Executive Summary
Under Armour is a company started by the former University of Maryland football player Kevin Plank. Although the company started in a basement, they have overcome many obstacles financially to have a continual growth in sales. The founder has been successful in developing new and innovative gears and apparels to help stay ahead of their competitors. Under Armour finds it extremely important to maintain relationships with their managers and more importantly with professional teams. The company has prided itself on maintaining a competitive advantage by always having top notch products and adopting new strategies and ideas to outcompete the rivals. The company strategy and initiatives clearly seems to be working since Under Armour is able to compete with Nike and Adidas.
Under Armour mainly markets to people with active lifestyle, as a result the company made it a priority to be a major player in the life of people who play sports or enjoy being physically active globally. Some competitive advantages enjoyed by Under Armour are the amount of fitness product they offer. Also the ability to recognize the company is simple because their logos are easy to identify. With the strong brand loyalty and the cost advantage that the company has, it is evident that the company will expand in domestic as well as international market.
The company needs to expand their target market from national to international and develop clothes for people interested in a more casual look. The company should move from the performance based apparels to a more diverse set of product segment which include athletic and sportswear. The fact that Under Armour narrows its product to athletes makes the company to lose customers to their competitors who sell both athletic and casual wears.
The Research paper on Does Your Company Have A Competitive Advantage
Does Your Company have a Competitive Advantage? Krispy Kreme Doughnuts, Inc. was created in 1937 by Vernon Rudolph. Nowadays Krispy Kreme Doughnuts, Inc. is a popular chain of doughnut stores that offers quality coffee roasting at significant discounts because of direct buying channels and unique know-how recipes, new improved coffee and new Hot Doughnut Machine technologies. According to MSN ...
Introduction
Under Armour is a profitable and ‘well-known company whose strategy and initiative edge has giving it a greater recognition and attention. My analysis starts by looking at a summary of the current situation i.e. the strategic posture and the current financial performances. Secondly the analysis will summarize the external analysis of Under Armour by describing the attractiveness of the industry, threats and opportunities that are associated with the growth of the company. This section will focus on the driving forces for change, Porter’s Five Forces Model, and the key success factors. The third segment of my analysis will summarize the internal analysis of Under Armour. This section will focus on the company’s resources and competences, value chain analysis, and a comparison of strengths to rivals.
The fourth segment of my analysis will summarize the SWOT analysis of Under Armour. Hear, my analysis is to compare the external and internal factors that have helped the industry archived its objectives. Based on my comparison of the internal and external factors affecting the company, I will conclude my report by providing recommendations that when properly executed will provide a significant and continued competitive edge to compete in the 21st century.
Summary of the Current Situation
This section provides a summary of the current situation, current financial performances and posture. It provides a clear inside on Under Armour’s aggressive push that involves many steps to further the company’s accomplishments. Some of which includes promotion and marketing, evolving sales strategy, increase presence in the retail market, networking and referrals, widening its product offering, targeting team managers. 1. Under Armour main focus is to “make all athletes better through passion, design, and relentless pursuit of innovation”. The goal is to empower athletes everywhere. This approach is very successful in that the company is constantly coming up with new merchandise for consumers so as to outcompete their biggest competitors. 2. Their main objective is to have “universal guarantee of performance”.
The Business plan on 3M Company SWOT Analysis
3M CO (Minnesota Mining and Manufacturing) is a company that manufactures all over the world, introducing new technologies and marketing a wide scope of products. It is present in the markets of healthcare, industrial markets, markets of display and graphics, consumer and office markets, safety, security and protection services, electronics, telecommunications and electrical and transportation. I ...
Under Armour is determining to dominate the market since every product that they put out must be better than what is currently out in the market. Their main goal is “best in class”, since the company is determined to increase its presence in the retail market. Under Armour’s strategies are consistent due to the fact that they are striving to provide the best possible products for the consumers. These strategies have giving Under Armour a sustainable competitive advantage over it competitors. Thus giving the company a priority to expand into international markets.
Current Financial Performance
Under Armour has proven itself as one of the powerhouse in the sport apparel industry in North America. The overall performance of the company in recent year shows a net revenue increase of 24.6% from 2011- 2012 giving it a dollars increase of $362.2 million. It’s net income increase of $32.1 million dollars. Analysis on its financial statement (see Appendix Table 1 and Appendix 2 below) shows that the company has an average growth rate of more than 25 percent in the last 10 years. A significant increase in growth of revenue over the past years hit its maximum at 38.4%. This was from 2010 to 2011 with a dollar amount increase of 65m as a result of introducing new products such as hats and bags that decreased license revenues on the one hand and increased accessories revenues on the other hand in 2011.
In this same year the net sales increased by 411.5M or 40.2% from the previous year due partially to a 62.2% increase in direct consumer sales. At the same time, there was a significant decreased in License revenues by 7.1% or 2.8M. With the current strategy at hand, Under Armour was able to beat the other competitors in terms of its financial performance. Although the company was able to increase its factory house stores by 48% or 26 additional factories, and also updated e-commerce website, gross profit has remained around the same at 48%, while the EBITDA was at 13.5% and Net income at 6%. The decrease in gross margin percentage was as a result of the following: About 110 basis point decrease that was driven primarily by higher apparel production input costs, this include cotton, in the current financial year. While higher input costs continued to negatively impact apparel product margin in 2012 and are predicted to continue to the first half of 2013.
The Term Paper on Topps Company Products Industry Risk
The Topps Company, among other things discussed later, is in the business of manufacturing chewing gum and confections. According to the Business and Company Resource Center, the Topps is involved in ten different industry categories. They are listed here with their respective SIC/NAICS codes: Commercial Printing (2759), Chewing Gum (2067), Candy and Other Confectionary products (2064), ...
Like every other company within the apparel industry, Under Amour’s recognizes revenue via the time of sale. It’s 10K notes the following: “Net revenues consist of both net sales and license revenues. Net sales are recognized upon transfer of ownership, including passage of title to the customer and transfer of risk of loss related to those goods. Transfer of title and risk of loss are based upon shipment under free on board shipping point for most goods or upon receipt by the customer depending on the country of the sale and the agreement with the customer. In some instances, transfer of title and risk of loss take place at the point of sale, for example at our retail stores.
We may also ship product directly from our supplier to the customer and recognize revenue when the product is delivered to and accepted by the customer. License revenues are recognized based upon shipment of licensed products sold by our licensees. Sales taxes imposed on our revenues from product sales are presented on a net basis on the consolidated statement of income and therefore do not impact net revenues or costs of goods sold.” The revenue recognition method of the company is fairly conservative, since it doesn’t provide a chance for revenue recognition until the goods are delivered to it consumers. Our conclusion is that the company’s revenue recognition policy is aligned with the industry standards and exceeds on the conservative end of the spectrum.
External Analysis
Due to the important of the external environment in a company’s ability to compete, the external analysis of the sports Apparel will describe the attractiveness of the industry, opportunities and threats by providing valuable data and information that are associated with the industry. My analysis will focus on the driving forces of change, Porter’s Five Forces Model and Key success factors.
The Research paper on General Electric Medical Systems – Global Product Company Concept
The Global Product Company concept means ”to concentrate manufacturing – and ultimately other activities – wherever in the world it could be carried out to GE’s exacting standards most cost-effectively”. That means that the production is moving to countries where people are mostly underutilized (the example given in the case study tells about engineers from Eastern Europe, who cost only $1,5/h). ...
Driving Forces for Change
1. Rapid growth in the performance based apparels and gears globally: Due to the increase demand in Footwear, it is becoming more difficult to center the focus on Nike and Adidas as two of the most competitive players over its rivals as a result of past records. This has proven not to be true since there has been a significant increase in the youth population in the world and thus led to a significant increase in the number of sporting activities and also the number of people participating in sports. As a result of these, Adidas and Nike have got to compete with Under Armour and many order players in the industry and they are doing significantly well and are not falling wayside. A second factor that could affect the sports clothing company is the growing population of staying in shape. This has led to new customers for Under Armour because they are currently focusing their market on products that benefit sport players.
2. Growing buyer preference for the apparel that is differentiated from the rest: Furthermore, a decrease in consumer spending as a result of the current weak economy has made consumers to become very critical in making choices. As a result of these, Under Armour has got to continue to provide a superior product so as to convince today’s customers of the value of their brand and the quality of the product they are paying for. Providing consumers with the assurance of a better brand equity needs to be the focus of all marketing communicators. An increase in the unemployment rates that has not only affected the United States, but also the rest of the world and Europe in particular as dramatically decrease the net income of Nike and Adidas thus providing Under Armour a chance to compete on a central stage as it makes more of its revenue in the United States.
3. Employing technological innovation to keep up with changing trends in fitness: Every company has a different level of strategy that they operate on at the various level of management. Due to the degree of competition that exists in the industry, innovation has help companies to get their product in the market faster so as to get an absolute advantage over their competitors. On the case of the footwear division of Under Armour, the Senior Vice President thus operate at a functional level thus, he brings the strategic way of thinking into the core of the company. As a result of the strategic nature of the functional level over the corporate level, we are going to center our discussion more on the functional level.
The Term Paper on Brand Vs Product Products Identity Nike
Consider Naomi Klein's (No Logo) claim that brands have now become the product be a discussion of two examples of advertisement that appeal to contemporary ideas of lifestyles In order to discern if 'BRANDS' have become the 'PRODUCT' we must first evaluate where brands have come from and what infact a brand entails. Branding is commonly mistaken to be advertising, however advertising ironically is ...
Porter’s Five Forces Model
This next model explains the competitive dynamics of the industry. The first part of Porter’s Five Forces Model is the analysis of the competitive rivalry. 1. Competitive rivalry within the industry: Under Armour has two large rivals which are Nike and Adidas, these two competitors own a large portion of the market share. The competitive rivalry within this industry is medium to high. The biggest rival in the industry is Nike and it holds approximately 7.0% of the market while Adidas follow second with 5.4% of the market. Under Armour only controls 2.8% of the market in 2011. Under Amour lack of patent on the cooling shirt provides a strong competitive pressure on Under Armour due to the ease of being able to recreate the product that helped build the company name by its competitors. As the demand for the breathable sports shirts grows, other sports clothing companies are able to take advantage of the opportunities to gain the customers that have not yet invested in Under Armour.
2. Bargaining power of suppliers. The strength of suppliers bargaining power is low since Under Armour is able to manufacture its product in different countries. In 2001 Under Armour was purchasing materials from 23 primary manufacturers from 16 different countries. Under Armour has a very diverse base of suppliers thus providing the company with the ability to make a choice and hence weakening the bargaining power of suppliers.
3. Buyers bargaining power: Due to a significant presence of Under Armor’s product in various retail stores in North America has made the bargaining power of consumers to be medium. Since the technology is fairly new and is in high demand by athletes. This can also be justified by the significant presence of Under Armour’s products in shops like Sports Authority and Dick’s Sporting Goods which comprises of 26 percent of Under Armour’s revenue.
The Term Paper on General Nutrition Company Products Gnc
Company Background General Nutrition Companies Inc. , was founded 65 years ago in Pittsburgh, Pennsylvania on the premise that Americans wanted to maintain control over their health. David Shakir ian founded the company. In 1935 he launched a dream of his by establishing a little health food store in Pittsburgh, Pennsylvania. He called it Lackzoom. The products that were offered at his store ...
4. Threats of new entrants: The barriers to entry are strong due to the brand loyalty. Companies require a large amount of capital in other to compete since the sport apparel industry need a large amount of resources on brand advertisement and endorsement. Brand loyalty place a large factor in the threats to new entrants since there are many customers who trust the quality that comes from the most popular brand makers as well as the feds that they carry with the products. As for companies that are already present in the apparel market, it is easy for them to move into the performance apparel market. With a lack of patents, as with the case of Under Armour, it may be easy to enter but the bottom line remains that it is difficult to compete as a result of no patent.
5. Threats of substitute products: Pressure from sellers of substitute products are high due to a significant increase in the demand for performance apparel. Due to the increase demand in Footwear, it is becoming more difficult to center the focus on Nike and Adidas as two of the most competitive players over its rivals as a result of past records. This has proven not to be true since there has been a significant increase in the youth population in the world and thus led to a significant increase in the number of sporting activities and also the number of people participating in sports. While the replication of Under Armour ‘s specific cold gear and hot gear technology has yet to occur, one can see that the competitive gape between Under Armour and its rivals are beginning to get close. As a result of a high threats of substitute, all of Under Armour’s other products can easily be substituted by any one of the clothing manufactures. Competitors’ positioning and future moves are the next factor in the external analysis. Under Armour’s biggest competitors are Nike and Adidas.
These two companies when compared together hold a great amount of similarity. They both specialize in apparel, equipment, sports footwear and accessories. They are also involved in the production of casual wear to helps expand the demand of their products. Under Armour compete with Nike a company that has created footwear for a list of sports including but not limited to: soccer, running, baseball, basketball, training, cheerleading, golf, football, lacrosse, skateboarding, outdoor activates, tennis, volleyball, walking and wrestling. Nike also makes its shoes similar to their sports apparel and the company has a lot of endorsements with professional sports players such as Tiger Woods so as to promote their products.
Adidas on the other hand is exceptionally a similar brand to Under Armour and Nike in that they also carry a vast variety of sporting gears as well as their large footwear collection. Adidas like Nike also sponsors professional sport players and sporting events around the world. As far as rivalry between these companies and their anticipated moves for the future, Nike and Adidas thus attempt making apparel with similar materials used by Under Armour for their shirts. If Under Armour is able to obtain a patent on all its products, they will be able to stop Nike and Adidas from completely copying their product.
Key Success Factors
This part of my analysis of the industry examines the key success factors in achieving success in the Sport Apparel and Active wear industry key factor plays are the main completive factors that enable company to prosper and out compete their rivals. Here are some important key factors that Under Armour uses to out-compete its competitors. 1. Innovative performance based apparels and gears: Under Armour’s goal is to have a brand that lives up to its promise of having an authentic brand. This started from the beginning as the company main strategy for success has been that of innovation. The company introduced the first performance and training based apparels and gears that was designed to have a brand that lives up to its promise of having a quality product that has multiple benefits for sports players and to keep athletics dry, cool and light during the period of the game. This is also done by having a product that does not have any stipulations or hidden requirements behind it. As a result, when an under Armour shirt is purchased it does not need anything to bring out the qualities that are promoted. These have made the company to experience a significant growth in the sports apparels industry.
2. Good marketing and promotion: Under Armour took every opportunity they could to get to show off their brand. The company has an in house marketing team that have been doing a great job in designing and producing advertising and marketing campaign amid at promoting growth and increasing sales. They would sponsor everyone and everything from individual athletes to entire team, from youth programs to nationally televised competitions. As a result of their great marketing skills consumers are becoming more aware of the product and the brand visibility is increasing. Under Armour is very aggressive in its promotion strategy to the point that it provides new up-and –coming athletes with clothing and accessories to bring the official footwear supplier of the MLB. This has helped the company to be visible among the consumer as the leading performance apparels. As a result of its aggressive promotion, the company in 2011 was able to spend $168 million dollars in marketing expenses including the endorsement of players (Under Armour: Challenging Nike).
Under Armour also worked with retailers to devise space in the store dedicated solely to Under Armour. In stores where such space where not allowed, the company worked to show off their merchandise in each individual department. As a result they were able to open their own company-owned retail stores. The fact that they were constant changes in athletic needs made the company to develop and implement new designs, products, and technology to fit the changing needs of the athletes. 3. Research and development: Under Armour is a company that has invested a lot on research and development so as to out-compete its competitors. Operating in a market where products substitutes are high, Under Armour has made research and development the center point of its operation. This as a result to be able to develop new and superior products so as to attract more customers and also to compete with Nike and Adidas.
Summary of External Analysis
After analyzing the threats and opportunities facing Under Armour and the industry, it becomes clear that Under Armour faces a high threat of substitute product, high competitive rivalry, and a pressing need for differentiation. The industry boasts many qualities that have been seen in the five forces model. If the company makes changes to combat these threats, the company will continue to grow but if not, then what they are helping to grow is not going anywhere and their competitors are going to benefit from their product. There are many key success factors in the industry that Under Armour has taken advantage of such as having an authentic brand, having room for growth, sponsorships, specific marketing, and company integration. Although Under Armour faces many threats, there are still many opportunities for Under Armour to grow as shown by the external analysis. The significant increase in population provides a market for growth in the sportswear and apparel industry, which allow Under Armour the opportunity to grow the company. All of these factors bring a positive outlook on the future of Under Armour’s sales and the sports and active wear industry.
Internal Analysis
The internal analysis shows that Under Armour is a strong company and has an excess of momentum; they have an excellent product, low production cost, significant brand recognition, and room for growth. After examining the external analysis form the previous section above, this section will look at different aspects of the company. This section will look at the factors that directly impact the company such as, what Under Armour is ill-suited for in manufacturing and sustaining themselves on the same levels as bigger rivals companies such as Nike, choices the company has made, and a comparison of Under Armour competitors. This analysis will provide an in-depth on Under Armour’s strengths, weaknesses, opportunities, threats and steps that can be taken to compete in the long run.
Resources and Competences
Based upon the strengths, weaknesses, threats and opportunities of the company, Under Armour separates itself from the competitors by expanding its operations and growth with efficient use of resources and acquiring an unprecedented expertise and core competences. Under Armour has great strength in its internal environment that has help it to compete efficiently with the rivals. One of the strength is that their working strategy is based on innovation technology used in their material, and the great marketing development has given them an edge over other competitors.
Many product lines – Under Armour’s ability to offer anything and everything that has to do with fitness and athletics i.e. socks, hats, shoes etc. online and the company’s brand name and reputation to make performance gear have given them an advantage over their competitors.
One of the main weaknesses faced by Under Armour is that their supply chain management fares poorly. While under Armour competitors such as Nike had an average inventory holding time of 81.05 days, Under Armour was able to hold inventory for 132 days in 2012. This brings me to a conclusion that Under Armour lacks efficiency in its supply chain process.
One other weakness the company is having is that of customization, since the general public can only buy what is sold in shops or online. They cannot order items and request specific off brand color, have a name embroidered on the shirt, or have an item tailored to their specific body measurements.
Value Chain Analysis
While Under Armour ‘s value chain does not differ greatly from its competitors, they have found a way to keep cost down by having suppliers complete two or more separate parts of the supply chain. The value chain proved us with a crystal idea of the various steps Under Armour takes in doing business and proceeding in the environment. The design looks at the raw material network that consists of Natural fibres (Cotton, wool, silk, etc.) and Synthetic fibres (Oil, natural gas).
While the source and manufacturing explores the component network of textile which in this case is Yarn (spinning), Fabric (weaving, knitting, finishing), Petrochemicals and Synthetic fibres. The marketing stage focuses on the production networks which talks about apparel manufacturers. In North America an example would be US garment factories (designing, cutting, buttonholing, ironing and sewing), with domestic and Caribbean/Mexican basin subcontractors. In Asia on the other hand, an example would be the Asian garment contractors with domestic and overseas subcontractors.
Securing clients focus more on the export networks which is all about all retail outlets from Brand-named apparel companies to overseas buying offices to trading companies. Distributing turn to look at the marketing networks which pays more attention on retail outlets such as department stores, specialty stores, discount chains, off-price, factory outlet, mail order, and lastly but not the list Mass merchandise chains. Under Armour has a strong Corporate Environment Code of Conduct which states that: “Under Armour was founded on the following core values: Innovation, Inspiration, Reliability and Integrity.” “Consistent with these values, we seek to do business with suppliers and their subcontractors that adhere to these practices, follow established work place practices and comply with our Code of Conduct. Value chain statement of Under Armour: Respect the Universal Guarantee of performance (UGOP).Every product we build must be better than what’s currently available on the market-best in class. Every product must be tested and every product must make athletes better, that’s our guarantee.”
This roles which are developed by the company’s top level management and branding heads of Under Armour footwear division are been followed by the company responding to matters that affects their customers. The role of the value chain of Under Armour is in sync with its compelling user experience, background support and relevant distinction, downstream solution, familiarity and visibility of the company. Under Amour’s mission statement includes the following: To make all athletes better, through passion, design and relentless pursuit of innovation. This mission statement to a larger extend is too open in nature. Under Armour customize their mission statement to be more specific to specific units of the company. An example is: To run athletes based on the confidence of products which are motivated through innovation, passion, design and comfort and are performance driven. (See Appendix 3)
Comparison of Strengths to Rivals
Under Armour is devoted to “the relentless pursuit of innovation” and making products to support the changing needs of athletes. Although the company’s innovation allows it to gain market share and stay competitive within the industry, Under Armour is overall weaker than its rivals. Even though Under Armour is engineered for both athletes and the general consumer, their loyalty base is not large enough to compete with substitute products. Under Armour researches new textiles to keep current with the best product options and often experiment with color, fabric, and texture to flex with changing fashion trends and enhance product awareness. The biggest issue facing Under Armour is the lack of patent on their designs, meaning that any of Under Armour’s rivals could design a product almost exactly like theirs without fear of retaliation.
While Under Armour has a recognizable design, it is not nearly as recognizable as Adidas and Nike, who have been in business longer and have more experience of how to market to customers and athletes, and have a much higher market share than Under Armour as well as years and years of financial and accounting data needed to properly identify trends in the market and forecast accordingly. (see Appendix 4 for major competitor and market share chart).
Another weakness faced by Under Armour is the limited presents in international markets. The company gets about 90% of their total sales from the North American market while only 10% of its sales is coming from international market. The strengths and weaknesses of Under Armour in comparison to their competitors have a large impact of their future competitiveness, Whether or not Under Armour can overcome these weaknesses will play a large part in determining if the company can survive in the industry, and eventually surpass their rivals.
Summary of Internal Analysis
In conclusion, the internal analysis shows that Under Armour has both strength and weaknesses when it comes to its structure, competitors and resources, but they still have a long way to go before they can truly call themselves competitive with companies like Nike and Adidas. Under Armour’s main strength are their innovative products, low production costs, brand loyalty and high quality of their apparel. Under Armour will need to survive until they can amass the same resources, experience, and recognition as the bigger rivals. The major primary weaknesses faced by Under Armour is the lack of international market share, their lack of product line in comparison to their competitors, their limited number of distributors, and their lack in the female market segment. The weaknesses put forth in the internal analysis are what Under Armour needs to focus on in other to stay competitive and also stay in business in the long run.
SWOT Analysis
The SWOT analysis provides a clear summary of the strength, weaknesses, threats, and opportunities facing Under Armour. This analysis provides an in-depth combination of the internal and external environment surrounding Under Armour on a company level, and the entire industry. (see Appendix 5 for SWOT Analysis Chart).
1. Strengths: Under Armour is the leader in providing high tech undergarments for athletes competing in diverse climates using innovative technology, high quality of their apparel, their brand loyalty, in producing a moisture-wicking fabric geared to high demand of a narrow target market. Their ability in dealing with the pressure of changing industry conditions by creating opportunities using technology and honing in on product differentiation keeps them from losing market share to substitute products. As a result, Under Armour is gaining market shares at a higher rate than their competitors. They have one of a kind product that allows them to stay competitive in their industry.
A big factor for their brand is that it is recognizable to consumers. It is simple in design, which allows consumers to easily identify the products. Under Armour inherits selling power through buyer’s loyalty to the brand. Under Armour’s customers are high end professional athletes paying for quick production of customized products based on Under Armour’s image and brand recognition. 2. Weakness: Under Armour suffers from a variety of weaknesses which includes their lack of patent, international market, female market segment, product line in comparison to their competitors, limited number of distributors, and the lack of individual customizations. Their lack of patent on popular cooling shirts provides Nike and Adidas a chance to make their own product with the same benefit.
This is significant because they could lose their customers, and their competitors could come up with better products. Under Armour’s lack of international market presence provide its competitors an edge in the industry. 3. Threats: In an industry where competition is high, there are also significant threats such as, the need for product differentiation within the industry, high risk of substitute products, and high raw material expenses. Under Armour’s lack of patent poses a high risk since all of their products are at a high risk of substitution. Due to the degree of competition in the industry, a substitute product could drastically hurt their company and its market share.
Also the price of Under Armour raw material is high since the company uses petroleum to produce most of their products. 4. Opportunities: Irrespective of the many weaknesses faced by Under Armour, there are also many opportunities for growth in the industry. These opportunities include Under Armour’s customization and growing number of customers, innovation, growing population, and the expansion into international market. There is a growing population of staying in shape and going to the gym, which would bring Under Armour a lot of new costumers. Also the need for innovation within the industry provides Under Armour with more opportunities to outcompete its competitors.
Strategy Recommendations, Alternative Analysis and Arguments
These next few pages will discuss some recommendations that will help Under Armour to strengthen its current weakness with its narrow product offering and provides ways to better adapt them for the future. My recommendation includes increasing research and development, expanding their products into international markets, get patents on their products, focus on differentiation strategy, developing new product line to appeal to more consumers, shifting their strategy from a focused niche to more of a broad segment, and diversifying their product to carter for none athletes. Mindful of the degree of competition that exists in the industry, Under Armour as a matter of urgency needs to focus on the following recommendations in other to compete in the long run. 1. Expanding Under Armour’s presence in International Market. Although Under Armour’s marketing strategy sought shop-in-shop approach making it easy and appealing to stores’ decision to integrate the product, Under Armour must increase their foreign market share to compete internationally with their major competitors.
This is important since Under Armour depends on North America for about 90% of its sales. Going international will not only generate significant revenue for the company, but will also help the company outcompete its rivals. Under Armour failure to enter international poses a risk of saturation on the current market and also making it difficult for the company to compete or stay in business in the long run. 2. Increase Research and Development: The investment in Research and Development is probably the most important recommendation for Under Armour’s continued growth. This is due to the fact that Under Armour’s quality design and strong buying power are the key success factors to its current market position.
As competition and risk of substitute’s increases in the industry, Under Armour needs to invest a substantial amount in not only the development of new product, but also in endorsements and advertisement of the product. Furthermore, Under Armour needs to offer more street clothing, more individual customization, and more products targeted at female market. By doing so, they will have the ability to stay competitive in the industry. These recommendations if well executed should have the highest positive effect on Under Armour’s future. Based upon all the analysis, I am confident that the implementation of these recommendations will have a positive impact for Under Armour to maintain a competitive advantage. Thus provide growth and success for the company.
Ronantonnoel. “Strategic Management in a Global Context: Under Armour”. May 31, 2012. http://www.slideshare.net/Ronantonnoel/strategic-management-in-a-global-context-under-armour. Viewed Dec. 5, 2013. I do not take credit for the creation of this slide/value chain design. The source of the document has been retained and cited in the Bibliography, as well as the original sources of the information. The intended purpose of the diagram is to be a visual aid used to extrapolate data relevant to the case study Appendix 4: Major Competitor Market Share
Source: CNN Money
Appendix 5: SWOT Analysis
Strengths
Product Technology Innovation
Brand Loyalty
High Quality Apparel
Weaknesses
International Market Share
Lack of Female Customers
Limited Number of Distributors
Focused Segment
Product Lines
No Individual Customization
Threats
Substitute Products
Highly Competitive Industry
Need for Differentiation
Opportunities
Growth in Sports Wear Industry
Need for innovation
Foreign Market
Citations
Appelbaum, R., and Gereffi, G., 1994. Power and Profit in the Apparel Commodity Chain in Edna Bonacich et al. Global Production : the Apparel Industry in the Pacific Rim. PA: University Press. Associated Press (2009, January 31).
Under Armour Takes a Chance on the Shoe Market. CBS http://www.cbsnews.com/stories/2009/01/31/business/main4766488.shtml IMC, WVU lesson 2: IMC Foundation and Key Principles. Retrieved from https://ecampus.wvu.edu on October 24, 2009
Burke, M. (2013, November 14).
Under Armour, With First-Ever Acquisition, Enters The World Of
Software. Forbes. Retrieved December 13, 2013, from http://www.forbes.com/sites/ monteburke/2013/11/14/under-armour-with-first-ever-acquisition-enters-the-world-of- software/
Cammett, M., 2006. Development and the Changing Dynamics of Global Production: Global Value Chains
and Local Clusters in Apparel Manufacturing, Competition & Change, 10 (1), pp 23-48.
Fool, Motley. (2011,Oct 31).
Where Under Armour Is Finding Its Growth Retrieved from
http://www.dailyfinance.com/2011/10/31/where-under-armour-is-finding-its-growth/
Roberts, Daniel. (2011,Oct 26).
Under Armour Gets Serious. Retrieved from
http://management.fortune.cnn.com/2011/10/26/under-armour-kevin-plank/
Industry Canada, 2008. A Canadian Approach to the Apparel Global Value Chain, [online] Available at
http://www.ic.gc.ca/eic/site026.nsf/eng/h_00102.html.
Ronantonnoel. “Strategic Management in a Global Context: Under Armour”. May 31, 2012. http://www.slideshare.net/Ronantonnoel/strategic-management-in-a-global-context-under-armour. Viewed Dec. 5, 2013.
Team, Travis. (2012,Nov 25).
Breaking Down Under Armours $53 Fair Value. Retrieved from http://www.forbes.com/sites/greatspeculations/2012/11/29/under-armour-has-growth-but-is – still-a 53-stock/
Under Armour, Inc. – Our Mission. (n.d.).Under Armour, Inc. – Our Mission. Retrieved December 13,
2013, from http://www.uabiz.com/company/mission.cfm
Under Armour, Inc. ClassA.(n.d.).Growth,Profitability,and Financial Ratios for( UA) from
Morningstar.com. Retrieved December 13, 2013, from http://financials.morningstar.com/
ratios/r.html?t=UA®ion=USA&culture=en-US
Under Armour(UA).
(n.d.).www, Barchart.com. Retrieved December 13, 2013, from
http://www.barchart.com/profile.php?sym=UA&view=ratios
Under Armour: challenging Nike. (n.d.).Global Business Strategy Simulation Game. Retrieved from /
http://www.glo-bus.com/Book2012
