Case Study- lululemon

Ethics and Social Responsibility

ADRIAN, TILLEY, SAHA, KUNAAL, DAVID

November 8, 2010
 TABLE OF CONTENTS
EXECUTIVE SUMMARY.............................................................................. PAGE 2
ISSUE/PROBLEM STATEMENT...................................................................... PAGE 2
BACKGROUND INFORMATION..................................................................... PAGE 2-3
CURRENT INFORMATION........................................................................... PAGE 3
DATA ANALYSIS...................................................................................... PAGE 3
CURRENT BUSINESS STRATEGY AND RESULTS................................................... PAGE 3-4
RECOMMENDATIONS AND IMPLEMENTATION PLAN............................................ PAGE 4
CONCLUSION......................................................................................... PAGE 4
REFERENCES.......................................................................................... PAGE 5
Case Study- lululemon

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 Case Study- lululemon
Ethics and Social Responsibility

Executive Summary
Founded in 1998, lululemon has become an extremely successful company. Over the last 12 years of
operation, its mission is to improve health, make a difference in all the communities it is located in, and
provide guests with quality products to help them live healthy lives.

Currently, lululemon still strives to make a difference in each community through the Community
Legacies Program. Plans for expansion are also in effect, and its economic responsibilities are continually
being met by the income generated each year.

Social Responsibility is the backbone of lululemon. It presents many positive aspects for the company
such as maintaining a positive image within society, however it may result in potential negative outcomes
like possible profit loss.

Strategically, lululemon uses non-traditional and unique marketing and business schemes. For example,
lululemon relies on social activities for product promotion rather than typical ad campaigns such as print
and/or television media.

The next step for lululemon is to encourage people to bring families to the in-store yoga classes to better
find a balance between work, family, and healthy living, together.

Issue/Problem Statement
lululemon athletica's main goal is to provide their guests with products that will help them live long and
healthy lives. They ensure quality in their products, as well as recognize customer needs and adapt to
meet those needs. Their goal is to demonstrate integrity and ethics in their company as well as create a
positive relationship between their stores and the communities they are located in. lululemon constantly
challenges itself to maintain these social bonds, ethical and social responsibility practices, while
achieving their economic and financial quotas.

Background Information
lululemon is a Vancouver based company with over 100 locations worldwide and is valued over $200
million dollars. The company was founded in 1998 by Chip Wilson, who started the company with the
idea that his products would help "improve the level of health within a community." Responding to the
increased number of women participating in Yoga, lululemon has created products with new innovative
fabrics and technology to fit, and feel better which helps women improve their fitness goals. They have
Case Study- lululemon

provided a culture that provides awareness of the health benefits of doing yoga in daily life.

lululemon’s mission statement is to help people live long, healthy, and fun filled lives. They focus on
ensuring that their products are of the highest quality and that their store experiences are one of a kind.
lululemon invests money in training to educate their staff on effective and creative ways to create a
unique experience in each individual store.

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 With deep rooted ties in each community, lululemon created the charitable giving program, where guests
of each location decide which local charities they would like to support. lululemon then chooses up to
eight of these charities to be part of the program.

Current Information
lululemon has established their popular Community Legacies program which is a “5-year vision that is
based on the belief that every person we hire, garment we create, store we open, customer we educate and
yoga class we attend contributes to building a legacy in our communities."

In 2009, lululemon’s net income generated about 58.3 million dollars. Their earnings have topped the
Street's consensus for seven consecutive quarters. It is also bringing U.S stores to the same level as
Canadian stores. The 44 stores in Canada (35% of the total) generated 60% of revenues last year.

For the year of 2010, lululemon has plans on opening 12 to 15 new stores this year; it aims to open 25
showrooms by June of the following year and 20 by August.

“CFO John Currie projects a possible 300 stores in North America, with Asian expansion likely into
2012.”

Data Analysis
lululemon athletica has become a strong and successful company which can be measured economically,
as well as by social responsibility. By being socially responsible and utilizing their strong code of ethics,
lululemon has created a prestigious reputation for itself by effectively serving the interests of the
customer by creating new, quality goods that helps benefit the customers’. lululemon has also fulfilled
customer interests by letting them choose which charities in the community they want to support.
lululemon also acts in a socially responsible manner by having in store yoga classes for customers to
fulfill their mission of helping people live healthier, longer lives.

Although lululemon athletica is a very strong company, it has some weaknessness. By acting in a socially
responsible manor, this may cause a halt in the company’s economic increase. Profit loss may be a main
consequence of investing so much money for training, hiring yoga instructors, and supporting charities. In
a short-term perspective, resources such as intellectual capital, money, and time are used on educating the
public about the yogi lifestyle.

In the long-term, the company is able to effectively use social responsibility as a competitive advantage,
as resource utilization and “waste” is a necessity to running a successful business. This is redeemed by the
company’s high prices on their product, which then is redeemed by the positive and unique in-store
experiences. This allows lululemon to have a strong economic and prestigious reputation, making it a
successful company with a high competitive advantage compared to its opponents.
Case Study- lululemon

Current Business Strategy and Results

lululemon executes an innovative non-traditional business strategy which can be seen in the marketing
strategies used. Since lululemon does not use traditional advertising techniques, it relies on running clubs
and other social activities for their products to gain attention. The stores also provide free products to
yoga teachers, fitness instructors and others to spread the word to people who have the same personal
interests. lululemon is also known to spend money on in-store yoga classes where they can stick to their
mission statement and inspire and build trust and loyalty among guests by concentrating on providing

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quality products, and providing a positive and memorable experience. Through this innovative marketing
strategy lululemon is able to maintain a competitive advantage over other brands that create a similar
product for half the price. Just like their marketing style, lululemon’s business strategy is non-traditional.
Before opening a store the company opens a “showroom” where educators interact with guests through
yoga and fitness classes to understand what customers in the area need the most, therefore management
differs from store to store, however the results are similar; the guests have a place to be challenged, relax
and achieve personal goals. Each store also creates a positive work environment for the educators creating
an extremely high quality of work life because the company cares about all of the educators’ health. An
educator at a lululemon location in Toronto was shocked by how much the company cared.

“I've never before worked for a company that cares so much about my life. They genuinely want you to be
proactive in your own life." At head office, employees are encouraged to display professional and
personal goals on posters over their desks”

Lululemon also uses a proactive strategy as it meets all of the economic, legal, ethical and discretionary
responsibilities. These responsibilities are met since the company is valued at over $220 million; they
operate legally; want to help people live healthier lives; and is committed to supporting charities.

As a result of the strategies used, lululemon has remained to be a successful business with loyal
customers because of the unique experience in every store and by giving customers what they want.

Recommendations and Implementation Plan

The company’s next step is to focus on providing their customers with a better lifestyle where they can
find a balance between work, family and health, as it is part of their core values. This could be
accomplished by expanding their in-store yoga classes from just the guests, to their entire families. This
would allow lululemon to bring in more customers as more people will be involved with the in-store
experience. This also would not dilute the main purpose of the business as their focus is to create healthier
communities by improving balance between work, family, and life.

Conclusion
Through being socially responsible can lead to economic downfall, lululemon has become an extremely
successful company. This is shown in how it serves the interests of the customers by providing them with
quality products and how it meets its mission to help people live healthier lives by providing in store yoga
classes. People also have a say in which charities they want lululemon to support, which encourages
people to use their products since they will know that money will go to charities.

It is evident that lululemon meets its economic and discretionary responsibilities as the company is valued
at over $220 million and are still opening stores, and how they support charities in every community the
company is located in. Its ethics and legal responsibilities are also met as lululemon does not partake in
any unethical practices and obeys the laws set in place. The company also advocates that they will keep
Case Study- lululemon

their promises.

With lululemon entering the global market, it will continue to achieve major success by being socially
responsible in any location it operates in.

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 References
"Media Kit." October 2009.http://www.lululemon.com/media/press_kit/lulu_media_kit.pdf
(accessed November 26 2010).

Bogomolny, Laura. "Toned and ready: Lululemon transitions." April 24,

2006.http://www.canadianbusiness.com/managing/strategy/article.jsp?content=20060424_764
24_76424&page=1 (accessed November 6, 2010).

Lacy, Jacq. "Lululemon's ground-level business strategy." Wednesday, 29 September

2010.http://www.oregonbusiness.com/the-latest/4195-lululemons-strategy (accessed November
6, 2010).
Case Study- lululemon