Investment Plan of Lululemon Athletica

Essay by ubc_sfuUniversity, Bachelor'sA, June 2009

download word file, 9 pages 0.0

INTRODUCTION TO LULULEMONLululemon Athletica is established in 1998 by the current Chairman Chip Wilson in Vancouver, Canada. Mr. Wilson realized the lack of women participation in sports; therefore, he devoted energy and time in promoting the sport of yoga with female customers in mind to try to create a "…components for people to live longer, healthier and more fun lives." With Lululemon's head quarter in Vancouver, Canada, it has became a multinational sport wear company with retail operations in the United States, Australia and Hong Kong and manufacturing partners in China, Taiwan, South Korea, Peru, Israel, Cambodia and Vietnam. With "community-base business approach", the revenue for Lululemon has increased from $40.7 million in year 2004 to $354 million in the end of 2008 ( This growth in the current market provides a strong support for Lululemon's expansion, thus the proposal of "Project China" has been generatedPROJECT CHINA OVERVIEWWith Gross Domestic Product growing over 10% for the past few years and projected GDP for 2009, 2010 and 2011 to be 6.5%,

7.5% and 10.3% respectively, Chinese consumers are experiencing a substantial growth in their wealth (International Monetary Fund). As their living standards improve, especially in the three target cities of Beijing, Shanghai, and Guangzhou, Chinese consumers are starting to spend their earnings on leisure activities especially yoga.

As the sport of yoga grows, the demand for yoga related products grow as well and Lululemon recognizes this opportunity and decides to bring on "Project China" that would generate considerable amount of profit and worldwide market share; however, returns are always attached with a cost and risk. Nonetheless, we believe the potential benefit from "Project China" would greatly out weight the associated cost.

TARGET MARKETAccording to National Bureau of Statistic of China, the city of Beijing, Shanghai and Guangzhou demonstrate the most purchasing...