Lululemon: Activity-Based Management Paper

Lululemon is a fast growing fitness clothing company that specializes in yoga pants and fitness attire. According to the post by Caroline Kelly, Lululemon has great potential for growth as its sales increase in the US, and ‘the likelihood of accelerated expansion, including e-commerce.” (Smith, 2014). The company has then identified activity-based management as the right approach that can take the enterprise to the next level of international success.
Activity-based management is a contemporary technique that maximizes value adding activities to the clients of the campaign while also eliminating non-value adding activities. Its main objective is to enhance the firm’s efficiency and effectiveness in securing its markets. ABM relies on activity-based costing for valuable information which is used to manage activities to bring down costs, set performance measures, improve cash flow and quality, and produces value added products and create value for the customers (Tuncel et al., 2005). The ABM system improves profitability for a company by identifying where the business is losing money.
It is also unique in that it allocates overheads to all the major activities rather than the departments. Through the ABM analysis process, the management at Lululemon would gain an in-depth understanding of their business processes and cost behavior that can help improve decision-making in the competitive international