Lululemon's Questionable Leadership Case Study

Case Notes for Instructors

This case demonstrates the successes and struggles of a popular company. Lululemon is an athletic apparel company intended for individuals with active lifestyles. The organization has deep roots in the yoga community and is one of the few businesses to offer apparel for this specific market. Denis "Chip" Wilson founded the company in 1998. From the get-go, Lululemon had a strong mission that embraced a healthy and active lifestyle. Inspired by author and philosopher Ayn Rand, Chip Wilson modeled Lululemon with the intent that involves "elevating the world from mediocrity to greatness." Stores are heavily engaged in community involvement. The company has adopted seven core values that guide its decisions. Lululemon has faced a number of ethical risks throughout the years, including charges of misleading advertising and issues with customer privacy. Founder Chip Wilson has often made controversial statements that generated intense criticism. He eventually stepped down as Chairman of the Board. Lululemon experienced quality control issues with its too-sheer yoga pants, in which it was forced to make recalls. Lululemon's culture has also been called into question.

1) Do you think the executives at Lululemon demonstrated ethical leadership? Could it have improved?

2) Does a CEO have an ethical responsibility to step down as a CEO when there is a production and marketing disaster that requires a product recall?

3) Does the chair of board of directors have an ethical responsibility to step down as a CEO when there is a production and marketing disaster that requires a product recall?

4) Does the board of directors have an ethical responsibility to reprimand the chair of the board if the chair makes controversial statements and comments to the press?