Cultural Concerns in International Expansion: lululemon athletica

1.The Canadian-based company lululemon athletica has successfully entered international markets. Its expansion so far has been to countries that share a common language and similar cultures, including the United States, Australia, and New Zealand. The company has been apprehensive about expanding to markets with different cultural attitudes. The leadership is now prepared for this next international expansion and has decided to enter the Chinese market.

You have been asked to be a part of the team developing the international strategy for the Chinese market. First, determine which approach to international strategy will best serve lululemon and be responsive to the company’s fears about cultural sensitivity.

a. Transnational strategy

b. Global strategy

2. Export vs. Wholly Owned Subsidiary

You have decided to pursue a transnational strategy in order to maximize lululemon’s local responsiveness for Chinese consumers. The key to profitability in the Chinese market will be lululemon’s ability to leverage its network of suppliers to maintain high-quality products, even if the overall pricing structure must be lower to appeal to the Chinese consumer. The entry mode into China that will best accomplish this is through:

a. Exporting from an existing network of suppliers

b. Establishing a wholly owned subsidiary that includes manufacturing, marketing, and retail operations

3. Exporting

You have chosen a transnational strategy so that your company can adapt to the needs of individual markets—in this case, China. To introduce your product into the Chinese market, you believe exporting offers the best mode of entry. Exporting will give you the greatest amount of control over the quality of your products and help you control costs because the products will be coming from your existing suppliers. However, you have not addressed any concerns that the team has raised about the liability of foreignness and the ability of the lululemon brand to connect with customers with such a different cultural experience.

Which products should lululemon export to China?

a. The current product offering that is available in all lululemon retail locations

b. A customized product line aimed at Chinese customers