Lululemon was founded in the year 1998 by now Founder and Chairman Chip Wilson as a speciality retailer which de
signed, manufactured and sold women’s athletic apparel that was
yoga inspired. The company presented a unique blend of culture where employees educated customers about the technology and research that went into their fabrics and why they were better than competitors. Employees were valued and the company soon began to expand. The company had opened a total of 20 stores in Canada by the year 2005 and had become the most favourite athletic brand with combined revenue of $ 40 million. The company then under the leadership of Bob (Former Reebok CEO) undertook an aggressive expansion strategy in Canada and the U.S. By 2008, the company had more than 35 stores and combined revenue of $350 million. The company however faced several issues and the
e began to fall apart as the new CEO Christine Dale stepped in. In light of this discussion, the current report is aimed at relying on management accounting theories and identifying three unique problems that Lululemon is faced with. The report also attempts to identify causes of these problems and their consequences for the organization.
Cross Boarder Expansion and Location Control
The very first control problem based on management accounting theory that could be identified in the case consists of controlling locations where Lululemon stores would open in the U.S. A management accounting system in literature is defined as system that has been specifically and uniquely designed for an organization. This system is responsible for the provision of all necessary information that the organization might need for making decisions. In other words, management accounting systems in an organization are responsible for the provision of reliable and accurate information to the organizational management (Broadbent, 2012). In accordance with the Contingency Theory of Management Accounting, this uniquely designed accounting management system for an organization is contingent on situational or circumstantial factors in which a firm is progressing. The theory also suggests that circumstances in which every organization progresses are distinct and they largely impact mechanism, adoption and sophistication of effective accounting management system. Six circumstantial factors have been defined in accordance with the contingency theory. These include the external environment, mission and strategies, technology, firm interdependence, business unit and knowledge of observable factors (Carter et al, 2010).
Lululemon Case Analysis Essay
4336 WordsMar 26th, 201418 Pages
Lululemon Athletica, Inc.
Created by: Kelsey Davis
March 21, 2014
Table of Contents
To: Laurent Potdiven
Chief Executive Officer
Lululemon Athletica Inc.
This report has been created with the intent to analyze the athletic apparel industry with a specific focus on Lululemon Athletica, Inc., further refered to as Lululemon. In this report you will find that the strengths and weaknesses of Lululemon’s current strategies and future goals are analyzed and compared to that of its closest competitors. In conclusion to the analysis, recommendations have been made to potentially guide Lululemon Athletica, Inc. in a positive direction in regards to its future endeavors. The following…show more content…
In the athletic apparel industry, as in any industry, it is key to stay in touch with the current trends in order to keep your products relevant. With Lululemon focused on such a niche activity it will be important that they explore other markets within the sports apparel industry in the future so as to stay relevant. We can see the company’s first steps in doing just this when they recently introduced their men’s apparel line. A summary of the athletic apparel industry’s external environment are listed in Exhibit 1.
Driving Five Forces
Lululemon faces constant competitive pressures from the five main driving forces: rivals/competitors, new entrants, substitute products, suppliers bargaining power, and buyers bargaining power.( Thompson, Peteraf, Gamble, and Strickland) Below is a detailed analysis of the competitive forces noted in Exhibit 2.
The rivalry among existing competitors is strong. It is becoming increasingly harder to develop new and unique products based solely around a small niche activity. There are only so many aspects of yoga that can be explored and that products can be developed to accompany. Although Lululemon was the first, new competitors are seeing the profit to be had in this niche market and are entering with the goal of creating new more creative strategies to compete with Lululemon and take part of their large market share. (Morning Star)
The threat of new entrants is moderate. Although this niche market is