University Case Study: Analysis of Lululemon's Strategic Decisions

This case study examines Lululemon's strategic business management, focusing on the company's marketing and product missteps. The analysis explores the impact of these missteps on the business, including the 'Who is John Galt' tote bag incident and the sheer yoga pants recall. It also highlights the importance of supply chain management in quality control and suggests steps to prevent similar mistakes, such as ensuring product appropriateness and implementing strict employee guidelines. Furthermore, the study addresses the impact of a toxic corporate culture on business performance. The report concludes by summarizing the key findings and recommendations for Lululemon to improve its strategic decision-making and overall business strategy.

Running Head: STRATEGIC BUSINESS MANAGEMENT
Strategic Business Management
Name of Student:
Name of University:
Author’s Note:

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Executive Summary:
All companies and brands, no matter how successful they are, face challenges and make
mistakes on the long run of business. In this report, we will study the different marketing and
product missteps of Lululemon, a successful sportswear brand and try to understand how such
mistakes can affect the company’s business and how they should be rectified to prevent
further mistakes.

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Table of Contents
Introduction:................................................................................................................................3
Discussion:..................................................................................................................................3
Impact of product and marketing misstep on business:......................................................3
Importance of supply chain management in quality control:..............................................4
Steps to prevent further similar mistakes:...........................................................................4
Impact of toxic culture on business:....................................................................................4
Conclusion:.................................................................................................................................5
Reference List:....................................................................................................................6

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Introduction:
Lululemon is a premium sportswear brand founded by snowboarder and surfer Chip Wilson.
The company quickly captured markets in North America and became the fourth biggest
fashion and luxury brand in 17 years. Despite successful business and marketing strategies
and focus on quality, the company made a number of missteps in their marketing and product
departments.
Discussion:
Impact of product and marketing misstep on business:
The phrase “Who is John Galt” emblazoned on a newly launched line of tote bags in
2010, got the company into trouble as the phrase was by author Ayn Rand, known for his
outlook of unregulated capitalism. The product received negative feedback as it did not bode
well with the customers, and had to be taken down. Being one of the largest fashion brands in
the country, supporting unregulated capitalistic sentiments goes against the company’s
goodwill and creates a bad impression among its customers- both existing and prospective.
This will not only bring down sales, but also discourage customers from favouring the brand.
Another instance of product misstep was in 2013, where customers complained about
a range of black yoga pants which were too sheer, and could be seen through when stretched.
This design flaw directly affected the company’s most central business strategy of ‘getting the
product right’. It cost Lululemon 17 million US dollars as they had to recall over 17% of the
popular Luon leggings. In addition to the negative feedback from the product, some customers
also complained of inappropriateness and misconduct by the store’s employees, who allegedly
asked them bend over in the pants to prove whether they were see-through (Thomas and

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Peters 2015). This was a serious blow in the area of customer service and marketing and acted
as a major discouragement for customers to avail the company’s services.
Importance of supply chain management in quality control:
Quality control is a vital part of a company’s production department, directly affecting
sales. The management of supply chain impacts the quality of the product and the overall
profitability of the company. If the supply chain quality control is inferior, the likelihood of
products to or wear out or get damaged increases before the expiry of warranty period. This
can happen due low quality raw materials, or poor product designing, or manufacturing
defects (Chen, Zhang and Delaurentis 2014).
Steps to prevent further similar mistakes:
Lululemon must ensure all structural, functional as well as ethical appropriateness of
all products before introducing them to the supply chain. Care must be taken during designing
of all new products. If any quote, phrase, symbol or the like are incorporated into the design
of the product, it must be ensured that the sentiments and beliefs of no customer is hurt (Chen,
Zhang and Delaurentis 2014). Furthermore, in order to prevent any customer-employee
altercation, strict employee guidelines should be incorporated into the company’s policy.
Heavy penalties should be imposed against any misconduct by employees that can harm the
company’s business or image.
Impact of toxic culture on business:
A company’s leadership greatly influences its business, culture and reputation (Eades,
2019). The illicit workplace relationship and misconduct by former CEO Laurent Potdevin
left a black mark on the image of the company. Along with attracting negative publicity and
affecting the share prices, the act also left the company in a toxic environment, which affected
work-culture and shared trust between the employees.

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Conclusion:
In this report the different marketing and product missteps that Lululemon were
identified and analysed to understand how they affected its business-level strategies. Some
corrective measures were also discussed to ensure the company did not repeat those missteps.

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Reference List:
Chen, C., Zhang, J. and Delaurentis, T., 2014. Quality control in food supply chain
management: An analytical model and case study of the adulterated milk incident in
China. International Journal of Production Economics, 152, pp.188-199.
Eades, J. (2019). Research on Hundreds of Companies Showed Toxic Cultures Have These
Characteristics. [online] Inc.com. Available at: https://www.inc.com/john-eades/research-on-
hundreds-of-companies-showed-that-toxic-cultures-have-these-characteristics.html [Accessed
15 Aug. 2019].
Thomas, J.B. and Peters, C., 2015. Lululemon Athletica and a Series of Bad Marketing
Decisions. Journal of Critical Incidents, 8, pp.102-05.