Lululemon’s Operational Strategies

Introduction

It is hard for an organization to accomplish its goals without a strategic plan. Such a plan simply assesses all the things a business can do and narrows them down to those that it is actually good at doing (Fred 48). Strategic planning gives rise to strategic management. The latter is defined as the systematic analysis of a company’s external and internal environment. The aim of such evaluation is to provide a basis for the maintenance of optimum management practices (Fred 48). Strategic management applies to both small and large businesses. Even the smallest of businesses face competition (Gamble, Peteraf and Thompson 102).

In this paper, the author will analyze how a company can use different strategies in its daily operations. Lululemon is used as a case study to achieve this objective. Different aspects of the company that have helped it gain or lose competitive advantage are analyzed. The firm’s current generic and grand strategies are identified and strategic recommendations made.

Generic and Grand Strategies

There are two main types of strategic management strategies that a company can choose to pursue depending on the intended results. They include generic and grand strategies (Barney and Hesterly 35). The first category mainly helps a company to pursue competitive advantage across a specific market scope (Barney and Hesterly 35). It can be in the form of low costs, differentiation, or focus.

Generic strategies mainly reflect the choice a company makes regarding its competitive advantage (Barney and Hesterly 35). Grand strategies, on the other hand, are major overarching plans that shape the course of a business. They largely deal with the long term goals of a business. Such objectives include product development and liquidation (Milevski 345).

Lululemon’s Strategic Management

Lululemon is a Yoga-inspired athletic apparel company that deals with products meant to help people to lead longer and healthier lives (Lululemon 3). The company was established to meet specific demands. It was meant to support female participation in sports. It was also inspired by the strong believe in Yoga as the optimal way of maintaining athletic excellence into old age (Larcker, Larcker and Tayan 40).

The company makes use of generic strategy of differentiation to deal with competition. It differentiates itself along dimensions valued by the customers with the aim of commanding a higher price than the competitors (Larcker et al. 40). The strategy works best for Lululemon for its target customer segment is not price sensitive. In addition, the consumers have specific needs for exercise apparels, which can only be satisfied by Lululemon.

Differentiation can be seen in that Lululemon has branded itself as the ‘go to’ destination for quality, shrink resistant, sweat-wicking, breathable, and elastic Yoga apparel (Hollie 45). In addition, the company prides itself as the first to start the Yoga craze and get it going. It mainly targets women between the ages of 18-65. The target consumers are educated, sophisticated, and fashion conscious. The company also heavily relies on product development as a strategy (Hollie 45). The objective is achieved by having professional instructors and trainers test out the products. Input is then sought from them on how to best modify the existing products (Lululemon.com 5). Information collected is used to improve quality and standards.

Innovation is another important aspect of the grand strategy used by the company. To this end, Lululemon has an online platform through which customers can give their suggestions and feedback on their experiences with the company (Larcker et al. 40). Information acquired is used to come up with improved and innovative products. Consequently, Lululemon acquires competitive advantage over other major competitors, such as Nike and Under Armor.

Major Strategic Issues that need to be addressed at Lululemon

Most strategies in Lululemon are formulated with the aim of increasing the company’s competitive advantage (Hollie 45). However, some of these strategies have led to more losses than gains, ultimately limiting the growth of the entity. One of the major strategic issues arises from aggressive emphasis on quality. While this may be the only factor that sets the company apart from other athletic attire producers, at times it leads to significant losses (Hollie 45).

For instance, in 2013, the company recalled its black Luon full-length and cropped pants. The reason for this is that the management considered the products to be ‘too sheer’ for the company’s yoga-loving customers. While this was intended to maintain the high levels of quality, it led to a five per cent decrease in the company’s share price. The recall further caused an estimated 67 million dollar loss in one year alone (Hollie 46). It is the company’s strategy to recall defective products to optimize profits. However, the policy should be reconsidered given that it has proved inefficient and extremely expensive.

Another strategic challenge for Lululemon is the inability to meet sales demands. One may assume that the failure is as a result of slow production process. However, a critical analysis of the company’s strategies reveals otherwise. Lululemon’s inability to meet demand is intentional (Bhavanani 38). Its products and design strategy is built around creating items for consumers whose sizes fall within the range of 2 to 12. Consequently, any woman above this range cannot find yoga pants in the company’s shops. The strategy has made it possible for rival companies to seize customers that would have ultimately belonged to Lululemon.

It is a fact that the existing management strategies at Lululemon have brought about positive results. However, there is significant potential that the company has not yet exploited. For instance, the firm can increase its growth by tapping into new businesses and markets (Hollie 47). Currently, Lululemon focuses on medium sized women athletic wear. It has minimal focus on plus-sized women or men’s attire.

The company can increase revenue and gain added competitive advantage by imposing its brand among men’s businesses and young women’s markets (Hollie 45). Its products can also be adopted to fit other sports and plus-sized consumers. Lululemon should also intensify its geographical expansion by opening stores in different strategic locations. Such locations include North America and other foreign markets. In doing this, the company will be able to increase its growth rate and improve brand awareness to a wider population (Bhavanani 39).

However, Lululemon should continue with the current strategy of focusing on quality. As a result, it will be able to continue selling its products at a high price. Increased quality would also go a long way in earning the firm competitive advantage, reducing rivalry with other players in the process (Hollie 45).

Importance of Continuing with the Same Strategy

As stated earlier, Lululemon heavily depends on differentiation strategy to survive the strong forces in its industry. As a result, the organization has been able to gain a loyal customer base. The strategy also seems tailor made for the company. Lululemon started the ‘yoga craze’ and became associated with all yoga-specific clothes (Bhavanani 38). The company was able to easily differentiate itself as the original producer of yoga pants that offered unrivaled quality and innovation (Lululemon.com 9). In light of this, the organization should continue focusing on this differentiation.

The infrastructure of the company allows for the differentiation strategy to be effectively implemented. The organization operates stores that are exclusively dedicated to its products (Bhavanani 38). In the recent past, the active wear trend has become increasingly fashionable, offering a continued stable market for Lululemon. The number of small fitness studios specializing in yoga exercises has also increased (Hollie 45).

Consequently, the company’s focus on this area provides room for future expansion. It is for these reasons that the company should stick to its current strategic plans. Changing the differentiation strategy would expose the organization to new competition. The company would start operating in a market where it has no competitive advantage. A change in strategy would also mean loss of the existing customer base (Gamble et al. 102).

Conclusion

Strategic management is one of the most important aspects of a company. The case study of Lululemon made it clear that any organization that wants to succeed should begin by formulating effective strategic plans. Lululemon is a good example of why a company should be consistent as far as these policies are concerned.

For instance, the organization has consistently produced yoga pants for women with specific sizes. It has maintained this path irrespective of increased controversy and accusations of biasness against plus-sized women. The consistency has proved to be the company’s major source of competitive advantage. However, an organization must not be rigid. It must always consider new ways of improving its strategic plans in order to enhance efficiency.

Works Cited

Barney, Jay, and William Hesterly. Strategic Management and Competitive Advantage, Upper Saddle River, NJ: Pearson/Prentice Hall, 2006. Print.

Bhavanani, AnandaBalayogi. “Diverse Dimensions of Yoga.” Yoga Mimamsa 23 (2014): 34-45. Print.

Fred, David. Strategic Management Concepts, Boston: Pearson Print, 2013. Print.

Gamble, John, Margaret Peteraf, and Arthur Thompson. Essentials of Strategic Management, New York, NY: McGraw-Hill Education, 2015. Print.

Hollie, Shaw. “Non-Sticky Exercise Wear Launched: Lululemon Retails New High-Tech Workout Line.” Edmoton Journal 2 (2006): 20-56. Print.

Larcker, David, Sarah Larcker, and Brian Tayan. “Lululemon: A Sheer Debacle in Risk Management.” SSRN Journal 45 (2008): 13-45. Print.

Lululemon.com. All Systems Go. 2015. Web.

Milevski, Lukas. “Grand Strategy and Operational Art: Companion Concepts and their Implications for Strategy.” Comparative Strategy 33 (2014): 342-353. Print.