Case Study Memo: Leadership, Culture, and Transition at Lululemon
Subject: Leadership, Culture, and Transition at lululemon
Introduction
Lululemon, Officially Lululemon Athletica, is a manufacturer and distributor of sports and semi sports apparel. It is domiciled in Delaware but has its headquarters at Vancouver[1]. Founded in 1988, it has grown from a single yoga store to a multinational company with over four hundred and sixty stores worldwide[2]. Lululemon continues its dominance in a new market where competition form established companies trading in hard sports (physical and contact sports such as soccer, football, basketball, athletics, and swimming) such as Nike and Adidas remains the biggest challenge[3]. The company continues to supersede all expectations by driving a wedge between it and these new entrants. The company has more than five thousand employees worldwide and an income of more than twenty-nine billion US dollars[4]. However, there are growing concerns that are directly influenced its management policies and decision-making policies. The price of its product. Pricing is becoming the company’s weakest link[5]. As stated, a team is as strong as its weakest link[6]. The next section will focus on the issues arising as a result of pricing and the management challenges arising from pricing.
Key Management Problem
One vital function of management is to authorize pricing. It is directly involved in the selection of price remains a core issue for Lululemon. After a quick search in google, there were various tantalizing queries on the prices of the product of the company. One user in a site known as Reddit asks whether the prices of the company are worth it[7]. Another response by stating that she doubts whether the products of the company are worth the price. Issues concerning the pricing from the company rise from two factors, it shares contemporary manufacturing with a Gap Athletica, which is a competitor, and the quality of the brand[8]. For most consumers, they feel that the management has betrayed its core statement, where the company promises to refrain from all forms of mediocrity[9]. Thus, while the management focuses on production and an increase in profitability, there are various underlying complaints by consumers that it overlooks and might cost its business.
Two significant causes of management problems on pricing are the quality of the product and value for money. Lululemon has one of the best quality products in the market. However, over the last five years, due to poor management decisions and a shift in joint production with GAP, the quality of the company’s product has seen a serious deep[10]. Thus, resulting in increasing consumer complaints and a reduction in sales. While GAP had limited access to Lululemon intellectual property, the case against G-III Apparel Group, owned by A former director of GAP is evidence that the joint production limited Lululemon’s innovation ability[11]. Therefore, the low quality meant low prices, which the management was not willing to accept, leading to price dissatisfaction among consumer[12]. Secondly, the value for money principle is evident in the accusation that the false advertising accusation made by the New York Times. Most of the interviewed consumers stated that the advertisement promised value, yet they purchased high-quality products with less longevity leading to piling up of purchasing costs[13]. The Competition Bureau of Canada has continuously cautioned the company against value advertisement.
The management responsibility for pricing remains a neglected aspect of Lululemon. The oversite is mostly associated with the poor leadership skills by the members of the board, especially the founding director Chip Wilson[14]. Mr. Wilson has, on several occasions, been accused of body-shaming, stating that the company targets women with good body shapes and those that represent its ideals and not the ones currently using the product[15]. These regrettable acts are as a result of the powers of the company is concentrated around one individual[16].
Recommendation
Firstly, the company should use a new management structure. The current structure following the authoritarian theory leaves little room for accountability. As such, power should be distributed with the decision-making authority lying on a larger team with the introduction of Co-executive officer[17]. While Christine Day has transformed the company, she has also stood by the largest price shift in any industry. Operations should be managed from a central leadership position such as the Chief of operations[18]. This system of management falls under the contingency management theory, where there is no specific method of management but utilizes various aspects such as the distribution of functions and shift in management practices depending on the changes in circumstances[19]. While a single leader may easily implement these changes and record challenges, it may be impossible to shift the management practice to suit a specific problem easily, thus, the need for a larger team.
Action Plan
| Action Item | Person Responsible | Deadline | Impact |
| Change in organizational structure | C.EO/ Executive Board | 6 months to two years | High |
| Initiation of product quality auditing | VP GMM And Supply | 6 months to one year | Medium |
| Initiation of product pricing auditing | Chie Financial Officer | 6 months | Medium |
| Projections Auditing | Director Community relations | 3 months | Low |
| Marketing shift and the creation of new marketing practices | Director Community relations | Immediate | High |
| Brand promotion | Marketing Manager | Immediately | High |
| Administration review and goal setting | Executive board | 6 months | High |
End Notes
[1] Tushman, Michael. “Leadership, Culture, and Transition at lululemon.” Harvard Business Review, 2010, 3.
[2] Harvard College. Leadership, Culture, and Transition at lululemon. Boston: Havard Business School publishing. 2010, 2.
[3] Ibid, 5.
[4] Lululemon. 2020. “Lululemon Financial Statement.” Lulumelon Athletica, 1.
[5] Tushman, Michael. “Leadership, Culture, and Transition at lululemon.” Harvard Business Review, 2010, 7.
[6] Ibid, 7.
[7] Reddit. 2012. Are lululemon leggings worth the price? https://www.reddit.com/r/lululemon/comments/a2gd8m/are_lululemon_leggings_worth_the_price
[8] Harvard College. Leadership, Culture, and Transition at lululemon. Boston: Havard Business School publishing. 2010. http://www.hbsp.harvard.edu/educators.
[9] Elkins, Hashaw. 2017. Management Theories & Concepts at the Workplace. (4th ed). Edited by Michelle Seidel, 15.
[10] Tushman, Michael. “Leadership, Culture, and Transition at lululemon.” Harvard Business Review, 2010. 1-17.
[11] Ibid, 12
[12] McConnon, Aili. “Lululemon’s Next Workout.” Business Week. 2008.
[13] Harvard College. Leadership, Culture, and Transition at lululemon. Boston: Havard Business School publishing. 2010, 5.
[14] Ibid, 5
[15] Tushman, Michael. “Leadership, Culture, and Transition at lululemon.” Harvard Business Review, 2010, 8.
[16] Ibid, 12
[17] Lululemon. 2020. “Lululemon Organizational Chart.” 1.
[18] Ibid, 1.
[19] Elkins, Hashaw. 2017. Management Theories & Concepts at the Workplace. (4th ed). Edited by Michelle Seidel. Vol. III.
Bibliography
Elkins, Hashaw. Management Theories & Concepts at the Workplace. (4th ed). Edited by Michelle Seidel. Vol. III. Chicago: Chron publishing. 2017.
Harvard College. Leadership, Culture, and Transition at lululemon. Boston: Havard Business School publishing. 2010. http://www.hbsp.harvard.edu/educators.
Lululemon. “Lululemon Financial Statement.” Lulumelon Athletica. 2020.
—2020. “Lululemon Organizational Chart.” .2020.
McConnon, Aili. “Lululemon’s Next Workout.” Business Week. 2008.
Reddit. Are lululemon leggings worth the price? 2012. https://www.reddit.com/r/lululemon/comments/a2gd8m/are_lululemon_leggings_worth_the_price/.
Tushman, Michael. “Leadership, Culture, and Transition at lululemon.” Harvard Business Review, 2010. 1-17.