemon in the market for performance-based yoga and fitness apparel? Do a five-forces analysis to support your answer.
2. What does your strategic group map of the performance sports apparel industry look like? Is lululemon well positioned? Why or why not?
3. What do you see as the key success factors in the market for performance-based yoga and fitness apparel?
4. What does a SWOT analysis reveal about the overall attractiveness of lululemon’s situation?
5. What are the primary components of lululemon’s value chain?
6. What are the key elements of lululemon’s strategy?
7. Which one of the five generic competitive strategies discussed in Chapter 5 most closely approximates the competitive approach that lululemon is employing?

Abstract:

Lululemon is based in Canada and it offers premium quality athletic apparel in different kinds of prices. The prices of Lululemon are mostly premium in nature. Lululemon has been experiencing financial profits and gains in recent times with implementation of its focused differentiation strategy. The company is having its own chain of stores. It is Focus towards enhancing market share in North American market. It offers products in niche market and the line of product for the company is also comparatively small as compared to other competitors. The brand image of the company in market is strong and positive as compared to other competitors. The future of Lululemon looks bright as the company is looking towards expanding its operations beyond North American market with implementation of broad differentiation strategy.

1) Threat of potential new entrants is high in this market. Different significant athletic apparel well known companies have launched their yoga clothing lines in market. Supplier power is not unnecessary competitive force because Lululemon uses a concentrated Sourcing strategy which is Focus towards depending on key 5 supplies From Asian Pacific region.

Customers related to yoga and apparel clothes have moderate to high level of bargaining power because this switching cost is less and they have better and more options available in market. Threat of substitutes does not create significant challenge because specific needs of customers cannot be satisfied by alternative companies. Intensity of rivalry is not yet considered to be intense in this industry (Chu, Buckworth, Kirby, & Emery, 2009). Segment sales are increasing but still the intensity of rivalry is not significant.

2)

The position of Lululemon on the strategic group map is different as compared to its rivals mostly because of the fact that the products offered by Lululemon are distinct as compared to competitors’. It has introduced its own performance based fitness and yoga apparel. Reform has its own physical change of retail stores. It has a positive improved image in market. The new retailers do not have such positive image in market. Brand recognition of Lululemon is better than most of its competitors. It can be seen that Lululemon is nearly alone in its strategic group with only a company called as Athleta beside it. Still Athleta is not considered to be a significant Rival for Lululemon in market on practical ground.

3) Some of the key success factors associated with success of fitness and yoga apparel are good design and styling of the clothes. The clothes are of good quality, they are comfortable to wear and they are also fashionable and attractive in design. The company has a strong distribution channel as it has its own physical owned retail stores. The brand name and reputation of the company is very strong in market as compared to competitors. The value added services provided by Lululemon are rarely provided by the products offered by the competitors. The company has significant ability to expand its operations to other Geographic locations. These are some of the significant market factors associated with operations of Lululemon.

4) Some of the strengths includes unique products offered to customers, good marketing strategy implemented by the company, competency in design and style related to yoga and fitness apparel items, and high sales due to company owned distribution network.

Some of the weaknesses include small product line as compared to competitors, Limited brand name recognition as compared to competitors.

Some of the opportunities are women sports apparel in the market, enhance the sales by using internet and Electronic Commerce and can enhance the number of physical stores by opening in other countries and areas which would of enhance the market share (Hammond & Kohler, 2000).

Some of the threats associated with the company are competitors are expanding in women yoga and fitness apparel, it is important to enhance business operations in North America seeing expansion of athleta stores in North America.

5) The primary components of Lululemon value chain includes  well-designed supply chain management as the company is associated with 45 different manufacturers and does not have any long term contracts, distribution facilities are focus in North America and growth in online sales can help to offset the market share gain by the competitors, operations of the company related to inspection and verification process are very strong in order to make sure that another recall does not occur, usage of social media websites like Face book in order to formulate communication between customers and Lululemon, usage of other marketing techniques like television and magazines to spread advertisements to potential customers and arranging different kinds of free yoga classes in outlets for the customers.

6) Key elements of Lululemon strategy is to establish strong base in North America in order to enhance market share in United States, enhanced awareness related to the brand and products offered by the company, usage of latest technology in formulation of new value added products and fabrics, considering showroom an opportunity to introduce Lululemon brand and culture towards community maintaining Limited store inventory is of the company due to which the company is not required to put discounted prices or sale on unsold items, and using contract manufacturers in order to provide products related to Lululemon line of products.

7) By looking towards the operations of Lululemon, we can suggest that the company is Focus towards focused differentiation strategy. They are focused towards launch of Limited products in a narrow market as compared to its competitors. The company will soon implement broad differentiation strategy when the company will expand its operations and product ranges in near future (Porter, 2000).

References

Chu, H., Buckworth, J., Kirby, T. E., & Emery, C. F. (2009). Effect of exercise intensity on depressive symptoms in women. Mental Health and Physical Activity .

Hammond, J., & Kohler, K. (2000). E-Commerce in the Textile and Apparel Industries. Harvard Business School.

Porter, M. (2000). The Five Generic Competitive Strategies. Concepts and Techniques for Crafting and Executing Strategy.