Swot Analysis For Lululemon
There are many economic data points that serve to demonstrate the economic soundness of the French marketplace as a viable option for Lululemon. France has a large population which includes several major urban centers which represent suitable targets for Lululemon’s marketing activities. As a developed economy with a robust economy, the average income in France is sufficiently high to afford high quality, high price products like Lululemon products. Finally, there is sufficiently developed technological and communication infrastructure to support a focused marketing campaign which will allow Lululemon to penetrate the market.
Population
The total population of France is 63.1-million people (Burgess et. al., 2013, page 148).
The French fertility …show more content…
rate is 2.0 births per women (Burgess et. al., 2013, page 149). This birth rate is just below the 2.07 births per women replacement rate (Engelman & Leahy, 2006). Therefore, when factoring in immigration, the French population is growing slowly at a rate of only 6.3% from 2000 to 2010 (suggesting an annual growth rate of ~0.6%). The impact of these factors is that the French population is almost double that of the Canadian population suggesting a market opportunity that is almost twice the size of Canada.
Demographics
France’s low birth rate suggests an aging population which is born out in the statistics. For example, only 18.4% of the French population is under age 15 while 23.2% of the French population is over age 60 (Burgess et. al., 2013, page 148). There are 94.5 men per women in France which suggests a more feminized country (Burgess et. al., 2013, page 148). Geographically the French population is both highly concentrated / dense and highly urban. The French population is highly urban with 85.8% of the population concentrated in urban areas (Burgess et. al., 2013, page 148). The impact of the French demographics on the marketing of Lululemon products in France is that the highly urban population could be targeted in similar “city first” approaches as applied by Lululemon is marketing in Canada and the USA (i.e. targeting urban cores to get early adopters to use the clothing before expanding advertising into suburban and rural areas). Thus the urban demographics bode well for Lululemon in France.
Economic statistics
France is a developed, service focused economy which is still struggling to emerge from the Great Recession. The French GDP is about $2.7-trillion USD and is growing at a stagnant rate of 0.6% which is less than the consume price inflation of 2.0% (Burgess et. al., 2013, page 148). On a per capita basis, the average French person has $42,380 per head - slightly more than the GDP per capita of Canada (Burgess et. al., 2013, page 148). However, France suffers from high unemployment with 9.3% of its work force out of work (Burgess et. al., 2013, page 148). This problem is particularly concentrated in the younger people in France where unemployment for people under age 25 is 25% (Goodman, Kirkham, and Kraland, 2013). Therefore, while France is a wealthy country which suggests that Lululemon’s high quality, high price products will sell well, there are concerns that the youth market place (under 25) which has bene a primary focus of Lululemon may not have sufficient buying power in order to fully adopt Lululemon products. However, due to the high overall disposable income in this market place, entering this market may still be viable. However, the stagnant economy suggests that French consumers may still be healing form the recession so a slow, incremental entry to the market place may be best.
Stage of development
France is a developed market and not an emerging market (Morgan Stanley Capital International, 2014). It economy is largely focused on the consume service sector (75% of GDP) suggesting it is a post-industrial nation (Burgess et. al., 2013, page 148). The impact of France being a developed market is that it is unlikely to experience the rapid growth that characterizes developing markets. Therefore, while France has a population that is twice as large as Canada, it is unlikely that the French economy will grow rapidly so once Lululemon has fully saturated the French marketplace it is unlikely to see significant growth in the country form overall GDP expansion.
Resources and mineral wealth
France has fairly limited resources and mineral wealth. For example, France imports 48% of the energy it uses suggesting its energy reserves in the form of oil, coal etc. are limited (Burgess et. al., 2013, page 148). This means that the French economy would benefit form a decline in oil prices. This makes the French market place a natural complement to the Canadian market place since as oil prices rise, the Canadian market place does better. Thus expansion into France would serve to compliment and reduce the risk exposure of Lululemon to commodity price changes.
Science, technology and Communications systems
France is highly developed technologically. There is very high penetration of modern technology like cell phone, land lines, color TVs, internet access, cars and other modern technology (Burgess et. al., 2013, page 149). France is a leader in many high technology sectors including nuclear power – France generates 76% of its electricity from nuclear power sources, the highest rate of any country in the world (Burgess et. al., 2013, page 57). French consumers are comfortable with social media, for example there are 25-million face book users in France (Burgess et. al., 2013, page 95). Therefore, as a developed country with a high level of technology, Lululemon can use a number of high technology based marketing strategies to enter the market place such as the use of social media, mobile technology and internet based advertising to try to increase consumer awareness in Lululemon products.
Working conditions
Working conditions in France tend to be very favorable for the employees. The employer / employee relations are characterized by the employee having significant legal and economic power. French wages and benefits tend to be high. On the whole, the French economy tends to be a more favorable one for employees who have jobs (Walsh, 2014). However, perhaps due to these pro-employee practices which tilt the field in favor of the worker, France has higher unemployment rates and higher youth unemployment (see discussion above).
Transportation Systems
France has a well-developed transportation infrastructure, ranking 3rd within Europe right behind Germany. “The country has 18,152 miles of railroad for train transportation, 591,084 miles of roads and a number of motor vehicles that range from 31,050,000 cars to 6,383,000 trucks and buses.” The World Factbook. (2014, June 22). Further information to know about Frances transportation system is that they have a number of airports and seaports in which the country utilizes. “With 294 airports scattered across the region, France certainly has achieved an advanced mode of transportation in flight. Also, the country manages seaports such as Brest, Calais, Dunkerque, Marseille, Nantes and its container port Le Havre.” The World Factbook. (2014, June 22) These factors all show how progressed the nation is and can be a benefit to merging within the country as it will be able to easily make shipments of products into the nation.
Industries
To further express how significant the private sector is in France, “the government has privatized companies such as Air France, France Telecom, Renault and Thales”. The World Factbook. (2014, June 22). However, the country does still play a role within the power, transportation and defense industries.
Foreign Investment
Having an attractive investment climate for France is very imperative to the economy and is very important to the government. The government strongly believes that foreign investment is a critical component to create jobs and keep the economy growing. “To ensure this the investment promotion agency, DATAR, was setup to provide active and extensive assistance to potential investors both in France and through agencies around the world.” Youngblood-Coleman, Denise. (2010). This helps to boost foreign investment within France. The opportunities which make foreign investment attractive in France are the skilled labor force, its central location within Europe and its well-developed infrastructure. “One sector in which this country receives a lot foreign investment is the banking sector where it is the least restrictive and has opaqueness.” Youngblood-Coleman, Denise. (2010).
International Trade Statistics
In 2008 the country had “$695,004,000,000US in imports and $594,505,000,000US in exports”. Weber, E. (2014, August 8). The number of imports had exceeded the amount of exports in the year 2008. The country has become a major importer of machinery, chemicals, agricultural products and industrial goods.” Weber, E. (2014, August 8). The economy of France has become heavily reliant on these imports to fill a gap in which they cannot produce in. This made the total deficit for the year of 2008 $100,499,000,000US. This can be a negative because it is believed that when imports exceed exports then job losses occur and the economy does not thrive as it would in a surplus. A non-thriving economy can prove difficult for Lulu lemon to grow in.
Currency
The currency within France is the Euro. This country has adopted the Euro in France since January 1st, 2002 and has been accepted within the country as well as around the world today. “According to Trading Economics the exchange rate for the embraced Euro to US dollar is $1.25US for €1 Euro.” It also shows a trend of €1.35 upon average from 1957 to 2014 with a high of €1.86 in July 1973 and a low of €0.69 in February 1985.” Euro Exchange Rate | EUR/USD | France 1957-2014 | Data | Chart | Calendar. (n.d.). The higher exchange rate can be a bit risky as the Euro may encounter problems since it is tied to Greece and this country’s economic status can impact France and the value of the Euro, affecting how well Lulu lemon does within the country.
Working Force
Within France the unemployment is high which maybe a positive for a foreign company such as Lulu lemon who is interested in establishing itself in the region. “The unemployment rate climbed from 7.8% in 2008 to 10.2% in 2013.” The World Factbook. (2014, June 22) This gives the company access to a skilled workforce that is looking for employment. Although there is an increased rate of unemployment the average earnings of a salary are quite similar to the United States as “a worker will earn €4,505 Euros monthly.” Salary Survey in France. (2014, January 1). This means for the business that it will still have to pay a high income to its workers abroad, costing the company money that it could potentially be saving.
Trade Restrictions
France has adopted tariffs since its involvement within the European Union impacting how they trade with non-members of the EU, facing import duties when trading with outside countries.
“Imports coming into France such as manufactured products are subject to rates of 5% - 17%.” Trade Regulations and Standards in France. (2011, March 13) This can prove to be a negative for Lulu lemon as Canada is not a part of the EU trade agreement. “A second barrier may also exist as TARIC or The Integrated Tariff of the Community requires certain products to be licensed when being imported into the country.” Trade Regulations and Standards in France. (2011, March 13) If Lulu lemon is not approved for a license then it will not be able to do business in this part of the world.
Channels of distribution and logistics
France being a well-developed country provides means it provides a great deal of wholesalers and retailers within the region. “The number of wholesalers is 95,108, stretched across the country.” Poncet, S. (2013, January 17). The nation will also have a large number or retailers within the space, making it highly competitive within the industry. This is a negative for Lulu lemon who is in interested in entering this foreign market. The country also conducts its business with both cash, credit and debit services, making it easy for consumers to purchase clothing and other items at retail stores.
Media
The media within the country is readily available with access to television, internet, radio, newspapers and magazines. “The role of the media plays a major role within the country with sales of €11 Billion Euros for the printed press and sales of €5 Billion Euros for television and finally €1 Billion Euros for radio.” Claude, S. (2007, August 22). Another key factor to keep in mind is “nearly all of the French watch television and read magazines and 80% listen to the radio, but the percentage who read a daily newspaper regularly has declined to only 36%.” Claude, S. (2007, August 22) The number of people who have access to the media and utilize it is quite high, making it a great form of advertisement for a company such as Lulu lemon who would like to penetrate the market. The company would also better understand from this information that television and magazine ads are the best when trying to access the market. Also France has several agencies within the country such as the “Agence France Presse (AFP), Reuters and Associated Press (AP) and Gamma and Sigma.” Claude, S. (2007, August 22)
Population
The total population of France is 63.1-million people (Burgess et. al., 2013, page 148).
The French fertility …show more content…
rate is 2.0 births per women (Burgess et. al., 2013, page 149). This birth rate is just below the 2.07 births per women replacement rate (Engelman & Leahy, 2006). Therefore, when factoring in immigration, the French population is growing slowly at a rate of only 6.3% from 2000 to 2010 (suggesting an annual growth rate of ~0.6%). The impact of these factors is that the French population is almost double that of the Canadian population suggesting a market opportunity that is almost twice the size of Canada.
Demographics
France’s low birth rate suggests an aging population which is born out in the statistics. For example, only 18.4% of the French population is under age 15 while 23.2% of the French population is over age 60 (Burgess et. al., 2013, page 148). There are 94.5 men per women in France which suggests a more feminized country (Burgess et. al., 2013, page 148). Geographically the French population is both highly concentrated / dense and highly urban. The French population is highly urban with 85.8% of the population concentrated in urban areas (Burgess et. al., 2013, page 148). The impact of the French demographics on the marketing of Lululemon products in France is that the highly urban population could be targeted in similar “city first” approaches as applied by Lululemon is marketing in Canada and the USA (i.e. targeting urban cores to get early adopters to use the clothing before expanding advertising into suburban and rural areas). Thus the urban demographics bode well for Lululemon in France.
Economic statistics
France is a developed, service focused economy which is still struggling to emerge from the Great Recession. The French GDP is about $2.7-trillion USD and is growing at a stagnant rate of 0.6% which is less than the consume price inflation of 2.0% (Burgess et. al., 2013, page 148). On a per capita basis, the average French person has $42,380 per head - slightly more than the GDP per capita of Canada (Burgess et. al., 2013, page 148). However, France suffers from high unemployment with 9.3% of its work force out of work (Burgess et. al., 2013, page 148). This problem is particularly concentrated in the younger people in France where unemployment for people under age 25 is 25% (Goodman, Kirkham, and Kraland, 2013). Therefore, while France is a wealthy country which suggests that Lululemon’s high quality, high price products will sell well, there are concerns that the youth market place (under 25) which has bene a primary focus of Lululemon may not have sufficient buying power in order to fully adopt Lululemon products. However, due to the high overall disposable income in this market place, entering this market may still be viable. However, the stagnant economy suggests that French consumers may still be healing form the recession so a slow, incremental entry to the market place may be best.
Stage of development
France is a developed market and not an emerging market (Morgan Stanley Capital International, 2014). It economy is largely focused on the consume service sector (75% of GDP) suggesting it is a post-industrial nation (Burgess et. al., 2013, page 148). The impact of France being a developed market is that it is unlikely to experience the rapid growth that characterizes developing markets. Therefore, while France has a population that is twice as large as Canada, it is unlikely that the French economy will grow rapidly so once Lululemon has fully saturated the French marketplace it is unlikely to see significant growth in the country form overall GDP expansion.
Resources and mineral wealth
France has fairly limited resources and mineral wealth. For example, France imports 48% of the energy it uses suggesting its energy reserves in the form of oil, coal etc. are limited (Burgess et. al., 2013, page 148). This means that the French economy would benefit form a decline in oil prices. This makes the French market place a natural complement to the Canadian market place since as oil prices rise, the Canadian market place does better. Thus expansion into France would serve to compliment and reduce the risk exposure of Lululemon to commodity price changes.
Science, technology and Communications systems
France is highly developed technologically. There is very high penetration of modern technology like cell phone, land lines, color TVs, internet access, cars and other modern technology (Burgess et. al., 2013, page 149). France is a leader in many high technology sectors including nuclear power – France generates 76% of its electricity from nuclear power sources, the highest rate of any country in the world (Burgess et. al., 2013, page 57). French consumers are comfortable with social media, for example there are 25-million face book users in France (Burgess et. al., 2013, page 95). Therefore, as a developed country with a high level of technology, Lululemon can use a number of high technology based marketing strategies to enter the market place such as the use of social media, mobile technology and internet based advertising to try to increase consumer awareness in Lululemon products.
Working conditions
Working conditions in France tend to be very favorable for the employees. The employer / employee relations are characterized by the employee having significant legal and economic power. French wages and benefits tend to be high. On the whole, the French economy tends to be a more favorable one for employees who have jobs (Walsh, 2014). However, perhaps due to these pro-employee practices which tilt the field in favor of the worker, France has higher unemployment rates and higher youth unemployment (see discussion above).
Transportation Systems
France has a well-developed transportation infrastructure, ranking 3rd within Europe right behind Germany. “The country has 18,152 miles of railroad for train transportation, 591,084 miles of roads and a number of motor vehicles that range from 31,050,000 cars to 6,383,000 trucks and buses.” The World Factbook. (2014, June 22). Further information to know about Frances transportation system is that they have a number of airports and seaports in which the country utilizes. “With 294 airports scattered across the region, France certainly has achieved an advanced mode of transportation in flight. Also, the country manages seaports such as Brest, Calais, Dunkerque, Marseille, Nantes and its container port Le Havre.” The World Factbook. (2014, June 22) These factors all show how progressed the nation is and can be a benefit to merging within the country as it will be able to easily make shipments of products into the nation.
Industries
To further express how significant the private sector is in France, “the government has privatized companies such as Air France, France Telecom, Renault and Thales”. The World Factbook. (2014, June 22). However, the country does still play a role within the power, transportation and defense industries.
Foreign Investment
Having an attractive investment climate for France is very imperative to the economy and is very important to the government. The government strongly believes that foreign investment is a critical component to create jobs and keep the economy growing. “To ensure this the investment promotion agency, DATAR, was setup to provide active and extensive assistance to potential investors both in France and through agencies around the world.” Youngblood-Coleman, Denise. (2010). This helps to boost foreign investment within France. The opportunities which make foreign investment attractive in France are the skilled labor force, its central location within Europe and its well-developed infrastructure. “One sector in which this country receives a lot foreign investment is the banking sector where it is the least restrictive and has opaqueness.” Youngblood-Coleman, Denise. (2010).
International Trade Statistics
In 2008 the country had “$695,004,000,000US in imports and $594,505,000,000US in exports”. Weber, E. (2014, August 8). The number of imports had exceeded the amount of exports in the year 2008. The country has become a major importer of machinery, chemicals, agricultural products and industrial goods.” Weber, E. (2014, August 8). The economy of France has become heavily reliant on these imports to fill a gap in which they cannot produce in. This made the total deficit for the year of 2008 $100,499,000,000US. This can be a negative because it is believed that when imports exceed exports then job losses occur and the economy does not thrive as it would in a surplus. A non-thriving economy can prove difficult for Lulu lemon to grow in.
Currency
The currency within France is the Euro. This country has adopted the Euro in France since January 1st, 2002 and has been accepted within the country as well as around the world today. “According to Trading Economics the exchange rate for the embraced Euro to US dollar is $1.25US for €1 Euro.” It also shows a trend of €1.35 upon average from 1957 to 2014 with a high of €1.86 in July 1973 and a low of €0.69 in February 1985.” Euro Exchange Rate | EUR/USD | France 1957-2014 | Data | Chart | Calendar. (n.d.). The higher exchange rate can be a bit risky as the Euro may encounter problems since it is tied to Greece and this country’s economic status can impact France and the value of the Euro, affecting how well Lulu lemon does within the country.
Working Force
Within France the unemployment is high which maybe a positive for a foreign company such as Lulu lemon who is interested in establishing itself in the region. “The unemployment rate climbed from 7.8% in 2008 to 10.2% in 2013.” The World Factbook. (2014, June 22) This gives the company access to a skilled workforce that is looking for employment. Although there is an increased rate of unemployment the average earnings of a salary are quite similar to the United States as “a worker will earn €4,505 Euros monthly.” Salary Survey in France. (2014, January 1). This means for the business that it will still have to pay a high income to its workers abroad, costing the company money that it could potentially be saving.
Trade Restrictions
France has adopted tariffs since its involvement within the European Union impacting how they trade with non-members of the EU, facing import duties when trading with outside countries.
“Imports coming into France such as manufactured products are subject to rates of 5% - 17%.” Trade Regulations and Standards in France. (2011, March 13) This can prove to be a negative for Lulu lemon as Canada is not a part of the EU trade agreement. “A second barrier may also exist as TARIC or The Integrated Tariff of the Community requires certain products to be licensed when being imported into the country.” Trade Regulations and Standards in France. (2011, March 13) If Lulu lemon is not approved for a license then it will not be able to do business in this part of the world.
Channels of distribution and logistics
France being a well-developed country provides means it provides a great deal of wholesalers and retailers within the region. “The number of wholesalers is 95,108, stretched across the country.” Poncet, S. (2013, January 17). The nation will also have a large number or retailers within the space, making it highly competitive within the industry. This is a negative for Lulu lemon who is in interested in entering this foreign market. The country also conducts its business with both cash, credit and debit services, making it easy for consumers to purchase clothing and other items at retail stores.
Media
The media within the country is readily available with access to television, internet, radio, newspapers and magazines. “The role of the media plays a major role within the country with sales of €11 Billion Euros for the printed press and sales of €5 Billion Euros for television and finally €1 Billion Euros for radio.” Claude, S. (2007, August 22). Another key factor to keep in mind is “nearly all of the French watch television and read magazines and 80% listen to the radio, but the percentage who read a daily newspaper regularly has declined to only 36%.” Claude, S. (2007, August 22) The number of people who have access to the media and utilize it is quite high, making it a great form of advertisement for a company such as Lulu lemon who would like to penetrate the market. The company would also better understand from this information that television and magazine ads are the best when trying to access the market. Also France has several agencies within the country such as the “Agence France Presse (AFP), Reuters and Associated Press (AP) and Gamma and Sigma.” Claude, S. (2007, August 22)