Lululemon: TOWS Analysis

Published: 2019-10-29 09:30:00
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A TOWS analysis is variant of the SWOT analysis tool, and thus, it is an acronym for a companys threats, opportunities, weaknesses and strengths. Despite the two being similar, SWOT analysis does not show the underlying relationship between the various categories and factors while the TOWS analysis looks to match the external to internal factors, to help it identify the relevant strategic options that the fir can pursue (Mindtools, n.d). In effect, it enables businesses identify how it can take advantages of the various opportunities, diminishing threats, overcoming any weaknesses, as well as exploiting the strengths. For Lululemon, the TOWS analysis can be presented as follows:

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External Opportunities (O)

i. The company can expand globally.

The company has an opportunity to expand to Europe and Asia, since it only has a strong presence in north America (Dalavagas, 2016).

ii. It can expand its product line.

Lululemon only majorly focuses on womenswear yoga products. It can expand its product line to encompass other apparels, including sportswear and footwear products in the mens category.

External Threats (T)

i. Competition.

Since the athletic apparel industry is highly competitive, Lululemon faces competition from sellers of traditional clothes, including sweatshirts and t-shirts from bid companies like Under Armour and Nike (Dalavagas, 2016).

ii. Adverse economic conditions.

Aspects of recession and inflation may decrease consumer spending.

Internal Strengths (S)

i. Premium brand affinity.

For the current focus on women, the companys target audience is the health-conscious, educated, and high-income individuals (Dalavagas, 2016).

ii. A strong balance sheet.

The companys finances are good in shape as the debt is manageable, which allows it to continue repurchasing the shares, thereby enabling it to support share growth.

iii. Leverage on increasing awareness of global fitness.

Every year there is an increasing number of people, both men and women, who are becoming fitness-conscious and have leveraged on athletics as one of the avenues to remain fit.

iv. New exciting products.

The company is always involved in making new products to satisfy new customer needs, such as VitaSea, fit and style garments, as well as incorporating new materials, such as Luon (Dalavagas, 2016). SO (Maxi-Maxi Strategies.

i. The company can use is premium product affinity to expand its product line.

ii. Lululemon can use its financial resources in the balance sheet to open stores in Europe and Asia.

iii. The company has potential customers globally, and this, it can open stores in various locations with high number of individuals demanding the yoga products. ST (Mini-Maxi Strategies)

i. The company can expand its products by adopting new ones to compete favorably in the market.

ii. It can use the financial resources to open more stores to capture ore customers and promote increased sales.

Internal Weaknesses (W)

i. Brand perception.

Since Lululemon has only majored with yoga products, and there has been a perception that the company is a yoga brand, a good image, especially for the women yoga enthusiasts (Dalavagas, 2016), but the company has only marginal success when it comes to expanding to other demographics, which affects the new product line negatively.

ii. Low sales of menswear due to stiff competition.

Currently, menswear only make a contribution of 16% of the total sales and the stiff coopetition from Nike and Under Armour makes it difficult for Lululemon to expand to the mens product category (Dalavagas, 2016).

iii. High Prices.

Even though Lululemons products are affordable, they are highly priced compared to those of Nike and Under Armour, which makes the company lose out to competitors, especially for low-income earners.

iv. Recent adverse publicity associated with the store and product design.

According to OConnor (2013), the company has faced negative publicity from revealing women products and design. WO (Mini-Maxi Strategies)

i. The company can expand its products to not only womenswear products but also menswear to eliminate the perception that the company is only a yoga brand.

ii. Lululemon can expand internationally to increase menswear sales.

WT (Mini-Mini Strategies)

i. The company can diversify to manufacture more menswear products, which reduces competitive edge over Nike and Under Armour.

ii. Increase advertising for menswear products for higher visibility in the market.

ii. Use low-pricing strategy to capture all income classes.

References

Dalavagas, I. (2016). SWOT Analysis: lululemon athletica inc. Retrieved from http://www.valueline.com/Stocks/Highlights/SWOT_Analysis__lululemon_athletica_inc_.aspx

MindTools (n.d). Using the TOWS Matrix Developing Strategic Options From an External-Internal Analysis. Retrieved from https://www.mindtools.com/pages/article/newSTR_89.htm

O'Connor, C. (2014, September 4). Under Armour Goes After Lululemon With Gisele And 'Womanifesto' Retrieved from http://www.forbes.com/sites/clareoconnor/2014/09/04/under-armour-goes-after-lululemon-with-gisele-and-womanifesto/

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