A BUSINESS STRATEGY (W501) PRESENTATION

PREPARED FOR

SHEIKH MORSHED JAHAN

ASSSOCIATE PROFESSORINSTITUTE OF BUSINESS ADMINISTRATION,

UNIVERSITY OF DHAKA

PREPARED BY

MARUF HASAN, ZR-13MD. DANIAL RAFI, ZR-27

SHARMILI ROWSHON KABIR, RH-30MUHTASIM SAROWAT RAYED, ZR-61

BBA 21st, SECTION AA2 SUBGROUP

OUTLINE

CASE BACKGROUND

INDUSTRY ANALYSIS

COMPANY ANALYSIS

PROBLEM ANALYSIS

RECOMMENDATIONS

01 02 03 04 05

A MAJOR SETBACK

Due to a PR disaster involving see-through pants, Lululemon’s growth in 2013-14 didn’t go as well as expected.

36.9%Revenue Growth

(2013)

16.1%

47%Net Income Growth

(2012)

3.3%Net Income Growth

(2013)

Revenue Growth (2012)

INDUSTRY OVERVIEW

All Fitness Apparel US Market Size

(2014)

Yoga Apparel US Market Size (2013)

$2-2.5 BILLION

$8-10 BILLION

All Fitness Apparel Global

Market Size (2012)

$135 BILLION

All Fitness Apparel Expected Global

Market Size (2019)

$178 BILLION

PORTER’S FIVE FORCES

THREAT OF EXISTING

COMPETITIONHIGH

BARGAINING POWER OF SUPPLIERS

MEDIUM

BARGAINING POWER OF

CUSTOMERSMEDIUM

THREAT OF SUBSTITUTES

LOW

THREAT OF NEW ENTRANTS

HIGH

STRATEGIC GROUP MAPPING

PERFORMANCE FABRIC QUALITY

AV

AIL

AB

LE

SIZ

ES

Athleta

Lululemon

Lucy

Bebe

Nordstorm

Nike

Adidas and

Rebook

UnderArmour

More and more market players are going for more

ordinary fabrics for apparel that are available

in more sizes.

Close competition with other performance fitness wear

brands

COMPANY VISION

Creating components for people to live longer, healthier fun lives

COMPANY GROWTH STRATEGY IN 2014

Broaden product line beyond yoga and fitness

wear, offering products for both males and females of

all ages

Grow market presence in North America

Establish market presence outside

North America

Increase brand awareness of

Atheltica and Ivivabrands

Improve online presence to drive sales

Provide distinctive customer experiences

Develop and incorporate next-gen

fabrics and technologies

CUSTOMER SEGMENTATION

Sophisticated, educated women who value active

and healthy lifestyles

Originally centered around

yoga, grew to include other

activities

Young, athletic women and men who value premium performance fitness wear

SWOT ANALYSIS

SO

W

T

High Product QualityStrong commitment to

valuesActive Community Presence

Many patents and trademarks

Increasing competition from

both global brands and smaller

upstarts

Not available in as many size as some other brands

Spillage from other market segments dilutes brand equity

Newer technology

Growing health and fitness conscious trend across all ages

KEY RESOURCES

V

R

I

N

PERFORMANCE FABRIC QUALITY

CUSTOMER EXPERIENCE

ONLINE PRESENCE

RESPONSIVE SUPPLY CHAIN

ALIGNMENT WITH VALUES

YES

YES

YES

NO

YES YES YES YES

YES NO YESYES

NO NO NO NO

NO NONO NO

CORE ISSUE

Can Lululemon bounce back and recover its growth momentum from the PR disaster in the face of increasing competition?

UNDERLYING ISSUES

PR Founder Wilson’s

inappropriate remarks damaged brand reputation

Delayed response to PR disaster

PRODUCT LINE Limited compared to

some competitors

VALUE CHAIN High cost for

production and design

Rapid investments in acquisition

Cut-throat competition and price war

RECOMMENDATIONSREBRAND LEADERSHIP

Capitalize on new CEO Potdevin’s good market reputation

Distance company from

Wilson post-retirement

Update core values to include all inclusive and healthy body image

RECOMMENDATIONSLAUNCH NEW ALL INCLUSIVE SUB-BRAND

Balance between performance fabric quality and availability of sizes

Channels can include social media, events, partnerships, campaigns

LAUNCH CAMPAIGNCentered around positive messages of self-esteem

Ads featuring men and women of all ages and sizes being active wearing Lululemon apparel

RECOMMENDATIONSPROMOTE MORE RESPONSIVE STAKEHOLDER MANAGEMENT

CSR ACTIVITYfighting mal-nutrition /obesity promoting healthy living fighting against body shaming and bullying

Communicate swiftly, openly

and honestly with

stakeholders to rebuild brand

equity

RECOMMENDATIONSSTREAMLINE VALUE CHAIN

CUT COSTSto cut non-value generating activities

Partner with suppliers of fabric for prompt delivery

Effective sourcing and procurement -Look for better avenues for sourcing cheaply

RECOMMENDATIONSRESPOND TO CUSTOMER DEMAND

MOVE TO FAST FASHIONrespond to demand by launching new products within weeks (ZARA

Model).

Develop a strong supply chain to support this

RECOMMENDATIONSOMNI CHANNEL CUSTOMER FULFILLMENT

Retail stores and online channels will come together with a holistic retailing capability, speed, quality and timely fashion

Will allow Lululemon to

justify premium

pricing

Increase customer

engagement and make them feel

important