Luxury athletics and yoga apparel retailer Lululemon Athletica has had great suc
ID: 2577557 • Letter: L
Question
Luxury athletics and yoga apparel retailer Lululemon Athletica has had great success in its less than 20 years of operation. With more than 200 retail locations, the company netted a 51.4 percent growth in revenue from fiscal year 2010 to 2011 and projected a more than 10 percent growth in the first quarter of fiscal year 2012. While the company has made its name on high quality, high-cost apparel for fitness enthusiasts—a pair of yoga pants can cost as much as $100—a recent manufacturing error shook consumer confidence and gave rise to quality control problems in the company's supply chain. In March 2013, Lululemon was forced to recall its signature "Luon" yoga pants after finding they were so sheer that they were practically see-through. The recall of the nylon and Lycra-blend Luon pants followed a similar event in 2012, when several of the company's swimsuits and light-colored pants were found to be too sheer. According to RBC Capital Markets analyst Howard Tubin, Lululemon’s fabric errors may simply represent a growing pain for the rapidly expanding company. “They tried to get in front of this by not letting the merchandise stay on store shelves and they’re working with vendors to try to figure out how this happened,” said Tubin. “They're probably handling it the best way they can.” Citing Lululemon’s fourth manufacturing snafu in one year, Credit Suisse analyst Christian Buss strikes a slightly less forgiving tone: “Their supply chain hasn't kept up with the demand that they have for their product, and their quality control processes have been proven inadequate.”
"Lululemon Athletica Inc. Announces Fourth Quarter and Full Year Fiscal 2011 Results," Lululemon, March 22, 2012, www.lululemon.com/media/index.php?id=219 (Accessed March 27, 2013); "Lululemon: Yoga Demonstration Not Required for Returns," CBS, March 27, 2013, www.cbsnews.com/8301-201_162-57576590/lululemon-yoga-demonstration-not-required-for-returns (Accessed March 27, 2013); Wendy Kaufman, "Lululemon's Too-sheer Yoga Pants Reveal Problems in Company's Supply Chain," NPR, March 20, 2013, www.npr.org/2013/03/20/174867737/lululemons-too-sheer-yoga-pants-reveal-problems-in-companys-supply-chain (Accessed March 27, 2013).
Which of the following should Lululemon not do to mend its relationship with its fabric supplier in the wake of the Luon yoga pant recall?
E. Take everything the supplier says with a grain of salt henceforth.
A. Acknowledge that the manufacturers demanded too much too quickly. B. Implement a new quality control system to test products’ sheerness as they leave the manufacturing plant. C. Launch an investigation into where exactly the error occurred. D. Monitor the state of the relationship as it evolves.E. Take everything the supplier says with a grain of salt henceforth.
Explanation / Answer
Answer is option E. Take every thing the supplier says with a grain of salt henceforth.
Lululemon should not doubt whatever the supplier says, if it starts doubting the suppliers then the relationship would get strained more. the other steps ie., mentioned in option B, Option C, and Option D are required to be taken by Lululemon to ensure that the low quality products are not sent to the market.
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