Under Armour Case Report

Case Study

Source: Hogan, 2013

Under Armour Case Study

TABLE OF CONTENTS

DETAILED TIMELINE 3

BUSINESS AND CORPORATE LEVEL PLANNING 4

BRIEF SUMMARY OF THE COMPANY SITUATION IN THEIR COMPETITIVE ENVIRONMENT, ISSUES THEY FACE AND CLEAR PROBLEM STATEMENT TO ANALYZE 6

KEY LEADERSHIP 8

TYPES OF INNOVATION AND EVIDENCE OF ENTREPRENEURSHIP 10

GLOBAL PRESENCE AND EFFECTS 11

ETHICS - EXAMPLES OF SOCIAL CONSCIOUSNESS/CORPORATE SOCIAL RESPONSIBILITY 12

RESPONSIBLE WEALTH CREATION 14

ENGAGEMENT AND PLAN ALIGNMENT & CORPORATE CULTURE 15

WILD CARD 16

INTERNAL ANALYSIS 17

EXTERNAL ANALYSIS 20

SWOT ANALYSIS 24

RECOMMENDATION 27

BIBLIOGRAPHY 33

APPENDIX 37

TEAM MEMBER ROLES 46

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Detailed TimelineIt 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

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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 PlanningUnder 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.

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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

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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 con-

current 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

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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

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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 LeadershipKevin 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

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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 leadership-

transformational 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 self-

interest 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

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to pursue the vision and mission of Under Armour and is willing to admit when he is

wrong.

Types of innovation and Evidence of EntrepreneurshipAs 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

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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 EffectsUnder 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

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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.

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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

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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 CreationUA 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

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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

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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 CardUnder 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

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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 AnalysisUnder 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,

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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

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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

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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 AnalysisThe 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

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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

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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

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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

23


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 AnalysisStrengths

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.

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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 full-

price 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.

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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).

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RecommendationSources 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

27


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

28


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

29


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.

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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.

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Appendix

Figure 1

Source: Simpson, 2013

Figure 2


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Figure 3

Source: Subramanian & Gopalakrishna, 2012

Figure 4


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Figure 5

Source: Gale Business Insights

Figure 6

Source: Gale Business Insights

Figure 7

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Figure 8U.S. SPORTS APPAREL MARKETNIKE '7%

ADIDAS GROUP '5.5%

UNDER ARMOUR '2.6%SOURCE: SPORTING GOODS INTELLIGENCE

Figure 9

Source: Under Armour Annual Report, 2010

Figure 10

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Source: Under Armour Annual Report, 2010

Figure 11The Eight Components of the Strategy Execution Process


Figure 12The Five Components of Socially Responsible Business Behavior

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Figure 13

Source: Bass, 1990

Figure 14

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Source: Protecting the House of Under Armour

Figure 15


Figure 16

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Figure 17

Source: CNN Money

Figure 18

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Source: Dbmaltby

Figure 19

Source: caneval.com

Figure 20

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Source: seekingalpha.com

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Team Member Roles

I. SITUATIONPiotr

Detailed Timeline: Launch to Now including key company events and key players

AbrarBusiness & Corporate Level Planning: Company Strategy (Focused? Differentiated? Cost? Broad?), Mission, Vision, Values. What are they and how are they implemented?

AnneBrief Summary of the company situation in their competitive environment, issues they face and clear problem statement to analyze.

II. ANALYSIS

PiotrLeaders and Leadership. Profile Key leaders, their leadership style, traits and behaviors.

RobTypes of innovation and evidence of entrepreneurship (focus on creativity, organizational learning and change)

AbrarGlobalization presence and effects (include general/macro environment and changes of, presence in and strategic approaches to global market).

RobEthics - Examples of Social Consciousness/Corporate Social Responsibility

AnneResponsible Wealth Creation (Are they healthy financially? Why/why not? What is their M&A and Strategic Alliance activity? Is this on Strategy?)

RobEngagement and Plan Alignment & Corporate Culture (How does this enhance their strategy or not?)

AbrarWild Card: You can focus on a key area of their success INSTEAD of one of the topics above.

AnthonyInternal Analysis (focus on the strategic analysis tools in Unit 2)

AnthonyExternal Analysis (focus on the strategic analysis tools in Unit 2)

PiotrSWOT

III. RECOMMENDATION

MikeWhat is the source of their success? Why?

MikeProvide alternative solutions to the problem statement you identified based upon the analysis you completed.

MikeClearly state your preferred recommendation

MikeWhat should be done?

MikeHow should it be done?

MikeWho’s going to do it? And WHY?

PROFESSIONAL PAPER AND PRESENTATION

Piotr Assembled and Formatted PowerPoint

Piotr Assembled Case Report (cover page, table of contents, formatted all parts of the paper to be uniform, appendix, team member roles)

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Documents

Under Armour Case Report