USA Gymnastics Sues Insurers for Refusing to Cover Legal Costs

 This Wall Street article talks about the legal battle that the non-profit organization USA Gymnastics is now fighting after its team doctor, Larry Nassar was accused of molesting at least 250 girls over the years. As a result, the USA Olympics is suing "a dozen insurers" because they have refused to pay for the lawsuits that many gymnasts have filed. Therefore, they are asking the judge to "better explain" the limits of their contract. At the same time, the organization filed for bankruptcy last December while at the same time being subject to the investigations that law enforcement might do regarding the lawsuits that even former Olympic Gymnastics have filed accusing the organization of not protecting them from the doctor. As a result, Nassar "pleaded guilty in 2017 to state sexual-abuse charges and federal child-pornography counts" and will be in prison for the rest of his life. According to WSJ, he volunteered for the organization for more than three decades and some girls have made accusations of sexual assault that "date back to the mid-1990s". 

According to the lawsuit, the insurance covers cost related to "state and federal investigations, internal and independent investigations, criminal investigations, crisis management, and the U.S. Olympic Committee’s decertification process". The implications of the lawsuit also affect their participation on the Olympic Games as the  U.S. Olympic Committee has started the process of revoking the organization's status of "sport’s national governing body". Therefore, they need to create a new governing body in order to participate in this year's Olympic Games once this process is completed. 
Also, as a result of the bankruptcy guidelines, the organization will probably invite anyone that might have claims to express them during a certain time frame, including claims not related to Nassar. At the same time, they can use their asset's money and "set deadlines for victims to come forward". All of these under the supervision of a federal judge. 
I think this article was very interesting because of its relevance to Marketing and brand image. This is the perfect example of how the lack of internal control resulted in the total damage of the USA Olympics brand image that is most likely to result in the end of the organization. At the same time, the organization is now receiving a high amount of negative publicity that is impossible to control. Not to mention that they also need to use publicity to invite possible victims to declare their stories. 
On the other hand, this scandal also affects their previous achievements and the status that they were able to build over the years. They are going to lose participation in the Olympic Games, and parents are not going to let their girls be part of the organization. It is important to highlight that this kind of scandals can happen to any organization, even if it is non-profit, and that the recovery of the reputation is extremely difficult because it does not deal with the person that was at fault only but also with their internal control and their trustiness.
Link to article: https://www.wsj.com/articles/usa-gymnastics-sues-insurers-for-refusing-to-cover-legal-costs-11549486473?mod=searchresults&page=1&pos=6
by: Adriana Chacon 

Lululemon Chief: ‘No Need’ to Discount $100 Yoga Pants

Lululemon is a Canadian brand that became known for its expensive workout clothes. The brand charges $100 for a pair of yoga pants, which is definitely a high price for most of the people. As a result of their big success, may cheaper alternatives have arisen, however, the brand’s Chief Executive Calvin Mc Donald does not see the “need” to lower its price, offer discounts or sell their products in any other store or website besides their own.

He believes that the brand has just started growing and is now focused on creating new products “from deodorant to sneakers”. At the same time, he would like to make the brand known by more people and expand to European and Chinese markets because he thinks that the brand is much more than just an “athleisure trend”, instead, it is a bigger trend. Also, the company has had some legal issues since the two previous CEO’s have been accused of improper conduct towards women, so McDonald made sure that he understood the culture of the brand before joining.

The success of Lululemon can be attributed to its distinctive “high-end attire” which is made of “unique fabrics” thanks to a patented component that makes them softer and that promises to offer excellent performance.  Even though its most famous products are the leggings, they also sell sports bras, outerwear, and work pants. The company also uses a marketing strategy based on “ambassadors” that wear their clothes and promote them at events and unlike other brands, they only sell their products through their stores and website. McDonald states that he focuses on innovation and experiences instead of founding discounts.

They are also testing stores that have a food and juice bar, yoga and meditation studios as well as a loyalty program. However, according to Bernstein, the brand is still not known by many people here in the U.S. Their competitors are Nike, Under Armour, Athleta and Victoria Secrets. Even though the company has been experiencing growth in their fiscal year reports, some analysts argue that this would not be sustainable if the brand does not become “more accessible”. Similarly, some shoppers believe that their product is too expensive for what it is even though they are the most famous among women that have higher incomes.

This article was the most interesting of all the articles that I have read during this project. It mainly focuses on the approach that Lululemon has taken on its price strategy since they decided not to offer discounts as many other brands. Instead, they believe that their brand image should remain exclusive and available only for those willing to spend that much money on high-quality sportswear. This is also the reason why they decided to only sell their products in their stores. However, I found interesting that they want to incorporate other kinds of products such as deodorants because I wonder how much it would cost and if people would be willing to pay as much for it. I also think that expanding to the international market could be risky because they are not even as known in the U.S. as other brands and also because of their “exclusivity” that might not sell in other countries as it does here. It is also amazing that they have been able to continue growing their sales after the scandals that they had with their two previous CEO’s. It makes me think on how they were able to maintain their brand reputation especially because their brand that mostly sells to women and these CEO’s were accused of sexual harassment and body shaming.  Finally, I would see if McDonald’s approach is going to work or if the analysts’ prediction turns out to be right.

Link to article: https://www.wsj.com/articles/lululemon-chief-no-need-to-discount-100-yoga-pants-11556035545?mod=searchresults&page=9&pos=10

By: Adriana Chacon