Strategic Management Case Study: Analysis of Under Armour (BUSM 3255)

This report presents a comprehensive case study analysis of Under Armour, examining its strategic position within the competitive athletic apparel industry. The analysis begins with an executive summary and introduction, followed by an in-depth exploration of the external environment using PESTLE analysis, considering political, economic, social, technological, legal, and environmental factors. The industry analysis utilizes Porter's Five Forces to assess competitive dynamics. A detailed company analysis covers Under Armour's strategy, business model, stakeholder relationships, financial performance, marketing approaches, and operational aspects. The report then presents a SWOT analysis, identifying the company's strengths, weaknesses, opportunities, and threats. Finally, the report concludes with strategic recommendations aimed at addressing key issues and capitalizing on opportunities for Under Armour's continued success in the global market. The report provides a thorough understanding of Under Armour's current state and future prospects, offering valuable insights for strategic decision-making.

Management

Management 1
Executive summary
The management is all about running all types of management. It is all about getting things
done in order to attain the objectives of the organization. This report includes the
management of Under Armour. The report is all about the application of the tools and
techniques of the strategic analysis and comprehension of the strategy process. The four
issues have been addressed in the report such as external environment and industry
environment. Further the company analysis has been done in order to better understand the
company. SWOT analysis has been also defined as a part of the report. Finally
recommendation has been given to Under Armour in order to address key issues being faced.

Management 2
Contents
Executive summary....................................................................................................................1
Introduction................................................................................................................................3
External environment and industry analysis..............................................................................3
Company analysis......................................................................................................................5
SWOT........................................................................................................................................9
Recommendation......................................................................................................................11
Conclusion................................................................................................................................12
References................................................................................................................................13

Management 3
Introduction
This report is all about the management of Under Armour. Under Armour was established in
1996 with the idea of more than a shirt and a brand. The company has totally changed the
performance apparel game. This report includes the external environment and industry
analysis of the company. The external analysis entails the Pestle analysis and the industry
analysis comprises the five forces. Further the company analysis has been defined comprising
strategy, business, position of business, stakeholders, finance, marketing, IT, operations,
research and development. The SWOT analysis has been defined and finally the
recommendations have been given in order to address the key issues.
External environment and industry analysis
The external analysis of Under Armour is possible through the PESTLE analysis:
Political factors
 The difficulty is caused in the operations of Under Armour due to various disruptive
events such as terrorist attacks on France, Brexit and volatility in the Chinese stock
market.
 The segment of the apparel clothing is in over 12 nations and exposes itself more to
the political risks (Blakely, Hendl, and de Lacey, 2019). The on-going political shifts
in UK and US affected state of the Under Armour.
 There is level of geopolitical instability in the Asian countries lead to uncertainty in
the operations of fashion industry which has impacted Under Armour.
Economic factors
 The increasing Chinese labour costs affect to the profitability of the company as the
costs of international labor is on the rise.
 The economic fluctuations in the Russia and demonetization in India put deep effect
on Under Armour (Gill, et al. 2017).
Social factors

Management 4
 Under Amour has brought affordable and good quality fashion to the customers. The
company has changed the trend and made high class fashion to not only limited to the
upper class.
 The obesity rates trending in US reflect that people are not active (Zivanovic, and
Luck, 2016). But the increase in the sports participant by the emerging markets
reflects good signs of growth for Under Armour in the developed nations like US and
UK.
Technological factors
 The increase in e-commerce influences Under Armour to introduce new technology.
The company is impacted by the availability of resources, demand and production
(Chin, Evans, and Choo, 2015).
 Under Armour is influenced by the cost structure in the textile which is apparent
clothing industry.
Legal factors
 The discrimination laws have been placed by the UK in order to safeguard the
employees and make sure that everyone in the Under Armour is treated fairly and
provided with the same opportunities.
 US government has placed laws to ensure a specific level of quality for the specific
products in order to keep customers safe.
Environmental factors
 Under Armour is affected by the several standards of the environmental protection.
The organization in the textile industry is not anticipated to incur the same level of
pollution and environmental degradation as an oil company.
 Under Armour is functioning in the direction of maximization of productivity and
minimization of carbon footprint (Andrić, Wang, Mahamadu, and Zhong, 2019).
The industry analysis of Under Armour is possible through the five forces
Competition in the industry- High
 There are uncountable numbers of the athletic apparel companies which compete with
UA in the specific market niches.

Management 5
 The identified competitors are Adidas and Nike. These are the older and established
companies with the larger market share (James, and Whitney, 2018).
The threat of new entrants- Moderate
 The barriers to the entry for the company are quite high. It requires a substantial
amount of financial and human capital in order to develop products and manufacture
them with the quality.
 It is possible for the new organizations to enter into the small niches of the industry.
(O'Brien, Parent, Ferkins, and Gowthorp, 2019).
Bargaining power of suppliers- Low
 It has been identified that the suppliers in the athletic apparel industry generally sell
materials in order to compete with the companies.
 The larger buyers are capable of attaining cheaper prices from the suppliers who order
larger quantities than the smaller companies.
Bargaining power of buyers- Moderate
 The buyers are likely to buy the best products from the extensive range of choices. It
puts pressure on the profitability of the company (Kharub, and Sharma, 2017).
 Under Armour has been successful in gaining a great reputation by marketing
campaigns and sponsorships.
The threat of substitute products-High
 There is always threat of the innovative version entering as a substitute.
 The high threats of the substitute products are faced by the company due to limited
number of competitors but are influential in making products of the same category.
Company analysis
Strategy
 Under Armour has been voted as the globe’s fifth most valuable business brand.
Brand recognition has been always successful in developing authenticity and
trustworthiness.

Management 6
 Under Armour is a multi-business and has collaborated with several brands. It
produces sports, casual apparels and footwear (Gil, 2017).
 The company uses a generic strategy for differentiation. Under Armour has made use
of the differentiated to differentiate its brand from the competitor companies. The
company has used formula of innovation in order to make its products superior to that
of the competitors. The innovation has assisted company to develop a different and
unique identity as compared to the competitors and attain an extraordinary market
share.
 Under Armour is seeking to expand globally. So the company has targeted to the
emerging nations like India, Argentina, China, Philippines and more. The emerging
nations offer more opportunities to the company.
 Under Armour is a leading performer since its launch in 1996. The key stakeholders
of Under Armour are its current and existing executives.
Kevin Plank, founder and CEO
Patrik Frisk, president and chief operating officer
Michael S. Lee, former chief digital officer
Harvey L. Sanders, independent director
Kip Fulks, strategic advisor
Kevin Plank held the position of CEO and Chairman. He has attained degree of MBS
from University of Maryland. Plank is the largest shareholder with 33.8 million class
C shares, 34.7 million class B shares and class A shares. Patrik Frisk is president and
chief operating officer. He joined the company in 2017 and owns 611,235 class C
shares. Michael S. Lee served as chief digital officer and joined company in 2016. He

Management 7
is the 3rd largest shareholder with 391,998 class C shares. Harvey L. Sanders is the
independent director and 4th largest shareholder. He is serving company since 2004
and owns 268, 689 class C shares. Kip Fulks has long connotation with the company
and occupies the conspicuous position. He is the 5th largest shareholder with 261,356
class C shares.
Businesses
Under Armour has produced state of the art products contrived to solve problems and make
athletes better along with the digital health and fitness apps construct to link people and drive
performance(James, and Whitney, 2018).
Position of businesses
Under Armour has positioned itself to make sure that it has the right mix to retain customers
in the business. The company has positioned relative to the competition in the apparel sector
due to the high sales and success. The products of the company are of high function and
judiciously priced to make it be reckoned with in the athletic apparel industry (Ansoff, et al.
2018). When it comes to the footwear segment, the company has positioned itself lower in
terms of the function and priced marginally higher. The company lowers in footwear segment
due to lack in sales.

Management 8
Stakeholders / values
The stakeholders of the company have a role in the successful performance of the
organization. The stakeholders have significant role in the organization and have been
enjoying growth after the company went public. The executives are the most trusted
stakeholders of the company since are commended to make acute decisions which decide the
future of the organization (Sadr, and Hosseini, 2016).
Finance
Under Armour has constricted its earnings outlook for the fiscal year 2018 and call for
adjusting earning per share (EPS) to fall between 21-22%. As per the forecast, Under Armour
expected to increase sales by 3-4% mainly in North America. Although sales can reach 5%.
The low single-digit revenue growth in US is expected to be 40% of the sales in 2023.
Marketing
The company has a market capitalization of almost $8.54 billion at the end of the year 2018.
The company is having substantial growth in the footwear segment and additional income
streams than direct sales from the customers. The market segmentation is done by the
company on the basis of the common needs, behaviour, common needs and targets. The
segmentation strategies of the company include differentiated and niche segmentation. The
niche segmentation strategy captures a large share of smaller niche market. The
differentiation strategy has been used to compete with brands like Nike and Adidas in the
fitness and health apparel.

Management 9
The product analysis is made by the company on the basis of all age groups. Under Armour
have product lines for men, women and children. The apparel line has been divided on the
basis of fabrics like heatgear, coldgear and all-season gear (Lovelock, and Patterson, 2015).
The company makes use of value-based pricing strategy for its products and is known for its
advanced quality. Under Armour is even able to charge extra for its product offerings. The
company mainly targets the players and athletic people.
The company make use of both direct and indirect channels. The direct channels are executed
through the stores and online shopping websites. The website provides shipping to over 200
nations in Latin America, North America, Europe, Middle East, Asia and Africa and more.
The promotions of the company consist of TV advertisements, online social media
campaigns, YouTube, magazines and sponsorships.
IT
The company make use of fabric technology and footwear technology. The technology makes
gear to work harder and smarter. The fabric and footwear technology offers to stay cool, stay
warm, stay dry, stay ready and stay moving. On the other side, apps offered by the company
improve overall health and fitness. It estimates the activity, workouts, sleep, and nutrition
with the mission of making better.
Operations
The operations of Under Armour have a positive impact on a large scale. The company work
to reset and reinforce underlying business with the three goals, operate, fuel and innovative.
Under Armour alters its end to end supply chain operations and re-evaluates its cost structure
comprising pricing strategies, volumes and asset network (Hridoy, et al. 2019).
R+D
The company incentivizes to design a new product which can play great role in the success of
the business. Under Armour has invested more on the applications with the great future clout
potential.
SWOT
Strength
Wide portfolio
Growing customer base
Adoption of digital apps
Weaknesses
Limited operating presence
High investment expenditure

Management 10
Opportunities
Introduction of new products
Collaboration
International markets
Threats
Enhanced competition
Product capabilities
Detailed description of the SWOT analysis
Strengths
Portfolio: The product portfolio of Under Armour has strengthened its positioning. The
company do not rely on a specific product. It is not just limited to only footwear but has also
combined accessories, apparels and more. The product category of the company has
eradicated the risk of failure.
Growing customer base: Under Armour is constant to evaluate brand additions into the
unfamiliar market segments by staying in touch with the target markets. The connected
fitness initiative helped company in contributing profits.
Adoption of digital apps: The company has transformed with digital apps such as
MapMyFitness, Endomondo and MyFitnessPal. It has helped company to enhance revenue
potential and diversified the resources (Bürklin, 2019).
Weaknesses
Limited operating presence: Under Amour is considered still a new brand with a limited
operating presence in the global markets. Under Armour still need to expand and produce
revenue from another international segment in order to sustain growth of the company.
High investment expenditure: Under armour has made high investment expenditure in the last
3 years which has resulted in higher risk. The restructuring plan of 2017 has been added to
the expenditure along with the great expenses.
Opportunity

Management 11
Introduction of new products: Under Armour has been innovative since the beginning. The
products of the company are technologically advanced. It enables company to continue the
trend of offering better products with the required modifications.
Collaboration: The collaboration of Under Armour with the stores like Kohl in 2017 proved
to be successful. The company can go for more collaborations and partnership in future and
can grow its revenue.
International markets: Under Armour can generate more sales and attain new customers by
making expansion in the international market.
Threats
Enhanced competition: The main competitors like Adidas and Nike have better brand
recognition and improved operational experiences internationally. It has threatened to Under
Armour’s working capability in the coming years.
Product capabilities: The products of the company like chin straps and athletic cups have
been criticised by the specialists as these causes’ potential athletic injuries (Vadicherla, and
Saravanan, 2015).
Recommendation
The above key issues to be faced by the organization can be tackled by the recommendations
given below:
Under Armour should increase its efforts towards the international market by focusing on
Europe. The company is recommended to acquire established companies in Europe. For
instance, Joma sports in Spain. The company can rebrand UA abroad as a futbol company,
not football organization. Under Armour is already sponsoring Tottenham Hotspur in EPL
and is recommended to sign such teams more in the future. The company is even
recommended to sign at least one national team in order to have presence in the upcoming
world cup 2022.
Under Armour should establish a large share in the female market. It should be made larger
to the men’s apparel business. The women are also more specific about wearing clothes
during workout. They make decision on the basis of the functionality of the products. The
key stakeholders will promote to this recommendation as it will increase the size of the