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Daniels Fund Ethics Initiative
University of New Mexico
http://danielsethics.mgt.unm.edu
Case 12
0
: Lululemon: Encouraging a
Healthier Lifestyle
Turning Lemons into
Lemonade
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. The culture
seems very competitive, which doesn’t seem to fit in with Buddhist philosophy. Also, some
employees have mentioned feeling forced to attend the Landmark Forum, a three-day
self-improvement program that Wilson strongly supports (Lululemon does pay the $500 fee). The
new CEO Laurent Pontdevin has addressed this issue by stating that the firm would no longer put as
much pressure on employees to attend the Landmark Forum.
However, Lululemon has also been praised for ethical practices as well. It seeks to inspire
employees to set goals and live healthy. It holds free weekly yoga classes for community members
and provides those who attend a 15 percent discount on purchases. It also appears to take customer
concerns very seriously and has been known to quickly implement changes in response to customer
feedback.
Lululemon is a good example of a company that is highly admired but still has ethical lapses and
risk areas it must address. This case should teach students that companies are never
black-and-white in terms of ethics, but must constantly put forth effort to maintain ethical conduct.
QUESTIONS AND 0DISCUSSION
1. How has Lululemon handled various ethical issues that it has faced over the last few years?
This material was developed by Jennifer Sawayda under the direction of O.C. Ferrell and Linda Ferrell. It is provided for the Daniels Fund
Ethics Initiative at the University of New Mexico and is intended for classroom discussion rather than to illustrate effective or ineffective
In some cases, Lululemon has taken a defensive approach, such as when it defended the
authenticity of its advertising regarding its VitaSea products. Lululemon’s responses appear
2. How has the ethical culture of Lululemon impacted its relationship with customers and
employees?
Lululemon has a strong employee culture that stresses inspiration. It seeks to inspire
employees to live healthy and strive for their goals, even paying for them to attend the
self-help Landmark Forum after a certain time of employment. It also tries to hire managers
3. To avoid negative publicity and ethical challenges, what steps should Lululemon take to
improve its stakeholder relationships?
Students’ answers will vary. Some answers might be to increase oversight over quality
control, ensure that the board works with the CEO, avoid pressuring employees to attend
ADDITIONAL RESOURCES
Lululemon Code of Business Conduct:
http://investor.lululemon.com/corporate-governance-document.cfm?documentid=2420
Chip Wilson and Lululemon:
https://www.forbes.com/sites/abrambrown/2016/12/14/lululemon-chip-wilson-turnaro
und-yoga/#7d3766cc6f61
Chip Wilson’s “too sheer yoga pants” comments:
http://www.today.com/style/lululemon-co-founder-too-sheer-yoga-pants-not-some-wome
ns-8C11547236
