Case Study Under Armour

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Rotimi Oyewole
December 17, 2010
INBM 400 Seminar
Final Case Study

Under Armour

Under Armour is an emerging company in the sports apparel industry whose mission is to “Make all athletes better through passion, science and the relentless pursuit of innovation”. Under Armour was a disruptive innovator in the sports apparel industry by creating sports apparel using synthetic materials as an alternative to natural fibers, such as cotton. This important change in material resulted in a “shirt that provided compression and wicked perspiration off your skin rather than absorb it…that worked with your body to regulate temperature and enhance performance”. This promise to increase athletic performance differentiated it from competing sports apparel companies, but rivals have since implemented synthetic materials into their product lines. This case study seeks to analyze Under Armour’s history, resources, capabilities, and core competencies, business and corporate-level strategies, as well as the general environment and competitive landscape. After careful inspection of these varying areas, the factors contributing to Under Armour’s current success and future challenges will become clearer. The conception for Under Armour began over a year ago when CEO Kevin Plank played on the University of Maryland football team. Frustrated with having to repeatedly change his cotton shirt during practice, he envisioned a shirt whose materials allowed the perspiration to dry quickly, causing the athlete to be quicker, faster, and stronger as a result of less burdensome water weight. he strived to develop a shirt using synthetic materials that handled perspiration better. He developed a shirt that used synthetic materials to handle perspiration better and tested the prototype with his own football team. After he graduated, Plank went to different universities trying to sell his product. His big break arrived after managing to earn Georgia Tech’s football team as a client. As the performance apparel market grew, Under Armour diversified their product offerings, and developed different types of performance gear, and ventured into women’s apparel, footwear, and other merchandise. While Under Armour managed to develop an innovative and marketable product, their lack of resources is somewhat concerning. In terms of physical resources, their suppliers are limited thereby decreasing their bargaining power. This results in lack of control in pricing, which often translates to lower profit margins. Additionally, even though the technology behind Under Armour’s products was new, they failed to protect their intellectual property through patents and trademarks, opening up the marketplace to large competitors such as Nike and Adidas. However, one argument against filing patents for their products was that despite their claim of authenticity, it would be easy for counterfeiters and replicators to circumvent the patent and deliver a similar looking product. In regards to Under Armour’s financial resources, despite great growth, their increasing variable costs bloat their operating expenses. This challenges their future sustainability and is worrisome to investors. Nevertheless, one great resource that has had an immense effect on their operations was their investment in SAP software that greatly clarified logistics and distribution. Perhaps more influential in Under Armour’s success, however, may be its intangible resources. For instance, its reputation and popularity especially in the U.S. precedes itself. This is largely due to its authenticity claim; “most budding stars or wannabe weekend recreational athletes want to wear the gear the pros wear.” Furthermore, Kevin Plank’s capability to produce great ideas and motivate his employees is not only a resource, but translates into a fertile capability and core competency. When examining the individual processes and behaviors that enable the company to achieve its level of success, it becomes apparent...
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