Lululemon Athletica SWOT Analysis

This assignment requires a comprehensive SWOT analysis of Lululemon Athletica. Using a variety of sources including academic texts, news articles, and company information, students must identify and evaluate the brand's strengths, weaknesses, opportunities, and threats. The analysis should draw insights from the provided resources and demonstrate a clear understanding of strategic management concepts.

RUNNING HEAD: Strategic Management
Strategic Management

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Introduction
Lululemon Athletics Inc. is athletic apparel company for both males and females (but basically
targets women between the ages of 15 and 65) and provides a diversified range of shorts, shirts,
pants and yoga accessories (Lululemon, 2017). It faces strong competition from Nike, Adidas
and Under Armour and has adopted various business level strategies to expand its geographic
market and to have an edge over its competitors (Car & Newell, 2014). Lululemon maintains
high quality standards in its products which in turn has resulted in increased loyalty among the
customers towards the brand.
1. Critically evaluate Lululemon’s competitive environment. Does the company have a
source of (sustainable) competitive advantage?
Answer- The primary competitors of Lululemon include Adidas, Nike, Under Armour
and VF Corp. and continuously face challenges and potential threats from its competitive
environment. These competitors are unrivaled in terms of their global success as a result
of their high performance products. These are financially powerful brands as compared to
Lululemon and also provide diversified range of products (Schlossberg & Lutz, 2016).
But the competitive advantage for Lululemon lies in the fact that these brands are
unproven in the yoga segment and they only provide limited focus on the yoga line.
Therefore, Lululemon is capable of attracting the yoga enthusiasts since it creates value
for its customers which could not be replicated by big brands like Adidas and Nike (CSI
Market, 2017).
Lululemon’s competitive advantage lies in the differentiation strategy in which
unique materials are chosen in order to create products that attract the customers with
their comfortable fitness and daily wear range. The organizational culture adopted by
Lululemon is unique and therefore acts as the source of competitive advantage. The
efficiency that it possesses due to outsourcing and technological advances in various
processes relating to its online store has kept it a step ahead of its competitors. Moreover,
corporate social responsibility is aimed by encouraging the employees to take
responsibilities of their individual actions with Lululemon. It also has a different

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department which is always engaged in developing innovative materials and products in
order to have an edge over the competitors. Also, Lululemon establishes a connection
with its guests which makes the customers prefer it over others (Lucid Press, 2015). In
other words, a sense of responsiveness towards the customers is maintained at all times
which have the ability to transform its customers into the die-hard supporters. The quality
standards are never compromised and always upheld to meet the customer preferences.
2. Based on an analysis of the internal environment, discuss the company’s capabilities,
and core competencies. Does Lululemon have any weaknesses that can impact its ability
to compete in the future?
Answer- Lululemon’s capabilities and core competencies are derived from its tangible
and intangible resources. They aim to create value for their customers by the way of
implementation of various strategies which are framed after proper consideration of all
the relevant facts. Its capabilities include its unique product designs which are considered
as the key to its success. The products are intended to increase the fit appearance of the
customers. Also, the higher prices are the result of innovation in the materials to provide
a soft touch feel to the customers. Lululemon holds intellectual property rights over the
designs of its products and also limit the availability of specific designs. Its research and
development is dependent on the system of customer responsiveness so that the trends in
the minds of the customers can be produced as products by them (Singer, 2012). Their
unique feedback collection methodologies ensure that the brand and culture are
propagated. Moreover, its organizational culture is focused on training and personal
growth which results in attracting passionate and motivated employees. Also, the
grassroots approach adopted by Lululemon for the purpose of marketing has resulted in
the achievement of strong brand identity and customer loyalty (Sherman, 2016). The
store employees of Lululemon are also trained and educated in order to develop strong
relationships with clients.
The ability of Lululemon to compete with other brands may be affected in future
due to various reasons. Since the company spends huge amount of time and money on the
research and development activities for the apparels, the prices are higher than its

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competitors which may affect its sales in the future. Moreover, it has created a brand
perception in the minds of people that its products are only for yoga enthusiasts.
Therefore, Lululemon must take steps to create awareness their products can be used for
any physical activity other than yoga (Dalavagas, 2016). If the demand and expansion of
the organization will not be managed properly, the final performance and brand image
might suffer in the future. Also, Lululemon’s inability to safeguard their intellectual
property rights could reduce the value of their brand and weaken their competitive
position. Moreover, Lululemon is also affected by the uncertainties in political and legal
areas. Global and country-specific rules and policies perform an important role in the
timely delivery of products of the organization in the market.
3. What are the trends and conditions in the external environment that will have a dominant
influence on the firm’s strategic actions? In what ways (if any) should Lululemon change
its strategic direction?
Answer- Lululemon performs the function of constantly scanning its external
environment in order to identify the ongoing trends such that its full advantage can be
obtained by entering new markets or by developing product line extensions. The
consumers all over the world have reduced excessive spending as a result of global
economic downturn. Since Lululemon deals highly discretionary nature of products, it is
expected that the changing global economy will affect the profitability of the organization
in the long run. Moreover, it faces uncertainties in the legal and political areas due to
variation in the international and country-specific rules and policies. There is a
continuous threat of new entrants in the market since the retailers in the industry takes the
benefit of low entry barriers. Strategic competitiveness and strong emphasis on the
intangible resources allows Lululemon to enhance its ability to positively execute the
focused differentiation strategy and to leave behind the entire industry. The firm’s
strategic actions are influenced dominantly as a result of such conditions in the external
environment.
It is important for Lululemon to adopt practices which enhance strategic elasticity
and responsiveness to fluctuating conditions because the industry environment and the

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internal assets of the firm affect its performance over time. Also, the increased
completion in the industry will significantly lead to long term effects on the profitability
of the firm. In order to deal with uncertainty and support strategic decision making,
Lululemon has already adopted various practices related to the environment scanning.
4. What are the advantages of Lululemon’s business level strategy? What are the risks?
Answer- Lululemon uses focused differentiation strategy which has resulted in
availability of high quality and performance athletic apparel to the customers at the best
price (Thompson Jr, Peteraf, Gamble, et. al., 2015). The strategy has engaged
coordination of commitments and actions which provides a competitive advantage to
Lululemon. The strategy has benefitted Lululemon in increasing the geographical
presence and brand awareness due to its participation in various events and establishing
partnerships with local fitness coaches (Business Teacher, 2017). Moreover, the popular
branding strategy has made them distinguished from their rivals. The strategy has built
customer loyalty for the brand which has helped in reducing the price sensitivity and
disarms those competitors who try to gain market share by the way of reducing the prices
(Nelson, 2011). It enables the company to provide superior value products to its
customers in terms of richness, reach and affiliation dimensions. This in turn reduces the
uncertainty faced by the company and improves the decision making quality of the
organization in order to deal with the competitive risks.
The business strategy adopted by Lululemon makes it vulnerable to a variety of
risks including the fickle consumer tastes. Moreover, the market is extremely competitive
due to the existence of competitors like Nike, Adidas and Under Armour. There is the
possibility for the customers to evaluate the price of the products offered by Lululemon
by making comparison with its competitors. Also, the development of rare yoga apparels
suffers from less enthusiasm and therefore maintenance of focus becomes a difficult job
therefore, the company should avoid the distraction caused by the unrelated lines of
business while looking for new growth opportunities. The source of differentiation
identified by Lululemon may divert the organization from the value for which the
customers are willing to pay.

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5. As the company grows and expands internationally, what challenges is it likely to face?
What recommendations can you make to reduce these potential risks?
Answer- As the company grows in size and expands its operations globally, it would
become difficult to maintain the community-centered and symbiotic relationships (Ho, S,
2013). Moreover, till date the expansion is made in countries such as Australia, United
States and New Zealand which share common languages and culture and therefore, the
barriers involved were comparatively lower (Baymout, 2014). But the emerging markets
such as India and China have altogether different cultures thereby involving various
barriers for the new market entrants. There may arise some challenges while the
expansion of the brand in relation to the approach to be used such that local
responsiveness is achieved at a high pace. Also, the selection of the entry mode in a new
market may create a challenging situation for the company.
The potentials risks can be reduced by the help of continuous environment
scanning which has already been adopted by the organization with the view to identify
them in advance and therefore, allows them to take proper steps before the potential risks
converts itself into a real problem. The firm should enter the market through the wholly
owned subsidiaries as it will allow to achieve the potential to produce value and also
enhance the strategic competitiveness of the company. Also, it is recommended that
Lululemon should opt for multi-domestic approach along with the decentralization in the
strategic and operating decisions while expanding the brand globally as it will enable
them to provide tailor-made products to the local market.
Conclusion
Lululemon Athletica Inc. has become a favorite shopping spot for all the fitness lovers. Since
Lululemon puts its entire focus on protecting a special community for the yoga enthusiasts, it has
created value for the customers which cannot be replicated by other popular brands such as
Adidas and Nike. It has new growth opportunities as its competitors do not put their complete
focus on the yoga line. Moreover, there is increasing scope for expansion in various emerging
markets (Hitt, Ireland & Hoskisson, 2014). Lululemon must take into account the above

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recommendations in order to encounter the potential threats that may arise with the growth and
expansion of the company in the international market. The expansion plans adopted by the
organization are well-matched with the strategy and capabilities but they must increase the
emphasis on the use of social media platforms in order to improve the relations with the target
customers and provide them an engaging brand experience.

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References
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STRATEGIES. International Journal of Advance Research. vol 2(5). pp. 1-15.
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CSI Market. (2017). Lululemon Athletica Inc. (LULU). Retrieved November 25, 2017 from
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Dalavagas, L. (2016). SWOT Analysis: lululemon athletica inc. Retrieved November 18, 2017
from
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Hitt, M. A., Ireland, R. D. & Hoskisson, R. E. (2014). Strategic Management: Concepts and
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lululemons-next-challenge-overseas-growth-idUSBRE99712S20131008
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exercise-retail-running/1917659/

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