Keywords
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Market value
Market value is obtained when the number of shares outstanding is multiplied by the share price currently prevailing in the market. It is the price of the asset in the market in the current.
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Market share
Market share is obtained when a sale of a specific company is divided by the total number of sales generated by a specific industry at a specific time. It the percentage of sales generated by a particular company relative to the total sales of the industry.
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Eavesdropping
Refers to the art of listening. In the given text it refers to the art of listening to customer suggestions and complaints.
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Price to earnings ratio
Price to earnings ratio refers to the earnings received by the investor against each dollar invested. This ratio predicts future growth.
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Management structure
The way the hierarchy of employees is organized and the way designations and roles are defined to the management structure.
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Customer relationship management
The way customer data is analyzed, managed and interpreted throughout the life cycle of customers to maintain and improve the long lasting relationship with customers is known as customer relationship management.
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Corporate control
Corporate control is the authority to make important decisions for a company such as acquisition, strategy determination, and resource allocation and so on
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Proxy fight
A fight to own voting rights to have increased corporate control.
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Buyout
Buyout refers to the share being purchased by the acquiring firm to have controlling interest in the company being acquired.
Summary of Articles
Mr. Wilson is the founder of the company Lululemon Athletica. At present, he is thinking about gaining some more control over the company. He has several options to deal with. He can either buy additional board seats, or he can partner the company with private equity. People and other board members including the bank have different views about him. Some say that Mr. Wilson wants to gain more influence over the decisions and strategies made by the company. Some believe that Mr. Wilson has some new plans for change in his mind. Although Mr. Wilson stepped down as a chief executive officer in the year of 2005, yet he used his twenty-eight percent voting rights to vote against the new directors. Mr. Wilson wants to have much more control over a company deal with modern yoga gear items. The company is going through difficult time. The company had to recall all its yoga pants from the market since they were inferior in quality. The company wanted to fix the issue and wanted to respond to the issue. But during that process, the company was unable to keep itself updated with new trends and change in preferences among consumers in the market. The consumer wanted more bright colors and designs. The company was so much into fixing the quality issue that they missed the change in the market. As a result, the company suffered regarding low sales and high cost incurred in fixing the quality problem. The company has been facing difficult times since then. The company has earned a bad reputation, and its market share has declined. Market value has fallen significantly too. Mr. Wilson is frustrated about what to do to bring the company to success. Mr. Wilson is in a constant battle with the board and the current chief executive officer. He wants the board and the new CEO to focus on the roots and the purpose of which the company was created. Mr. Wilson wanted strategy makers to pay attention to the quality of products. However, the new CEO and board focused on globalization and internalization. Mr. Wilson is still confused what to do. Many other people in the same situation as Mr. Wilson have either resigned or given up their shares or have refused to sell their shares. Mr. Wilson has to decide what to do (Suzanne Kapner, 2014).
The company is deciding about what to do to meet latest challenges. The company has thought to bring changes in its structure and the strategies that were being followed. The industry has faced growth in the previous year. However, some executives predict that there would be a little opportunity for profits to grow in this particular industry. Lululemon is famous for targeting women. However, now they plan to change their strategies. The company has suffered regarding the decline in profit and departure of the founder. The company has decided to bring alteration in its management structure. The company has removed the role of senior vice president in the category of men’s wear. The current CEO has decided to unify men’s and women apparel category to strengthen the brand and to focus on globalization too. The change in the management structure is a new move that is quite different from competitors’ n the same field. Many competitors including Adidas has a different executive role for men and women category. But Lulu has decided to alter its management structure to stay ahead of competitors and to strengthen the brand both in women and men category. The company is focusing on both men as well as children category. With new changes, the company believes that its profit and sales will rise. The company believes that its market value and share will also rise. At present, the company does not sell its products to wholesalers as it owns its distributors (Germano, 2016).
The company has experienced a huge in the rise in profit and sales as a result of its new strategy. The company has now built a mini-empire from its small yoga apparel business. The competitors in the same field focus on price-lowering strategy to boost sales, but Lulu doesn’t do any such thing. They do not use special software to gather large data and analyzing it to generate information to guide for decision making. The company stocks less don’t rely on discounts and offer to drive its sales. The company founded by Mr. Wilson experienced huge growth. However, some experts believe that the company is just overvalued while others argue that the company has a bright future across boundaries and it can do much more if it chooses to globalize. Thus the company has a unique strategy. It does not depend on various software for analysis rather Mr. Day would spend his time in outlets observing the behavior how people shop. The company does not believe in opening new stores to drive up sales rather they observe the behavior of shopper and think about ways of resolving them. The company has trained its workers to listen and to focus on complaints of customers. The company focuses on every minor detail. For instance, a shopper refused to buy because sleeves were to fit too. The company wants to make sure that it is updated to latest trend such as bright and sharp color apparel to attract customers. Many analysts complain that the company is unable to keep it stock up to the level as required. So the company introduced some logistic changes. The company now stocks basics at high levels that limited time products. The company also follows a very strict return policy. The company makes sure that products are returned for not more than fourteen days, and they must carry original packaging and tags. They must not be washed or worn. The company makes sure that its core items are never out of stock (Mattioli, 2012).
Discussion:
The articles mentioned focused on how companies suffering from worst times such as the departure of founder, the decline in profits and sales can bounce back to the track of success. Companies need to focus on change management and effective strategy implementation to boost up profit and sales as Lulu did. The company focused on change in management structure, determined new strategies unlike competitors, responded to customer complaints, and focused on new market trends to drive profit and sales.
References
Germano, S. (2016, March 30). Lululemon Outlines Long-Term Sales Goals, Changes Management Structure. Retrieved from The Wal Street Journal: https://www.wsj.com/articles/lululemon-profit-sales-top-views-1459333813
Mattioli, D. (2012, March 22). Lululemon’s Secret Sauce. Retrieved from The Wall Street Journal: https://www.wsj.com/articles/SB10001424052702303812904577295882632723066
Suzanne Kapner, J. S. (2014, June 22). Lululemon Founder Fights for Company Control. Retrieved from The Wall Street Journal: https://www.wsj.com/articles/lululemon-founder-fights-for-company-control-1403459190
Memo
To: Laurent Potdevin
From: Nicole Kudialis
Date: March 6, 2018
Subject: the importance of strategy implementation and change management
This is to bring into notice that Lululemon Athletica is doing wonders in the category of men and women apparel. The company has recovered itself from huge crises such ad departure of founder, declining profit and sales, product recall and declining market share and value. This is all due to a prompt response to changes and having an effective change management strategy.
However to drive profits and sales in the future and to earn a good reputation in the market there are many things that the company can focus on. The company must devise a strategy for keeping its customers attracted in the market. To increase market share, the company has to focus on stock levels, respond to latest changes and must respond to customer responses. The company can also focus on globalization to expand its boundaries to other countries. Improving the price-earnings ratio will attract more investors. Thus the company will have more cash and return to invest in future projects. Management structure plays an integral role in driving the success of the company. Bureaucracy, too many bureaucratic lines, lack of decision making, residing control in few hands can make the organization too rigid to change according to latest needs and changes in the industry. Flexible structure, decentralization, diversity, teamwork and leaner organization are much flexible in responding to latest changes.
I believe my suggestions will help the company to prosper. Thank you for your time and consideration.
Nicole Kudialis.
