Market Analysis of Footwear Industry: Under Armour Case Study

This report analyses the external and internal environment of Under Armour, a manufacturing company of America which operates in the different sectors such as sports equipment’s, footwear and the casual apparel. The report includes PESTLE Analysis, Porter’s Five Forces Framework, consumer preferences, current trends, gap in demand and sale, and market analysis.

Strategic Management

STRATEGIC MANAGEMENT 1
Contents
Introduction...........................................................................................................................................2
About the company................................................................................................................................2
Current Trends.......................................................................................................................................3
Gap in demand and sale.........................................................................................................................4
Consumer Preferences...........................................................................................................................5
Market Analysis....................................................................................................................................6
PESTLE Analysis:.............................................................................................................................6
Porter’s Five Forces Framework........................................................................................................9
Conclusion...........................................................................................................................................11
References...........................................................................................................................................13

STRATEGIC MANAGEMENT 2
Introduction
Strategic Management is a process of controlling, analysis and monitoring the environment of
the company. The company can develop the strategy in order to achieve the objective of the
company. It is necessary for the company to analyse the market before developing the
strategies for the good results (Doz, 2017). There are many tools which are used by the
companies to analyse the market. PESTLE Analysis, SWOT Analysis and Porters five forces
are the tools which are used by the company in order to analyse the market. These tools help
the company to identify the factors which affect the company. These tools also help to
analyse the opportunity for the company in which it can grow and grab the high market share
in the market. The report is based on the market analysis of the environment of the company.
Under Armour has been taken into consideration in order to analyse the external environment
of the market.
The main aim of this report is to identify the external and internal environment of the
company. In the starting section of the company, current trends and taste will be analysed of
the footwear industry. Later on the discussion is made on the preferences of the consumer and
in the last section; the analysis will be done on the footwear industry.
About the company
Under Armour is a manufacturing company of America which operates in the different
sectors such as sports equipment’s, footwear and the casual apparel. The main headquarters
of the company is established in Maryland, Baltimore and the other offices are located in
Austin, Amsterdam, Honkong, Guangzhpu, and many others. It was established in the year
1996 by Kevin Plan. The company starts its business by selling the products in the market by
using the car. The company is growing continuously in the market with the passage of time.

STRATEGIC MANAGEMENT 3
The company use the effective strategy to supply the large amount of products in the market.
The company expand its business in the different sectors but now it wants to grab the high
market share of Footwear industry at the international level. The company analyse the market
in order to develop the effective strategy so that the company can attain the high market share
(Reuters, 2018).
Current Trends
Global Footwear market is growing continuously with the passage of time. It is expected that
the industry will grow with the good amount such as $184.6 billion by 2020. The main
purpose of this industry is to offer the comfort to the consumers during the period of walk.
The global footwear market is growing due to increasing the health conscious consumers. It
is observed that the health conscious consumers are the main consumers of the company
which increase the demand of the company. The activities such as running, yoga, aerobics
and many others attract the consumers to stay fit for long time. It is a beneficial factor for the
industry to sell the products to that consumer who performs these activities. North America is
the largest country in generating the revenue in the market of sports and apparel. There are
any companies who have high goodwill such as Nike, Adidas and many others. The
companies expand the business at the international level in order to provide the services to
the consumer. United States is also has the largest footwear market in the terms of high
revenue like 79.86 billion in US dollars in the years of 2017. The footwear industry is
growing with the demand of consumer because nowadays people spent more money on their
dress up and looks (Cho, et al., 2017). The industry manufacture the different style of
footwear’s as per the demand of the consumers. The industry uses the leather, textile,
synthetic material and the other materials to manufacture the product. There are many
industries where the footwear are one of the main goods such as film industry as well as the

STRATEGIC MANAGEMENT 4
sports industry (Statista, 2018). Athletic industry generates the high revenue with the amount
of 19.6 billion in US dollars. The industry earned 58.16 US dollars as per the average selling
price. The sports and footwear industry increasing with the high consumer demand and this
industry has high experienced in the segments in the United States market. It has been
analysed that the sales amount of the stores is increasing as per the year like in the year 1992
to 2016, the stores sale 36.23 billion in the US dollars. In the year 2016, the sale amount of
the consumers is 32017 which is continuously growing with the high rate of profit.
(Source: Allied Market Research, 2018)
Gap in demand and sale
The definition of Gap states the statement of where we have today and where we have to
reach. There is always a gap between the demand and sale of the product. The business of the
industry is increases due to increasing the demand of the consumer towards the services. It
has been seen that the industry did not satisfy the demand of consumer due to lack of
distribution channel (Safari, Farhang, and Rajabzadehyazdi, 2016). Nowadays; online

STRATEGIC MANAGEMENT 5
shopping helps to reduce the gap which is increasing between the demand and sale of the
product. Online shopping is the channel which is used by the companies of the industry to
sale the product at the large number of people. It is also relies on the prices, on the special
occasions the company provide the discount to the consumer that time the demand of the
consumer is increases and vice versa. The gap between the demand and sale is also depending
on the prices of the product (Edabl, 2018).
Consumer Preferences
Footwear provides the protection to feet from the surface where the people walked. It is part
of the necessity of the human being. Earlier, the people believes to spent less on the
footwear’s and bought the one or two pairs for the special occasions. They wear the same
pairs in their daily schedules but nowadays, the consumers spent the high amount on their
dress up and look. The consumers buy the different style of pairs as per the occasions and
events. Nowadays, people consider the footwear as an important part of their dress up
because nowadays it is important to look good in front of many people (Macchion, Danese,
Fornasiero, and Vinelli, 2017). The new generation judge the each other by the dress up and
style. Even, in the film industry the different style of design is adopted as per the dresses of
the celebrities. The thoughts of new generation help to expand the business at the
international level by increasing the demand of the different designs product. It has been seen
that the gender is also a main part of increasing the demand of the industry because people
wear the different pattern as per their gender. There are different styles of consumers as well
as their preferences (Bamossy, and Solomon, 2016).
The male consumer always prefers the formal shoes for the parties, women consumers always
prefers the sandals for the parties. There are different patterns and designs are prefer by the
consumers as per their taste. It is observed that the young people wear the footwear’s as per

STRATEGIC MANAGEMENT 6
the occasions and the colour of their dresses such as heals for the parties, sneakers shoes for
the picnic and for the daily purpose (Parsons, Maclaran, and Chatzidakis, 2017). Film
industry spent their one fourth parts in the pairs of footwear just because of developing the
attractive movies. The demand of the consumer is also depend on the taste and trends of the
consumers like some of the consumers always buy the products as per the trend not for the
personality. Consumer preference is also change with the profession of the personal like the
athletic person always buys the sports shoes from the physical stores and the any office
personality always buys the formal shoes for office. But the prices of the product are different
from each other due to using the different types of raw material (Gupta, 2015). The nature of
the consumer is main factor which helps to analyse the consumer preferences like process
conscious consumer spent the less amount on these trends and fashion. Each and every thing
of the consumer increases the variation in the footwear’s. Footwear industry develops the
different design and patterns as per the demand of the consumer in order to grow in the
market. It has been seen that the big brands of the industry have high prices buy still people
wants to buy those footwear’s. The whole discussion states that the preferences of the
consumers are depend on the different factors such as gender, age, taste and trends. The
preferences of the consumers are change with the passage of time. There are some people
who stay same but rest of the people requires the changes in their life (Marttunen, Lienert,
and Belton, 2017).
Market Analysis
PESTLE Analysis:
It is a tool which is used by the company in order to analyse the external factors which affect
the organisation. It also finds the other factors which will be the best opportunity for the
company in the coming future.

STRATEGIC MANAGEMENT 7
Political
It has been seen that there are many political policies which is developed by the government
of the country. As the different country have the different policies as per the export and
import of the goods and services. Earlier, the government restrict the export and import as per
the market condition of the country. But nowadays, there is no restriction on the export and
import of the goods which is a favourable factor for the company. The government of US
announced the new policy for the transportation with the name of Trans-Pacific Partnership.
This policy has a positive impact on the business of the footwear in order to expand the
business at the international level (Michael, Storey, and Thomas, 2017).
Economics
United States is the highly developed economy in the world in the terms of nominal GDP.
The country has high income which states the strong financial condition. The purchasing
power of the consumer is increases as per the strong financial condition of the country. Apart
from this, it has been seen that the consumers spent the large amount of their income on their
dress up and looks. The different country has the different cash system which raises the issue
for the company. It is an opportunity for the company to expand the business at the
international level due to increasing the demand of the consumers towards the services of the
industry. But as per the different cash system, the value of labour is high in some companies
which are a negative factor for the company and there are large numbers of competitors in the
industry (Aravendan, and Panneerselvam, 2016). It can be recommended that the company
has to enter the market with the cost leadership strategy so that it can easily grab the high
market share of the footwear industry.
Social

STRATEGIC MANAGEMENT 8
It has been analysed that the different country have different culture and trends. Culture is a
factor which affects the demand of the industry. People of different country wear the different
style of footwear’s as per their culture and tradition. It is difficult for the company to follow
the different culture and satisfy the consumer needs. It is also observed that the demand of the
consumers is change with the passage of time and trends. It can be said that the company has
to adopt the diversification strategy in order to provide the unique goods to the consumers
(Fozer, et al., 2017).
Technological
As the time passed, the technology is developing day by day. There are many companies in
the industry which used the machines during the manufacturing process. It is a beneficial
factor as well as the negative factor for the company. The company can expand the business
at the international level by manufacturing the large amount of products so that it can satisfy
the demand of consumers. It is a negative factor as well because it increases the competition
between the companies. New companies enter the market with the advance technology due to
which they can easily grab the high market share that is why it is negative factor for the
company (Dodgson, 2018).
Legal
The government of the different country developed the legal policies as per the condition.
The company face the issue while expanding the business at the international level related to
the different rules and regulation of the government. It is necessary for the company to follow
the rules and regulation while entering the country. It has been seen that there are some
similar policies which are compulsory for the every company to follow it such as safe
consumer product, packing and labelling legislation and many others. In the recent years, the

STRATEGIC MANAGEMENT 9
US government also announced the Occupational Safety and Health Act related to the
footwear industry (Kozlowski, Searcy, and Bardecki, 2016).
Environmental
Each and every manufacturing organisation generates the wastage in the large amount which
affects the environment. There are many policies introduced by the government of the
different country in order to reduce the environmental issues. There are many companies are
legally banned by the government due to high pollution and wastage. Packaging policy is the
perfect example of the environmental policy which was announced by the government
because it affects the environment. The countries set the specific amount on the wastage of
the company (Kim, Lee, and Park, 2016). The specific amount of the wastage is set by the
government of the country. The companies are restricted to increase the wastage beyond the
specific amount which is set by the government. If any company caught during the spreading
the mess in the environment then it can directly penalised by the government. It is a barrier
for the companies especially for the footwear industry because of the quality of its raw
material. The companies produce the limited amount of product due to the fear of penalised
as per increasing the wastage beyond the limit. It is recommended that the company has to
adopt the innovation and recycling strategy so that it can use the waste product again. These
strategies help the company to reduce the amount of wastage which affects the environment
(Hill, 2017).
Porter’s Five Forces Framework
The threat of new entrants
It has been seen that the footwear industry has moderate level of threat of new entrant just
because of high brand value of the existing companies. The existing companies of the
industry have the high brand value which is a negative factor for the new entrant because it is

STRATEGIC MANAGEMENT 10
difficult for the new companies to beat the existing companies. The new companies enter the
market with the high advance technology which is a barrier of the existing companies
because the new companies can garb the market by attracting the consumer with their new
ideas (Dsouza, 2017).
Bargaining power of buyer
The bargaining power of the buyer is high due to large competition in the market. There are
many small and big companies in the industry which offers the low prices in order to gain the
competitive advantage in the market. It is observed that the buyer can easily switch from one
consumer to the other company in order to buy the footwear. The consumer always attract
towards the low prices. The negotiation power of the consumer is increase due to increasing
the options of the company (McDonald, and Wilson, 2016).
Bargaining power of suppliers
It has been analysed that the bargaining power of the supplier is increases due to less number
of supplier in the market. It has been seen that the raw material use by the company is rarely
available in the market and the supplier of these raw material is also less in number. That is
why the bargaining power of suppliers is large. It is also observed that the suppliers of the
company can easily switch the companies in order to sell the product. It is difficult for the
companies to switch with the new supplier. This is also a reason of high bargaining power of
buyer (Wheelen, Hunger, Hoffman, and Bamford, 2017).
The threat of rivalry
The threat of competitors is high due to high competition in the market. there are many
companies in the industry who have the high brand value in the market. It is difficult for the
company to beat the existing companies by providing the similar products. Nike, Adidas are

STRATEGIC MANAGEMENT 11
the example of the competitors of the company which have the high market share in the
market. It is recommended that the company has to adopt the focus strategy of porters generic
strategy in order to gain the competitive advantage (Hanson, Hitt, Ireland, and Hoskisson,
2016).
The threat of Substitute product
The threat of substitute products is low because it is difficult to replace the footwear with the
other product. Even the footwear’s are not replace each other for example- tennis footwear
cannot be replaced by heals sandals and many others. It is a positive factor for the company
because the company have more time to focus on the development of the product instead of
focusing of substitute product (Wicker, Soebbing, Feiler, and Breuer, 2015).
Conclusion
From the above analysis, it has been concluded that the company has high brand value in the
market of US for its goods and services. It has been seen that the company can easily enter
the international market of the Footwear industry. The companies face the issues while
entering the market due to many factors. As per the analysis of the Footwear industry, it is
observed that the industry is growing continuously the high rate and it is expected that it can
earn the high revenue in the future. The preferences of the consumer are also getting change
with the passage of time. There are many political, legal and environmental policies which
are followed by the company while entering the international market. It is also analysed that
the company have high threat of competitors. It is recommended that the company has to
adopt the porter’s generic strategy and ansoff matrix method in order to attain the global
market of sports and footwear market.

STRATEGIC MANAGEMENT 12

STRATEGIC MANAGEMENT 13
References
Allied Market Research. (2018) Sports Apparel Industry Overview. [online] Available from:
https://www.alliedmarketresearch.com/sports-apparel-market [Accessed 30/1/19].
Aravendan, M. and Panneerselvam, R., 2016. Application of Hybrid Genetic Algorithm for
CLSC Network Design Problem in Fashion Footwear Industry—A Case Study
Approach. Journal of Service Science and Management, 9(03), p.195.
Bamossy, G.J. and Solomon, M.R., 2016. Consumer behaviour: A European perspective.
Pearson Education.
Cho, M., Choi, S.P., Choi, H.R., Park, B.K., Kim, D.H., Kim, H.S. and Lee, B.H., 2017.
Footwear Design Crowdsourcing Platform Model For Strengthening Of the Competitiveness
Of The Footwear Industry. International Journal of System Modeling and Simulation, 2(4),
pp.30-33.
Dodgson, M., 2018. Technological collaboration in industry: strategy, policy and
internationalization in innovation. Routledge.
Doz, Y.L., 2017. Strategic management in multinational companies. In International
Business (pp. 229-248). Routledge.
Dsouza, H. (2017) Sportswear Is Driving Apparel Consumption. [online] Available from:
https://www.textileexcellence.com/news/industry-news/sportswear-is-driving-apparel-
consumption/ [Accessed 30/1/19].
Edabl. (2018) Gap Analysis of Footwear Sector. [online] Available from:
https://edabl.org/pub/edaen/GAP_Footwear.pdf [Accessed 30/1/19].

STRATEGIC MANAGEMENT 14
Fozer, D., Sziraky, F.Z., Racz, L., Nagy, T., Tarjani, A.J., Toth, A.J., Haaz, E., Benko, T. and
Mizsey, P., 2017. Life cycle, PESTLE and multi-criteria decision analysis of CCS process
alternatives. Journal of Cleaner Production, 147, pp.75-85.
Gupta, A., 2015. Predictive Modeling of Athletic Footwear Sales using Trend
Analysis. Journal of Textile and Apparel, Technology and Management, 9(2).
Hanson, D., Hitt, M.A., Ireland, R.D. and Hoskisson, R.E., 2016. Strategic management:
Competitiveness and globalisation. Cengage AU.
Hill, T., 2017. Manufacturing strategy: the strategic management of the manufacturing
function. Macmillan International Higher Education.
Kim, J., Lee, S. and Park, Y., 2016. A visual context-based market analysis of mobile
application services. Management Decision, 54(9), pp.2106-2132.
Kozlowski, A., Searcy, C. and Bardecki, M., 2016. Innovation for a sustainable fashion
industry: a design focused approach toward the development of new business models.
In Green Fashion (pp. 151-169). Springer, Singapore.
Macchion, L., Danese, P., Fornasiero, R. and Vinelli, A., 2017. Personalisation management
in supply networks: an empirical study within the footwear industry. International Journal of
Manufacturing Technology and Management, 31(4), pp.362-386.
Marttunen, M., Lienert, J. and Belton, V., 2017. Structuring problems for Multi-Criteria
Decision Analysis in practice: A literature review of method combinations. European Journal
of Operational Research, 263(1), pp.1-17.
McDonald, M. and Wilson, H., 2016. Marketing Plans: How to prepare them, how to profit
from them. John Wiley & Sons.

STRATEGIC MANAGEMENT 15
Michael, S., Storey, D. and Thomas, H., 2017. Discovery and coordination in strategic
management and entrepreneurship. Strategic entrepreneurship: Creating a new mindset,
pp.45-65.
Parsons, E., Maclaran, P. and Chatzidakis, A., 2017. Contemporary issues in marketing and
consumer behaviour. Routledge.
Reuters. (2018) Under Armour Inc (UA). [online] Available from:
https://www.reuters.com/finance/stocks/company-profile/UA [Accessed 31/1/19].
Safari, N., Farhang, M. and Rajabzadehyazdi, E., 2016. The study on the competitive status
of construction companies based on Michael Porter's five competitive forces (Case study:
Armeno Project Development and Management Company). European Online Journal of
Natural and Social Sciences: Proceedings, 5(3 (s)), pp.pp-72.
Statista. (2018) Film Industry - Statistics & Facts. [online] Available from:
https://www.statista.com/topics/964/film/ [Accessed 30/1/19].
Wheelen, T.L., Hunger, J.D., Hoffman, A.N. and Bamford, C.E., 2017. Strategic
management and business policy. pearson.
Wicker, P., Soebbing, B.P., Feiler, S. and Breuer, C., 2015. The effect of Porter’s generic
strategies on organisational problems of non-profit sports clubs. European Journal for Sport
and Society, 12(3), pp.281-307.