Lululemon Athletica Inc. - Moving Forward With Humility SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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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, central banks are concerned over increasing inflation, increasing transportation and logistics costs, digital marketing is dominated by two big players Facebook and Google, increasing household debt because of falling income levels, there is backlash against globalization, increasing government debt because of Covid-19 spendings,
banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing commodity prices, 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 -
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.
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.
Ability to recruit top talent
– Athletica Lululemon is one of the leading recruiters in the industry. Managers in the Lululemon Athletica Inc. - Moving Forward With Humility are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
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.
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.
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.
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.
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.
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.
Effective Research and Development (R&D)
– Athletica Lululemon has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Lululemon Athletica Inc. - Moving Forward With Humility - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Learning organization
- Athletica Lululemon is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Athletica Lululemon is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Lululemon Athletica Inc. - Moving Forward With Humility Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Low bargaining power of suppliers
– Suppliers of Athletica Lululemon in the sector have low bargaining power. Lululemon Athletica Inc. - Moving Forward With Humility has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Athletica Lululemon to manage not only supply disruptions but also source products at highly competitive prices.
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 -
No frontier risks strategy
– After analyzing the HBR case study Lululemon Athletica Inc. - Moving Forward With Humility, it seems that company is thinking about the frontier risks that can impact Sales & Marketing strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Lululemon Athletica Inc. - Moving Forward With Humility HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Athletica Lululemon has relatively successful track record of launching new products.
Aligning sales with marketing
– It come across in the case study Lululemon Athletica Inc. - Moving Forward With Humility that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Lululemon Athletica Inc. - Moving Forward With Humility can leverage the sales team experience to cultivate customer relationships as Athletica Lululemon is planning to shift buying processes online.
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.
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.
Low market penetration in new markets
– Outside its home market of Athletica Lululemon, firm in the HBR case study Lululemon Athletica Inc. - Moving Forward With Humility needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
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.
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 dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Athletica Lululemon supply chain. Even after few cautionary changes mentioned in the HBR case study - Lululemon Athletica Inc. - Moving Forward With Humility, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Athletica Lululemon vulnerable to further global disruptions in South East Asia.
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 -
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Athletica Lululemon can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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.
Developing new processes and practices
– Athletica Lululemon can develop new processes and procedures in Sales & Marketing industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Athletica Lululemon is facing challenges because of the dominance of functional experts in the organization. Lululemon Athletica Inc. - Moving Forward With Humility case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
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.
Loyalty marketing
– Athletica Lululemon has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, 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.
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.
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.
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.
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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Athletica Lululemon can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
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.
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 -
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.
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.
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 .
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.
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.
Technology acceleration in Forth Industrial Revolution
– Athletica Lululemon has witnessed rapid integration of technology during Covid-19 in the Sales & Marketing industry. As one of the leading players in the industry, Athletica Lululemon needs to keep up with the evolution of technology in the Sales & Marketing sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Athletica Lululemon in the Sales & Marketing industry. The Sales & Marketing industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Shortening product life cycle
– it is one of the major threat that Athletica Lululemon is facing in Sales & Marketing sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 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.
Regulatory challenges
– Athletica Lululemon needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Sales & Marketing industry regulations.
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.