Strategic Management and Financial Planning

The provided document is a report on strategic management and financial planning for Lululemon. It begins with an introduction to strategic management, explaining its importance in the context of business development and growth. The report then delves into organizational analysis, highlighting Lululemon's competitive environment, core competencies, capabilities, and weaknesses. Furthermore, it discusses the effects of various strategies on the company, including financial management, which is crucial for meeting the needs arising from expansion and borrowing funds. Proper planning is emphasized to manage cash flows effectively and evaluate sources to select the most beneficial option at the least possible cost.

Strategic Management

Table of Contents
Introduction......................................................................................................................................1
TASK...............................................................................................................................................1
1 ..................................................................................................................................................1
2. .................................................................................................................................................2
3...................................................................................................................................................3
4...................................................................................................................................................4
5...................................................................................................................................................5
Conclusion.......................................................................................................................................6

Introduction
Strategy formulation is an important task in an organisation. As, this helps the firm to attain their
long term goals and objectives. This will help out to make their business efficient and effective
and the company is able to get the competitive advantages over it (Elliot, 2011). Now, for
formulation of the strategic management, the company requires to recruit the most talented
employees or managers. They will also help out the firm to get the most effective management
tool that are easily in an effective manner. This report is based on lululemon athletica Inc. which
is specially deals athletic apparel. However this company is a self-described yoga-inspired
athletic apparel firm.
TASK
1
Lululmon's Athletica's incorporation operate their activities in an effective manner so that
the company could get the competitive advantage over other rivals. The cited company is able to
get the competitive advantage with the help of mainly 4 main factors. These are:
 Efficiency: Under this two sub factors are there. These are outsourcing and
technological advances.
Under outsourcing, cited organisation frame their products design in Canada, but they outsource
the manufacturing division for many nations. Like:- China, Indonesia, Bangladesh, Peru and
Israel (Duncan and Kasemsap, 2014).
Technological advances: The firm enables the alternative of buying the product online, on their
site, which covers free shipping form the factory outlet. Hence, save shipping time, costs and
various resources of retail store.
 Quality: The cited firm is able to have the competitive advantage via providing the
finest quality to the firm. The quality of the firm is usually derived by way of doing CSR
activities in an effective manner. This department assist to motivate the employee to
execute their work personally. Two main action plan is emerged as an outcome of the
CSR activities. These are: grass roots actions and company action plan. The grassroots
action plan occur in the cited firm's stores via persons taking own responsibility to frame
alter in their societies. Such program is totally accountable for linking society and
1

health, via mediums like complimentary fitness and yoga classes taught by regional
ambassadors.
Company actions depends in three Luluemon centers. Which are:
1. Guest education Centre: renders product education to company's guests and at the greater
community.
2. Distribution centre is concentrates on the supply chain effectiveness and innovating
unique way for making optimum efficiency and nominal wastage.
3. Store Support Centre covers more than 100 individuals from various outlets. This is the
main team which provides support system of design, production, finance, training,
community connections, operational offices.
 Innovation: Innovating fabrics helps the firm to get the competitive advantage. The
cited company frame fabrics and technologies department which main function is to do
regular research and develop new and advance materials, goods and improving current
products. The cited company has made specific product lines for:
s Luon Family (Genuine fabric for yoga, company's signature fabric)
s Luxtreme (company's most demandable fabric for running)
s Swift Family (extreme light fabric for running)
s Natural Blend Family
s Meshes and Liner Family
 Responsiveness to Customers: The cited company are striving hard to get the
competitive advantages by way of responsiveness to Customers. Team Research and
Development, and ambassador are the main factor by which the cited company can make
their response to the consumers.
2.
Same as any another organisation which having good growth and success, Lululemon is
having some of the core competencies and capabilities. In the capabilities, there comes the
factors regarding how company's marketing and sales activities are done. Their marketing
approach is mainly having focus on maximising the customer loyalty and brand identity. In short,
it can be said that, advertising of an organisation is generally on the basis of community. The
company forms the localized communication system with the assistance of various sponsored
2

events. Another ability is that the logistics of an organisation is outbound; their management of
inventory is in such kind of way that that enterprise make supply less than demand, it develops
artificial insufficiency of products and as an outcome clients will make a quick buy before
product goes out of the stock.
Separated from selling and producing its athletic apparels, they also demeanour events
like activities related to running and yoga classes. This thing maximise popularity of an
organisation among individuals. In regards with acquisition, they have produced a strong
relationship with the suppliers. Another sort of capability is the manner in which they make
technological development. They do this by doing proper research of market before producing
any latest product. With the better management of human resource, employers of the company
are trained well and also make personal interactions with customers.
Strong relationship with customer is considered as one of the main core competency of
Lululemon. This supports in development and customer retention in regards with market power
against competitors (Liu, 2010). Design quality and product which are most reliable is
considered as their another competency and it helps in creating brand recognition between
consumers. They are also having appropriate and effective culture which give motivation to the
employees and customers. Despite of the continuous development and growth, Lululemon also
have various weaknesses which may impact competition's nature in future. One of the major
weakness is high price. The product's price of the mentioned company in comparison to the same
product of another company is very high. It will impact the market of an organisation in future,
as there are many customers who will make choice of cheaper products if the purpose is same.
Another kind of weakness is perception regarding brand. There are many consumers who believe
that items from Lululemon are used for yoga only, which means that it face major challenge
when the diversification of services and products are made. Therefore, they have to invest more
in order to make change in perception of people.
3.
There are various external environment conditions as well as trends which will impact the
strategic actions of Lululemon. External environment must be the major determiners of firm's
strategic position. The model of industrial organisation of the above average return influences the
external environment's dominant effect on strategic action of the company. It explains that the
kind of industry in which an enterprise make choice to have competition has major effect on
3

performance in comparison to actions and choice which is done by company (Guerras-
Martín,Madhok and Montoro-Sánchez, 2011). As per the case of Lululemon, it has seen
enormous success and growth by giving premium niche product in a growing segment of market.
The enterprise has slowly made an expansion geographically, and there is continuous growth in
sales from the past 12 quarters. Some of the success is done by growth and popularity of yoga.
However, customer all over the world, have cut discretionary spending due to global economic
downturn. By taking into consideration the turbulence of economy from the past years and it is
the fact that products of Lululemon are at high end of price spectrum.
There are various kinds of conditions in external environment which may have minimum
effect on performance of the company, the I/O model will be having less description regarding
the situation of Lululemon than resource based model. The brand equity of the company, in
combination with loyal customers and successful grass roots campaign of marketing has made
company to have a force in industry despite of the poor conditions of the economy. High amount
of emphasis on effective vision, strategic competitiveness and intangible resources play main
role in ability of an organisation to make successful execution of the differentiation strategy.
Although the performance of an enterprise has been protected from external forces effect,
Lululemon is seeing rise in the level of inventory and is also making predictions regarding slow
growth (Hess and Rothaermel, 2011). Organisation is unknown in relation with the large effects
of increased competition for the share of segment and the dynamic global economy will also
impact the profitability of the firm. In order to deal with the several kind of uncertainties and to
assist strategic decision making, company do the practice in regards with scanning of
environment as both internal assets and industry environment will have impact on its
performance.
4.
Many strategies were formulated by the management in order to experience the growth. A
strategy was made which emphasis on change in the yoga clothes for which the feedbacks from
the yoga teachers were collected so that the best variety could be served to customers. It proved
to be a good move as this way a new variety was launched which was capable of serving the
needs of clients having plus sizes. Another strategy of same was to offer new products to the
market in which prime pricing policy was used in order to target the upper class of society. With
4

change in trends people like buying products which are high in cost considering it as their status
symbol and increased the total revenue for the company. Many sports apparel were made
available in the market which focused mainly on few sports like soccer and basketball which is
very much in trend and demand for which never fades away. All these strategies brought positive
move in the total scale of business but there were some associated risk too with same. The policy
of hike in price brought a tough external competition with itself as it became difficult to compete
with the products of another brands. There was a chance that the image of cited company may
get effected as customers are so much price sensitive and may not like the idea of prime costing.
After this the policy of making the uniforms for several sports proved to be a wrong idea as this
way company had to give more efforts on its marketing team which add additional cost to
products.
5
In the expansion which is carried out by the organisation there are various challenges that
will have to be faced and some of them are explained below:
1. Communication: In this the misunderstanding in relation to culture will be arised as it
will not be possible to communicate effectively due to the difference in the language of
all the countries. The practices of the business will not be understood in the appropriate
manner by which the operations will be not be carried out in the correct manner (David,
2011). This can be dealt with by having an international team at those places who will be
reducing the gap among the difference in culture.
2. Human resources: In the expansion the work will be conducted in various countries and
so the manner in which the various managers will be performing the activities will be
different. They will not be able to coordinate with each other in the proper manner which
will lead to the mismanagement of the activities. It can be solved by specifying it clearly
that which operation is required to be performed by whom. By this there will be no
confusion regarding the responsibilities to be taken.
3. Financial management: This will be the most important problem as in the process of the
expansion there will be requirement of the large amount of funds so that all the
operations can be carried out without any hindrance. But as there are many task so the
problem will be arising and in order to meet the needs the company will have to take the
5

loans and borrowings. By this the interest cost will be increased which will also have to
be borne and will cause the overall increase in the cost and there by the profitability of
the business will be affected adversely. In order to manage the cash flows proper
planning will be required to be done so that the needs can be identified in advance and
due to this the various sources can be evaluated and the most beneficial among them will
be selected which can be obtained at the least possible cost.
Conclusion
From the above mentioned report, it can be analysed that strategic management is very
important for Lululemon as it assist them in making proper development and growth.
Competitive environment of the company consists of efficient, innovation, quality and the way
they make response to the customers. Organisation is also have major core competencies,
capabilities as well as weaknesses which are impacting on business. Report also provide the
knowledge about the different effects of various strategies which were formulated by an
organisation as each had both positive as well as negative effect.
6

REFERENCES
Books And Journals
David, F.R., 2011. Strategic management: Concepts and cases. Peaeson/Prentice Hall.
Hess, A.M. and Rothaermel, F.T., 2011. When are assets complementary? Star scientists,
strategic alliances, and innovation in the pharmaceutical industry. Strategic
Management Journal.32(8). pp.895-909.
Liu, Z., 2010. Strategic financial management in small and medium-sized
enterprises. International Journal of Business and Management. 5(2). p.132.
Duncan, B.L., Miller, S.D., Wampold, B.E. and Hubble, M.A., 2010. The heart and soul of
change: Delivering what works in therapy. American Psychological Association.
Kasemsap, K., 2014. Strategic innovation management: An integrative framework and causal
model of knowledge management, strategic orientation, organizational innovation, and
organizational performance. In Strategic approaches for human capital management
and development in a turbulent economy. (pp. 102-116). IGI Global.
Elliot, S., 2011. Transdisciplinary perspectives on environmental sustainability: a resource base
and framework for IT-enabled business transformation. Mis quarterly.35(1), pp.197-
236.
Guerras-Martín, L.Á., Madhok, A. and Montoro-Sánchez, Á., 2014. The evolution of strategic
management research: Recent trends and current directions. BRQ Business Research
Quarterly. 17(2). pp.69-76.
7