About lululemon - Research Paper Example

(Lecturer’s Research paper about lululemon Lululemon Athletica is an apparel retail company with branches across the globe. It was founded in the year 1998 in Vancouver in a small space that it even shared but it has grown to become a major player in its industry. Its major products are “technical yoga and run cloths” (Lululemon 1). Political, economic, and technological factors are significant to the company’s macro environment, while SWOT analysis informs on its microenvironment. MicroenvironmentKey Intermediaries The company sells directly to its consumers and this shows lack of intermediaries in its chain.

It offers its products’ details on its websites from which consumers can place order and make online purchases (Lululemon 1). Key SuppliersLululemon has three main suppliers; Delta Galil, Eclat Textile company, and Workday Inc. All of the suppliers are established organization, a factor that suggest their stability and ability to meet Lululemon’s demand for resources. The fact that Lululemon’ competitors, such as Nike, also deal with the suppliers also suggests the suppliers’ reliability.

Lululemon however only commands a small proportion of the suppliers’ revenues and this identifies it as a minor buyer who may lack strong bargaining power. It only commands 1.2 percent of Delta Galil’s revenues and less than one percent of revenues for Ecalt Textile and Workday Iinc (Forgeon, et al. 25, 26). Key CustomersThe company operates direct links with customers, with women as the main customers. Adults, however, forms the major target market that women dominate, and types of offered commodities shows this because for every class of commodities, there are more types for women that for men (Lululemon 1).

Studios and gyms are another target market and sells to customer (Forgeon, et al. 26). SWOT Analysis Strengths The company’s products have trademarks that protect them from unfair competition, especially through illegal trade in counterfeit commodities. Offered yoga trainings to the community is another strength that bonds the company with the community and establishes competitive advantage through the relationship and through aspects of corporate social responsibility. Research and development that leads to innovation and established product identities are other strengths that the company has.

It also trains its employees to ensure quality products for customer utility. Such an initiative is also likely to ensure low employee turnover rate, as it identifies value in the organization’s employees (Bayley, Beale, Dubinsky, & Peedin 20). WeaknessesLululemon however deals in a narrow range of products and this limits its revenues. Even though its high retail prices could suggest ability to optimize profit due to high profit margins, the prices may be a barrier to some customers who may derive same level of utility from competitors’ lowly priced products.

The company’s brand also remains weak (Bayley, et al. 21). OpportunitiesExpansion potentials and increasing demand for athletic wears are the major opportunities for Lululemon. The company is able to increase the types of commodities that it produces as well as to venture into additional geographical areas. It has previously focused on North America but even this region still has expansion opportunities. Increasing demand for commodities also offers room for more production and sales (Bayley, et al. 22). Threats The company experiences stiff competition from established companies in the industry and this could worsen.

In addition, threats of new entrants, into increased level of competition, also exist. Other threats are possible production and trade in counterfeit goods, and economic factors such as inflation in target markets (Bayley, et al. 23).Macro EnvironmentMacroeconomic environment in which Lululemon operates, focus on the United States and Canada, has been improving since the last recession and this means better prospects for the company. Improvements in employment rates and disposable income, for example, mean consumers’ greater ability to spend and increased sales for the company.

Stiff competition from other players in the industry as well as rising production cost in some countries are other factors in the macro environment. National legislations and international trade agreements are also significant to the company’s global scope of operations (Forgeon, et al. 36- 40). Works citedBayley, Steven, et al. “Lululemon athletic, Inc.” Slidshare. N.d. Web. November 3, 2014. < http://www.slideshare.net/StevenBayley/lululemon-athletica-case-2?next_slideshow=1>. Forgeon, Ralph et al.

“Lululemon Athletica, Inc.” Seminar in Strategy and Policy. May 1, 2014. Web. November 3, 2014. Lululemon. “Lululemon.” Lululemon. 2014. Web. November 03, 2014. < http://shop.lululemon.com/home.jsp >.