SWOT Analysis
The mid 2008 and early 2009 of the Lululemon Athletica’s growth was focused from a specialty retailer leaning on a single niche market to a publicly traded international firm, was characterized by critical opportunities, strengths, however long-term sustainability under the leadership of Christine McCormick Day called for the mitigation of the threats and weaknesses posed by the external market forces and competitors.
Strengths
Lululemon avoided the traditional marketing strategy of hiring the high-priced sports celebrities to model its outfits –this marked the company’s product and marketing strengths. This made Lululemon spend almost nothing on the advertising expenditures beyond its occasional print ads in running magazines and yoga. This made it have good advertising and marketing strategies of its brands (Lululemon 329).
The company’s large workforce of approximately 3,000 employees was a major strength as this constituted its driving force that propelled its mission and implementation of business policies besides operating in about 100 stores across the United States and beyond.
Opportunities
The mid-2008 and early 2009 marked the period when Lululemon Athletica was in the process of implementing new inventory systems of putting the company at $1 billion production mark in order to keep pace with the increasing demands in the marketplace (Lutz 272).
Secondly, the world sports clothing industry was on the verge of being expected to increase and this offered an opportunity for the company to enhance its sales.
Threats
The company faced hard challenges in leadership, transition, and culture which presented fundamental pressures that Day’s leadership had to face in ensuring a balance of the rapid growth and the need to leverage the organization’s architecture.
The drop in the composite store sales from 24% to 3% was a big threat that Day had to find an immediate solution to.
Weaknesses
The uncertainties in the global markets resulted in the loss of confidence of the company’s customers which consequently impacted on the company’s sales.
Day takes office when the company is faced with a big challenge of management capacity for the outgoing CEO thereby picking up the company’s leadership from a team of workforce which of fragmented and highly demoralized.
PEST Analysis
Political
The NAFTA made it easier for the Canadian companies, for instance, Lululemon to open branches across the North America.
Technological
The mid-2008 and early 2009 period is mapped with an increasing emergence of online shopping, and the prevalence of social media gave new ways of advertising and means of spreading the brand awareness. Therefore, the apparel companies experienced sources of competition due to advanced high-tech materials.
Economic
Lululemon Athletica faced continued economic struggles, particularly within the European Union, which negatively affected the company’s international expansion. The hard economic times was characterized by price-conscious consumers, and the company had to provide differentiated products in order to maintain the price levels (Pacheco 303).
Sociocultural
The activewear market was bolstered by the societal movement driven towards active and healthy lifestyles. There was a rise in the number of individuals engaged in yoga in North America. Moreover, a good number of consumers were increasingly showing concern on the aspects of ethical production of the goods they buy.
Competitive Environment (Industry / Market) analysis
The company faces a hugely competitive industry as it experiences direct competition with wholesalers and direct sellers of sports apparel, like Adidas AG, Nike, Inc. and Under Armour, Inc. Further, it faces completion with retailers particularly focused on women’s athletic clothing like Lucy Activewear, Inc., Bebe Stores and The Gap, Inc.
Porter’s Five Forces Model Analysis
Bargaining power of suppliers
There are several supplier competing for the retailers’ business. The raw materials (cotton and rubber) are readily available giving Lululemon an avenue to choose who to buy from making the suppliers to have a low bargaining power (Ferrell 158).
Bargaining power of buyers
Lululemon’s customers when operating as a group have a high level of bargaining power. The buyers have flow switching costs, and therefore, they can easily switch to any brand if dissatisfied.
Threat of New Entrants
The company enjoys economies of scale thereby experiencing a moderated threat of new entrants. Getting access to distribution channels is a challenging aspect that the company also enjoys.
Competition level
There is high competition in the sporting apparel industry, with different companies strategically positioning themselves to attract a bigger market share. Since there is low switching costs the companies try to poach customers of its competitors.
Threats of substitutes
There are less good substitutes for sports apparel; therefore, the threat of substitutes is low.
Works Cited
Ferrell, O C. Business Ethics: Ethical Decision Making & Cases: Ferrell. Mason, OH: South Western Educational Publishing, 2016. Print.
Lululemon Athletica. Our frequently asked questions. 2013. Print. Retrieved from http://www.lululemon.com/faq/
Lutz, Ashley. Why Gap's Athleta Will Overtake Lululemon. 2013. Retrieved from http://www.businessinsider.com/reasons-athleta-will-beat-lululemon-2013 3http://shop.lululemon.com/home.jsp
Pacheco, Hector. Design patents and Lululemon: a way forward in fashion? 2013. Retrieved from http://www.lexology.com/library/detail.aspx?g=a618791e-3967-4e4f-a24f-76ca37c397f7
Plunkett's Sports Industry Almanac 2009. Plunkett Research Ltd, 2008. Print.
