Under Armour Case Study: Issues and Solutions for Global Expansion

This case study analyzes the issues faced by Under Armour in global expansion and provides solutions to overcome them. It includes the company's background, products, and competitors. The analysis is based on Porter's Five Forces Model and SWOT analysis.

Integrated Capstone Project

Table of content
INTRODUCTION...........................................................................................................................3
ASSESSMENT TASK....................................................................................................................3
Background of the company........................................................................................................3
Issues/ Problems that being analyzed..........................................................................................4
Detailed analysis of the identified issues.....................................................................................4
Recommend Solutions.................................................................................................................9
Plan for the future study............................................................................................................11
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12
APPENDIX....................................................................................................................................15

INTRODUCTION
The market is growing day by day; competition within the market is high in the current
situation as compared to the previous. The reason behind this enhancing competitive
environment is innovativeness for meeting the needs of the people. Time to time, companies face
some issues in the market for maintaining their sustainability. Multinational companies are
seeking competent and innovative strategies and approaches for increasing their demand and
popularity across the world (Fraga, 2016). Concerning this, a case study of Under Armour is
taken into consideration. The file consists of the information regarding the background of the
firm, issues faced by the company and appropriate solutions for handling them effectively.
ASSESSMENT TASK
Background of the company
Under Armour, Inc is a well-known company in America which manufactures footwear,
sports and casual appeal. The firm was established 22 years ago in 1996 by Kevin Plank.
Headquarter of the company is located in Baltimore, Maryland, United States. Additional offices
of the firm are situated in Amsterdam, Austin, London, Jakarta, New York, Panama City and
many more. Initially, the name of the organization was KP Sports which was later changed by
the Plank in the year 2005 (Grady, 2016). The key people of Under Armour include Chairman
and CEO, Kevin Plank and President and COO, Patrik Frisk. In 2017, the revenue of the
company was US$ 4,977 million with the total assets of US$ 4,006 million. The tagline of the
firm is “I Will” which represents the origin of the organization. According to the founder of the
firm Plank, the potential for the long-term growth of the Under Armour is achieved due to its
ability to develop and build an extraordinary powerful brand in a short period. The organization
is working from its early stages for establishing its brand within the market with substantial
value and image (Holt, 2016).
The products of Under Armour such as gear are designed for keeping the athletes cool,
dry and light during their entire course of game, practice or workout. The technology used by the
company for manufacturing the products for men, women and youth is however difficult, but the

idea behind this diversified approach is simple, i.e. wear HeatGear when it is hot and ColdGear
when it is cold. There is AllSeasonGear are available for the people who love to wear footwear
in all seasons. The mission of the Under Armour is to develop effective and innovative footwear
for all athletes. There are various other firms offering sports shoes and footwear are available
within the market like Nike and Adidas. Thus, Under Armour is searching for an innovative and
creative way of developing and marketing the shoes among the people for gaining competitive
advantages at the international level (Whitehead and et al., 2018).
Issues/ Problems that being analyzed
According to the provided case study, the company is facing issues for identifying the
appropriate strategy for becoming more geographically diverse for surviving within the
competition in the global market. The firm is making continuous efforts for moving into the
other geographic locations like Europe and Asia. In context to this, the organization will have to
diversify their product offerings while expanding their business in the new places. This factor
can enhance the problem for the company as they will have to minimize the risk associated with
the majority of the sales. There are highly competitive and top companies available at the
international level which includes Nike and Adidas. Both the organizations are available across
the different nations of the world and offering high-quality footwear to the customers. The
popularity of Under Armour is less as compared to the other competitors. Due to this, the firm is
looking for better ways of increasing its brand awareness at the global level (Strauss & Frost,
2016).
Along with this, the firm is also finding innovative and creative ways for surviving within
the competition. Another major issue is how to grab the attention of the people towards the brand
and to make them purchase the products. All these problems every company faces while
competing with the top level of MNCs.On the other hand, the raw materials which are used by
the Under Armour are developed and manufactured by the third parties and are only present from
a restricted number of sources. Thus, development and manufacturing of the speciality fabrics
from the third party can create risk for the Under Armour’s core competencies (Heroux, 2017).
Detailed analysis of the identified issues
For understanding the issues and actual situation of the Under Armour within the market,
the different methods and approaches are as follows:

Porter’s Five Forces Model
This method is used for analyzing the actual situation of the sports apparel industry.
Porter’s Five Forces Model is as follows:
The competition among the developed companies like Nike is intense. The sports apparel
sector is highly competitive along with the highly demanding conditions. The low switching cost
of the industry also increases the competition. The competitors of Under Armour like Nike,
Adidas include the massive level of capital. On the other hand, the threat of new potential entry
is moderately high in the sports industry. The sports apparel sector at the global level has seen
various new trends within the market line increase in the people’s appeal towards the healthy
lifestyle, addition of new sports, raising some participation in games and many more (Jensen and
et al., 2016).
Along with this, there is a low barrier to enter within the sports sector due to the use of
conventional technology and ease of brand switching. The principal competitors of the Under
Armour consist of Reebok, Adidas, Nike and Puma. However, new entrants will have to invest
lots of money in marketing and advertisement strategies for developing a strong position within
the market and becoming competitive with the top level firms like Nike and Adidas (Wheeler,
2017).
The threat of substitute items is high within the market which limits the price which a
firm can charge for its elements and services. Technology has also enhanced the danger of
alternative products as due to this; there are around 25 brand name competitors are available
across the different parts of the world. Along with the enhancing utilisation of social media,
people used to search the price, sales and read reviews on the internet (Su & Tong, 2015). On the
other hand, the bargaining power of the buyers is high. There are no switching costs and clients
have various options regarding the items they want to choose. The bargaining power regarding
the suppliers is moderately high. Usually, suppliers impose long processes on the items or reduce
the quality of the products which increases the risk for the firms. But in the sports appeal sector,
there is an enormous amount of the suppliers available which generally equate to the lower costs
(James & Whitney, 2018).

Thus, from the above analysis, it is found that Under Armour is facing the major issue of
less advertisement and marketing of the sports shoes and appeals among the people. Due to this,
the company faces the problem of less brand awareness and recognition as compared to the
brands like Nike. Product differentiation is another barrier which creates a problem for the firm
in becoming as popular as the other companies. High level of advertising and promotions are
required for informing people about the diversified products. The range of products in Under
Armour is limited, and due to this, it becomes complex for the company to retain the customers
(Ghanbarnejad & Steinberg, 2017).
Driving Forces:
Societal or Fashion Trends: Changing attitudes and lifestyles of the people in society impacts
directly on the apparel sector. In the developed society, sports industry gets tremendously
influenced by the societal changes. The increasing consciousness of the individuals towards their
health is making them run and walk on a daily basis. Due to this, the demand for sports shoes is
increasing. However, changing sports affects the available sports apparel and make firms to
improve their product designs for meeting the needs. To this, Under Armour is offering a limited
range of footwear to the people. It is necessary for the firm to increase the diversified products
for the changing societal trends. In context to remain relevant, the firm needs to stay cognizant of
the relational impacts of changing lifestyle trends (Fan, Lau & Zhao, 2015).
Innovation within the product: In the present time, technology is changing with time, and due to
this, methods of producing sports apparel are also upgrading. From the lighter footwear to
performance under the garments to grip, the sports sector is offering new, innovative and more
evolved products to the customers. Product differentiation is directly proportional to the
improvement and innovation of the products. New and innovative products are increasing the
demand for sports apparels among the individuals. With respect to this, it is necessary for the
Under Armour to understand the impact of the product innovation, as it needs proper focus on
production of the new and improved products (White, White & White, 2017).
Marketing Innovation: Competition in the sports industry is extraordinarily high, and due to
this, each company is trying innovative and creative strategies for promoting their products and
services. Firms like Nike, Puma, etc. are using different methods like digital marketing for

grabbing the attention of the people towards their footwear and making them purchase. Creative
content about the products and attractive images informs people about the new products and their
benefits (Touchette, Schanski & Lee, 2015). With respect to this, Under Armour needs to use
effective marketing innovative techniques for promoting their products among the individuals at
the global level. Due to the less marketing, the company is facing the problem of less brand
awareness and recognition. For gaining the competitive advantages, it is necessary for the
organization to use some innovative ideas, develop the professional team and endorse footwear
for all the athletes (Woodside & Sood, 2017).
Globalization: The market for the sports apparel has become global, and companies are
promoting their products at the international level. For gaining competitive advantages and
accomplishing the objectives of increasing sales and profit, it is necessary for the enterprises to
target global customer markets. Moreover, any impact within the international market like the
organization of the Olympic games, etc. (Keegan & Green, 2015). Have real positive or negative
effects on the sales and profitability of the sports apparels. For increasing the sales, firms like
Nike, Adidas promote their footwear in such games for grabbing the attention of the customers.
With respect to this, it is also necessary for Under Armour to invest more in the marketing of its
products and services.
Along with this, the company is also facing the problem of expanding its business in the
different regions of the world. The firm can take advantages of the low labour cost of the
developing countries like India, Bangladesh and many more. The labour cost differences among
the nations and geographic regions can help Under Armour to pay attention to their production
activities for gaining cost and competitive advantages (McCullough & Melton, 2017).
SWOT analysis:
Before taking any action for increasing the promotion of the products and services, it is
necessary for the company to understand the actual situation of its working environment. The
internal analysis with the help of SWOT of the Under Armour is as follows:
Strengths: The strong points of the firm are as follows:

Innovation: UA from the beginning is paying attention to the needs and demands of the
customers. The company is using innovative technology for gaining competitive advantages.
Diversified product mix, new product offerings and different market segment are making
company to meet the changing demands of the customers (Krueger & Storlie, 2015).
Product Portfolio: Under Armour has become a strong competitor of Nike, Addidas and many
other firms working in the athlete industry. As a primary growth strategy, the firm is expanding
its product offerings among the additional market segments. Initially, the focus of the firm was
on the football, but later it moves to the baseball, basketball, rugby, golf, soccer and many more
(Vicente, 2016).
Weaknesses:
Lack of geographically diverse: The company is offering its services and products to the limited
regions. Due to the lack of geographical diversification, most of the people are unaware of its
products and brand.
Limited Marketing: The Company is conducting limited promotions of its products as compared
to the Nike, Adidas, Puma and many more. Nowadays, organizations are marketing their items
and services at a considerable range for increasing the sales and brand awareness. Concerning
this, the efforts of UA are less (Burgelman, 2017).
Opportunities:
Technology: With the increased use of internet and mobile applications, the market has become
technologically advanced. In context to this, UA can develop its mobile app along with the
fitness feature for providing information regarding the products. Wearable fitness devices will
also help in enhancing the profit and product offerings of the firm (Naraine, Séguin &
MacIntosh, 2015).
Threats:
High Labor cost: China is the largest supplier of textiles, and an increase in the labour cost along
with the private sector wages is affecting its market. Raising fees and price can have an impact

on the apparel industry which can affect the working process of UA (Funk, Alexandris &
McDonald, 2016).
Low Barriers to Entry: The capital investment for entering into the apparel sector is low which
provides new players with an opportunity to take advantage of it by coming to the market. Along
with this, there is significant price control and power of the suppliers within the industry which
can limit the market share to the existing firms (Melancon & Dalakas, 2018).
Thus, it is necessary for UA to handle its weaknesses for enhancing the sales, market
position and profit within the apparel sector.
Diversification Strategies:
Under Armour is using limited corporate diversification strategy. The maximum business
activities of the firm come under the single industry which is sport’s performance sector. The
firm earns revenue as a dominant venture, i.e. around 70 and 95 per cent of the clothing business.
While categorizing the various products of the company, one can found that the firm is
engineered at removing the sweat and offering the comfortable workout for the professional and
general athlete (Mahdi and et al., 2015). Diversification strategy of UA can be understood via its
mission statement which is “To make all the athletes better with the help of science, passion and
relentless use of innovation”. UA diversifies through selling its new items to the available
customers. The firm keeps stuck to their core customers and produces new products within the
area of sports performance apparel. This strategy of UA is entirely different from the Nike which
has categorized its different markets in the sports sector. It is clear that the niche of UA is tiny.
With the help of innovation, effective marketing and market, the firm can be a premium one
within the sports industry. On the other hand, the competitors of UA are expanding their business
over various markets (Bolos and et al., 2016).
Recommend Solutions
According to the case study, for handling the issue of limited marketing, Under Armour
has recently used digital technology. Now Under Armour has become the second largest athletics
brand in the United States, and it is all due to the use of digital marketing. The firm uses the
concept of will in its every role. For example, one of the ads of UA features the brand’s select
“Women of Will” which includes the pro-soccer player Kelley O’Hara. This advertisement

defines the “Will” depending upon the ability to handle the pressure and win the different
degrees of adversity which women athlete players usually faced in their game (Flynn, 2015).
Along with this, the firm also started a campaign named “Rule Yourself” which features
the “Will” in the form of ability to be disciplined within the training sessions. Similarly, the new
Slay Your Challenge campaign “will” is defined as the manner to win the next challenge. Thus,
it is clear from this, that UA has used effective ways to promote its sports along with the tagline.
The advertisements emotionally connect players to the brand which helps it in enhancing the
sales and number of customers (Grady, 2016).
Difference between the new marketing approach of Nike and Under Armour is as
follows:
 Nike represents it as a mighty king whereas UA acts like an underdog
 Nike pays attention to the democratizes fitness whereas UA focuses on the professional
athletes
 Nike helps in proving yourself right, and UA helps in proving others wrong (Tuten &
Solomon, 2017).
Under Armour now does not have a shortage of stars partners as it includes Tom Brady,
Gisele Bundchen, who contributes to the growth and development of the company. The tagline
of Nike is “Just Do it”, Under Armour targets this tagline by showing the brand as how to do it.
So the company is selecting effective strategies for handling its issue of limited geographical
diversification and marketing of products. Apart from it, UA needs to target and explore the new
market segment for expanding its target market. The endorsement contracts of the celebrities
used by the firm need to be adequately researched and re-evaluated for developing the best
potential endorsement contracts which can increase the brand awareness and decrease the risk
related with the unknown future payouts (Wear, Heere & Clopton, 2016).
On the other hand, with respect to the issue of global growth, the company possesses
significant potential for earning the profit within the international market and which can also
help it in increasing the profit margin in future. Along with this, the firm needs to expand its
product line. This will not only improve the potential for profits but also decrease the risk related
to the limited offerings. The diversification of products will lead to enhancing the reach of UA to

the new markets of the consumers (Grady, 2017). Another recommendation for the issue of third-
party manufacturing products is, the company needs to explore the options of acquiring or
integrating the production of their raw materials inside the workplace. However, more research
needs to be done for identifying whether this suggestion can be financially feasible and worth the
cost long-term or not (Fraga, 2016).
Plan for the future study
With respect to my future research, I would like to do a diploma in marketing subject.
The present assessment has developed my interest in the marketing area, and due to this, I want
to do further courses in this. Along with this, I will develop skills and knowledge which are
necessary within the vital area for getting a job in a well-repudiated firm.
CONCLUSION
From the study, it is concluded that Under Armour is a well-known company in the
United States. The firm is offering products related to the sports to all type of athletes. UA is
facing the issue in the field of limited marketing, no geographical diversification and many more.
Along with this, the competition of the firm is with top brands like Nike and Adidas. To this, UA
has recently used digital marketing strategy for enhancing its brand awareness and recognition
which helped it in gaining competitive advantages against Nike. On the other hand, there are
other solutions as well which UA can use for handling its issues.

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APPENDIX
1. Under Armour revenue Graph
The graph above represents the continuous growth of the company from the year 2008 to
2013.
2. Under Armour Key Ratios
September
2013
September
2012
September
2011
September
2010
Earning 1.38 1.21 0.90 0.67
Profit Margin 6.88 7.02 6.58 6.44
Return on
Equity
16.93 15.76 15.23 13.78
Return on
Assets
11.94 11.13 10.54 10.14
Price/Sales 3.39 4.12 2.47 1.81
Price/Earning 61.21 40.99 39.02 28.25
Debt/Equity 0.05 0.06 0.11 0.02
3. Net Revenue

2013 2014 2015 2016 2017
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
Profit
Profit
Thus, the profit of the company is increasing every year.
Net revenue by the product category
Apparel
Footwear
Accessories
Licensing
Connected Fittness
Therefore, it is clear from the above diagram that primary product of the company is Apparel
which helps it in earning a profit and growing market share.

2013 2014 2015 2016 2017
0
20
40
60
80
100
120
140
160
180
200
DTC Store Count (both owned and operated)
North America
International
The above graph represents the global image of the company. UA is working
extraordinary well in the United States but at the global market, the company is enhancing its
business, but it is comparatively low as compare to the Nike and Adidas.
4. Revenue in 2017
The below table represents the new revenue by segment for each of the year ending (December
31, 2017, 2016 and 2015)
2017 2016 2015
Standards Net Revenue Percentage of
net revenue
Net
Revenue
Percentage of
net revenue
Net
Revenue
Percentage
of net
revenue
North
America
$3802406 76.5 4005314 83.0 3455737 87.2
EMEA 469997 9.4 330584 6.9 230109 5.1
Asia-Pacific 433647 8.7 268607 5.6 144877 3.7
Latic
America
181324 3.6 141793 2.9 106175 2.7

Connected
Fitness
89179 1.8 80447 1.6 53415 1.3
Intersegment
Elimination
(1410)
Total net
revenues
$4976553 100 $4825335 100 $3963313 100