CAGE Analysis of Lululemon Athletica

Introduction

This paper will be presented to Lululemon Atletica officials with an analysis of their potential
expansion to Brazil based on the factors in the CAGE framework. Brazil has a very diverse population,
with indigenous peoples living in and around the interior, with a significant presence of European
culture along the coast. Brazil's rich folk traditions, music, dance, art, and literature come from a
mixture of different cultures introduced over the centuries. This could be a Lululemon challenge as
they hope to migrate businesses south to the Latin country of Brazil.

Cultural distance

The main difference between the two countries is in the Hofstede cultural framework, especially the
Power Distance Metric. Brazil reflects a society that highly values hierarchy, and then believes that
inequalities between people are acceptable. Lululemon is proud to be a very progressive company,
highlighting issues of self-empowerment, trust and equality. Lululemon has had problems in the past
with not buying employees to improve teams, as the company culture found employees in the field
of "almost evangelizing to say the least." Employees may have problems recruiting because they do
not buy into the emphasis they place on leadership, including Lululemon; With the ultimate goal of
retaining talent and developing leaders.

Another cultural problem facing Lululemon is the difference in language. Lululemon can look forward
to the challenges of access to the Brazilian market, customer service communication and e-
commerce platforms. Communication lines, such as e-mail and telecommunications, all have
inquiries and complaints in Portuguese, so Lululemon will have to adapt to minimize
miscommunication. This will incur higher costs to Lululemon as they will have to hire employees to
lead this segment of their business. Moreover, this presents a challenge within the store as there is a
huge difference in etiquette. In Brazil it is common to have two kisses on the cheek when meeting
others. Employees should be aware of these practices when working to provide a superior customer
experience.

To combat the Power Distance challenge, Lululemon must have an in-depth testing process to select
candidates who positively promote the progressive culture they represent in Brazil. Regarding
language differences, Lululemon should recruit a group of Portuguese-speaking workers in their
administrative offices. Having these employees will help with customer service issues that may arise,
giving a more personalized feel to the automated translation responses. Lululemon need to
stimulate their company's sense of community to help it survive in the Brazilian market.

Administrative distance

Canada and Brazil enjoy diplomatic relations dating back to 1941iv. Despite the long-standing
relationship between the two nations, there are still many areas that impede business dealings.
Corruption is one of the biggest problems facing the country, from the police to the ranking of
government officials. Most of these problems arise because government officials bleed money from
government accounts for personal gain. This has had a negative impact on the economy, such as
rising inflation and negative economic growth. The federal structure of the political system means
that there are a wide range of regulatory bodies that lead to bribery of public officials. This causes
many problems for foreign companies entering the Brazilian market. Real and variable tax rates in
Brazil have depreciated due to the negative economic growth shown in Brazil. Due to this factor we
have seen an annual import rate decline of -8.9% from 223B in 2012vi to $ 181.2 in 2018vi.