Under Armour’s rapid rise in the sports apparel industry under its founder and CEO Kevin Plank has surprised many. Plank has turned a company that he started in his grandmother’s basement into a powerful opposing force to Nike. The company’s competitive advantage comes through its focus on performance, and its products have been well received by athletes. The company currently enjoys a strong position as professional athletes and movie and video game creators clamor for its products.
Nevertheless, if Under Armour wishes to say on top of its game, it will have to tackle several issues head on that could negatively impact the company in the future if they are not addressed. To name a few, Under Armour will have to deal with the potential of an economic downturn and declining retail sales, its suppliers who currently have a great deal of power, a potential expansion of its product offering, and its lack of an international presence.
Summary of key learning points and strategic issues
1. How does Under Armour’s overall diversification set the company up for the future? 2. Does Under Armour’s strong dependence on its suppliers put the company in a threatening position? How could the company reduce its risk? 3. Assess the potential impact of an economic decline on Under Armour. 4. How can Under Armour increase its international presence? What lessons can the company take from the US market to help ensure its success? 5. Can the company maintain its current premium pricing strategy? Is departing from this strategy even an option for Under Armour considering its market position? 6. What is the impact of IP protection on a firm’s ongoing strategy? To what extent is Under Armour’s success tied to having this protection?
1. Perform a STEEP analysis to understand the general environment facing Under Armour. How will the firm be affected by external factors? 2. Use Porter’s Five Forces Model to analyze the apparel, footwear, and equipment industry in the US. Given this analysis, is the industry attractive or unattractive? 3. Who are Under Armour’s main competitors? How do they measure up against these competitors? 4. What are Under Armour’s main capabilities? Do they have a core competence? 5. Create a SWOT analysis to understand Under Armour’s strengths and weaknesses. Does Under Armour have a sustainable competitive advantage? Is so, what is the source? What about Under Armour’s evolution and current business strategy may pose problems going forward? 6. What is Under Armour’s business-level strategy? Is the strategy appropriate to offset the forces in the industry? Do you recommend any changes and/or foresee any challenges?
I. EXTERNAL ENVIRONMENT ANALYSIS
Summarize the external environment, including conditions in the general, industry, and competitor environments.
a. The General Environment
Definition: The general environment is focused on the future and can be analyzed by considering the STEEP framework: Social/demographic, Technological, Economic, Environmental/geographic and Political/legal/governmental factors at play.
Discussion Question 1: Perform a STEEP analysis to understand the general environment facing Under Armour. How will the firm be affected by external factors?
a. Sports: Under Armour has developed extensive sponsorships throughout the sports world to build its brand image. i. College: In 2005, Under Armour was supplying over 100 division NCAA IA football programs ii. Professional Sports
1. NFL: Under Armour currently supplies 30 of 32 NFL teams 2. Under Armour is the...