Under Armour: Advanced Strategy for International Market Expansion

This report provides a comprehensive analysis of Under Armour's international expansion strategy. It begins with an introduction highlighting the importance of international growth for the company, particularly given the slowdown in its North American sales. The report then offers a company overview, followed by an in-depth examination of Under Armour's international expansion strategy, including market selection, market analysis, and market entry strategies. The report also includes a situational analysis based on SWOT analysis, VRIO analysis, and a review of the institutional environment, considering political, economic, social, technological, legal, and environmental factors in both the home and host countries. The report further explores competitive analysis, including potential new entrants, the power of suppliers and customers, and the threat of substitutes, and discusses issues in global expansion. Finally, the report provides recommendations and conclusions based on the analysis.

ADVANCED STRATEGY 1
Advanced strategy
Under Armour
SUBMITTED BY:

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Contents
Introduction......................................................................................................................................3
Company’s Overview......................................................................................................................4
International expansion strategy......................................................................................................4
Institutional Environment................................................................................................................7
Home Country..............................................................................................................................7
Political.....................................................................................................................................7
Economic..................................................................................................................................7
Social........................................................................................................................................7
Technological...........................................................................................................................8
Legal.........................................................................................................................................8
Host County.................................................................................................................................8
Political.....................................................................................................................................8
Economic..................................................................................................................................8
Social........................................................................................................................................9
Technological...........................................................................................................................9

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Legal.......................................................................................................................................10
Environmental........................................................................................................................10
Competitive analysis......................................................................................................................10
Potential new entrant..................................................................................................................11
Power of suppliers......................................................................................................................11
Power of customers....................................................................................................................11
Threat of substitutes...................................................................................................................11
Issues in global expansion..........................................................................................................12
Recommendations and Conclusion................................................................................................13
References......................................................................................................................................13

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Introduction
Managing a business at an international level is an important part of the growth strategy. The
company has shown a growth of more than 20 percent over year every quarter in last six years.
The brand has gained a significant market position and started maturing and getting closer to
saturation in its home market. At this point of time, international growth has become an
important component to continue a long lasting growth story. In the recent time, the
organization is witnessing a slowdown in sales in North America (Hobbs, 2016). It’s their
international sales that will keep up with the expectations of the brand. The international sales at
Present amount to 15percent of the total UA’s growth. Looking on to the market condition, there
is still an ample of space to grow world-wide. It will be tough for a brand to compete against the
world’s most established brand Nike, Reebok and Adidas. With such a strong support the
company can make initiative in the international market leading a significant growth. UA has a
long way to go in order to gain increased sales. Interestingly, In FY 2015, international
revenues at Under Armour amounted to 17.5%. In contrast, Nike managed to collect
approximately 53.6% throughout the same period UA has continually stressed on its intention to
raise its international presence. In order to gain competencies, the brand is using Connected

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Fitness app (Hollensen, 2015). strangely 35% on the Connected Fitness network belongs to
regions outside the U.S. The brand gained a competitive advantage made possible thanks to the
acquisition of Endomondo in early-2015. The app was ranked amongst the top most efficient
training app with close to 20 million user’s base primarily in Europe. Therefore, Connected
Fitness gave UA the ability to market its products to international target audience at a fraction of
the marketing cost. Moreover the app is able to gain a significant market share with 200 million
users worldwide.
Company’s Overview
UA is America’s footwear, sports and casual apparel company formed in 1996 by Kevin Plank
The head office of UA is located in Baltimore, Maryland (Team, 2013). There are different
ranges of products manufactured by the company that include athletic shoes, t-shirt, jackets,
hoodies etc. Moreover, the company is making uniform for American Football, basketball and
soccer. Over the period of 4 years from 2010-2014, Revenue of the company has grown
tremendously (Kell, 2017).
International expansion strategy
Majority of companies are spending well in order to create a capacity in order to gain economies
of scale. The target of these companies is to convert the market opportunities and potential in
order gain potential. Where, there is larger demand, it is important to occupy the market
opportunity and to build efficiency in order to gain long-term sustainable objectives. An
international expansion strategy is crucial for the business organization in order to target
customers, channel strategy and to develop an effective creative model. For UA, it is important
to implement an effective market penetration strategy to use the corporate resources in the best

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possible way. In order to gain market competencies, it is important to look onto the following
segments in order to derive success.
 Firstly, it is important to choose a Target Market for the business.
 Secondly, a detailed market analysis in order to understand the market size and growth
potential etc is suggested to gain market competencies.
 Thirdly, by determining market entry strategies and by deciding value proposal,
positioning of the brand, targeting customers, product, influential price levels and channel
strategy.
 Fourthly, by determining operational and organizational model(Martin,2017)
 Fifthly, conducting feasibility analysis in the market and determining action plan
 Sixthly, through support in business partner selection, consultancy and commercial
agreements
 Lastly by Determination of production facility location
Under Armour, is a well known distributor of athletic apparel, footwear and accessories, shown a
growth over 20% in its top line. In this time-period, UA is able to manage the profits in a well an
effective way. The company's extraordinary expansion has been determined by its men's
synthetic performance apparel business. This business is considered as the backbone of the
company. Under Armour has maintained its growth through an effective revenue base and by
strengthening its footwear, worldwide and women’s wear businesses. . With such a strong
support the company can make initiative in the international market leading a significant growth.
UA has a long way to go in order to gain increased sales.

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It is projected that the company in near future will gain revenues from outside of their country.
Investing in the international projects and has created a well diversified market across the globe.
In the recent time, the company has allocated resources to the other foreign countries creating
ample of opportunities. The growth is only possible if the business is able to grow like
international brands: Nike and Adidas. Looking on to the market condition, there is still an ample
of space to grow world-wide. It will be tough for a brand to compete against the world’s most
established brand Nike, Reebok and Adidas (Verbeke, 2013).
Following In Nike’s Footsteps
By studying the world renowned brand Nike It is clear that the brand before entering the
European soccer market, was producing running and basketball. The European market was
conquered already by Adidas and Puma. Connecting them, 75% market share of Europe's market
has a huge potential in terms of expansion. Nike deliberately targeted key teams and players for
sponsorships. This in turn has helped the company in gaining market competencies. These
sponsorships have helped in building strong relationship with national leagues. In today’s
context, Nike is one of the most well-known names in the soccer business, supporting nearly 30
national teams and some of the most influential club (Deresky, 2017).
Under Armour has based its strategy on the similar concept. The company is currently is
associated with American Football. It has sealed well-known partnership agreements with
organizations in other sports. In this way they are able to align the organizational goal to
influence consumers. Though, its capability is to persuade these consumers to gain competitive
advantage. For gaining a competitive advantage the company is able to gain competitiveness
with teams like Tottenham Hotspur. In order to gain admittance to large fan bases and persuade
consumer insight, it is important to manage the teams through effective marketing strategies. By

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developing an international strategic alliance, the company can gain successfully so as to be
leveraged into even bigger company. The rising challenge in this sector can only be managed
through competitive strategies. At this point of time, international growth has become an
important component to continue a long lasting growth story (Cavusgil et al 2014).
Situational analysis based on SWOT
Strength- Under Armor of US can become the most successful company because of their
excellent product. They have a significant positive impact which adds to the value by increasing
profit. Their innovative culture can strengthen the brand value of UA because the customers can
relate the company with the recent products.
Weakness- their limited sale outside the North American market was the main after effect
of the emerging global penetration plan. Most of their sales come from the men’s garments
which is a drawback. UA has permitted NIKE to lead the industry as a result of that they are
constantly struggling to go ahead in the competition.
Opportunities- they have the opportunity to expand their market from male products to
other segments. They have also developed their accessories category with special performance
feature. International Expansion UA got the opportunity to global expansion. They not only look
into the domestic market of US but also outside.
Threat- Weak global economy has disrupted the growth prospects of UA. This has led to
an increase in costs and decrease in profit because of reduction in product demand. The
increasing competition from Adidas, Nike, Reebok and Columbia sportswear because of their

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huge investment on sponsorship, advertising and product innovation has posed a major threat for
UA.
The company Under Armor should be taken to the given location because there is an increase in
the minimum wages which will help in the growth and development of global brands. This can
be done by bringing a change in the pricing policy so that the likelihood of the customers who
will purchase the products will be modified. For gaining competitive advantage over Nike and
Adidas, UA must use an efficient market penetration and diversified strategy. Recently, their sale
has experienced slow down in North America so it will be the appropriate time to go abroad for
setting up the business. Australian market will tend to give new opportunities to UA because the
apparel industry is highly competitive. UA should gain a retainable position in the clothing
industry by policy development and gaining knowledge of the situation.
VRIO analysis
VRIO stands for the question of value, rarity, imitability and organization. To get insight
about UA’s internal environment and competitive advantage the process of VRIO analysis is an
essential tool. This analysis is based on the detailed evaluation of the various resources and the
abilities of Under Armor. In this analysis, such capabilities and resources are selected which are
considered as the best for the in the athletic footwear sector. For the expansion of the
organization, it is important to invest in new technologies and deliver competitive compensation
to the labors in the form of wage, salary or bonus. The shareholders can be provided with
dividend and stock purchase so that the company can stand in the competitive industry. If the
company can become competitive it should have a strong cash flow, reasonable debt which
should be able to give interest and the potential to raise capital which can be further examined by

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the return of the organization. ROI or return on investment and return on equity, if present in
good form can attract the investors to spend their capital for the company. Tangible resources are
used to gain competitive advantage and intangible resources are used to help the company
progress in the apparel industry. Creativity and innovation are the best possible factors for
developing the footwear industry. If UA can employ creative and innovative employers then,
they will be at a substantially advantageous position. It is important to have an outstanding sales
and marketing team for the success of the company, especially those who come up with new
products quite often.
Institutional Environment
Home Country
Political
•USA has a robust democratic setup considering fair and transparent placement of policies.
•The country has gained a massive political and economic authority over national and
international policymaking.
•Majority of international business organizations are located in the country.
Economic
•The country enjoys a GDP of over $16.760 trillion
•The economic system is well-developed and the economy bounced back after the 2009
recession with a growth of around 4% in the third quarter of 2014
•The country is also experiencing budget deficit, economic prosperity of the country.

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Social
•US face the difficulty due to an aging population leading to a serious labour shortage.
•The country has one of the most efficient education and healthcare system.
•People in USA has a liberal mindset with racial intolerance
•There is a continuous issue of rising risk of racial discrimination
Technological
•Innovation and technology are the backbone of the country.
•Moreover, the country is continuously enhancing and developing technologies in areas such as
nanotechnology, environmental
•IT is one of the important field help in facing intense competition from countries like China and
India.
Legal
•The country is following a strict legal structure with federal legal system.
•For international companies, legal factors are one of the most influential factors (Rothaermel,
2015).
Environmental
•Country is a continuous supporter of Laws regulating environmental pollution, attitudes towards
“green” solutions, climate change.

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Host County
Political
•The country has a bicameral Parliament, comprising the Queen, the Senate, and the House of
Representatives.
•The country has a strong legal policies supporting international business.
•The policies are trade friendly helping international business.
Economic
•Low-cost Commercial Property
•The Currency exchange rates against Euros, dollars and sterling is very favourable in Australia
today
•The foreign purchasers are able to purchase much more for their money
•The cost of living in large cities is very high.
•The economy of Australia is supportive in terms of business development.
•An effective market penetration strategy to use the corporate resources in the best possible way.
Social
•The changing social trends have a huge impact on the demand for a firm's products.
•There are three main social classes: working class, the middle class, and the upper class.
•The country has seen a growth in middle class that requires goods to be produced efficiently
without any other external interference.
•The country has witnessed an increase in professions, like accountants, computing specialists,
engineers, and medical doctors. There has been a tremendous growth in the economy.

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Technological
•The country has gained tremendous growth through effective business policies in terms of
technological advancement.
•The Commonwealth Scientific and Industrial Research Organization (CSIRO), supports
research and development in the country.
•This supports research and development.
•The technological growth and development in the country will help in gaining a competitive
advantage for the international brand.
Legal
•There is an increase in the minimum wages that will help in expansion of international brands.
•Legal changes affect a firm's costs and likelihood of customers purchasing the good or using the
service (Czinkota and Ronkainen, 2013).
Environmental
•Australia supports a strong Environmental protection legal system.
•Changes in temperature can affect the industries including farming, tourism and insurance.
•The climate is changing due to global warming affecting a change in government policies.
•The purpose is to develop environmentally friendly products and develop an effective demand
patterns (Hair, 2015).

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Competitive analysis
The industry has witnessed tremendous competition from the brands like Nike and Adidas.
There are very few companies who have a strong distribution channel. For, Now Nike and
Adidas are causing a strong competition. In order to gain a competitive advantage, it is evident
to understand the market segment and to deploy the policies accordingly. For the purpose of
gaining a competitive advantage, UA need to use an effective market penetration and
diversification strategy. Australia has a vast business opportunity. At this point of time,
international growth has become an important component to continue a long lasting growth
story. In the recent time, the organization is witnessing a slowdown in sales in North America
(Forsgren and Johanson, 2014).
Potential new entrant
There is a high amount of competition in the athletic apparel industry. UA has tremendous
opportunities to explore in the Australian market. Few segment in the athletic and sports
industry is very competitive. There are many international brands causing a tough competition.
For new entrant it will be tough to manage in difficult circumstances.
Power of suppliers
The large buyers are able to obtain goods at a cheap rate. Nike can buy goods at a very cheap
rate creating a sustainable competition. There is an immense competition in the industry. Brands
like Nike, Adidas and Reebok are causing extreme level of competition. In the recent time, the
brand has gained an effective market position. In order to gain a competitive advantage, it is
necessary to develop itself in the international market. Australia has a fair market condition and
an inclination towards sustainable market growth and development (Shank and Lyberger, 2014).

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Power of customers
The switch over cost of customers is very high. There are already many competitions as in the
industry. Existence of premium brands is causing a harsh competition to the companies. In order
to gain an effective market position, it is important to develop effective market strategies. These
strategies will help in occupying sustainable growth.
Threat of substitutes
Clothing is a necessary item which is predicted to grow in upcoming years. UA has to gain a
sustainable market position through development of policies and gaining an ongoing insight into
the different situation. For managing growth, it is necessary to gain effectiveness and to deploy
major functions and maintaining better opportunities. The growth is only possible if the business
is able to grow like international brands: Nike and Adidas. Looking on to the market condition,
there is still an ample of space to grow world-wide.
Issues in global expansion
An international expansion of a brand involves different issues causing hindrance in growth and
development of the business. Marketing barriers: A business finds difficulty in expanding
business due to issues in managing business in different culture. Culture obstructs the growth of
a product. For gaining efficiency it is important for a brand to manage distinguish goals and to
develop effective marketing strategies. There is a barrier in carrying out a business in a different
country and managing the operations all together. For gaining a competitive insight it is
suggested to deeply an effective framework leading to long term growth and development
(Chadwick, Chanavat and Desbordes, 2015).

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Legal barriers: These are the barriers caused due to a country’s legislation and are conducible to
the establishment. It is important for a business organization to develop effective policies in
order to manage objectives. In a competitive economy, it is important for a business organization
to understand the legal obligation and to form the policies accordingly (DeGaris, 2015). The
main focus here is to have a better understanding of the local law and policies so that; the
business can be operated effectively. One can face following issues while expanding the business
internationally:
 Change in economic trends
 Political instability
 Fluctuation in currency exchange rates
 Foreign investment and approval procedures
 Restrictions on termination and non-renewal
 Different regulatory requirements
 Access to capital and raw materials
 Accessibility of transportation and communication channel
 Labour and employment laws
 Technology transfer regulations(Fetchko, Roy and Clow, 2016)

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Recommendations and Conclusion
In order to deal with the above mentioned issues, it is important for UA to deploy effective
marketing strategies. The lifestyle of Australian attracts International brands to make investment.
It should deploy the same strategy that is been used by Nike or Adidas. By doing so, they can
gain an effective market position within a definite time-period. The company can make growth at
the international market and can manage the business environment in an effective way. Global
business strategies need to be compiled keeping in mind the importance of growth and
development. In this way they can gain market saturation. Under Armour has maintained its
growth through an effective revenue base and by strengthening its footwear, worldwide and
women’s wear businesses.
References
Cavusgil, S.T., Knight, G., Riesenberger, J.R., Rammal, H.G. and Rose, E.L.,
2014. International business. Pearson Australia.
Chadwick, S., Chanavat, N. and Desbordes, M. eds., 2015. Routledge Handbook of Sports
Marketing. Routledge.
Czinkota, M.R. and Ronkainen, I.A., 2013. International marketing. Cengage Learning.
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Deresky, H., 2017. International management: Managing across borders and cultures. Pearson
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Fetchko, M., Roy, D.P. and Clow, K.E., 2016. Sports marketing. Routledge.

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Forsgren, M. and Johanson, J., 2014. Managing networks in international business. Routledge.
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biggest-sports-brand/ Accessed on: 9 September 2017
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2017
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Verbeke, A., 2013. International business strategy. Cambridge University Press.