KMGT 706 - International Expansion Plan: Lululemon Athletica

This report outlines an international expansion plan for Lululemon Athletica, a Canadian athletic apparel company, focusing on the North American market. It discusses the opportunities within the North American sports industry, including sports sponsorships and media rights. The proposed strategy involves a multidimensional approach, emphasizing independent operation of subsidiaries, product standardization, and gaining a competitive advantage in various North American regions. The report also highlights the importance of a tailored pricing strategy that considers the shopping behavior of local customers. Licensing is recommended as the mode of entry, balancing low-cost expansion with risk absorption and access to technology. The anticipated outcome includes international diversification and increased returns over time, as Lululemon establishes a strong presence in the North American sports market. This plan aims to leverage Lululemon's existing success and adapt it to the nuances of the North American market.

Running head: INTERNATIONAL EXPANSION PLAN
International Expansion Plan
Name of the Student
Name of the University
Author’s Note

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Table of Contents
Introduction......................................................................................................................................2
International Business Opportunities...............................................................................................2
North America Sports Industry Trends........................................................................................2
Initial International Business Expansion of Lululemon..............................................................3
Multidimensional International Strategy.........................................................................................3
Pricing Strategy...............................................................................................................................4
Modes of Entry into the International Market.................................................................................5
Outcome of the Strategies................................................................................................................5
Conclusion.......................................................................................................................................5
References........................................................................................................................................7

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Introduction
Expansion in the international market is considered as a major step for the business
entities for gaining business success as well as international expansion. Various reasons work for
the companies for the purpose of international expansion. However, the primary reasons for the
companies for international expansion are existing business opportunities in the international
market, new business prospects, opportunity to enhance the customer base and the opportunity
for achieving the high business growth (Verbeke 2013). International business expansion is
considered as a challenging process for the companies that can be done with the help of effective
international business strategies. This report is about the development of the international
expansion plan of one of the Canadian athletic and sports apparel company, Lululemon
Athletica. Established in the year of 1998, Lululemon Athletica is regarded as an apparel
company for various sports like running, training, yoga and other sports that include sweaty
pursuits and the company has acquired a significant share in the Canadian market
(info.lululemon.com 2018). However, the company is now considering for international business
expansion.
International Business Opportunities
North America Sports Industry Trends
As per the business position of Lululemon Athletica, the intension of the company is to
make the international expansion in the market of North America as this international region is
considered as a major destination for earning major revenue from the sports segment. This region
will be largely helpful for Lululemon Athletica in various aspects like sports sponsorship,

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revenues, media rights and others (Cavusgil et al. 2014). Apart from this, there are other
advantages. The North American sports industry has acquired television rights of 35% with the
National Hockey League, National Basketball Association and Major League Baseball. It can be
observed that the consumers of North America has been able to purchase goods contents with the
help of streaming media and it is expected to grow from $14.6 million in 2014 to $20.6 million
in 2019.
Initial International Business Expansion of Lululemon
In this context, it needs to be mentioned that Lululemon Athletica has already made
expansion in the Asian market as a part of their strategy of international business expansion. For
this reason, their business growth is evident and they want to expand in more countries for
making partnership with the large sports corporations (Dunning 2013). The main reason behind
the expansion in the market of Asia is to make their presence in the large Asian sports market for
providing boost to their earnings and revenues. Apart from this, Lululemon Athletica has been
able in achieving the economies of scale in the marketing aspects for increasing the marketing
opportunities. However, with the help of the development in the developed countries, Lululemon
Athletica will be able in gaining the necessary competitive advantage in various aspects like
lower cost of the labors and others.
Multidimensional International Strategy
The main reason for the application of the international business strategies is to provide
the subsidiary companies with the opportunity in acting independently in the international
business markets. Lululemon Athletica can develop their international expansion strategy in

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three ways for entering in the international market of North America (Blackburn, Hart and
Wainwright 2013).
As a part of the first strategy, Lululemon Athletica is required to execute their
international expansion business strategy in the developed areas of North America on an
international scale. Moreover, in order to meet the needs of the local business operations, a
bidirectional relationship needs to be the part of the expansion strategy of the company (Buckley,
Burton and Mirza 2016).
Secondly, the company is required to adopt the strategy of product standardization in
order to acquire responsiveness from the local business operations.
Thirdly, the international business expansion strategy of Lululemon Athletica will be
majorly helpful for Lululemon Athletica to gain the required competitive advantage in different
areas of North America. As a result of the decentralized business expansion strategy of
Lululemon Athletica, it will tailor the products in the local market. Apart from this, the company
is required to establish protected market positions that will lead to the segmentation of the
industry along with the local market (Cavusgil et al. 2014).
Pricing Strategy
As a part of the international expansion strategy, one prime focus of Lululemon Athletica
will be on the adoption of correct pricing strategy that will be effective in the international
market. For this reason, the responsibility of Lululemon Athletica will be to develop such
pricing strategy that will be tailored to understand the shopping behavior of the local customers
of North America in case of the sports industry (Bentley, Omer and Sharp 2013).

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Modes of Entry into the International Market
The application of the correct mode of entry for Lululemon Athletica to enter into the
North American market will be based on the expansion strategy of the segment of developed
countries. In case of Lululemon Athletica, Licensing will be largely beneficial as helps in
promoting the low cost business expansion (Shenkar, Luo and Chi 2014). This strategy will be
an effective one when applied in the developed business segments. Lower potential return for the
investors is a major drawback of this strategy, but it helps in absorbing risks. However, the main
reason for the suitability of this strategy is its involvement in getting different technology in the
sports products that will be helpful in attracting large number of customers for the company. This
aspect will help in ensuring trademark rights, patent rights and others aspects (Shenkar, Luo and
Chi 2014).
Outcome of the Strategies
As the outcome of this adopted strategy with this entry mode, Lululemon Athletica will
achieve international diversification. In the initial stage, return can decrease, but it will soon
increase after the whole implementation of the expansion plan (Buckley, Burton and Mirza
2016).
Conclusion
The above discussion states that Lululemon Athletica is required to adopt some specific
strategies for expanding their business internationally. As per the discussion, the company has
adopted the strategy to operate independently in the presence of effective pricing strategy. In
addition, the company will receive low return in the initial stage due to adoption of licensing

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strategy, but there will be increase in this return once the company gets the hold in the North
American sports markets.

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References
Bentley, K.A., Omer, T.C. and Sharp, N.Y., 2013. Business strategy, financial reporting
irregularities, and audit effort. Contemporary Accounting Research, 30(2), pp.780-817.
Blackburn, R.A., Hart, M. and Wainwright, T., 2013. Small business performance: business,
strategy and owner-manager characteristics. Journal of small business and enterprise
development, 20(1), pp.8-27.
Buckley, P.J., Burton, F. and Mirza, H. eds., 2016. The strategy and organization of
international business. Springer.
Cavusgil, S.T., Knight, G., Riesenberger, J.R., Rammal, H.G. and Rose, E.L.,
2014. International business. Pearson Australia.
Dunning, J.H., 2013. International Production and the Multinational Enterprise (RLE
International Business). Routledge.
lululemon.com/about. (2018). About Us. [online] Available at: https://info.lululemon.com/about
[Accessed 21 Jun. 2018].
Shenkar, O., Luo, Y. and Chi, T., 2014. International business. Routledge.
Verbeke, A., 2013. International business strategy. Cambridge University Press.