Analysis of Lululemon's Business Model and HomeGrocer.com's Demise

This assignment presents a case study analysis of two contrasting business scenarios: the rise of Lululemon and the fall of HomeGrocer.com. The Lululemon case explores the company's successful business model, focusing on market niche, product quality, differentiation strategies, and employee engagement. It highlights the importance of understanding consumer needs, building brand loyalty, and maintaining competitive advantages through innovation and strategic sales methods. Conversely, the HomeGrocer.com case examines the reasons behind the company's failure, including rapid expansion, inefficient funding, poor timing, and a lack of effective strategic planning. The analysis emphasizes the significance of conducting thorough market analysis, identifying target consumers, establishing a strong value proposition, and utilizing strategic tools like SWOT and PESTLE analyses. The assignment integrates the case studies with relevant management concepts and provides a comprehensive overview of the factors contributing to business success and failure.

Running head: MANAGEMENT
Management
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Case Study 1: The Rise of Lululemon
The unique business model strategy of Lululemon that includes focusing on market niche
to meet the needs of the consumers by delivering them with high quality of athletic wear can be
considered as one of the major reason behind the success of the company. Lululemon is one of
the most globally renowned Canadian athletic apparel retailers and the organization
manufactures and delivers athletic clothes for yoga, running, working out and offers the
consumers with free shipping. The chief aim of the company from the beginning has been
providing the consumers with a superior quality of athletic wear that are highly stylish in nature.
In order to ensure that the employees poses enough understanding the commodities they are
selling, the company recruits only those employees who themselves are passionate about fitness.
Instead of selling their products with the help of the retailers, the company from the initial days
possesses its own outlets. These unique strategies of Lululemon helped the organization to
differentiate its market and gain competitive advantages over its competitors.
However, the company has evidenced a drastic drop in the yearly revenue after a
controversial comment made by the then CEO of the mentioned organization. THE CEO of the
organization had commented, “"Some women's body types don't work with our clothing," This
caused fall in the demand of Lululemon drastically. 17 percent of the women’s atheletic wears
were recalled.
Another major claim made by Jayson includes “looked to me like a brand that was still
very strong and that had issues that could be overcome.” This was indeed true, since the
organizations with the help of its effective strategies were able to gain back its reputation and the
revue had risen to 150 million dollars. According to Harris (2018), one of the chief strategies tat

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was implemented by Lululemon in order to gain back the reputation included its effective
differentiation strategy. The company attempts to differentiate themselves from its competitors
with the help of using as well as implementing a good number of methods as well as strategies.
The strategic sales method of the company pairs with local entrepreneurs and athletes who
possess the passion for betterment of both themselves and their surrounding communities.
Jayson also stated in the interview that the sales of the mentioned company got increased
while the company had no CEO. He stated that the instead of a vertical layer of management,
the company is not operated by a committee of employees. According to him “It seems like all of
the top people reporting to the CEO could just do fine as a committee, which is presumably what
they've doing.” This it can be understand that the workplace of the mentioned organization
ensures free workplace culture that in turn motivate the employees to perform independently and
develop responsibilities by their own.
Along with the differentiation strategies, Lululemon also possess a good number of
advantages compared to its competitors. These include product quality, consumer loyalty,
efficiency, patented materials, innovation as well as responsibility to the consumers. When it
comes to patented material, the mentioned company owns 45 patents on its athletic gear. These
patents allow the organization to own the title for an effective period of time in order to establish
monopoly in the market. When it comes to the trademark registration, it allowed the company to
designate particular design features that distinguish the company from its competitors.
Finally it can be said that in spite of all these strategies, the chief building block of the
company is its efficiently employees. In spite of the fact that the designs for Lululemon are being

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still created in Canada, outsourcing has become a major part of the organization when it comes
to contributing the great success.
Case study 2: HomeGrocer.com
Rapid expansion and lack of effective strategies has led to failure of the
HomeGrocer.com. The HomeGrocer.com is an online supermarket that was initiated by Terry
Drayton and Mike McDonald in the year 1994. It has been found that even though the
organization had applied a good number of strategies, some major errors as well as unfortunate
timing have resulted them to expand too quickly and running low on cash. Some of the major
reason behind failure of the mentioned business venture includes inefficient initiation, financing,
development as well as merger failure of the HomeGrocer.com.
When it comes to the startup phase, the idea of the startup was given by Terry’s wife
during the snow clad winter season. Considering the fact that it was becoming difficult for the
consumers to drive through snow for buying groceries, it can be clearly understood that the idea
of initiating a startup business of online grocery store was highly appreciable. However, during
the late 90s the technology was not as well developed as today. Thus, the idea of the business
needed to be modified as per the availability of internet. The initial funding was a venture capital
funding. This type of funding, refers to the investment funds which mmanage the money of
investors who seek private equity stakes in start-up and small- to medium-sized enterprises with
strong growth potential. Thus the idea of manual funding can be considered as an ineffective step
taken by the owners since other methods of ensuring business capital funding like partnering
with an existing corporation to ensure a slow yet steady growth under the influence of the
Venture capital investors.

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It can be clearly understood that selecting inefficient VC had made it clear for the
managers and board remembers of the mentioned organization to have inadequate capital for
meeting their commitment. The two obvious alternatives that could have been conducted, include
the scale back operations along with the work of getting existing distribution centres cash
positive or margining with a powerful online organization, Webvan. According to Suddaby
(2019), in order to ensure an effective business venture, it is highly crucial for the organization to
assess both the external as well as internal environment of the business. While PESTLE analysis
can be conducted to perform the external environmental analysis, for internal environmental
analysis, Porter’s five forces analysis can be performed.
Another major strategy that could have enhanced the potential of the HomeGrocer
organization to gain a tight grasp of the market position includes establishing a value proportion.
Establishing value proportion is highly crucial to ensure long term growth of the business. This
strategy would have helped the organization to understand the specific service provided by it
which is unique. The promotions of products should be done on the basis of the obtained value.
Another major point that needs to be pointed out is that the organization was unable to
identify its ideal consumers. According to Litman (2018), locating target consumer is highly
essential in order to ensure enhancement brand awareness as well as profit. Identifying its target
consumers would have enabled the company to ensure specific promotional strategies to attract
them. Lack of brand awareness of the mentioned online business, thus, can be considered as one
of the major reasons behind its failure in obtaining brand awareness.
Finally, another major loophole of the organization includes lack of conducting SWOT analysis.
SWOT analysis is a management strategic tool that helps an organization to understand its

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strengths, weaknesses, opportunities as well as threats. Considering the fact that lack of cash
flow and rapid expansion of the business can be considered as two major weaknesses of the
company, it can be clearly understood that effective SWOT analysis could have helped the
organization to deal with the issues.

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Reference List
Harris, L.C., 2018. A basically marxist analysis of the rise of activewear. Lifted Brow, The, (38),
pp.71.
Litman, T., 2018. Parking Management Strategies. In Parking Management Best Practices, pp.
86-225.
Suddaby, R., 2019. Spiritual myths of consumption: puritanism, transcendentalism and the
consubstantiation of the American consumer. Journal of Marketing Management, 35(5-6),
pp.410-426.