Business Strategies | Case study of UA (Under Armour)

Submitted on 29-April-2022
Business Strategies
(Spring 2022) sec. 02
Under Armour
Group Case
Analysis

Executive Summary
The study has shed its light on reasons and causes of Under Armour’s performance downturn
which initiated during 2016. Apart from this, strengths, industrial forces confronting the firms
and core competencies, distinctive sources or competencies has been evaluated in this report.
The financial performance analysis, strategic issues and a set of constructive
recommendations have also been provided in this study.
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Table of Contents
Introduction................................................................................................................................3
1. Causes as well as reasons behind Under Armour performance downturn in North America,
appearing for first time in Q4, 2016...........................................................................................3
2. Critical evaluation of strength of competitive rivalry in North American market.................3
3. Assessment of four competitive forces, confronting Under Armour in light of five-force
analysis.......................................................................................................................................4
4. Determination and illustration of core competencies of Under Armour................................5
5. Discussion of Under Armour’s distinctive competence.........................................................6
6. Overall attractiveness of Under Armour in light of SWOT analysis.....................................6
7. Key strategic elements of Under Armour’s strategy..............................................................8
8. Five generic competitive strategy having resemblance competitive approach of Under
Armour.......................................................................................................................................8
9. Weighted competitive strength assessment against Nike as well as Adidas Group...............9
10. Conducting financial analysis including ratio calculation.................................................12
11. Key issues Confronting Under Armour’s management team............................................14
12. Recommendations and suggestions for further improvement............................................14
Conclusion................................................................................................................................14
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Introduction
Rising protectionism, geopolitical tension including global pandemic has led to several issues
for the entire apparel industry including the Sports ware segment as well. Since, founded by
1996, the popular sport apparel making company has made sport apparel with performance-
enhancing fabrics, which can provide comfort and other functionalities regardless of any kind
of weather. The current report has shed its light on causes and reasons of Under Armour
performance downturn in 2016. Apart from this, strength of competitive rivalry of this
company, core competencies, five forces analysis, SWOT analysis, key strategic elements has
also been highlighted in this study. Preference has also been given in analysing key issues
confronting the management team, determination of weighted competitive strength and
financial analysis of this firm.
1. Causes as well as reasons behind Under Armour performance downturn in North
America, appearing for first time in Q4, 2016
In reference to the case study, during the initiation of 2020, Under Armour basically headed
into tremendous sales difficulties for five consecutive years. In addition to this, based on 2016
sales outlook, it is evident that in the North American Market, there is weakening demand for
Under Armour’s products. The provided facts and figures also reveal that 2016 quarterly
revenue of Under Armour in 2016 is same as the quarterly revenue of FY 15. It is reduced
around 25.7%, 21.5% and 15.6% in Q1, Q2 and Q3 of FY16 respectively. Critical analysis of
performance downturn in UA, which first appeared in FY16, further reveals Operational
inefficiencies of this firm. The transition towards “product-category management structure”,
“reengineered organisation’s go-to-market process” further entails that product innovation,
product design, seasonal products delivery time might not be maintained properly by this
firm. As per the views of Shad et al. (2019), inefficiency in managing business operations
mainly diminishes work quality, enhances risks including preventing a business from
achieving its strategic goals. Furthermore, the $140-$150 million restructuring plan further
pinpoints inappropriate control in maintaining profit margin, poor speed of response in
shifting towards consumer preferences and so on. As per Jagtap and Duong (2019),
innovation to existing processes and products contributes higher productivity and profits and
reduces costs. Thus, all these aspects provide a solid indication that due to operational
inefficiencies, poor management of inventory including failure to maintain product innovation
and design might be the underlying reasons or causes for the performance downturn of UA in
the North American market.
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