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Under Armour Case Study Piotr Fudala, Anthony Chavez, Michael Buonavolanto, Robert Kozina, Anne Li, Abrar Mirza
Source: Hogan, 2013
Under Armour Case Study TABLE OF CONTENTS
BUSINESS AND CORPORATE LEVEL PLANNING
BRIEF SUMMARY OF THE COMPANY SITUATION IN THEIR COMPETITIVE ENVIRONMENT, ISSUES THEY FACE AND CLEAR PROBLEM STATEMENT TO ANALYZE 6 KEY LEADERSHIP
TYPES OF INNOVATION AND EVIDENCE OF ENTREPRENEURSHIP
GLOBAL PRESENCE AND EFFECTS
ETHICS - EXAMPLES OF SOCIAL CONSCIOUSNESS/CORPORATE SOCIAL RESPONSIBILITY
RESPONSIBLE WEALTH CREATION
ENGAGEMENT AND PLAN ALIGNMENT & CORPORATE CULTURE
TEAM MEMBER ROLES
Under Armour Case Study
Detailed Timeline It all started in 1995 when Kevin Plank, the special teams captain on the University of Maryland football team, noticed that the cotton T-shirts he and his teammates wore underneath their pads were always soaked and filled with sweat (Under Armour, 2012). ―There has to be something better,‖ he believed (Under Armour, 2012). That statement soon launched the performance apparel industry (Under Armour, 2012). That statement also became Under Armour’s generic strategy, which was to develop a better product than there was in the market. While Plank was perfecting his t-shirt after he graduated, he needed funds to launch his apparel line, so he maxed out his credit cards to the tune of $40,000 and set up a company in his grandmother’s basement in Washington, DC (Under Armour, 2012). In 1996, Kevin Plank founded Under Armour (Funding Universe). One year later, he made his first team sale to Georgia Tech, after which other major Division I teams followed in droves, along with 26 NFL teams (Under Armour, 2012). Under Armour released several apparel lines with each one having been designed for a specific purpose (Funding Universe). ColdGear was for harsh winter weather (Funding Universe). TurfGear was for artificial turf protection (Funding Universe). AllseasonGear was for any season (Funding Universe). StreetGear provided hats, visors, and wristbands (Funding Universe). In 1999, Under Armour had sold more than 250,000 pieces of gear, outfitted eight MLB teams, almost two dozen NFL teams, four NHL teams, and twenty-four NCAA teams (Funding Universe). Sales had topped one million for the first time (Funding Universe). Due to outfitting the new XFL football league in 2000, Under Armour gain exposure which led to Under Armour gear being sold in 1,500 retail outlets (Funding Universe). Under Armour was named Sporting Good’s Business Apparel Supplier of the Year and a Sports Authority Victor Award for the best New Product Launch in 2001 (Funding Universe). Over 2,500 retail stores began to offer Under Armour gear in 2002 (Funding Universe). In 2003, Under Armour launched its first television commercial (Under Armour, 2012). It included a rallying cry for athletes, Protect This House (Under
Under Armour Case Study Armour, 2012). Under Armour also launched the Women’s Performance Gear product line in 2003 (Funding Universe). Under Armour opened its first retail location in Annapolis, Maryland in 2007 (Mui, 2007). In 2009, Under Armour and baseball Hall of Famer Cal Ripken Jr. formed an alliance under which Under Armour gear would have significant presence at several venues and events under the auspices of Ripken Baseball (NYSportsJournalism.com, 2009). In 2011, Under Armour became the official supplier of performance footwear for Major League Baseball (MLB.com, 2011). In 2013, Under Armour became the official gear provider for USA gymnastics for the next eight years, including the 2016 and 2020 Summer Olympics (Korman, 2013). Under Armour’s strategic alliances with major sports organizations allow popular athletes to promote their gear, while at the same providing quality performance gear to the athletes who will promote the gear to other potential customers because the gear is highly reliable and effective. ―Elite athletes and teams from virtually every sport you can imagine—like Cam Newton, Tom Brady, Brandon Jennings, Lindsey Vonn, Bryce Harper, Michael Phelps, Natasha Hastings, Lauren Cheney, the Welsh Rugby Union, and many more—proudly wear Under Armour Performance gear. (Under Armour, 2012)‖
Business and Corporate Level Planning Under Armour’s primary business activities revolve around the development, marketing and distribution of branded performance apparel, footwear and accessories for men and women both. They engineer moisture wicking fabrics and provide a high performance product to their customers. They are focused on their approach and have differentiated giving them a competitive market advantage. As far as business level planning goes, Under Armour is focused on selling to customers primarily for athletic use, fitness and outdoor activities. As stated in their 10-K for fiscal 2012, they seek to do this by building brand equity and by positioning their product within consumers’ mindset by establishing the idea of the product being advantageous for athletes’ performance.
Under Armour Case Study Under Armour’s organizational structure includes executive management, making all the strategic decisions, manufacturing department that is comprised of purchasing, procurement and inventory control. In addition they have a Product Development team, a marketing team and a finance team. Since Under Armour has a very keen focus to establish brand equity and to provide their customers with a superior product, they invest heavily on product design and development. The products are manufactured with technical fabrications by third parties and are developed with joint forces of their product development team. They can boost their corporate structure and make their organization even more powerful by vertically integrating with yarn and spinning companies.
Under Armour’s strategy of developing a premium quality product has obliged them to conduct research and development and they have developed trademarks and other intangible assets internally. They own numerous patents and trademarks in multiple countries and as of fiscal 2012; their intangible assets are valued at $4.48 M. Figure 6 points at UA’s growth trend compared to some of their biggest competitors. Nike, Adidas, Columbia are all industry giants, but as we can see UA has a stable revenue trend, signally sustainable growth. Stable and growing revenues means less volatility in their earnings, this is very good from a strategy point of view as UA can lure investors to bring more money into their company. Their marketing and promotion strategy focuses on providing and selling their products to athletes and high-school, collegiate and professional level teams. They have executed this strategy through outfitting agreements, professional and collegiate sponsorships, individual athlete agreements and by providing and selling their products directly to team managers. Subsequently, their products are noticed on fields giving them exposure to wide
Under Armour Case Study audiences. Under Armour maintains an active presence online, on TV, in magazines and at live sporting events as well. Under Armour’s vision is to grow in this industry through brand awareness and brand equity and to establish themselves as the prominent, high performance sport’s wear brand. Also, by allowing companies like Nike, Columbia etc. to use their patented technology, they can earn royalty. Their current strategy is in alignment with the balanced scorecard method, and can ensure that we grow sustainably and profitably. Under Armour’s primary long-term strategy is to grow their business domestically and internationally, and they aim to achieve this by bringing in more revenue. They are trying to accomplish this by continually making improvements to their products by research and development and by positioning their products as high quality, premium athletic and sports apparel through increased use of marketing and promotion strategies, sports sponsorships, endorsements etc. Their decentralized corporate structure allows every department within the organization to come together and pitch ideas that are in the best interest of the company. Since UA does most of its manufacturing overseas in an effort to have sustainable wealth creation and enjoy economies of scale, it is imperative that their strategy includes streamlining the supply chain function by incorporating concurrent engineering.
Brief Summary of the Company Situation in their Competitive Environment, Issues they Face and Clear Problem Statement to Analyze It all started with the creation of a t-shirt that would be moisture wicking, affordable, lightweight, helpful to every individual athlete’s body type, and their training environment. Current founder and CEO, Kevin Plank realized that cotton garments were unfit for sports, and did not have the proper wicking sweat off the athlete’s body. Plank was frustrated with having to continually change his cotton t-shirt during games and practice and wondered why no one had created a much-needed alternative (Thomaselli, 2001). Due to the feeling of the uncomfortable cotton, Plank set out to develop next generation shirts that would remain drier and lighter. In phase 3 of the strategy-making process, it involves entrepreneurship. Plank searched for opportunities for athletes to wear clothes that would make them feel comfortable in. He created a new category of
Under Armour Case Study sporting apparel called performance apparel, and from there he built Under Armour. In 2000, Under Amour tried entering the market competing against well-known brands such as Nike who owned 21% of the athletic appeal market including 32.5% of the shirt and miscellaneous tops market. Adidas was second in the market share of 13%. Adidas also dominated the boys and girls appeal holding an 18.6% market share for boys and 17.1% for girls. At that time, some challenges UA faced were their minimal marketing budget. Due to the lack of financial resources, UA employed various marketing initiatives aimed at developing its corporate brand images and reach out to its target audiences. Since UA lacked the financial resources of its competitors, they needed to create inexpensive marketing strategies that not only aligned with UA’s overall brand strategy but also help it rise above the clutter in the market. The initiatives UA came up with at that time was athlete endorsement and product seeding, word of mouth marketing, popular culture, and product placement. As Kotter said, ―Companies manage complexity tint by planning and budgeting-setting targets or goals for the future (typically for the next month or year), establishing detailed steps for achieving those targets, and then allocating resources to accomplish those plans. By contrast, leading an organization to constructive change begins by setting a direction developing a vision of the future (often the distant future) along with strategies for producing the changes needed to achieve that vision‖ (What Leaders Really Do, 2001). Although Plank struggled in budgeting in the growth stage of the company, he was able to find alternatives to market his product to the market. ―We’re not taking this lying down… It’s a war,‖ Warns Ken Barker, director of apparel at Adidas America (Salter, 2005, p.70). In a matter of 5 years since UA’s entrance into the athletic market, competitors such as Adidas were already feeling the heat and threat from a young and up-and-coming Under Armour brand. At that time, UA dominated the performance apparel category with 75% of the market share. The company growth went from total revenue from $115.4 million in 2003 to $607.7 million in 2007 showed the rapid success of this young company. As companies around the world transform themselves for competition that is based on information, their ability to exploit intangible assets has become far more decisive than their ability to invest in and manage physical assets (Kaplan and Norton, 2007). UA strive for innovation on a daily basis, creating and letting the product develop the brand was exactly what UA did in the
Under Armour Case Study beginning to get them to where they are at today. UA also infused their products and brand image in visual media forms, including several popular television shows and motion pictures as shown in appendix 14. Some notable movies and television shows include Fantastic Four, Dodgeball, Million Dollar Baby, The Apprentice, MTV’s The Inferno, and Real World Road Rule Challenge. Another issue that UA faced would be entering the female athletic market. UA’s female line was introduced in 2004, which made up 25% of their total apparel sales. Competition was still present especially with fast growing female brands like Lululemon Athletica, and Gap Inc.’s Athleta. To this day there are zero women on either UA’s board of directors or its senior executive team. This could be a reason why UA had trouble marketing for a female target due to its own corporate makeup. Unlike their rival Nike, they have two on its Board of Directors and two on the top executive team, hence making Nike a much more diversified company. Lastly, UA faced inventory issues in 2012. The company closed their stocks at $76.40 in the beginning of 2012, and company inventories grew by 63% from 2011 (Andrejczak, 2012). UA’s goal is for inventories to grow more closely to revenue. If inventory grows at a much faster pace than sales over several quarters, it can raise a red flag for investors. If the product does not sell well, the company will put the product on markdown or discount to clear out inventory, which pinches profit.
Key Leadership Kevin Plank is the founder and Chief Executive Officer of Under Armour (Under Armour, 2012). ―Now 40, he was most recently ranked #3 on Forbes' "Most Powerful CEOs 40 And Under" and #12 on Fortune Magazine's prestigious "40 Under 40" list, which accounts for influence, power, and future potential. (Under Armour, 2012)‖ Plank is the key leader at Under Armour. His philosophies and strategies caused Under Armour to grow from a $16,000 company to a $1 billion company. One of Plank’s philosophies at Under Armour is ―No Loser Talk‖ (Mednik, 2010). Plank believes that losers blame things on external factors and that leaders take responsibility for mistakes and know that the burden is on them to adapt and change (Mednik, 2010). Successful leaders blame themselves when things go wrong because
Under Armour Case Study they are the ultimate decision makers. Employees simply carry out their management’s and leader’s decisions. Having a constant offensive strategy, instead of a defensive strategy, is what will make a company success, according to Plank (Mednik, 2010). Continuous innovation and reinvention is the key for success (Mednik, 2010). Plank is always challenging himself and his company. His greatest philosophy for Under Armour is ―We have not yet built our defining product‖ (Mednik, 2010). This philosophy is meant to show that even though Under Armour has made several great and innovative products, it still has not made its ―WOW‖ product, its iPhone. This philosophy shows that Plank is a courageous leader. Continuously challenging himself and not giving up and striving for that perfect product is what makes him a great leader. Plank’s actions and beliefs make him a transformational leader. According to Bernard Bass in a 1990 Organizational Dynamics article entitled ―From Transactional to Transformational Leadership: Learning to Share the Vision‖, ―superior leadershiptransformational leadership- occurs when leaders broaden and elevate the interests of their employees, when they generate awareness and acceptance of the purposes and mission of the group, and when they stir their employees to look beyond their own selfinterest for the good of the group.‖ Transformational leaders are charismatic, inspirational, and intellectually stimulating to their employees (Bass, 1990). Figure 13 shows what makes a transformational leader. Plank is intellectually stimulating and inspirational because he constantly challenges his employees to innovate better, more technologically advanced products. He promotes their intelligence and his expectations of his employees are high, so that they may design the product that will define the Under Armour brand. Plank is charismatic because he takes responsibility for his actions. As stated above, Plank has a ―No Loser Talk‖ policy at Under Armour. As a result of his motto, Plank’s employees respect, trust, and value him. This also goes to show that Plank has the qualities of a Level 5 Leader. A Level 5 Leader is an executive who‖ Builds enduring greatness through a paradoxical blend of personal humility and professional will‖ (Simpson, 2013). Plank is a highly knowledgeable executive with good work habits who collaborates with other employees
Under Armour Case Study to pursue the vision and mission of Under Armour and is willing to admit when he is wrong.
Types of innovation and Evidence of Entrepreneurship As CEO, Kevin Plank has created and transformed Under Armour from a sporting apparel business operated in his grandmother’s basement to a publicly traded company. ―WE HAVE NOT YET BUILT OUR DEFINING PRODUCT‖ is printed above the doors of Under Armour’s product design offices. The company has transformed compression clothing, but the fact of the matter is that its competitors sell similar products. Plank understands that his company is still young and has time to grow. Michael Porter and Mark Kramer published a Harvard Business Review article in 2006 stating that successful corporations need a healthy society an that education, health care, and equal opportunity are essential to a productive workforce. This holds true in UA case, Plank always strives for everyone to achieve success. In 2009, Stephanie Mehta described Plank of having an analogy that Under Armour, at age 16, is not unlike a 16 year old. ―It’s a good kid, but still screws up sometimes.‖ By the age of 21 Plank reasons the kid will be more mature. The CEO has a continuing vision of the company improving across time to achieve success. He states that "Best merchants are the ones who dictate cool, not those who try to predict it!"(Mehta, 2009). UA has two major competitors of Nike and Adidas that are in the sports apparel industry. UA needs to stay creative to separate themselves from the others to be able to compete. Plank is a strong entrepreneur in that he takes advantage of his opportunities. According to Under Armour’s website in 2013, the company’s vision is to ―Protect the UA Culture, But Embrace Change. Evolve and innovate. We’re a different company every 6 months, and we can’t use culture as an excuse to not change product, process, or people.‖ The company continues to grow in many ways and as stated previously has not built their defining product yet. Through innovations and strong leadership UA plans to do just that. In the hallways of the headquarters a treadmill stands with a digital camera along with software that can create information on how the body behaves in motion. The company uses the latest technologies and innovations to try and further itself from the competition. To design shoes, Under Armour uses 3-D technology to save time and
Under Armour Case Study money as oppose to an actually physical shoe. The CEO states that ―we try to be on the bleeding edge, we’re willing to look at wild, out-there ideas if they can make our products perform better‖(Mehta 2009). Under Armour uses advanced design software, material engineering, manufacturing techniques to help their products and company grow. As a result we can see in Figure 10 in the appendix, according to the Under Armour Annual report for 2010, there has been an increase in the net revenues from footwear. The new technologies that UA is using to help develop their products are leading to an increase in net revenues, which is a sign of success, reference figures 9 and 10 for further results. In a 2009 Harvard Business Review article written by Steven Prokesch, he states that change is most effective in a company when everyone goes through a program together with a consensus view of the opportunities and problems. A company needs a strong leader when it is going through change, as in the case of UA. Plank is helping guide the company in the direction he thinks is best for being able to find their defining product. John Kotter, who also wrote another HBR article, states that more change will demand more leadership (2001). Plank is taking his coming in the right direction by expanding the functions of his company as revenue from footwear proves just that.
Global Presence and Effects Under Armour maintains a strategic global position for performance, moisture wicking fabrics. Large majorities of their sales revenue come from within North America; however, their overseas operations account for five percent of their total revenues.
One of their objectives is to expand their market share globally in the high performance fabric market. UA sells in China and certain European counties. They also use third party licensees’ to sell products in other foreign countries. Their main strategy to grow over
Under Armour Case Study seas would incorporate increasing their market share by better brand awareness through marketing and promotion and also through the expansion of their wholesale distribution chain. Also, most of their production is done over seas in an effort to cope up with rising costs here in the United States. Because UA uses foreign suppliers and manufacturers’ it is crucial that they maintain an exceptional relationship with their vendors to avoid inventory control problems. One of their main strategies should focus on streamlining their supply chain and international distribution link to suppress any market risks associated with inventory, raw and finished. Also, in order for them to have seamless operations, it is essential that they forecast demand efficiently and avoid building up too much or too little inventory. Since virtually all production is done over seas this would help them keep their freight costs low.
Since some of the revenues generated by UA are in Canada and Europe, Foreign currency translation might have an impact on their business. As shown in the excerpt from the 10-K above, in fiscal 2012 UA incurred approximately $ 3M in foreign currency translation, this is somewhat material to the company and these losses could be avoided if foreign currency swaps are used.
Ethics - Examples of Social Consciousness/Corporate Social Responsibility ―Help Others. Volunteerism and serving others are vital parts of our mission‖(Under Armour, 2013). UA has a strong sense of social consciousness embedded in its roots. Social responsibility is an organizations obligation to make choices and take actions that will contribute to the welfare and interests of society and organization, reference figure 12 for the five components of socially responsible business behavior. This means to be a good corporate citizen while the issues can be ambiguous with respect to right and wrong. Under Armour has helped a small town in Baltimore regain its image while boosting the local economy. When the company was first expanding, they purchased the Tide Point complex to house over 4500 employees in the Baltimore area.
Under Armour Case Study Plank has stayed faithful to his Maryland roots by helping a once economically devastated city boom by housing his company there. He states ―the DNA of this town is part of what has built Under Armour‖(Mehta, 2009). Plank is a firm believer of helping others and especially helping his own. UA has played a huge role in the overall Baltimore economy and as the company grew so did its heart. According to Michael Porter and Mark Kramer, corporate social responsibility can become a source of tremendous social progress, as the business applies its considerable resources, expertise, and insights to activities that benefit society (2006). Corporate social responsibility is a company’s duty to operate in an honorable manner, provide good working conditions for employees, be a good steward of the environment, actively work to better quality of life in local communities where it operates and society at large. The Under Armour website in 2013 listed alliances to the following charitable organizations that include Power in Pink Program, UA FREEDOMTM, initiative, Wounded Warrior Project, Baltimore Police, Catalyst line of UA Green products, Sandtown Habitat for Humanity, Habitat for Humanity, Big Belly Solar, Parks & People to name a few. Social responsibility plays an important role for Under Armour’s brand and culture. According to underarmour.com, there is also a list of ―legacy partners‖ which are supported; The Boomer Esiason Foundation, The V Foundation, Ronald McDonald House Charities. An effective management team needs to match a company’s social responsibility strategy to its core values, mission/strategic vision, and overall strategy. With the combination of socially responsible endeavors, a company elects to pursue defines its social responsibility strategy. The company provides donations to its charities through clothing and monetary assistance. UA is also conscious of its own employee’s well being by abiding by all the labor laws, paying fair wages, and creating a safe and fun work environment. According to Kotter, change is the function of leadership and being able to generate highly energized behavior is important for coping with the inevitable barriers to change (2001). The behavior of UA employees has helped the company succeed and grow while its social efforts have helped those less fortunate. The management team has been able to create opportunities for UA to give back to its community and charities. Prokesch states that management development programs that focus on teaching and
Under Armour Case Study inspiring individuals to apply new approaches have a fundamental flaw: If other members of an individual's team have not taken the course, they may resist efforts to change. This has not happened in UA’s case because everyone sees the importance of being able to give back. Plank has instilled the company’s strategy in its employees to create unity.
Responsible Wealth Creation UA earned $50.1 million or 47 cents per share in the three-month period ending on December 31, 2012. Their revenue rose 25% to $505.8 million in the quarter. Plank says, ―Our ability to bring practical innovation to our consumer across a board range of product drove our 25% net revenue growth in 2012 and positions us well for 2013 and beyond‖ (Bloomberg BusinessWeek, 2013). UA projected at least an increase of 20% to 21% sales growth to anywhere from $2.20 billion to $2.22 billion for the year. This shows the company itself is healthy financially. Since UA strive for innovation, Plank says the company is on pace this year to double revenue from 2010 levels. It is also a goal they established to their investors in 2011. Mergers and acquisitions is a strategy that a corporate objective have to achieve by either acquiring a firm to gain more market share and create a more efficient operation, expand a firm’s geographic coverage, extend a firm’s business into new product categories or international markets, or gain quick access to new technologies. There are currently no mergers and acquisitions for UA, however back in 2009, it was suggested Nike should acquire Under Armour because at that time purchasing UA would have benefited them in profit. Nike tried to duplicate many of UA’s top products such as Cold Gear and Heat Gear, but had little success in taking away any form of market share from these products. UA has been dominating the younger generation market in the recent years, which in a long run-term value for Nike, this can be a threat for the company. As shown on appendix 15, this is a strategic choice made at a corporate level strategy. According to Kanter, one of the concepts she mentioned was that new companies quickly start envisioning and building the future. In a matter of couple years, Plank was able to take Under Armour to a level that is as notable as Nike. It was able to catch the attention of consumers who are brand loyal to Nike. If Nike did merge with
Under Armour Case Study Under Armour, they would have become dominate in the athletic market. (Mergers that Stick, 2009).
The purpose of strategic alliance is to acquire or improve market access via joint marketing agreements, pursue join sales or distribution, gain economies of scale in production, collaborate on the design of new products, and form technology licensing agreements. In 2011, UA spent $62.6 million to purchase the full Tide Point complex and would soon build a 20,000 square foot retail store there. What sets Under Armour apart from other competitors are their innovative products that are made hard to imitate. Products such as the Cold Gear and Heat Gear gave them the competitive advantage in the market. UA had the access to resource and capabilities they need to create economic value. In the article, Simple Rules for Making Alliances Work, there were five principles mentioned. Principle 3 would be the best example for strategic alliances. ―Instead of trying to eliminate differences, leverage them to create value,‖ (Hughes and Weiss, 2007). Since UA do not have any female management in the higher positions, they should have company allies so they have key differences they want to leverage.
Engagement and Plan Alignment & Corporate Culture ―To make all athletes better through passion, design and the relentless pursuit of innovation.‖ This is the powerful brand mission and vision stated on the UA website in 2013. As the company moves forward to be a strong force in the apparel market, the mission needs to be implemented by all of its workers by being strong believers. The corporate culture of the company helps UA fulfill their strategy. The UA website states that ―Our CULTURE is FAST, HARD-HITTING, STRONG, PASSIONATE, DYNAMIC, UNIQUE, SPECIAL – it’s the ultimate experience.‖ To be able to implement and execute a strategy the entire management team and employees must take part cohesively. The top level managers like Plank need to lead and orchestrate major initiatives while the middle and lower-level managers need to keep track of their specific areas, and all employees need to perform their roles daily. The goals of the strategy implementation process are to unite the entire organization behind the brands strategy, generate commitment, make sure activities are done at first-rate execution, and to fit the
Under Armour Case Study organizations operations to the requirements of the strategy, reference figure 11 for the eight components of the strategy execution process. According to Porter and Kramer, any business that pursues its ends at the expense of the society in which it operates will find its success to be illusory and ultimately temporary (2006). The company’s strategy has led to its success over the years because UA has stayed faithful to its strategy. The corporate culture helps the company enhance their employees’ moral and company strategy. Daniel Roberts mentions in his 2011 article, that one worker, Erin Wendell, states that ―working here is like being part of a sports team.‖ The headquarters if referred to as the ―campus‖ and co-workers call each other ―teammates.‖ In the cafeteria the food is color coded green (go) and red (stop) to encourage healthy eating. The CEO himself has a discomfort of wearing a suit and tie to work. He firmly believes in staying fit and once was quoted saying "We need to stop making wide-body seats on airplanes, stop accommodating that, because it's not healthy"(Roberts, 2011). Kotter states that good management brings a degree of order and consistency to key dimensions like the quality and profitability of products (2001). In Under Armour’s case, the level of commitment and leadership from the CEO has transcribed to its employees. When asked about his opinion on what a leader does Prokesch says that they "Drive change and develop other leaders‖ (2009). Through his leadership Plank has been able to lead his company through times of change and creating a corporate culture that has been effective. To build a strong and effective culture there needs to be implicit boundaries set. The effective culture must be cultivated, encouraged and fertilized by everyone in the company. Culture acts as a means of reducing monitoring costs. To maintain an effective culture there needs to be storytelling, and rallies by top executives as commonly done by Plank.
Wild Card Under Armour can enter the Military Clothing Manufacturing Industry. According to a report by Bizminer, currently only nineteen firms operate in this industry. Under Armour, with the help of its innovative development team, can penetrate this market by evolving flame resistant and moisture wicking active and non-active combat wear. UA has an established reputation that would allow it to mature and flourish in this
Under Armour Case Study market without much hindrance. Market volume for 2011 was well over $ 105 M for U.S only. If UA is able to enter this market it would help them boost their financial performance, mature further in the high-performance fiber market, and also help the company grow domestically because sales to the U.S Military require production to be done here in the U.S. As seen from Bizminer industry report, the average annual sales for the second quarter of 2012 was reported at well over $30M, from an external analysis view point even a ten percent market share in this market would put UA in a financially stronger position. Entering the Military market means the benefit of having relationships with militaries of all U.S allies, the NATO as well as the federal and municipal law enforcement agencies. This is a huge market and if exploited could prove very lucrative. ―Restoring American Competitiveness‖, that appeared in the Harvard Business Review in July 2009 talks about the need to stimulate our domestic manufacturing industry to bring back jobs and have a competitive edge by domestic production. Domestic production would also help UA take advantage of the DPAD (Domestic Production Activities Deduction) and attribute further towards sustainable wealth creation.
Internal Analysis Under Armour, as we all know, is part of a very competitive market. They try to attack the sports industry from all different directions, but all of the strategies have to come from the internal environment within the company. Internally, it is safe to say that Under Armour is a very sound company. They know what they want to be good at and they know where they want to be in the market. They are always looking for new ways to be more innovative and how to beat out their competition, which is one of their major strengths. The innovation part of Under Armour is one of their biggest strengths because without it, Under Armour would not be able to compete in the market. The sports market is an extremely competitive market mainly because of the leading top brand competitors like Nike, Adidas and Columbia Sportswear (UA Competitors, 2013). Another strength that Under Armour can carry with them is the brand that they have given themselves (Management Paradise, 2013). Under Armour has built up that loyal brand that their consumers can rely on. When thinking of ―cold gear‖ winter wear,
Under Armour Case Study the first thing that pops into most people’s head is Under Armour. That is the product recommended to wear on those cold game days. Under Armour wants to make sure they get it right the first time. This is why their customers keep buying from them. This is how Under Armour keeps its customers coming back to them. By making sure that they put out the most superior product, they can build up that loyal dependable brand name that will keep people coming back to buy more. Although Under Armour has not been around as long as its competitors, one can see that the company has built up a reputation and is very trusted throughout the industry. One can see this by taking a look at Figure 17 below. This chart shows us the sports apparel market in the U.S. Of course Under Armour has many strengths. One can see this easily through the many successes that the company has had but one thing we don’t hear about are the weaknesses. Some of the weaknesses that Under Armour needs to work on are that Under Armour prices their products high and they are primarily male focused. Under Armour has the ability to price their products high because of the quality of product that they put out but this might take away a lot of potential business. Take for instance the current economic position right now. Currently, the U.S. is not doing as well as it used to. With this being said, many people are looking at ways to save a quick buck so they might buy the generic brand rather than spend the extra $10-$15 to buy the Under Armour product. When comparing strengths and weaknesses to its competitors, they are very similar. All of the companies have built up that reputation of being the best and when thinking of top sports sponsors or sportswear, these are definitely the names at the top of the list. They all have built up the respectable reputations with their customers and defiantly are very innovative in the industry. As far as weaknesses go, Under Armour has a disadvantage of appealing to women. When watching the commercials for Nike, they will at times have members of the Women’s National Soccer team in the commercials representing the brand. When watching the Under Armour commercials, it is mostly football players that the audience sees. This is a weakness for Under Armour, however, at the same time, they can use this as an opportunity to open a new door to hit that market. The value chain analysis is something that the company looks at and relies upon to ensure that the production of the company continues to improve in order to help expand. When talking about inbound logistics, they have the right guy for the job. Jim
Under Armour Case Study Calo is their supply chain manager and he has got the logistics down to a science. When Under Armour first started out, they wanted to look for a garment manufacturer that would not need all the time in the world to deliver the products to Under Armour. They cut a 98 day lead time down to a 30 day lead time in no time. The ideas the Jim Calo brought to the table were the perfect ones that helped put the company in the position it is today.
"We wanted to reduce that to 60 days, then 45, and ultimately 30," Calo says. So early this year, he and his team started placing orders with that supplier weekly instead of monthly. With smaller, more frequent orders, the garment maker - and, in turn, the fabric mills and trim manufacturers he relies on - can deal more efficiently with customer demand fluctuations.‖ (Jim Calo, 2007)
This is a great example of something so simple that helped create smoother operations and helped the company grow. When talking about operations, Under Armour does outsource most of them. They outsource to Asia, Mexico, and Central and South America (Who Makes Our Products, 2013). It helps keeps costs down but at the same time they are helping create opportunities for others to work. With their outbound logistics, Under Armour likes to have a 3rd party take care of that as well. Under Armour does deal with the sales and marketing directly though. They want to have direct control over that so they control where their products are being marketed more heavily and how they are directing the product to the consumer. One thing that Under Armour has been able to do though is perfect their customer service. They want to make sure that customers are happy with the product and will make sure that he/she is content so that they will return. They are definitely living up to their vision statement as far as trying to be the best performance apparel manufacturer and distributor there is. A more detailed version of the value chain can be found by looking at Figure 18. When applying the VRIO framework to Under Armour, one can truly see the inside of the company. Is there any value to Under Armour? Yes, there is a lot of value there. The reputation that Under Armour has worked towards has helped them get
Under Armour Case Study this value. Because of the name they have, people are willing to go and drive distances to purchase their items. They have touched the hearts of the consumers and showed them that the product they put out is worth every penny. The products that they offer are not rare though. They are not rare because there are many substitute products and much competition in the performance apparel market. With this being said, it is easy to imitate a product that Under Armour manufactures but it is not easy to imitate the reputation that they have. The products that Under Armour produces are easy to imitate because the materials needed to produce this type of apparel are easily attainable. The reputation however, is not easily attainable. Not many companies overall can say they have such customer loyalty. Within their organization, they give out incentives. This helps performance, not only to their employees, but also to their customers. By buying a product from them, people know that they are buying a high quality piece of clothing and it is seen as an incentive to the customer base as well. Management controls the operations of Under Armour, which also works in their favor. The reason why the VRIO framework is implemented is because it helps management recognize the sources of which the company has competitive advantage against. When they do not have a competitive advantage in one area, they strive to work for it in order to gain the competitive advantage because it will increase business and performance. Under Armour has the tools to be one of the most successful companies and it all started out when they formed themselves as a company. In the popular Harvard business review article titled ―Mapping Your Competitive Position‖, it informs its readers how a company should truly define the market that they want to be in. It starts off by saying ―First, identify the consumer needs you wish to understand.‖ (D’Aveni, 2007). This is very important because without identifying this, Under Armour would not have been able to meet the customer needs as well. They defined the market that they wanted to be in and from this, they defined the specific customer needs that they wanted to target and market for. So far, it seems to be working out very well for them.
External Analysis The external analysis is an essential key to the growth and continued success to Under Armour. It is key to understand the outside environment and how to compete with
Under Armour Case Study the competitors. There are many ways in which an organization can see how they can compete in the market. One of these ways is to complete a porter’s five forces model. This will help break down the industry a business is in and help paint a picture on what is needed to be successful in that industry. Not only is it essential to complete this model, but it is also essential to understand that international opportunities that can arise. There are five parts to the Porter’s five forces model. These five parts consist of threat of new entrants, threat of substitute products, competitive rivalry within the industry, bargaining power or buyers, and bargaining power of suppliers. To start off, lets talk about the threat of new entrants into this specific market. When thinking of the sports apparel industry, three names come to mind right away. These three names are Under Armour, Nike, and Adidas. It is important to establish what separates these three companies and how one is better than the other. As far as the threat of new competition arising from a new company is very low. Although it is easy to attain the materials to manufacture such products, being able to compete right away with a company like Under Armour is virtually impossible. It takes years to build up the reputation that a respectable company like Under Armour has achieved. Moving on to the threat of substitute products, threat is high. The switching cost to a consumer is low so the threat of substitutes is an industry is always high. It is Under Armour’s goal to make sure that no one will be switching from using their products. This is why they are always looking for ways to improve upon their already made products and see how else they can satisfy their customers’ needs. Competition is always around in an industry like this. Businesses are always looking to sign big time endorsements with well-respected athletes. This is what helps Under Armour reach or surpass those expected sales forecasts. Signing a respected athlete like Tom Brady would spike up sales in the football category of sales. Since he is one of the best QB’s of all time, many people who might see him as an idol might see what he is wearing and say ―Man, I need that. If Tom Brady has it, then it must be good.‖ This is one thing that Under Armour tries to do. The bargaining power of buyers is low in an industry like this. When talking about consumers, there really is no wiggle room when shopping for sporting apparel. The prices are set at the stores and that is what the customers are expected to pay unless there is a sale of course. Obviously there are discounts for people who are a part of teams that are sponsored by Under Armour but for
Under Armour Case Study the average Joe, the prices are set and are competitive with the competitions prices. The bargaining power of suppliers is also low. There are many people out there that can produce the raw materials needed to be in an industry like Under Armour is. This is helpful because it helps keep costs low because suppliers know that it is easy for a company to switch to a new cotton provider if need be. There are many things that go into determining all of this (Simpson). By looking at Figure 19, one can see how extensive the research for a model like this is. Being in an industry like Under Armour is, it is necessary to be competitively intelligent. What this means is that as a company, they have to know the ins and outs of their competition. Companies have to try to prevent any surprises that might arise. They want to make sure they are always prepared to compete, which also means that they have an upper hand on your competition. In chess, players want to predict their competition’s next move. With this, it will help because maybe they can put out a new product before their competition does. The sports apparel industry is very large and there is always new products being introduced and old products being improved. It is their job to make sure that they still have the better product. One can achieve this in one of many ways but what the biggest and most important factor in this is knowing the strengths and weaknesses of the competitors. This helps because they can play to their weaknesses. How one can attain this is through research. That is why R&D exists. This helps with the production phase. It helps make sure that a company puts out a superior product than their competitors. To gain competitive intelligence does not imply on spying. This would mean that the company is partaking in illegal activities to better themselves. What competitive intelligence means is that information is being analyzed. It is being analyzed to the point in which they know they can beat out their competitors because they are better (Simpson). Even though there are many things that Under Armour can control, there is still many things that they cannot. Many of those having to do with the external environment. Many threats and opportunities may arise from this. Some of the threats that can arise are a recession like they are experiencing now and the threat of substitute products. These two can play a major role in the performance of Under Armour. The recession has to be the biggest threat just because it affects everyone financially. A recession hurts not only
Under Armour Case Study the consumers, but the manufacturers as well. If no one is buying, then manufacturers have too much inventory in stock. Recently, people have become more conscious on what they spend and where they spend it. This is because they find it harder to pay for things seeing as how the economy has gone down the gutter the past couple years. Yes, it is making a recovery, but there is still some time to go. As for substitute products, they’re always going to exist. This is because they are geared towards the people who are financially conscious and are not searching for a specific brand. This is especially a threat during the recession because many people might switch to a substitute to save money (Management Paradise, 2013). Opportunities arise in the external environment as well. There needs to be an understanding when these opportunities arise. One needs to know what to do when they arise. Some examples of opportunities that might arise in the industry with Under Armour are potential global expansion, targeting a new segment, and a recovery in the economy. These can all play a big role in the success of Under Armour. With the ability to expand globally, it gives Under Armour an opportunity to showcase their products in other countries. As of now they have a small share in the global market but maybe by them expanding, they can show people how reliable of a brand name they are and possibly gain many more customers in that process. When targeting a new segment, it helps them hit a niche that they have not had before. It will give them an opportunity to try out products to people that might have never owned an Under Armour product if this never happened. Finally, a recovery is an opportunity for Under Armour to increase sales. It is an opportunity because for the past couple years, the performance is not where it was wanted because of the cautious buyers but since the economy is in a little bit of a recovery now, people might not be as afraid or reluctant to go out and spend the money to get a superior product that Under Armour offers (Management Paradise, 2013). As seen in Figure 20, even with the recession, Under Armour was able to appeal to its customers and steadily increase its revenues each year. When looking at Under Armour, one can see that they are definitely a red ocean strategic business. They did not start a new niche themselves but they went into one with a very competitive environment. They are looking to ―beat the competition, exploit existing demand, and make the cost/value trade off‖ (Blue Ocean Strategy, 2004). It was
Under Armour Case Study hard at first because of all the work that Under Armour had to do to catch up to its competition but they did it quickly and now have a dominant name in the world of performance apparel. By using the many techniques of external analysis such as the Porter’s five forces model, they can position themselves favorably to gain control of the market share of the performance apparel industry.
SWOT Analysis Strengths Under Armour uses high performance and high quality fabrics and offers a wide range of apparel. This is what makes Under Armour a great brand. Customers know that any products they buy from Under Armour will be reliable and effective. Innovation is one of Under Armour’s greatest strengths. Innovation is what causes Under Armour to have the latest and most advanced performance apparel on the market. This is also why Under Armour has loyal customers. Customers return to Under Armour because they know what they are going to buy is the best of the best. Under Armour’s marketing strategy is very effective. Under Armour has trendy and modern ads that appeal to its younger market segment. In one of Under Armour’s latest commercials, a woman is seen changing the composition and color of her clothing by simply using a touch screen built into the sleeve of her shirt (Korman, 2013). These kinds of commercials grab attention; thus, it gets viewers excited and want the product. Kevin Plank wants consumers to think of Under Armour as the company that is constantly pushing to find ways to make their lives as an athlete better (Korman, 2013).
Weaknesses Under Armour’s high prices decrease its customer base. Its premium pricing does make the brand look more prestigious, but it could hinder sales. Under Armour is losing customers to cheaper priced brands. While very active athletes may be willing to pay the premium pricing, the average runner may not be so willing. The average runner may not see the advantage of wearing Under Armour’s innovative and reliable performance gear because of the high price.
Under Armour Case Study Under Armour is primarily male-focused. Under Armour markets, sells, and innovates for males primarily. Males are Under Armour’s number one consumer segment. By focusing on males, Under Armour is reducing the number of female consumers it can have because it spends less on marketing to them. Women’s apparel is a weakness for Under Armour. ―The general view is Under Armour stinks at women’s. (Townsend, 2013)‖ The problem that Under Armour has with women’s apparel is not the its performance or design, but its distribution of the apparel (Townsend, 2013). ―Now it’s a matter of getting the brand in front of more women. That’s where the new store, and a second location later this year, may help. The overwhelming majority of Under Armour’s products are sold at such big boxes as Dick’s Sporting Goods Inc. and Sports Authority Inc. Those aren’t common destinations for women and neither are Under Armour’s 100 outlet locations and five fullprice stores. (Townsend, 2013)‖ Under Armour’s marketing strategy can also be a weakness. Under Armour’s commercials feature athletic and fit men and women. This can cause the ―average Joe‖ to become disinterested in Under Armour’s advertising. Since the ―average Joe‖ is not as fit or active as the athletes featured in advertisements, they assume that Under Armour gear is only for fit and active people.
Opportunities Seniors and women are both major opportunities for Under Armour. As more and more baby boomers start retiring, there will be an opportunity for Under Armour to gain this consumer segment. In recent years, seniors are starting to live more healthy lifestyles. Seniors are becoming more active every day. Women are becoming more active in sports, both professionally and recreationally. The women’s athletic apparel category is about 10 percent larger than the men’s in the U.S. (Townsend, 2013). Seniors and women are an excellent opportunity for more sales for Under Armour.
Under Armour Case Study The recovering economy can provide a great opportunity for Under Armour. Consumers will have a greater amount of disposable income to spend on performance gear. A greater international presence is another opportunity for Under Armour. Not only does international expansion provide a wider customer base, it also provides financial stability. When one country is in economic distress, other countries may not suffer from the same distress, thus making international expansion common sense. ―Firms can improve the probability of above normal profits by exploiting the opportunities presented by international market characteristics. (Simpson, 2013)‖ Figure 16 shows what structural responses a company must do in multinational, global, and transnational international opportunities.
Threats The obesity rate in the U.S. is a threat to Under Armour. People that are obese are unlikely to buy Under Armour apparel. This leads to decreased sales and profits and a decreased customer base. People that are obese commit little to none physical activity and, thus, do not require Under Armour gear. Competition is another risk for Under Armour. Under Armour’s main competitors are Nike, Adidas, Columbia, and The North Face. All of these companies specialize in either athletic or outdoor gear. Under Armour’s competitors are well known and established brands. Under Armour is currently competing with Nike for a share of the footwear industry. Substitute products provide another threat for Under Armour. Substitute products inhibit Under Armour from raising prices because consumers can switch to another product. Under Armour’s competitors are the companies that create Under Armour’s substitute products. Adidas competes directly with Under Armour’s performance gear. Under Armour’s performance can also be threatened by economic downturns, like most industries. Economic downturns cause consumers to have less cash and spend less. Under Armour’s high prices would likely cause consumers to spend less on their gear because they would less disposable income. Economic downturns are part of the economic segment of a company’s macroenvironment. The economic segment affects interest rates, unemployment, and changes in stock market valuations, which all affect a company’s performance (Simpson, 2013).
Under Armour Case Study
Recommendation Sources of Success Under Armour’s success started with the man who created the company, Kevin Plank. Plank’s visions and missions come from his ―prowess as a university of Maryland football player, his entrepreneurial character traits, and, less frequently, his training at the Fork Union Military Academy‖ (Kraft & Lee, 2009). He founded the company and is still CEO to this day. This shows that Under Armour’s successes have been built off of the values that Kevin Plank had back when the company first started. ―Since its founding in 1996, the company has specialized in ―performance apparel‖ that is responsive to changes in body temperature and perspiration as an alternative to cotton-based products‖(Weedon, 265). This material was proprietary in a way that nobody had ever worn it before in sports. Athletes were used to having cotton based t shirts that would get soaked in sweat during games and would ultimately slow down the athlete due to much more weight being added from the sweat. Thanks to Plank, athletes no longer had to worry about the added weight. When Under Armour began selling their products, the sales took off and their success was achieved. Under Armour took the approach by inventing and taking care of a problem in the sports world and it totally paid off. Under Armour’s proprietary fabric can be seen in figure 3. Since Under Armour was so successful in selling apparel they decided to take on footwear and other accessories. The great success of the performance apparel and vision of Kevin Plank allowed Under Armour to enter the market with Nike, Adidas, and other sporting goods who had been in the industry for a long time.
Alternative Solutions 1. Expand Internationally Under Armour is doing a great job running their company, but like all great companies, there is room for improvement. Under Armour’s problem of having allow sales for the first quarter of the year can be solved. The company does not want to take an approach that is going to leave them scratching their heads. They have started to expand internationally but are in the early stages. In April of 2012 they hired former Adidas executive Karl-Heinz Maurath to run its international business (Dreir, 2012). One
Under Armour Case Study alternative solution is for the company to continue to keep doing this but increasing their level of activity on a priority basis. In this solution, they can cater to sports such as soccer, which is played all year long. By developing a campaign around soccer, an international sport, a sales boost is very promising. Since soccer is played all year long, Under Armour can target the ―slow season‖ with campaigns like they have done in the United States to grow sales in the first quarter. They need to pick a player to endorse their brand and help everyone globally understand why they need Under Armour in their lives.
2. Cater to Other Demographics Another opportunity is for Under Armour to target different demographics. These demographics include females and senior citizens. Under Armour has very little presence when it comes to targeting these two. Living a healthy lifestyle seems to be the trend currently. People are eating healthier and working out more often. With this comes great opportunity for Under Armour. Under Armour should create a campaign and products designed to compete with Lululemon, a yoga apparel company. Lululemon is doing very well by reporting a $57.3 million profit and growing revenue by 37% in the third quarter of 2012 (Tucker, 2012). Under Armour can take a page out of Lululemon’s book and design a line that caters to woman such as yoga clothes. Yoga is very popular today and retailers are selling a large quantity of yoga inspired clothing in all outlets. Under Armour has to be careful when developing this line and think about who will be using this. It needs to be in its own category and have a different display that helps customers understand the integrity of their product. The other demographic to cater to is senior citizens. Under Armour can develop a product that is to be worn by older people. As the Baby Boomer’s continue to get older there will be an increased demand in active gear for them. This can range from looser fitting, more comfortable active clothing to a well-cushioned shoe designed to reduce joint pains. By catering to new demographics, Under Armour can increase their sales and make them stable all year long. Imitating may be an option when looking for ways to grow sales, but a different strategy needs to be implemented. In the popular article ―Why Business Models Matter,‖ it talks about how two companies can have the same business
Under Armour Case Study model but in the end have a different strategy (Magretta, 2002). If Under Armour is to take this approach of imitating brands like Lululemon their strategies must be different. Also, the story must make sense and the numbers must add up.
Preferred Recommendation The preferred recommendation for Under Armour is to expand internationally. Under Armour should do this because there is a great opportunity to bring their brand to every nation. Doing this will not be easy but there are many upsides to this. Under Armour has proven to be a successful company in the United States. Every country is active in sporting activities if not more then the U.S. With that said, Under Armour can increase and stabilize their sales at the same time by taking the international approach. This is the best approach because their product will finally reach the masses. Companies need to always be thinking of new ways on how to expand their brand and maximize their profit. They can do this by using the patching technique. They will remap their company to the rapidly changing market opportunities. Since Under Armour is such an innovative company they are always patching up the market and will not have trouble with this. Under Armour needs to focus on the expansion of their brand globally, while taking certain factors into consideration. This solution can have its downside and it is obviously easier said then done. One thing to keep in mind is that there are many local companies in the world who are in the market as well. Like every international company, Under Armour needs to have a different strategy in different nations. For instance, there can be another company who is selling the same thing but is a native of that country. This company who is a direct threat to Under Armour knows more about the foreign customers’ needs and wants. For a multinational company like Under Armour to succeed in international markets they must emulate some of the local companies’ strategies and develop other strategies that local companies cannot easily copy (Bhattacharya, 2008). These homegrown companies are given a national competitive advantage over Under Armour. As seen in Figure 1, a national competitor has many advantages on a multinational company. These include factor endowments, demand conditions, related and supporting industries and a firm’s
Under Armour Case Study strategy, structure and rivalry (Simpson 2013). These factors all work together in synergy to help a national company gain an advantage on multinationals.
What? How? Who? As seen in Figure 2, the U.S. is not projected to have the world’s largest economy in 2020. With that said, Under Armour needs to start expanding as soon as possible. Under Armour already has the framework in place for international expansion, so it is time to roll it out. Under Armour needs to get familiar with the different types of sports in other countries and learn the lifestyles of the people who are native to the land. They need to develop marketing campaigns to help promote their product and message. The preferred method is to market to soccer athletes since it is the most internationally known sport in the world. They can use their existing product line and develop something geared more towards soccer. Not only will this help them when expanding internationally, but it will also help their soccer presence in the U.S. Soccer is dominated by Nike and Adidas, so to take any share of that market would be ideal. Under Armour has the technology and innovating leaders to help with this expansion. Under Armour was built on introducing a new product line that helped the athlete perform better. They have continued to innovate products so designing something more towards soccer is defiantly the best route. Under Armour should take advantage of the social media boom that is happening to help them develop their new soccer product. This campaign should start through a number of social media websites like YouTube, Facebook and Twitter. Under Armour can develop a contest for soccer athletes around the world to participate. The participants will submit their idea for the next product to be launched involving soccer. Once this product is selected, Under Armour will design a campaign around this and will help them roll out their brand to the international stage. As previously stated, Under Armour was built on innovation. With this expansion strategy, Under Armour will parallel their core values of innovation. This will encourage others to think outside the box for a chance to change the sporting world the way Under Armour once did and still continues to do. The winner who comes up with the best idea will be rewarded but the real winner will be Under Armour.
Under Armour Case Study Kevin Plank will be directly involved with this move because it is vital to the organization. Also the head of international business, Karl-Heinz Maurath, will be in charge of rolling this campaign out to the world. Maurath will need to hire more key employees who will ultimately help in this big step. The plan is to build a team like Under Armour has in the U.S. for the international division. This division will have its own side and will help them focus solely on international operations while the U.S. focuses solely on their operations at home. This will not be any easy step but in the end all of the hard work will payoff to help stabilize and grow sales year over year.
Under Armour Case Study
Under Armour Case Study
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Under Armour Case Study Complete, 152-162 Roberts, D. (2011, October). Under Armour gets serious. Fortune Management & Career Blog. Retrieved March 3, 2013, from http://management.fortune.cnn.com/2011/10/26/under-armour-kevin-plank/ Salter, C. (2005, August). Protect this house. Fast Company, 97, 70. Simpson, Dr. S. (2013) Evaluating a Firms External Environment, Internal Capabilities for Vision and Strategic Direction [PowerPoint Slides] Retrieved from DePaul University Desire 2 Learn Simpson, Dr. S. (2013) Management Strategy: Strategic Analysis for Competing Globally [PowerPoint Slides] Retrieved from DePaul University Desire 2 Learn Simpson, Dr. S. (2013) Management Leadership [PowerPoint Slides] Retrieved from DePaul University Desire 2 Learn Simpson, Dr. S. (2013) National Competitive Advantage (Porter, 1990) [PowerPoint Slides] Retrieved from DePaul University Desire 2 Learn Simpson, Dr. S. (2013) Projected Economic Growth[PowerPoint Slides] Retrieved from DePaul University Desire 2 Learn Simpson, Dr. S. (2013) Responsible Wealth Creation [PowerPoint Slides] Retrieved from DePaul University Desire 2 Learn Subramanian, R., & Gopalakrishna, P. (2012). UNDER ARMOUR. Business Case Journal, 19(2), 62-83. SWOT ANALYSIS OF UNDER ARMOUR. (2010, November). Management Paradise. Retrieved March 3, 2013, from http://www.managementparadise.com/article/849/swot-analysis-of-under-armour Thomaselli, R. (2001). Fighting in Nike's shadow. Advertising Age, 72(42),10 Townsend, M. (2013, February 15). Under Armour Finds Feminine Side to Go Beyond $2 Billion. Bloomberg. Retrieved February 18, 2013, from http://www.bloomberg.com/news/2013-02-15/under-armour-finds-feminine-sideto-go-beyond-2-billion.html Tucker, E. (2012, December 6). Why is Lululemon so successful? Retrieved February 20, 2013, from Global News website: http://globalnews.ca UA Competitors. (n.d.). Yahoo! Finance - Business Finance, Stock Market, Quotes, News. Retrieved March 3, 2013, from http://finance.yahoo.com/q/co?s=UA+Competitors Under Armour (2013). Community Involvement & Giving Back. Under Armour. Retrieved February 17, 2013, from http://www.underarmour.jobs/communityinvolvement.asp Under Armour (2013). Executive Leadership. Under Armour. Retrieved February 17, 2013, from http://www.underarmour.jobs/executive-leadership.asp Under Armour (2013). Leadership. Under Armour. Retrieved February 17, 2013, from http://www.underarmour.jobs/leadership.asp Under Armour (2013). UA Leaders. Under Armour. Retrieved February 17, 2013, from http://www.underarmour.jobs/ua-leaders.asp Under Armour (2013). Under Armour Mission, Vision & Values. Under Armour. Retrieved February 17, 2013, from http://www.underarmour.jobs/our-mission.asp Under Armour (2013). Under Armour Performance Sports Company History. Under Armour. Retrieved February 17, 2013, from http://www.underarmour.jobs/our-
Under Armour Case Study history.asp Under Armour Inc. (2012). United States Securities and Exchange Commission. Form 10-K. Delaware Under Armour Earnings Preview. (2012, July). Seeking Alpha - Stock Market News & Financial Analysis. Retrieved March 3, 2013, from http://seekingalpha.com/article/737571-under-armour-earnings-preview Value-Chain Analysis to Identify Resources and Capabilities at Under Armour. (n.d.). dbmaltby | Daily thoughts, observations, and speculations. Retrieved March 3, 2013, from http://dbmaltby.wordpress.com/2013/02/17/value-chain-analysis-toidentify-resources-and-capabilities-at-under-armour/ Vision on Innovation: Models on the dynamics of innovation. (n.d.). Caneval. Retrieved March 3, 2013, from http://www.caneval.com/vision/innovation/innovation2.html Weedon, G. (09/01/2012). ""I Will. Protect this House:" Under Armour, Corporate Nationalism and Post-9/11 Cultural Politics.". Sociology of sport journal (07411235), 29 (3), p. 265. Who Makes Our Products. (n.d.). UABiz.com - Under Armour, Inc. Retrieved March 3, 2013, from http://www.uabiz.com/products.cfm
Figure 8 U.S. SPORTS APPAREL MARKET NIKE '7% ADIDAS GROUP
UNDER ARMOUR '2.6% SOURCE: SPORTING GOODS INTELLIGENCE Figure 9
Source: Under Armour Annual Report, 2010 Figure 10
Source: Under Armour Annual Report, 2010
Under Armour Case Study Figure 11 The Eight Components of the Strategy Execution Process
Source: Simpson, 2013 Figure 12 The Five Components of Socially Responsible Business Behavior
Source: Simpson, 2013
Under Armour Case Study Figure 13
Source: Bass, 1990 Figure 14
Source: Protecting the House of Under Armour Figure 15
Source: Simpson, 2013
Under Armour Case Study Figure 16 International Opportunities
Multinational Opportunity Market Characteristics
Market Characteristics • global product standard
• tastes and preferences vary
• replicate headquarters functions in multiple markets
• transportation of finished product is cost prohibitive
• give local managers autonomy to respond
• significant economies of scale exist
• governments impose local content rules
• modify product to local tastes & preferences
• product development costs are significant
• no global product standard
• governments allow importation
Structural Response • minimal replication of headquarters functions • centralized decision making at headquarters • centralized manufacturing • little responsiveness to local tastes & preferences
International Opportunities Transnational Opportunity Market Characteristics
• product standardization differs from region to region
• headquarters functions are replicated in some but not all regions
• government policy varies from region to region
• high degree of coordination between regions and headquarters
• local tastes and preferences vary from region to region
• this is a combination of a multinational and global approach
Source: Simpson, 2013 Figure 17
Source: CNN Money
Under Armour Case Study Figure 18
Source: Dbmaltby Figure 19
Under Armour Case Study Figure 20
Under Armour Case Study
Team Member Roles I. SITUATION
Piotr Abrar Anne
Detailed Timeline: Launch to Now including key company events and key players Business & Corporate Level Planning: Company Strategy (Focused? Differentiated? Cost? Broad?), Mission, Vision, Values. What are they and how are they implemented? Brief Summary of the company situation in their competitive environment, issues they face and clear problem statement to analyze. II. ANALYSIS
Piotr Rob Abrar Rob Anne Rob Abrar Anthony Anthony Piotr
Leaders and Leadership. Profile Key leaders, their leadership style, traits and behaviors. Types of innovation and evidence of entrepreneurship (focus on creativity, organizational learning and change) Globalization presence and effects (include general/macro environment and changes of, presence in and strategic approaches to global market). Ethics - Examples of Social Consciousness/Corporate Social Responsibility Responsible Wealth Creation (Are they healthy financially? Why/why not? What is their M&A and Strategic Alliance activity? Is this on Strategy?) Engagement and Plan Alignment & Corporate Culture (How does this enhance their strategy or not?) Wild Card: You can focus on a key area of their success INSTEAD of one of the topics above. Internal Analysis (focus on the strategic analysis tools in Unit 2) External Analysis (focus on the strategic analysis tools in Unit 2) SWOT III. RECOMMENDATION
Mike Mike Mike Mike Mike Mike
What is the source of their success? Why? Provide alternative solutions to the problem statement you identified based upon the analysis you completed. Clearly state your preferred recommendation What should be done? How should it be done? Who’s going to do it? And WHY? PROFESSIONAL PAPER AND PRESENTATION
Assembled and Formatted PowerPoint
Assembled Case Report (cover page, table of contents, formatted all parts of the paper to be uniform, appendix, team member roles)