Under Armour's Strategy in 2013: Good Enough to Win Market Share from Nike & Adidas
Module 3 Case Assignment 2– Under Armour’s Strategy in 2013 – Good Enough to Win Market Share from Nike & adidas?
1. How strong are the competitive forces confronting Under Armour, Nike, and The adidas Group? Provide a five-forces analysis to support your answer.
The competitive forces confronting Under Armour, Nike and The adidas Group are:
Supplier Bargaining Power
Under Armour
Under Armour has established multiple suppliers of raw materials and fabrics, most of which are dispersed among south-east Asia and Latin America. Five suppliers provide between 50 to 55% of Under Armour’s fabrics. Almost all of their products were manufactured by 27 primary manufacturers dispersed throughout 14 countries. Ten manufacturers produce slightly less than half Under Armour’s products. Asia has the most products manufactured at 53%, followed by 19% from Central and South America, 18 % in the Middle East, and 8 % in Mexico.
Nike
Nike has independent manufacturers in Vietnam, China and Indonesia, which produce about 98 % of Nike’s footwear. Other apparel is manufactured in 28 other countries, mostly in China, Thailand, Vietnam, Malaysia, Sri Lanka, Indonesia, Turkey, Cambodia, El Salvador and Mexico.
The adidas Group
The adidas Group outsources over 95 % of their production to 337 independent contract manufacturers. Of these, 76 % are located in Asia, 16 % are in the Americas, and 8 % are located in Europe.
Supplier power is low, because the multiple sources for raw materials and fabricators provide all three manufacturers the bargaining power to negotiate favorable price concessions from one manufacturer or another. Lower cost manufacturers can be rewarded with additional sales, and higher cost manufacturers can be motivated to reduce costs by decreasing the amount of fabric ordered. Under Armour does not have as much buyer strength with the fabric suppliers, but five suppliers is still enough to be able to negotiate slightly favorable price
1. How strong are the competitive forces confronting Under Armour, Nike, and The adidas Group? Provide a five-forces analysis to support your answer.
The competitive forces confronting Under Armour, Nike and The adidas Group are:
Supplier Bargaining Power
Under Armour
Under Armour has established multiple suppliers of raw materials and fabrics, most of which are dispersed among south-east Asia and Latin America. Five suppliers provide between 50 to 55% of Under Armour’s fabrics. Almost all of their products were manufactured by 27 primary manufacturers dispersed throughout 14 countries. Ten manufacturers produce slightly less than half Under Armour’s products. Asia has the most products manufactured at 53%, followed by 19% from Central and South America, 18 % in the Middle East, and 8 % in Mexico.
Nike
Nike has independent manufacturers in Vietnam, China and Indonesia, which produce about 98 % of Nike’s footwear. Other apparel is manufactured in 28 other countries, mostly in China, Thailand, Vietnam, Malaysia, Sri Lanka, Indonesia, Turkey, Cambodia, El Salvador and Mexico.
The adidas Group
The adidas Group outsources over 95 % of their production to 337 independent contract manufacturers. Of these, 76 % are located in Asia, 16 % are in the Americas, and 8 % are located in Europe.
Supplier power is low, because the multiple sources for raw materials and fabricators provide all three manufacturers the bargaining power to negotiate favorable price concessions from one manufacturer or another. Lower cost manufacturers can be rewarded with additional sales, and higher cost manufacturers can be motivated to reduce costs by decreasing the amount of fabric ordered. Under Armour does not have as much buyer strength with the fabric suppliers, but five suppliers is still enough to be able to negotiate slightly favorable price