ipl-logo

Business Strategy Case Study: Lululemon Athletica

1008 Words5 Pages

In the startup phase of Lululemon Athletica they had a high bargaining power. This was due to a desire to work with leading fabric suppliers and increased investments. A majority of their apparel production was in Asia however they are willing to use Canada as well as the United States for production facilities as they are required. There are many suppliers competing for retailer’s business. Common materials used in apparel making such as rubber and cotton are readily available. This gives Lululemon a lot of choice in picking who they want to buy supplies from. In this situation, the suppliers have a low level of bargaining power.
In Columbia Sportswear raw materials are the main supplies that are used to make the majority of the industry’s …show more content…

This encourages a very competitive battle among companies. One way a customer has very high bargaining power they are a regular customer within and industry, purchasing large amounts of that companies output.
Buyers are constantly seeking to find the lowest costs. It is so easy for a consumer to switch to another brand if they are at all dissatisfied with the current product. So as a group, the customers of Lululemon have a high level of bargaining power. This is why it is so crucial for Lululemon to create and build relationships with customers in order to make them customers for life. There is a large variety of sports apparel brands making the buying power of consumers high. With a variety of sports apparel brands the difference between their products might not be that different after all. This makes it very important for Columbia has to create brand loyalty within their customers. Sportswear is usually used in extreme or rugged conditions so buyers become very concerned with the quality of the product in which they are purchasing. This forces Columbia as well as its competitors to maintain their strong brand reputation in all items …show more content…

However, the company still has to compete in the industry. The threat of substitute products, despite their very specific styles and brands, is very high for Lululemon. This is due to the buyer’s ability to easily wear competitors clothing items.
Columbia has a very low/high threat of substitute products. Columbia develops their own technologies posing a low threat. On the other end they have a high threat because their competitors could take a new direction into performance outdoor apparel. Columbia focuses on innovative ideas and the quality of their products to differentiate them in the competition.
FOUR CRITERIA OF SUSTAINABLE COMPETITIVE ADVANTAGE Not every capability is a core competence, although every core competence is a capability. In order for a capability to be a core competence it must possess the four core competencies. The four core competencies are capabilities that are valuable, rare, costly to intimidate and non-substitutable. When a competitor lacks resources to attempt imitation or when a company cannot duplicate benefits of a firm’s strategy is when a sustainable competitive advantage exists.
VALUABLE
Valuable capabilities help a firm neutralize threats or exploit

Show More
Related
1598 Words | 7 Pages

“In Porter’s five forces, supplier power refers to the pressure suppliers can exert on businesses by raising prices, lowering quality, or reducing availability of their products.” (Wilkinson). When it comes to the drug store industry, pharmaceutical companies dictate the prices causing there to be a high switching costs for Walgreens. According to Bell, 55.7 percent of suppliers feel they are not in an equally beneficial relationship, this is indicative of retail pharmacy buying power. (Bells).

Read More
1452 Words | 6 Pages

Overall, I don’t know how I feel about Lululemon’s product for a high price. I know fitness gurus that praise the company’s products mentioning the high quality of their product. I also know that there are many other comparable quality products out there that is half the price or less. I’m also glad that founder, Chip Wilson, is no longer affiliated with Lululemon. He did not seem like a great CEO at that time, and I’m glad the current CEO took over.

Read More
966 Words | 4 Pages

Government policies supporting active and healthy lifestyle can have effect on Lululemon. With growing market, there will be opportunity to grow. Canadian government introducing Workplace Fitness Program Policy, and many other countries that Lululemon operate have also such policies. It is opportunity for Lululemon.

Read More
933 Words | 4 Pages

Wal-Mart’s demands has forced some of their suppliers in the ground. For example, Wal-Mart had a problem with Levi Strauss clothes because they were too expensive (Fishman). Fishman stated Wal-Mart demanded Levi Strauss to produce cheaper denim with simpler schemes that will be easier and less expensive to produce. In return, Levi Strass brand name was reduced as a consequence of doing business with Wal-Mart. Meanwhile Levi

Read More
882 Words | 4 Pages

1. Premium Brand of the firm. Products of Lululemon Athletica Incorporation (LULU)[1,2] are oriented on educated men and women, which are health-oriented and have the high income. The company’s yoga pants and other products, lead in the sportswear industry. Despite high price for many of these goods, the brand popularity stable increases.

Read More
729 Words | 3 Pages

What are the two types of core competencies that drive a firm’s competitive advantage? Which firms demonstrate a clear competitive advantage because of (a) major value-creating skills/core capabilities and/or (b) superior assets or resources? Which firms have demonstrated sustainable sources of competitive advantage? The two core competencies that drive a firm’s competitive advantage are cost leadership and differentiation.

Read More
257 Words | 2 Pages

Based in Vancouver, Canada, lululemon athletica inc. is an upstart company that provides premium quality athletic apparel at a premium price. While the worldwide economy has been in decline, lululemon has been producing financial gains in every major measure of performance. Furnishing excellent examples of foundational strategic management concepts, this case illustrates the power of entrepreneurial thought, vision, and strategy to produce results in stark contrast to forces in the external environment. The case describes lululemon’s niche strategy, inimitable corporate culture, and leadership values, as well as conditions in the external environment.

Read More
989 Words | 4 Pages

One of the possible solutions to the above issues is to continue with the Product Lifecycle Initiative, but with a refined scope. As proposed, Patagonia might repair any garments regardless of their brands. Such services may benefit its competitors at the expense of Patagonia’s profits as it will incur extra cost to boost repairing capacity. Therefore, Patagonia may consider to provide such services to other brands only when they agree to pay a price for it. Also, outsourcing the repair services to reliable and high quality provider can keep their repair cost at a low level.

Read More
1063 Words | 5 Pages

Nike’s first globalization strategy was outsourcing. Nike Inc. realized that manufacturing its products (footwear) in the U.S was expensive and to further export these products to distributors outside the U.S would be a massive challenge. This is because price affordability was a major concern for customers outside the U.S who would not comprehend why sportswear should be that expensive to buy. However, Nike Inc. took advantage of globalization by using the Japanese high-quality, low-priced production strategy by outsourcing all its shoe production to Japanese producers (Locke,

Read More
885 Words | 4 Pages

Due to their huge success, control over suppliers can be always be maintained by the company. Rivalry among the competitors is the force to reckon with and it is the one that will decide the future profitability of the fashion industry. Competition in fashion is very high since there are only a handful of competitors when looking at the giants. Future Industry evolution Scenario 1 The future of today’s world is technology.

Read More
1364 Words | 6 Pages

Individual private customers have a low bargaining power in front of large retail chains, however, their power is greater for small retailers, who are far less organized. Having a contract with large retailers such as Christian Dior can make or break a small supplier. In the fashion industry, suppliers tend to have minute power. For example the Jewelry section of the fashion industry: There is increasingly larger number of competitors in the market, which has meant a larger supply of diamonds in the market. In the past, De Beers solved oversupply problems by collecting and storing them to be sold when deemed acceptable by them.

Read More
764 Words | 4 Pages

This will create competition among the suppliers. Hence it gives an added advantage to Lululemon and they now can find a supplier who is willing to sell them at the least price. * Bargaining price of customers: As stated in the case article, that synthetic factors are now easily available among other companies. This will create more choice for the customers as now they will tend to buy from a store which is selling at a cheaper price.

Read More
3756 Words | 16 Pages

They have achieved such a success based on the way they have organized their operations. Competencies are very important for an organization to build up on their own. Competencies can be of two aspects namely core competencies and threshold competencies. A core competence can be identified as a unique set of skills or production techniques that deliver a particular value to the customer. A threshold competence can be identified as a quality that need to maintain by the organization in order to remain competitive in the market (Rohwedder & Johnson,

Read More
720 Words | 3 Pages

Pharmaceutical products require various types of organic chemical. There are a number of chemical suppliers present in the market. Instead of buying chemicals at the high cost, pharma companies can switch from one company to other. For specific APIs where the sourcing of raw materials is difficult, suppliers have a higher bargaining power but since most raw materials are easily available and suppliers are numerous, where one can easily replace the other, their bargaining power is low. " Bargaining power of buyer:

Read More
1014 Words | 5 Pages

The four building blocks of competitive advantage can be used to help a company become more profitable and stay ahead of their competition. The four factors are superior efficiency, quality, innovation, customer responsiveness. All four building blocks are important to any company. However, I believe that customer responsiveness is the most important because having loyal and happy customers can make or break any company. The four building blocks can help companies grow and become the leader in their industry over their rivals.

Read More

More about Business Strategy Case Study: Lululemon Athletica

Related Topics

Open Document