International Apparel Supply Chain Risks

This assignment delves into the challenges and risks associated with international apparel supply chains. It encourages a critical analysis of case studies involving companies like lululemon and Cambodian manufacturers, highlighting the complexities of managing these global networks. The focus is on understanding the unique vulnerabilities present in international operations and developing effective mitigation strategies to ensure sustainable and ethical practices within the industry.

Running head: STRATEGIC MANAGEMENT OF LULULEMON ATHLETICA
Strategic Management of Lululemon Athletica
Name of the student
Name of the University
Author note

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Lululemon Athletica has four key competitors that operate in the arena of yoga
apparel- Nike, Under Armour, VF Corp and Adidas. Lululemon Athletica has been able to
expand the business by taking recourse to targeted marketing. Lululemon faces competition
from different quarters. Bill Bowerman along with Phil Knight was the two visionary who
created Nike. Initially, Nike was a footwear distributor but it soon grew to become a global
marketer in the field of athletic footwear and apparel. The brand is characterized by very
strong operational performance (Gamble & Thompson, 2014). The balance sheet of Nike is
strong and the company boasts of around $4.6 billion in cash. Nike has a great amount of
capacity and it can invest in new ventures. Adolf Dassler made the first shoe making use of
canvas. Dassler was a passionate athlete and he was a close follower of sporting events. The
product range of Adidas ranges from footwear to that of accessories in relation to sportswear.
The line of Adidas is very limited and the styling is different from that of Lululemon which
suggests that the target market of Adidas is different. The Under Armour Brand is strong in
United States but it lacks worldwide awareness that is possessed by Nike along with Adidas.
They have also launched their own line of yoga apparel in order to capture the growing
market. The styling of Under Armour is different is similar to that of Lululemon but its
selection is limited. VF Corp is a leader in the arena of lifestyle apparel and footwear. It is a
diversified company that has multiple brands along with product categories under it. Brands
such as The North Face and Timberland are included in the VF Corp. VF Corp owns Lucy
which is a women’s active wear brand. Lucy was founded a year after that of Lululemon and
it is a relatively young company (Gabriel, Bass & Morris, 2014).
The competitive advantage of Lululemon Athletica Inc is on account of outsourcing,
technological advances, quality and innovation. The products of Lululemon are being made
in China, Israel and Bangladesh. Lululemon gives opportunities to purchase the products
online that gives the opportunity for free shipping. The Corporate Social Responsibility of

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Lululemon Athletica Inc carries out action plan programs that help in bridging the gap
between that of community and health. There is a fabrics and technologies department of
Lululemon Athletca Inc that researches and develops innovative materials. They are
continuously improving the products that are already existing (Thomas & Peters, 2015). The
fitness instructors are offered discounts after purchasing products and they are asked to
provide the feedback. Athletes test the product and in this manner the company gets direct
feedback from the customers regarding the fabric and quality of the products of Lululemon.
Lululemon Athletica has a great amount of knowledge in regard to its target audience.
Lululemon recognizes the niche market and high performance material along with that of
attractive product design has been successful in creating a committed brand. Lululemon lays
great focus on culture that is manifested on the manifesto of the company. It appears on
different products of Lululemon from that of bags to that of water bottles. The bags of
Lululemon are printed with the manifesto of the company that reflects the vision of the
company (Groissberger & Riedl, 2017). There is a link between that of the employee and the
guest. The employees of the company being happy reflect on their faces which in turn allow
the customers to purchase the experience. The caring and sharing culture in relation to
Lululemon Athletica Inc. strengthens the quality of the products. Focus is laid on the
employee development and this is a crucial strategy of the company. The people working in
the company strongly believe in the lifestyle and what it denotes. The employees have
knowledge of clothing along with that of culture and they share this with every guest who
comes to the store (Sundaramurthy, 2014). They can explain the functions of clothing that
the customers may not be able to easily recognize like that of hidden pockets and about
materials that offers protection from the UV rays of the sun.
Lululemon Athletica relies to a great deal on the factories in the areas of China, South
Korea, Israel and Thailand. Lululemon does not own the manufacturing facilities and more

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than that of the 36% of the products are being produced by 5 among its 45 manufacturers. If
something happens to the five manufacturers then it would have an extremely adverse impact
on the supply chain of Lululemon. Almost 90 % of the products are product of Asia and 49 %
is produced only in China. The product supply of Lululemon will be badly affected if any
global event occurs in this part of globe. The products of Lululemon are of very high cost and
decrease in the arena of discretionary spending would affect the ability of Lululemon to
operate profitably.
On account of the global economic downturn, consumers have cut down on the
discretionary spending. It is expected that the bottom line of the company would decrease on
account of the discretionary nature of the products but the sales of the company have
continued to grow. International regulations play a dominant role in marketing the products
of the company within a stipulated time frame. The internal and international policies have to
be complied with which demands effort that is capital intensive. The company had to combat
the California Transparency in Supply Chains Act of 2010. Under this law, the retailers who
were carrying out business in the region of California had to reveal efforts that can help in
eliminating human trafficking along with that of slavery from the supply chains (Hyun-Nam
Lee & Ha-Brookshire, 2015). Lululemon must address these legal hurdles in order to operate
in an effective manner in the domestic and global arena. Technology has played an important
role in the operation of Lululemon. Most of the products of the company are driven by
technology which includes the use of silver thread in its products. The expansion of the brand
called Lululemon Athletica Inc has been greatly facilitated by the use of effective technology.
E-commerce was introduced in the April of the year 2009 that has enabled the company to
reach out to the customers apart from the traditional brick-and-mortar location. Lululemon
has conducted an assessment of the significance in relation to environment changes and the
trends that it observes (Dickson & McCord, 2016). Comprehensive analysis has forced the

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company to introduce the segment of running apparel along with developing the iviva brand
in relation to the children. Lululemon has also added the e-commerce option in order to serve
the global customer base. By following this process, the company can stay aware of the
potential competition which includes the multiple entrants into the product field. Threat of
new entrants in relation to the yoga apparel industry is quite high which poses a threat for the
success of Lululemon. Any company that has active wear in the product lines acts as an
potential competitor to the Lululemon Athletica Inc. Ease of entry into the market has opened
door for retailers like that of GAP and Macy (Gamage et al., 2014). The new entrants have a
lot of additional capacity that reduces the profits of Lululemon in an industry where the
switching cost is extremely low.
Lululemon Athletica Inc has highlighted three important improvements that will help
in building the business of the brand. Lululemon had to suffer from design flaws and they had
to recall many of the shirts on account of dangerous drawstrings (Eisenhardt, Graebner &
Sonenshein, 2016). Importance is laid on innovation from the point of view of fabric and
styling. Efforts has been made to improve the production process. The suppliers should
deliver on the basis of the production requirement and information can be delivered to the
customers so that they can produce on the basis of the demands of the modern consumer and
thus reduce the cancellations (Adhikari, 2016). The delays along with cancellations were
often the reasons for the high price of the products along with the fact that Lululemon had to
pay the companies who produced the products. Lack of co-ordination between the different
departments in relation to the supply chain has made the costs of the products significantly
high. Lululemon Athletica Inc is currently focussing in the arena of improving supply chain
(Lavrence & Lozanski, 2014). A supply chain that is streamlined is the need of the hour and
the previous supply chain in relation to Lululemon Athletica Inc focussed on inventory
management that was subpar. It resulted in ample inventory and there were many incidences

5STRATEGIC MANAGEMENT OF LULULEMON ATHLETICA
of markdowns. The system has been updated bringing in tighter inventory management that
will help the company to grow in the coming years.
The company focuses on the creation of value with the help of grassroots marketing
along with communication with the customers. Supply chain activities are also integral to the
strategy of Lululemon. Lululemon Athletica Inc. is instrumental in creating artificial scarcity
with the help of limited production runs (Li et al., 2015). It aims of maintaining low level in
relation to the inventory. This strategy helps in keeping the sought-after clothing at the
demand level that exceeds that of the supply. Lululemon has a lot of leftover inventories that
serves like that of an advantage in the retail industry that is always evolving. When the new
lines are brought in front of the public then the excitement is generated and these lines are
sold before that of the expiration date. A feeling in relation to scarcity is created that helps in
increasing the psychological need in relation to the purchasing of products
The company continues to grow in size and expand in the global arena which poses
another important question-whether it will be able to maintain community-centered along
with that of symbiotic relationship. Internation growth is another factor that Lululemon
should consider. Lululemon has expanded in various countries like that of United States and
New Zealand. These are the developed countries that have a common culture which suggests
that the barriers in relation to expansion are lower as compared to that of emerging markets
like that of China and India (Hilbich, Shannon & Gray, 2016). The major question revolves
around whether the company will be able to reproduce the success in countries that have a
different cultural milieu.
There is lack of product segmentation in relation to the business of Lululemon.
Brands like that of Nike along with Under Armour have successfully segmented the business.
They are rapidly growing in different sports and activities. Other companies working in the

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international sphere makes use of 3D technology that provides the customers with abundant
freedom to get what they want. Having little segmentation is thus the drawback of Lululemon
that lays more importance on a single product. There are other companies that offer the same
quality of the product at a lower price tag.
International businesses have to face potential risk and they have to ward off these
risks by implementing superior strategies. The suppliers should be able to deliver the
products within a specified timeframe and within a budget. The risk can be mitigated by by
diversifying the supply chain by spreading the orders to several suppliers. Suppliers should be
distributed over different nations and regions in order to lessen the risk in relation to
unforeseen problem like that of the weather. Environmental regulations have becoming
extremely important in the modern age (Ding, Sly & Sun, 2015). They adversely affect the
expense in relation to the operation by putting more stress on the health of people residing on
the earth. Respecting the local attitude in regard to the environment can help in the arena of
international expansion in a smooth manner. Local business lawyer can be taken recourse to
by Lululemon Athletica Inc in order to cut across that of the red tape. Political risks include
that of nationalization and seizure of assets. The business dealings should be investigated in
the proper manner and the sucees and failures pertaining to other companies should be
thoroughly assessed in order to understand what works in the international sphere.
Precautions should be devised and adequate policies should be thought of that can mitigate
the potential risks.

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References:
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Designed Buyback Revenue Sharing Contract.
Dickson, M. A., & McCord, J. (2016). The integrated business strategy of a Central
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