Lululemon Athletica Inc. - Moving Forward With Humility SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Sales & Marketing
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Lululemon Athletica Inc. - Moving Forward With Humility
On March 27, 2014, the new chief executive officer of Lululemon Athletica Inc., headquartered in Vancouver, British Columbia, has just announced the previous year's flat fourth quarter results. These unimpressive financial figures have amplified the need to address the company's damaged reputation. In 2013, the apparel brand faced a product recall and a public relations backlash after a controversial interview and botched apology by its founder, as well as the resignation of several key executive employees. A communications strategy must be devised to repair the company's reputation and regain the trust of both investors and customers.
Swot Analysis of "Lululemon Athletica Inc. - Moving Forward With Humility" written by Mary Weil, Julia Cutt includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Athletica Lululemon facing as an external strategic factors. Some of the topics covered in Lululemon Athletica Inc. - Moving Forward With Humility case study are - Strategic Management Strategies, Corporate governance, Public relations and Sales & Marketing.
Some of the macro environment factors that can be used to understand the Lululemon Athletica Inc. - Moving Forward With Humility casestudy better are - – geopolitical disruptions, there is backlash against globalization, cloud computing is disrupting traditional business models, increasing government debt because of Covid-19 spendings, increasing inequality as vast percentage of new income is going to the top 1%, increasing commodity prices, banking and financial system is disrupted by Bitcoin and other crypto currencies,
challanges to central banks by blockchain based private currencies, talent flight as more people leaving formal jobs, etc
Introduction to SWOT Analysis of Lululemon Athletica Inc. - Moving Forward With Humility
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Lululemon Athletica Inc. - Moving Forward With Humility case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Athletica Lululemon, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Athletica Lululemon operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Lululemon Athletica Inc. - Moving Forward With Humility can be done for the following purposes –
1. Strategic planning using facts provided in Lululemon Athletica Inc. - Moving Forward With Humility case study
2. Improving business portfolio management of Athletica Lululemon
3. Assessing feasibility of the new initiative in Sales & Marketing field.
4. Making a Sales & Marketing topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Athletica Lululemon
Strengths Lululemon Athletica Inc. - Moving Forward With Humility | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Athletica Lululemon in Lululemon Athletica Inc. - Moving Forward With Humility Harvard Business Review case study are -
Superior customer experience
– The customer experience strategy of Athletica Lululemon in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Diverse revenue streams
– Athletica Lululemon is present in almost all the verticals within the industry. This has provided firm in Lululemon Athletica Inc. - Moving Forward With Humility case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Cross disciplinary teams
– Horizontal connected teams at the Athletica Lululemon are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Innovation driven organization
– Athletica Lululemon is one of the most innovative firm in sector. Manager in Lululemon Athletica Inc. - Moving Forward With Humility Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Digital Transformation in Sales & Marketing segment
- digital transformation varies from industry to industry. For Athletica Lululemon digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Athletica Lululemon has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Operational resilience
– The operational resilience strategy in the Lululemon Athletica Inc. - Moving Forward With Humility Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Analytics focus
– Athletica Lululemon is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Mary Weil, Julia Cutt can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
High switching costs
– The high switching costs that Athletica Lululemon has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
High brand equity
– Athletica Lululemon has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Athletica Lululemon to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Successful track record of launching new products
– Athletica Lululemon has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Athletica Lululemon has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Strong track record of project management
– Athletica Lululemon is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Sustainable margins compare to other players in Sales & Marketing industry
– Lululemon Athletica Inc. - Moving Forward With Humility firm has clearly differentiated products in the market place. This has enabled Athletica Lululemon to fetch slight price premium compare to the competitors in the Sales & Marketing industry. The sustainable margins have also helped Athletica Lululemon to invest into research and development (R&D) and innovation.
Weaknesses Lululemon Athletica Inc. - Moving Forward With Humility | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Lululemon Athletica Inc. - Moving Forward With Humility are -
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Lululemon Athletica Inc. - Moving Forward With Humility, it seems that the employees of Athletica Lululemon don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Slow decision making process
– As mentioned earlier in the report, Athletica Lululemon has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Athletica Lululemon even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Lack of clear differentiation of Athletica Lululemon products
– To increase the profitability and margins on the products, Athletica Lululemon needs to provide more differentiated products than what it is currently offering in the marketplace.
High cash cycle compare to competitors
Athletica Lululemon has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
High operating costs
– Compare to the competitors, firm in the HBR case study Lululemon Athletica Inc. - Moving Forward With Humility has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Athletica Lululemon 's lucrative customers.
Skills based hiring
– The stress on hiring functional specialists at Athletica Lululemon has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Lululemon Athletica Inc. - Moving Forward With Humility, is just above the industry average. Athletica Lululemon needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Need for greater diversity
– Athletica Lululemon has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Slow to strategic competitive environment developments
– As Lululemon Athletica Inc. - Moving Forward With Humility HBR case study mentions - Athletica Lululemon takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Increasing silos among functional specialists
– The organizational structure of Athletica Lululemon is dominated by functional specialists. It is not different from other players in the Sales & Marketing segment. Athletica Lululemon needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Athletica Lululemon to focus more on services rather than just following the product oriented approach.
Capital Spending Reduction
– Even during the low interest decade, Athletica Lululemon has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Opportunities Lululemon Athletica Inc. - Moving Forward With Humility | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Lululemon Athletica Inc. - Moving Forward With Humility are -
Manufacturing automation
– Athletica Lululemon can use the latest technology developments to improve its manufacturing and designing process in Sales & Marketing segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Creating value in data economy
– The success of analytics program of Athletica Lululemon has opened avenues for new revenue streams for the organization in the industry. This can help Athletica Lululemon to build a more holistic ecosystem as suggested in the Lululemon Athletica Inc. - Moving Forward With Humility case study. Athletica Lululemon can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Athletica Lululemon in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Sales & Marketing segment, and it will provide faster access to the consumers.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Athletica Lululemon can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Lululemon Athletica Inc. - Moving Forward With Humility, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Athletica Lululemon can use these opportunities to build new business models that can help the communities that Athletica Lululemon operates in. Secondly it can use opportunities from government spending in Sales & Marketing sector.
Better consumer reach
– The expansion of the 5G network will help Athletica Lululemon to increase its market reach. Athletica Lululemon will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Sales & Marketing industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Athletica Lululemon can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Athletica Lululemon can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Buying journey improvements
– Athletica Lululemon can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Lululemon Athletica Inc. - Moving Forward With Humility suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Using analytics as competitive advantage
– Athletica Lululemon has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Lululemon Athletica Inc. - Moving Forward With Humility - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Athletica Lululemon to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Leveraging digital technologies
– Athletica Lululemon can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Building a culture of innovation
– managers at Athletica Lululemon can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Sales & Marketing segment.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Athletica Lululemon can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Athletica Lululemon to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Athletica Lululemon to hire the very best people irrespective of their geographical location.
Threats Lululemon Athletica Inc. - Moving Forward With Humility External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Lululemon Athletica Inc. - Moving Forward With Humility are -
Easy access to finance
– Easy access to finance in Sales & Marketing field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Athletica Lululemon can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Stagnating economy with rate increase
– Athletica Lululemon can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Athletica Lululemon will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Athletica Lululemon with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Increasing wage structure of Athletica Lululemon
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Athletica Lululemon.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Athletica Lululemon.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Lululemon Athletica Inc. - Moving Forward With Humility, Athletica Lululemon may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Sales & Marketing .
Environmental challenges
– Athletica Lululemon needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Athletica Lululemon can take advantage of this fund but it will also bring new competitors in the Sales & Marketing industry.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Athletica Lululemon needs to understand the core reasons impacting the Sales & Marketing industry. This will help it in building a better workplace.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Athletica Lululemon in the Sales & Marketing sector and impact the bottomline of the organization.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Athletica Lululemon can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Lululemon Athletica Inc. - Moving Forward With Humility .
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Athletica Lululemon business can come under increasing regulations regarding data privacy, data security, etc.
Weighted SWOT Analysis of Lululemon Athletica Inc. - Moving Forward With Humility Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Lululemon Athletica Inc. - Moving Forward With Humility needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Lululemon Athletica Inc. - Moving Forward With Humility is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Lululemon Athletica Inc. - Moving Forward With Humility is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Lululemon Athletica Inc. - Moving Forward With Humility is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Athletica Lululemon needs to make to build a sustainable competitive advantage.
