Lululemon: Stay Public or Go Private? SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Lululemon: Stay Public or Go Private?
After having virtually created the yoga-wear segment more than a decade earlier and having become a stock-market darling, Lululemon Athletica finds itself at a critical point in its development. After a series of missteps and a first-quarter profit drop of 60 per cent, the yoga-wear retailer's founder, Chip Wilson, prepares to go into battle, meeting with banks and private equity firms to mount a buyout and take the company private. Similar to other highly successful entrepreneurial companies and their leaders, Lululemon, Wilson and the company executives face fundamental struggles in their attempts to balance an ambition to grow with the need to preserve core elements of the brand as the firm evolves.
Swot Analysis of "Lululemon: Stay Public or Go Private?" written by W. Glenn Rowe, Maria Semenova includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Lululemon Yoga facing as an external strategic factors. Some of the topics covered in Lululemon: Stay Public or Go Private? case study are - Strategic Management Strategies, and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Lululemon: Stay Public or Go Private? casestudy better are - – banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing commodity prices, wage bills are increasing, increasing government debt because of Covid-19 spendings, competitive advantages are harder to sustain because of technology dispersion, central banks are concerned over increasing inflation, challanges to central banks by blockchain based private currencies,
geopolitical disruptions, technology disruption, etc
Introduction to SWOT Analysis of Lululemon: Stay Public or Go Private?
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Lululemon: Stay Public or Go Private? case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Lululemon Yoga, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Lululemon Yoga 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: Stay Public or Go Private? can be done for the following purposes –
1. Strategic planning using facts provided in Lululemon: Stay Public or Go Private? case study
2. Improving business portfolio management of Lululemon Yoga
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Lululemon Yoga
Strengths Lululemon: Stay Public or Go Private? | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Lululemon Yoga in Lululemon: Stay Public or Go Private? Harvard Business Review case study are -
Strong track record of project management
– Lululemon Yoga 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 Strategy & Execution industry
– Lululemon: Stay Public or Go Private? firm has clearly differentiated products in the market place. This has enabled Lululemon Yoga to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Lululemon Yoga to invest into research and development (R&D) and innovation.
Organizational Resilience of Lululemon Yoga
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Lululemon Yoga does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
High brand equity
– Lululemon Yoga has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Lululemon Yoga to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Ability to lead change in Strategy & Execution field
– Lululemon Yoga is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Lululemon Yoga in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Analytics focus
– Lululemon Yoga 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 W. Glenn Rowe, Maria Semenova 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.
Successful track record of launching new products
– Lululemon Yoga has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Lululemon Yoga 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.
Operational resilience
– The operational resilience strategy in the Lululemon: Stay Public or Go Private? 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.
Ability to recruit top talent
– Lululemon Yoga is one of the leading recruiters in the industry. Managers in the Lululemon: Stay Public or Go Private? are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Innovation driven organization
– Lululemon Yoga is one of the most innovative firm in sector. Manager in Lululemon: Stay Public or Go Private? Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Effective Research and Development (R&D)
– Lululemon Yoga 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: Stay Public or Go Private? - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Lululemon Yoga digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Lululemon Yoga 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.
Weaknesses Lululemon: Stay Public or Go Private? | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Lululemon: Stay Public or Go Private? are -
Increasing silos among functional specialists
– The organizational structure of Lululemon Yoga is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Lululemon Yoga needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Lululemon Yoga to focus more on services rather than just following the product oriented approach.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Lululemon: Stay Public or Go Private? 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 Lululemon Yoga has relatively successful track record of launching new products.
Skills based hiring
– The stress on hiring functional specialists at Lululemon Yoga 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Lululemon Yoga is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Lululemon: Stay Public or Go Private? can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Lack of clear differentiation of Lululemon Yoga products
– To increase the profitability and margins on the products, Lululemon Yoga needs to provide more differentiated products than what it is currently offering in the marketplace.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Lululemon: Stay Public or Go Private?, in the dynamic environment Lululemon Yoga has struggled to respond to the nimble upstart competition. Lululemon Yoga has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
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 Lululemon Yoga supply chain. Even after few cautionary changes mentioned in the HBR case study - Lululemon: Stay Public or Go Private?, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Lululemon Yoga vulnerable to further global disruptions in South East Asia.
Aligning sales with marketing
– It come across in the case study Lululemon: Stay Public or Go Private? 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: Stay Public or Go Private? can leverage the sales team experience to cultivate customer relationships as Lululemon Yoga is planning to shift buying processes online.
Slow decision making process
– As mentioned earlier in the report, Lululemon Yoga 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. Lululemon Yoga 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.
High cash cycle compare to competitors
Lululemon Yoga 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Lululemon Yoga needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Opportunities Lululemon: Stay Public or Go Private? | 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: Stay Public or Go Private? are -
Leveraging digital technologies
– Lululemon Yoga 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Lululemon Yoga 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 Lululemon Yoga to hire the very best people irrespective of their geographical location.
Building a culture of innovation
– managers at Lululemon Yoga 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 Strategy & Execution segment.
Developing new processes and practices
– Lululemon Yoga can develop new processes and procedures in Strategy & Execution 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, Lululemon Yoga is facing challenges because of the dominance of functional experts in the organization. Lululemon: Stay Public or Go Private? 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.
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. Lululemon Yoga can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Strategy & Execution industry, but it has also influenced the consumer preferences. Lululemon Yoga can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Low interest rates
– Even though inflation is raising its head in most developed economies, Lululemon Yoga 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
– Lululemon Yoga can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Lululemon: Stay Public or Go Private? 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.
Creating value in data economy
– The success of analytics program of Lululemon Yoga has opened avenues for new revenue streams for the organization in the industry. This can help Lululemon Yoga to build a more holistic ecosystem as suggested in the Lululemon: Stay Public or Go Private? case study. Lululemon Yoga can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Manufacturing automation
– Lululemon Yoga can use the latest technology developments to improve its manufacturing and designing process in Strategy & Execution 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.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Lululemon Yoga to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Lululemon Yoga can use these opportunities to build new business models that can help the communities that Lululemon Yoga operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Threats Lululemon: Stay Public or Go Private? External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Lululemon: Stay Public or Go Private? are -
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 Lululemon Yoga business can come under increasing regulations regarding data privacy, data security, etc.
Environmental challenges
– Lululemon Yoga 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. Lululemon Yoga can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
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.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
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. Lululemon Yoga 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Lululemon Yoga in the Strategy & Execution industry. The Strategy & Execution 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.
Consumer confidence and its impact on Lululemon Yoga demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
High dependence on third party suppliers
– Lululemon Yoga high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Shortening product life cycle
– it is one of the major threat that Lululemon Yoga is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Regulatory challenges
– Lululemon Yoga 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 Strategy & Execution industry regulations.
Stagnating economy with rate increase
– Lululemon Yoga 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.
Increasing wage structure of Lululemon Yoga
– 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 Lululemon Yoga.
Technology acceleration in Forth Industrial Revolution
– Lululemon Yoga has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Lululemon Yoga needs to keep up with the evolution of technology in the Strategy & Execution 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.
Weighted SWOT Analysis of Lululemon: Stay Public or Go Private? 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: Stay Public or Go Private? 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: Stay Public or Go Private? 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: Stay Public or Go Private? 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: Stay Public or Go Private? 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 Lululemon Yoga needs to make to build a sustainable competitive advantage.
