Lululemon Case Study

Satisfactory Essays
exam #1 Practice • Answers • BUSA 4980

Section A: Multiple Choice
1. E.
2. B.
3. C.
4. A.
5. D.
6. D.
7. B.
8. C.
9. E.
10. A.
11. D.
12. C.
13. B.
14. A.
15. C.

Section B: Short Answers on material
1. As discussed in the course introduction and chapter one, the two main determinants in achieving and sustaining superior performance are (1) industry attractiveness (i.e. external environment) and (2) competitive position (i.e. internal organization). The first input involves the Industrial Organization model of above-average returns, which suggests that the external environment imposes constraints on superior performance. Hence, firms must study the external situation, especially industry and competitor dynamics, to locate an attractive industry and set an appropriate strategy. The second input involves the Resource-Based model, which suggests that a firm’s unique resources and capabilities are the basis of superior returns. Here, firms select a strategy that allows the firm to utilize its capabilities relative to market opportunities in order to build competitive advantage.
Strategic management is largely an effort to understand the factors
…show more content…
Based on the financial information, it is clear that lululemon has performed extremely well using a focused differentiation business-level strategy. However, as the case study noted, until recently, lululemon has been unchallenged in serving a distinct premium yoga niche for women. Dozens of established apparel companies, including Nordstrom, Adidas, Nike and Under Armour, have now entered this attractive segment. This niche faces some favorable general trends, such as a large demographic with disposable income, increasing health concerns, and the use of technology to provide superior materials. All of this has attracted considerable entrance into the premium yoga segment. As a result, customers may decide that the value of lululemon’s products compared to rivals’ products does not justify the price

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