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Lululemon Company: Poor Management Under the Conditions of Fast Corporate Expansion

Introduction

Lululemon is a multinational company specializing in selling athletic apparel. While the company has been experiencing worldwide success and opportunities for growth and market expansion, some circumstances turned out to cause the corporation financial issues. Moreover, the customers grew unsatisfied with the selection of items they could reach in stores, and the leadership team was less motivated to contribute to the company’s productivity levels. The problems became critical when the company decided to double the number of stores in the US. However, issues with the inventory, locations, and inability to satisfy customer demands occurred. Thus, it is certain that the problem that created multiple adverse outcomes is the inability to address corporate expansion through effective management practices.

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Fundamental Management Problem

As mentioned prior, the company’s aims for expansion have not been addressed in a proper manner. Specifically, opening new stores was one of the challenges due to the relatively unknown aspects of the locations where they would operate. Lululemon doubled the number of stores in the US relatively quickly. However, there are several significant factors that have to be taken into consideration during such processes. The management team has to focus on the area where the store s to be located, the logistics, the specific customers within different locations, the number of items showcased in each store, and other essential aspects of growth. Researchers specifically mention the CEO as the driver for applying organizational behavior concepts to corporate decision-making processes. Thus, the process management theory illustrates some of the helpful additions that can assist the organization. Based on this notion, all the organizational processes are connected and need to be considered as one entity. For example, opening a store in a new location does not mean having an entirely new entity. While the policies, business strategies, and organizational behavior remain intact, there is still the need to consider possible differences between locations and objectives.

In the case of lululemon, there was a lack of adequate inventory management, effective logistics, and other vital aspects. An example that could sum up the management’s ineffective strategies is the fast selling out of certain sizes in the different locations. Big sizes were more likely to be sold in the Midwest, while the smaller ones were more popular in the coastal areas. Such an outcome exemplifies the leaders’ lack of planning and assessment of the area.

Another area that requires intervention is the real estate that the company is using. The pattern of challenges occurring when new locations are being opened illustrates the bigger picture. Thus, it is fair to point out that before opening a new store, there is no detailed planning, assessment of the area, and examination of possible risks. Researchers refer to the significance of considering such factors during corporate expansion. Thus, the company may benefit from having a more objective approach to corporate growth.

Recommended Solution

Lululemon would benefit as an organization if there was an emphasis on planning. Moreover, there is an urgent need to consider specific individual characteristics of certain locations and customers that differ based on where the company plans to open a store. The current organizational behavior exemplifies the concept of having a common purpose. However, establishing a goal is different from figuring out how to coordinate efforts in order to reach it. Researchers illustrate that strategic planning in terms of fulfilling a common objective is an essential concept within organizational behavior that shows cooperation and coordination in the company. Based on this notion, the recommendation that can be beneficial for the company is coordinating efforts toward effective planning and evaluation as one of the components of the goal-establishing and fulfilling process. Lululemon is interested in growth, maintaining company-specific branding, and satisfying customer demand while expanding. Thus, it is essential to implement a policy that would address preventative measures and analysis of opportunities prior to investments that may be financially draining without the proper examination.

Action Plan

Addressing Customer-Specific Differences

First, lululemon can address certain customer-specific traits that differ based on the area of the store. As mentioned prior, one of the problems is that certain sizes are sold quicker in specific locations. Thus, it would be beneficial if planning involved an in-depth market analysis with a focus on potential customers. This can involve a size that may be most popular in the store, the athletic activity that is most preferred in the area, the prior successes and failures of companies selling items in similar locations, and other customer-related concepts. The team responsible for the task is the marketing research analysts, and the process should take between six and eight weeks. This can be enough to examine specific traits, preferences, and differences portrayed by specific customers.

Implementing New Logistics Guidelines

As a part of the supply chain, lululemon is already familiar with having to comply with actors within the operational process. However, the logistics became increasingly difficult to manage when the company expanded. In order for this domain to work more effectively, it is essential to implement sales predictability techniques. Thus, stores are less likely to have items that go out of stock, and customers cannot reach them. In cooperation with the sales management team, the logistics managers are to examine the current situation and build a plan. The operation can last between four and six weeks, a time period in which all the necessary reports and alterations can be executed.

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Examining the Real Estate Marketing

Another important action is to focus on the real estate market. Specifically, it is vital to analyze the current trends in real estate, the price fluctuations in the areas, and the preferred locations where customers are often able to access the stores. One aspect to consider is the company’s branding itself. Areas where there is a demand for lululemon’s items, a financial possibility for customers to purchase them, and a specific market appeal that aligns with the corporate branding are to be primarily considered. Thus, a third-party real estate agency can be hired for proficient market analysis. Specifically, a company familiar with the local trends and preferences. Such organizations can provide a comprehensive report with available and potentially profitable locations in two to four weeks.

Bibliography

Gagné, Marylène. “From Strategy to Action: Transforming Organizational Goals into Organizational Behavior.International Journal of Management Reviews 20 (2018). Web.

Islam, Touhidul. “Practices of Cross-Cultural Etiquette and Communication in Global Business – a Conceptual Analysis on Managing Corporate Expansion: A Review Study.” Journal of Business & Financial Affairs 06, no. 03 (2017). Web.

Nyberg, Anthony J., Ormonde R. Cragun, and Donald J. Schepker. “Chief Executive Officer Succession and Board Decision Making: Review and Suggestions for Advancing Industrial and Organizational Psychology, Human Resources Management, and Organizational Behavior Research.” Annual Review of Organizational Psychology and Organizational Behavior 8, no. 1 (2021): 173–98. Web.

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StudyCorgi. "Lululemon Company: Poor Management Under the Conditions of Fast Corporate Expansion." December 13, 2022. https://studycorgi.com/lululemon-company-poor-management-under-the-conditions-of-fast-corporate-expansion/.

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StudyCorgi. 2022. "Lululemon Company: Poor Management Under the Conditions of Fast Corporate Expansion." December 13, 2022. https://studycorgi.com/lululemon-company-poor-management-under-the-conditions-of-fast-corporate-expansion/.

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StudyCorgi. (2022) 'Lululemon Company: Poor Management Under the Conditions of Fast Corporate Expansion'. 13 December.

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