2 Case Studies

Please use the headings in bold to address the assignment requirements for your first case: Lululemon Athletica, Inc

Lululemon Athletica, Inc

Provide an introduction to the company and an overview of your analysis before beginning analysis with these headings.

Performance Criteria/Balanced Scorecard and Strategic Controls

·Establish criteria for judging strategic performance by considering successes and strategies. Use a balanced scorecard framework to make sure that both financial and strategic controls are used to assess performance.

Core Competencies and Sustainable competitive advantage

·Determine if the company has a sustainable competitive advantage. If you determine that a sustainable advantage exists, support your claim. If you find it lacking, recommend actions that would secure a sustainable competitive advantage.

Business Strategy Analysis

·Determine if Lululemon’s business strategy provides an integrated and coordinated set of commitments and actions that are based upon the company's core competencies, guides behavior toward achieving performance goals, and fits existing external environmental conditions.

Strategy and Structure Evaluation

·Evaluate lululemon’s strategy and its use of strategies to achieve company objectives.

·Discuss the company's organizational structure and if it effectively supports lululemon’s strategy.

Conclusion

CASE 22: Iululemon athletica Inc.

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Jenna Beyer, Leon Faifman, Eric Ho, Miso Kezunovic, and Lance Olian

Texas A&M University

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Rachael Fowler ran cross-country and played tennis in high school. In college, she successfully completed two full marathons. After college, she remained active and health conscious. Now a 37-year-old mother of two boys, Rachael maintains her physical fitness through gym sessions with a personal trainer and by attending yoga classes twice a week. At the end of one yoga session, a friend of hers suggested she purchase some yoga apparel from lululemon. Overhearing the two women talk, the class instructor added that she was a lululemon ambassador and began to rave about the quality and style of lululemon’s products.

“This is how 80 percent of our guests come to know lululemon, through word-of-mouth. Guests are so pleased with the clothes we offer that they can’t help but tell all their friends about it,” explains Laci Levisay, a lululemon associate from a store in Austin, Texas.1 Levisay continues, “For the other 20 percent who walk into lululemon stores with no previous knowledge, store employees look to find out as much as possible about the guests’ lifestyle and then educate them on what products would best suit their needs.”

© Vividfour / Shutterstock.com

Choose a Positive Thought

Based in Vancouver, Canada, lululemon athletica provides premium quality athletic apparel at a premium price. One of lululemon’s signature items is its yoga pants, typically sold by competitors for between $25 and $50.2 Yoga pants available in lululemon stores and online range between $78 and $128 with its most popular pair priced recently at $98 – two to three times rivals’ prices.3 However, lululemon’s products sell and they sell fast. Demand for lululemon clothing is so high that stores have trouble keeping new lines in stock. Sheree Waterson, Lulu’s chief product officer conveyed this example, saying, “A hot-pink color named ‘Paris Pink’ that launched in December (of 2011) was supposed to have a two-month lifecycle but sold out its first week.”4 The question then arises as to why customers, or “guests” as lululemon refers to them, are willing to pay high prices for high fashion items that are destined to be soaked in sweat!

It seems the answer to this question resides in lululemon’s ability to connect with its guests on a deeper level than just the typical sales associate–customer relationship. After all, other companies such as Nike, Adidas, and Under Armour not only produce high-tech clothing with the same soft cotton feel, four-way stretch, and moisture-wicking technology that lululemon touts, but do so much less expensively for their end consumers. Ultimately, what competitors cannot duplicate is lululemon’s culture. It is lululemon’s deep understanding of its target market, close relationships with its communities, and an inimitable culture that transforms customers/guests into diehard loyalists.

This is not to say that lululemon does not uphold the highest quality standards in its products. Levisay states, “People will save up if they need to in order to afford our clothing because of the benefits they provide.” She goes on to explain, “It’s silly to spend that much on yoga 283284pants if they’re not going to live up to their promise.”5 Jennifer Black, president of an investment research firm confirms this sentiment saying, “lululemon won’t put stuff in its store just to sell it. They don’t compromise on quality.”6

Summarize key findings and provide insights for the future of this company.

Case Study—lululemon Athletica, Inc

Read the case study located on page 283 of the section titled Case Studies in your textbook and prepare a 3- to 4-page report in a Microsoft Word document concerning the following situation:

As the end of the year comes to a close, the CEO is evaluating lululemon's strategic approach and its ability to produce desired results for the company in the future. The CEO has asked you to prepare a report assessing the company's current situation, reviewing its strategy, and making recommendations to maximize effectiveness.

Your report and overview should address the following key strategic issues:

·         Establish criteria for judging strategic performance by considering successes and strategies. Use a balanced scorecard framework to make sure that both financial and strategic controls are used to assess performance.

·         Define the company's core competencies.

·         Determine if the company has a sustainable competitive advantage. If you determine that a sustainable advantage exists, support your claim. If you find it lacking, recommend actions that would secure a sustainable competitive advantage.

·         Identify any external environmental forces that have future strategic implications for lululemon athletica, Inc.

·         Determine if lululemon’s business strategy provides an integrated and coordinated set of commitments and actions that are based upon the company's core competencies, guides behavior toward achieving performance goals, and fits existing external environmental conditions.

·         Evaluate lululemon’s strategy and its use of strategies to achieve company objectives.

·         Discuss the company's organizational structure and if it effectively supports lululemon’s strategy.

CASE 28: Principled Entrepreneurship and Shared Leadership: The Case of TEOCO [The Employee Owned Company]1

Prof. Thomas Calo, Ed.D.

Perdue School of Business, Salisbury University

Prof. Olivier Roche, PhD

Perdue School of Business, Salisbury University

Prof. Frank Shipper, PhD

Perdue School of Business, Salisbury University

Introduction

Fairfax, October 6, 2009. Atul Jain, founder of TEOCO, a provider of specialized software for the telecommunications industry, had been meeting all day to finalize a partnership agreement with TA Associates, a private equity firm. For Atul, the pace of activities had been relentless on this special day.2 By all accounts, the last 12 hours had been hectic, but the closing of the transaction was a success. The event had started with back-to-back meetings between TEOCO’s senior management and their new partner’s representatives and had culminated with the usual press conference to mark the occasion. The senior management teams of both organizations announced to the business community that TA Associates [TA] had made a minority equity investment of $60 million in TEOCO. It was indeed a memorable day, the culmination of intense and uneven negotiations between two organizations that did not have much in common except for deep industry knowledge and a shared interest in seeing TEOCO succeed.

©Vividfour / Shutterstock.com

This new partnership marked the end of a marathon, but Atul did not feel the excitement that usually comes with crossing the finish line. It was late and he was tired. Back in the quiet of his office, he reviewed, once again, the draft of the press release relating the day’s event. As he read the various statements captured from the meetings, he still had the uneasy feeling that comes with making life-changing decisions when one does not have all the required information. There were so many unknowns. Partnering with the right investor, like many other entrepreneurial endeavors, was not a decision made in a vacuum. It was all about good timing, cold analysis, gut feeling and luck; the latter was last but by no means least. Despite all the uncertainty, Atul felt that this was a worthy endeavor.

Atul had come a long way since his humble beginnings in India and a lot was at stake, not only for him but also for the 300 employees of the company. The TEOCO enterprise had been a successful business endeavor and at the same time a very personal journey. What had begun as a result of frustration with his old job in Silicon Valley 15 years ago had become one of the fastest growing businesses in the telecom software industry; the fast pace of the company’s development had not gone unnoticed. For quite some time now, TEOCO had been on the “radar screen” of investors looking for high-growth opportunities. However, Atul had never cultivated a relationship with potential external investors; he had remained congruous with his long-held business beliefs 361362that an alliance with external financiers was rarely in the best interest of a company and its employees.

Atul [CEO & Chairman]: “I am often asked why we didn’t approach an investor for money or seek venture capital. I have two answers to this question. My first answer is: that’s not our way of doing business. I believe that every entrepreneur must aspire to be debt-free and profitable from the very first day. My second answer is: nobody would have given me the money even if I had asked! I also had a fear – that external investment might impact the culture and values that I wanted TEOCO to promote and cherish. I wanted to steer the TEOCO ship along a very different course. My dream was to set up an enterprise based on a model of shared success. TEOCO’s success wouldn’t just be my success; it would be our success. TEOCO wouldn’t just have one owner; it would be owned by each of its employees – who would therefore be called employee owners.”

But several months earlier, events had taken an unexpected turn; unsolicited financiers approached TEOCO once again, this time offering to invest a substantial amount of capital. Still, Atul was reluctant to engage in negotiations with a party that, as far as he knew, did not share TEOCO’s values.

Case Study: Principled Entrepreneurship and Shared Leadership: The Case of TEOCO (The Employee Owned Company)

Read the case study located on page 361 of the section titled Case Studies in your textbook and prepare a 5- to 6-page report in a Microsoft Word document, based on the following situation:

The CEO, Atul Jain, has made some very radical decisions recently that he believes will help to move TEOCO forward in ways that were previously unavailable to the company. He has asked you to serve as a consultant over the next 12-24 months as TEOCO navigates working with their new investor group, TA, and as they seek to incorporate the new acquisition, TTI, into their corporate culture.

To familiarize yourself with the client; your first task is to prepare a background report which analyzes TEOCO’s business environment and strategy. Your report should include the following:

·         • Analyse and discuss the external forces and industry conditions that have impacted TEOCO’s performance over the years?

·         • Analyze and discuss how the internal organization and culture at TEOCO influence its performance?

·         • Discuss how TEOCO has strategically responded to its competitive environment and internal capabilities?

What strengths and weaknesses do you perceive Jain’s management style lends to TEOCO’s overall effectiveness?

What issues do you expect to arise given TA’s recent investment in TEOCO? What recommendations do you have to assist with these issues?What issues do you expect to occur while incorporating TTI into the TEOCO culture? What recommendations do you have to assist with these issues?What challenges to you foresee in maintaining TEOCO’s strong corporate culture given the need for continued organizational change?In your report, you should be able to demonstrate an insightful look at TEOCO’s situation, make recommendations for incorporating TA’s requirements into TEOCO’s unique management style, and recommendations for incorporating the employee’s of TTI into TEOCO’s organizational culture.

Support your responses with examples.