Table of Contents

Executive summary
1.

Introduction

3
2.

Summary of the Current

Situation.4
2.1

Current financial

nder Armour Case Analysis

Performance.5
3.

External Analysis..

Ciro Njinyaho

..7
3.1

Driving Force for Change.

7
3.2

Porters Five Forces

Model8
3.3

Key Success

Factors.11
3.4

2014

Summary of External Analysis.

13
4.

Internal Analysis......

...13
4.1

Resources and Competences.

14

4.2

Value Chain Analysis.

15
4.3

Comparison of Strength to Rivals..

.16
4.4

Summary of Internal

Analysis17
5.

SWOT

Analysis17
6.

Strategy Recommendations, Alternatives Analysis and

Arguments19
7.
Appendices
21
Appendix 1: Under Armour
Revenue21
Appendix 2: Under Armour Key
ratios.21
Appendix 3: Value
Chain..22
Appendix 4: Major competitors market share.
....23

Appendix 5: SWOT
analysis....................................2
3
8.

Citations..

.24

Executive Summary
Under Armour is a company started by the former University of Maryland
football player Kevin Plank. Although the company started in a basement, they
have overcome many obstacles financially to have a continual growth in sales. The
founder has been successful in developing new and innovative gears and apparels
to help stay ahead of their competitors. Under Armour finds it extremely important
to maintain relationships with their managers and more importantly with
professional teams. The company has prided itself on maintaining a competitive
advantage by always having top notch products and adopting new strategies and
ideas to outcompete the rivals. The company strategy and initiatives clearly seems
to be working since Under Armour is able to compete with Nike and Adidas. Under
Armour mainly markets to people with active lifestyle, as a result the company
made it a priority to be a major player in the life of people who play sports or enjoy
being physically active globally. Some competitive advantages enjoyed by Under
Armour are the amount of fitness product they offer. Also the ability to recognize
the company is simple because their logos are easy to identify. With the strong
brand loyalty and the cost advantage that the company has, it is evident that the
company will expand in domestic as well as international market.
The company needs to expand their target market from national to
international and develop clothes for people interested in a more casual look. The
company should move from the performance based apparels to a more diverse set
of product segment which include athletic and sportswear. The fact that Under
Armour narrows its product to athletes makes the company to lose customers to
their competitors who sell both athletic and casual wears.
3

Introduction
Under Armour is a profitable and well-known company whose strategy and
initiative edge has giving it a greater recognition and attention. My analysis starts
by looking at a summary of the current situation i.e. the strategic posture and the
current financial performances. Secondly the analysis will summarize the external
analysis of Under Armour by describing the attractiveness of the industry, threats
and opportunities that are associated with the growth of the company. This section
will focus on the driving forces for change, Porters Five Forces Model, and the key
success factors. The third segment of my analysis will summarize the internal
analysis of Under Armour. This section will focus on the companys resources and
competences, value chain analysis, and a comparison of strengths to rivals. The
fourth segment of my analysis will summarize the SWOT analysis of Under Armour.
Hear, my analysis is to compare the external and internal factors that have helped
the industry archived its objectives. Based on my comparison of the internal and
external factors affecting the company, I will conclude my report by providing
recommendations that when properly executed will provide a significant and
continued competitive edge to compete in the 21 st century.

Summary of the Current Situation

This section provides a summary of the current situation, current financial
performances and posture. It provides a clear inside on Under Armours aggressive
push that involves many steps to further the companys accomplishments. Some of
which includes promotion and marketing, evolving sales strategy, increase presence
in the retail market, networking and referrals, widening its product offering,
targeting team managers.

1. Under Armour main focus is to make all athletes better through passion,
design, and relentless pursuit of innovation. The goal is to empower
athletes everywhere. This approach is very successful in that the company
is constantly coming up with new merchandise for consumers so as to
outcompete their biggest competitors.
2. Their main objective is to have universal guarantee of performance.
Under Armour is determining to dominate the market since every product
that they put out must be better than what is currently out in the market.
Their main goal is best in class, since the company is determined to
increase its presence in the retail market. Under Armours strategies are
consistent due to the fact that they are striving to provide the best
possible products for the consumers. These strategies have giving Under
Armour a sustainable competitive advantage over it competitors. Thus
giving the company a priority to expand into international markets.

Current Financial Performance

Under Armour has proven itself as one of the powerhouse in the sport apparel
industry in North America. The overall performance of the company in recent year
shows a net revenue increase of 24.6% from 2011- 2012 giving it a dollars increase
of $362.2 million. Its net income increase of $32.1 million dollars. Analysis on its
financial statement (see Appendix Table 1 and Appendix 2 below) shows that the
company has an average growth rate of more than 25 percent in the last 10 years.
A significant increase in growth of revenue over the past years hit its maximum at
38.4%. This was from 2010 to 2011 with a dollar amount increase of 65m as a result
of introducing new products such as hats and bags that decreased license revenues
on the one hand and increased accessories revenues on the other hand in 2011. In
this same year the net sales increased by 411.5M or 40.2% from the previous year
due partially to a 62.2% increase in direct consumer sales. At the same time, there
6

was a significant decreased in License revenues by 7.1% or 2.8M. With the current
strategy at hand, Under Armour was able to beat the other competitors in terms of
its financial performance.
Although the company was able to increase its factory house stores by 48%
or 26 additional factories, and also updated e-commerce website, gross profit has
remained around the same at 48%, while the EBITDA was at 13.5% and Net income
at 6%. The decrease in gross margin percentage was as a result of the following:
About 110 basis point decrease that was driven primarily by higher apparel
production input costs, this include cotton, in the current financial year. While higher
input costs continued to negatively impact apparel product margin in 2012 and are
predicted to continue to the first half of 2013.
Like every other company within the apparel industry, Under Amours
recognizes revenue via the time of sale. Its 10K notes the following: Net revenues
consist of both net sales and license revenues. Net sales are recognized upon
transfer of ownership, including passage of title to the customer and transfer of risk
of loss related to those goods. Transfer of title and risk of loss are based upon
shipment under free on board shipping point for most goods or upon receipt by the
customer depending on the country of the sale and the agreement with the
customer. In some instances, transfer of title and risk of loss take place at the point
of sale, for example at our retail stores. We may also ship product directly from our
supplier to the customer and recognize revenue when the product is delivered to
and accepted by the customer. License revenues are recognized based upon
shipment of licensed products sold by our licensees. Sales taxes imposed on our
revenues from product sales are presented on a net basis on the consolidated
statement of income and therefore do not impact net revenues or costs of goods

sold. The revenue recognition method of the company is fairly conservative, since
it doesnt provide a chance for revenue recognition until the goods are delivered to
it consumers. Our conclusion is that the companys revenue recognition policy is
aligned with the industry standards and exceeds on the conservative end of the
spectrum.

External Analysis
Due to the important of the external environment in a companys ability to
compete, the external analysis of the sports Apparel will describe the attractiveness
of the industry, opportunities and threats by providing valuable data and
information that are associated with the industry. My analysis will focus on the
driving forces of change, Porters Five Forces Model and Key success factors.

Driving Forces for Change

1. Rapid growth in the performance based apparels and gears globally: Due
to the increase demand in Footwear, it is becoming more difficult to center
the focus on Nike and Adidas as two of the most competitive players over
its rivals as a result of past records. This has proven not to be true since
there has been a significant increase in the youth population in the world
and thus led to a significant increase in the number of sporting activities
and also the number of people participating in sports. As a result of these,
Adidas and Nike have got to compete with Under Armour and many order
players in the industry and they are doing significantly well and are not

falling wayside. A second factor that could affect the sports clothing
company is the growing population of staying in shape. This has led to
new customers for Under Armour because they are currently focusing
their market on products that benefit sport players.
2. Growing buyer preference for the apparel that is differentiated from the
rest: Furthermore, a decrease in consumer spending as a result of the
current weak economy has made consumers to become very critical in
making choices. As a result of these, Under Armour has got to continue to
provide a superior product so as to convince todays customers of the
value of their brand and the quality of the product they are paying for.
Providing consumers with the assurance of a better brand equity needs to
be the focus of all marketing communicators. An increase in the
unemployment rates that has not only affected the United States, but also
the rest of the world and Europe in particular as dramatically decrease the
net income of Nike and Adidas thus providing Under Armour a chance to
compete on a central stage as it makes more of its revenue in the United
States.
3. Employing technological innovation to keep up with changing trends in
fitness: Every company has a different level of strategy that they operate
on at the various level of management. Due to the degree of competition
that exists in the industry, innovation has help companies to get their
product in the market faster so as to get an absolute advantage over their
competitors. On the case of the footwear division of Under Armour, the
Senior Vice President thus operate at a functional level thus, he brings the
strategic way of thinking into the core of the company. As a result of the

strategic nature of the functional level over the corporate level, we are
going to center our discussion more on the functional level.

Porters Five Forces Model

This next model explains the competitive dynamics of the industry. The first part of
Porters Five Forces Model is the analysis of the competitive rivalry.
1. Competitive rivalry within the industry: Under Armour has two large rivals
which are Nike and Adidas, these two competitors own a large portion of
the market share. The competitive rivalry within this industry is medium to
high. The biggest rival in the industry is Nike and it holds approximately
7.0% of the market while Adidas follow second with 5.4% of the market.
Under Armour only controls 2.8% of the market in 2011. Under Amour lack
of patent on the cooling shirt provides a strong competitive pressure on
Under Armour due to the ease of being able to recreate the product that
helped build the company name by its competitors. As the demand for the
breathable sports shirts grows, other sports clothing companies are able
to take advantage of the opportunities to gain the customers that have
not yet invested in Under Armour.
2. Bargaining power of suppliers. The strength of suppliers bargaining power
is low since Under Armour is able to manufacture its product in different
countries. In 2001 Under Armour was purchasing materials from 23
primary manufacturers from 16 different countries. Under Armour has a
very diverse base of suppliers thus providing the company with the ability
to make a choice and hence weakening the bargaining power of suppliers.

10

3. Buyers bargaining power: Due to a significant presence of Under Armors

product in various retail stores in North America has made the bargaining
power of consumers to be medium. Since the technology is fairly new and
is in high demand by athletes. This can also be justified by the significant
presence of Under Armours products in shops like Sports Authority and
Dicks Sporting Goods which comprises of 26 percent of Under Armours
revenue.
4. Threats of new entrants:

The barriers to entry are strong due to the

brand loyalty. Companies require a large amount of capital in other to

compete since the sport apparel industry need a large amount of
resources on brand advertisement and endorsement. Brand loyalty place
a large factor in the threats to new entrants since there are many
customers who trust the quality that comes from the most popular brand
makers as well as the feds that they carry with the products. As for
companies that are already present in the apparel market, it is easy for
them to move into the performance apparel market. With a lack of
patents, as with the case of Under Armour, it may be easy to enter but the
bottom line remains that it is difficult to compete as a result of no patent.
5. Threats of substitute products: Pressure from sellers of substitute products
are high due to a significant increase in the demand for performance
apparel. Due to the increase demand in Footwear, it is becoming more
difficult to center the focus on Nike and Adidas as two of the most
competitive players over its rivals as a result of past records. This has
proven not to be true since there has been a significant increase in the
youth population in the world and thus led to a significant increase in the

11

number of sporting activities and also the number of people participating

in sports. While the replication of Under Armour s specific cold gear and
hot gear technology has yet to occur, one can see that the competitive
gape between Under Armour and its rivals are beginning to get close. As a
result of a high threats of substitute, all of Under Armours other products
can easily be substituted by any one of the clothing manufactures.
Competitors positioning and future moves are the next factor in the external
analysis. Under Armours biggest competitors are Nike and Adidas. These two
companies when compared together hold a great amount of similarity. They both
specialize in apparel, equipment, sports footwear and accessories. They are also
involved in the production of casual wear to helps expand the demand of their
products. Under Armour compete with Nike a company that has created footwear
for a list of sports including but not limited to: soccer, running, baseball, basketball,
training, cheerleading, golf, football, lacrosse, skateboarding, outdoor activates,
tennis, volleyball, walking and wrestling. Nike also makes its shoes similar to their
sports apparel and the company has a lot of endorsements with professional sports
players such as Tiger Woods so as to promote their products.
Adidas on the other hand is exceptionally a similar brand to Under Armour
and Nike in that they also carry a vast variety of sporting gears as well as their large
footwear collection. Adidas like Nike also sponsors professional sport players and
sporting events around the world. As far as rivalry between these companies and
their anticipated moves for the future, Nike and Adidas thus attempt making
apparel with similar materials used by Under Armour for their shirts. If Under
Armour is able to obtain a patent on all its products, they will be able to stop Nike
and Adidas from completely copying their product.

12

Key Success Factors

This part of my analysis of the industry examines the key success factors in
achieving success in the Sport Apparel and Active wear industry key factor plays are
the main completive factors that enable company to prosper and out compete their
rivals. Here are some important key factors that Under Armour uses to out-compete
its competitors.
1. Innovative performance based apparels and gears: Under Armours goal is
to have a brand that lives up to its promise of having an authentic brand.
This started from the beginning as the company main strategy for success
has been that of innovation. The company introduced the first
performance and training based apparels and gears that was designed to
have a brand that lives up to its promise of having a quality product that
has multiple benefits for sports players and to keep athletics dry, cool and
light during the period of the game. This is also done by having a product
that does not have any stipulations or hidden requirements behind it. As
a result, when an under Armour shirt is purchased it does not need
anything to bring out the qualities that are promoted. These have made
the company to experience a significant growth in the sports apparels
industry.
2. Good marketing and promotion: Under Armour took every opportunity
they could to get to show off their brand. The company has an in house
marketing team that have been doing a great job in designing and
producing advertising and marketing campaign amid at promoting growth
13

and increasing sales. They would sponsor everyone and everything from
individual athletes to entire team, from youth programs to nationally
televised competitions. As a result of their great marketing skills
consumers are becoming more aware of the product and the brand
visibility is increasing. Under Armour is very aggressive in its promotion
strategy to the point that it provides new up-and coming athletes with
clothing and accessories to bring the official footwear supplier of the MLB.
This has helped the company to be visible among the consumer as the
leading performance apparels. As a result of its aggressive promotion, the
company in 2011 was able to spend $168 million dollars in marketing
expenses including the endorsement of players (Under Armour:
Challenging Nike). Under Armour also worked with retailers to devise
space in the store dedicated solely to Under Armour. In stores where such
space where not allowed, the company worked to show off their
merchandise in each individual department. As a result they were able to
open their own company-owned retail stores. The fact that they were
constant changes in athletic needs made the company to develop and
implement new designs, products, and technology to fit the changing
needs of the athletes.
3. Research and development: Under Armour is a company that has
invested a lot on research and development so as to out-compete its
competitors. Operating in a market where products substitutes are high,
Under Armour has made research and development the center point of its
operation. This as a result to be able to develop new and superior

14

products so as to attract more customers and also to compete with Nike

and Adidas.

Summary of External Analysis

After analyzing the threats and opportunities facing Under Armour and the
industry, it becomes clear that Under Armour faces a high threat of substitute
product, high competitive rivalry, and a pressing need for differentiation. The
industry boasts many qualities that have been seen in the five forces model. If the
company makes changes to combat these threats, the company will continue to
grow but if not, then what they are helping to grow is not going anywhere and their
competitors are going to benefit from their product. There are many key success
factors in the industry that Under Armour has taken advantage of such as having an
authentic brand, having room for growth, sponsorships, specific marketing, and
company integration. Although Under Armour faces many threats, there are still
many opportunities for Under Armour to grow as shown by the external analysis.
The significant increase in population provides a market for growth in the
sportswear and apparel industry, which allow Under Armour the opportunity to grow
the company. All of these factors bring a positive outlook on the future of Under
Armours sales and the sports and active wear industry.

Internal Analysis

15

The internal analysis shows that Under Armour is a strong company and has
an excess of momentum; they have an excellent product, low production cost,
significant brand recognition, and room for growth. After examining the external
analysis form the previous section above, this section will look at different aspects
of the company. This section will look at the factors that directly impact the
company such as, what Under Armour is ill-suited for in manufacturing and
sustaining themselves on the same levels as bigger rivals companies such as Nike,
choices the company has made, and a comparison of Under Armour competitors.
This analysis will provide an in-depth on Under Armours strengths, weaknesses,
opportunities, threats and steps that can be taken to compete in the long run.

Resources and Competences

Based upon the strengths, weaknesses, threats and opportunities of the
company, Under Armour separates itself from the competitors by expanding its
operations and growth with efficient use of resources and acquiring an
unprecedented expertise and core competences. Under Armour has great strength
in its internal environment that has help it to compete efficiently with the rivals. One
of the strength is that their working strategy is based on innovation technology
used in their material, and the great marketing development has given them an
edge over other competitors.
Many product lines Under Armours ability to offer anything and everything
that has to do with fitness and athletics i.e. socks, hats, shoes etc. online and the
companys brand name and reputation to make performance gear have given them
an advantage over their competitors.

16

One of the main weaknesses faced by Under Armour is that their supply chain
management fares poorly. While under Armour competitors such as Nike had an
average inventory holding time of 81.05 days, Under Armour was able to hold
inventory for 132 days in 2012. This brings me to a conclusion that Under Armour
lacks efficiency in its supply chain process.
One other weakness the company is having is that of customization, since the
general public can only buy what is sold in shops or online. They cannot order items
and request specific off brand color, have a name embroidered on the shirt, or have
an item tailored to their specific body measurements.

Value Chain Analysis

While Under Armour s value chain does not differ greatly from its
competitors, they have found a way to keep cost down by having suppliers
complete two or more separate parts of the supply chain. The value chain proved us
with a crystal idea of the various steps Under Armour takes in doing business and
proceeding in the environment. The design looks at the raw material network that
consists of Natural fibres (Cotton, wool, silk, etc.) and Synthetic fibres (Oil, natural
gas). While the source and manufacturing explores the component network of
textile which in this case is Yarn (spinning), Fabric (weaving, knitting, finishing),
Petrochemicals and Synthetic fibres. The marketing stage focuses on the production
networks which talks about apparel manufacturers. In North America an example
would be US garment factories (designing, cutting, buttonholing, ironing and
sewing), with domestic and Caribbean/Mexican basin subcontractors. In Asia on the
other hand, an example would be the Asian garment contractors with domestic and
17

overseas subcontractors. Securing clients focus more on the export networks which
is all about all retail outlets from Brand-named apparel companies to overseas
buying offices to trading companies. Distributing turn to look at the marketing
networks which pays more attention on retail outlets such as department stores,
specialty stores, discount chains, off-price, factory outlet, mail order, and lastly but
not the list Mass merchandise chains.
Under Armour has a strong Corporate Environment Code of Conduct which states
that: Under Armour was founded on the following core values: Innovation,
Inspiration, Reliability and Integrity. Consistent with these values, we seek to do
business with suppliers and their subcontractors that adhere to these practices,
follow established work place practices and comply with our Code of Conduct.
Value chain statement of Under Armour: Respect the Universal Guarantee of
performance (UGOP).Every product we build must be better than what's currently
available on the market-best in class. Every product must be tested and every
product must make athletes better, thats our guarantee. This roles which are
developed by the companys top level management and branding heads of Under
Armour footwear division are been followed by the company responding to matters
that affects their customers. The role of the value chain of Under Armour is in sync
with its compelling user experience, background support and relevant distinction,
downstream solution, familiarity and visibility of the company. Under Amours
mission statement includes the following: To make all athletes better, through
passion, design and relentless pursuit of innovation. This mission statement to a
larger extend is too open in nature. Under Armour customize their mission
statement to be more specific to specific units of the company. An example is: To
run athletes based on the confidence of products which are motivated through

18

innovation, passion, design and comfort and are performance driven. (See Appendix
3)

Comparison of Strengths to Rivals

Under Armour is devoted to the relentless pursuit of innovation and making

products to support the changing needs of athletes. Although the companys
innovation allows it to gain market share and stay competitive within the industry,
Under Armour is overall weaker than its rivals. Even though Under Armour is
engineered for both athletes and the general consumer, their loyalty base is not
large enough to compete with substitute products. Under Armour researches new
textiles to keep current with the best product options and often experiment with
color, fabric, and texture to flex with changing fashion trends and enhance product
awareness. The biggest issue facing Under Armour is the lack of patent on their
designs, meaning that any of Under Armours rivals could design a product almost
exactly like theirs without fear of retaliation.
While Under Armour has a recognizable design, it is not nearly as
recognizable as Adidas and Nike, who have been in business longer and have more
experience of how to market to customers and athletes, and have a much higher
market share than Under Armour as well as years and years of financial and
accounting data needed to properly identify trends in the market and forecast
accordingly. (see Appendix 4 for major competitor and market share chart).
Another weakness faced by Under Armour is the limited presents in
international markets. The company gets about 90% of their total sales from the
North American market while only 10% of its sales is coming from international
19

market. The strengths and weaknesses of Under Armour in comparison to their

competitors have a large impact of their future competitiveness, Whether or not
Under Armour can overcome these weaknesses will play a large part in determining
if the company can survive in the industry, and eventually surpass their rivals.

Summary of Internal Analysis

In conclusion, the internal analysis shows that Under Armour has both
strength and weaknesses when it comes to its structure, competitors and resources,
but they still have a long way to go before they can truly call themselves
competitive with companies like Nike and Adidas. Under Armours main strength are
their innovative products, low production costs, brand loyalty and high quality of
their apparel. Under Armour will need to survive until they can amass the same
resources, experience, and recognition as the bigger rivals. The major primary
weaknesses faced by Under Armour is the lack of international market share, their
lack of product line in comparison to their competitors, their limited number of
distributors, and their lack in the female market segment. The weaknesses put forth
in the internal analysis are what Under Armour needs to focus on in other to stay
competitive and also stay in business in the long run.

SWOT Analysis
The SWOT analysis provides a clear summary of the strength, weaknesses,
threats, and opportunities facing Under Armour. This analysis provides an in-depth
combination of the internal and external environment surrounding Under Armour on
a company level, and the entire industry. (see Appendix 5 for SWOT Analysis
Chart).
20

1. Strengths: Under Armour is the leader in providing high tech

undergarments for athletes competing in diverse climates using
innovative technology, high quality of their apparel, their brand loyalty, in
producing a moisture-wicking fabric geared to high demand of a narrow
target market. Their ability in dealing with the pressure of changing
industry conditions by creating opportunities using technology and honing
in on product differentiation keeps them from losing market share to
substitute products. As a result, Under Armour is gaining market shares at
a higher rate than their competitors. They have one of a kind product that
allows them to stay competitive in their industry. A big factor for their
brand is that it is recognizable to consumers. It is simple in design, which
allows consumers to easily identify the products. Under Armour inherits
selling power through buyers loyalty to the brand. Under Armours
customers are high end professional athletes paying for quick production
of customized products based on Under Armours image and brand
recognition.
2. Weakness: Under Armour suffers from a variety of weaknesses which
includes their lack of patent, international market, female market
segment, product line in comparison to their competitors, limited number
of distributors, and the lack of individual customizations. Their lack of
patent on popular cooling shirts provides Nike and Adidas a chance to
make their own product with the same benefit. This is significant because
they could lose their customers, and their competitors could come up with
better products. Under Armours lack of international market presence
provide its competitors an edge in the industry.

21

3. Threats: In an industry where competition is high, there are also

significant threats such as, the need for product differentiation within the
industry, high risk of substitute products, and high raw material expenses.
Under Armours lack of patent poses a high risk since all of their products
are at a high risk of substitution. Due to the degree of competition in the
industry, a substitute product could drastically hurt their company and its
market share. Also the price of Under Armour raw material is high since
the company uses petroleum to produce most of their products.

4. Opportunities:

Irrespective of the many weaknesses faced by Under

Armour, there are also many opportunities for growth in the industry.
These opportunities include Under Armours customization and growing
number of customers, innovation, growing population, and the expansion
into international market. There is a growing population of staying in
shape and going to the gym, which would bring Under Armour a lot of new
costumers. Also the need for innovation within the industry provides
Under Armour with more opportunities to outcompete its competitors.

Strategy Recommendations, Alternative Analysis and

Arguments

These next few pages will discuss some recommendations that will help
Under Armour to strengthen its current weakness with its narrow product offering
and provides ways to better adapt them for the future. My recommendation
includes increasing research and development, expanding their products into
22

international markets, get patents on their products, focus on differentiation

strategy, developing new product line to appeal to more consumers, shifting their
strategy from a focused niche to more of a broad segment, and diversifying their
product to carter for none athletes. Mindful of the degree of competition that exists
in the industry, Under Armour as a matter of urgency needs to focus on the
following recommendations in other to compete in the long run.
1. Expanding Under Armours presence in International Market. Although
Under Armours marketing strategy sought shop-in-shop approach making
it easy and appealing to stores decision to integrate the product, Under
Armour must increase their foreign market share to compete
internationally with their major competitors. This is important since Under
Armour depends on North America for about 90% of its sales. Going
international will not only generate significant revenue for the company,
but will also help the company outcompete its rivals. Under Armour
failure to enter international poses a risk of saturation on the current
market and also making it difficult for the company to compete or stay in
business in the long run.
2. Increase Research and Development: The investment in Research and
Development is probably the most important recommendation for Under
Armours continued growth. This is due to the fact that Under Armours
quality design and strong buying power are the key success factors to its
current market position. As competition and risk of substitutes increases
in the industry, Under Armour needs to invest a substantial amount in not
only the development of new product, but also in endorsements and
advertisement of the product. Furthermore, Under Armour needs to offer

23

more street clothing, more individual customization, and more products

targeted at female market. By doing so, they will have the ability to stay
competitive in the industry.
These recommendations if well executed should have the highest positive
effect on Under Armours future. Based upon all the analysis, I am confident that the
implementation of these recommendations will have a positive impact for Under
Armour to maintain a competitive advantage. Thus provide growth and success for
the company.

Appendices
Appendix 1: Under Armour Revenue Graph

Source: financials.morningstar.com

Appendix 2: Under Armour Key Ratios:

Earnings/Share

Sep 2013
1.38

2012
1.21

2011
0.90

2010
0.67

2009
0.46

2008
0.38

2007
0.52
24

Profit Margin, %
Return on Equity, %
Return on Assets, %
Price/Sales
Price/Earnings
Price/Book
Debt/Equity
Interest Coverage
Book Value, $
Dividend Payout, %

6.88
16.93
11.94
3.39
61.21
9.22
0.05
174.94
9.16
0.00

7.02
15.76
11.13
4.12
40.99
6.35
0.06
40.27
7.81
0.00

6.58
15.23
10.54
2.47
39.02
5.71
0.11
41.85
6.15
0.00

6.44
13.78
10.14
1.81
28.25
3.88
0.02
49.40
4.87
0.00

5.46
11.70
8.57
1.35
25.04
2.89
0.03
36.22
3.99
0.00

5.27
11.54
7.84
2.18
42.24
4.78
0.04
83.24
3.36
0.00

8.66
18.74
13.45
0.00
0.00
0.00
0.03
0.00
2.89
0.00

Appendix 3: Value Chain

25

Ronantonnoel. Strategic Management in a Global Context: Under Armour. May 31,

2012. http://www.slideshare.net/Ronantonnoel/strategic-management-in-a-globalcontext-under-armour. Viewed Dec. 5, 2013.
I do not take credit for the creation of this slide/value chain design. The source of
the document has been retained and cited in the Bibliography, as well as the
original sources of the information. The intended purpose of the diagram is to be a
visual aid used to extrapolate data relevant to the case study

26

Appendix 4: Major Competitor Market Share

Source: CNN Money

Appendix 5: SWOT Analysis

27

Strengths

Product Technology Innovation

Brand Loyalty
High Quality Apparel

Weaknesses

Threats

Substitute Products
Highly Competitive Industry
Need for Differentiation

International Market Share

Lack of Female Customers
Limited Number of Distributors
Focused Segment
Product Lines
No Individual Customization
Opportunities

Growth in Sports Wear Industry

Need for innovation
Foreign Market

Citations
Appelbaum, R., and Gereffi, G., 1994. Power and Profit in the Apparel Commodity
Chain in Edna
Bonacich et al. Global Production : the Apparel Industry in the Pacific Rim. PA:
University Press.
Associated Press (2009, January 31). Under Armour Takes a Chance on the Shoe
Market. CBS
http://www.cbsnews.com/stories/2009/01/31/business/main4766488.shtml
IMC, WVU lesson 2: IMC Foundation and Key Principles. Retrieved from
https://ecampus.wvu.edu on October 24, 2009
Burke, M. (2013, November 14). Under Armour, With First-Ever Acquisition, Enters
The World Of
Software. Forbes. Retrieved December 13, 2013, from
http://www.forbes.com/sites/
monteburke/2013/11/14/under-armour-with-first-ever-acquisition-enters-theworld-ofsoftware/
Cammett, M., 2006. Development and the Changing Dynamics of Global Production:
Global Value Chains
and Local Clusters in Apparel Manufacturing, Competition & Change, 10 (1),
pp 23-48.
Fool, Motley. (2011,Oct 31). Where Under Armour Is Finding Its Growth Retrieved
from

28

http://www.dailyfinance.com/2011/10/31/where-under-armour-is-finding-itsgrowth/
Roberts, Daniel. (2011,Oct 26). Under Armour Gets Serious. Retrieved from
http://management.fortune.cnn.com/2011/10/26/under-armour-kevin-plank/
Industry Canada, 2008. A Canadian Approach to the Apparel Global Value Chain,
[online] Available at
http://www.ic.gc.ca/eic/site026.nsf/eng/h_00102.html.
Ronantonnoel. Strategic Management in a Global Context: Under Armour. May 31,
2012.
http://www.slideshare.net/Ronantonnoel/strategic-management-in-a-globalcontext-under-armour. Viewed Dec. 5, 2013.
Team, Travis. (2012,Nov 25). Breaking Down Under Armours $53 Fair Value.
Retrieved from
http://www.forbes.com/sites/greatspeculations/2012/11/29/under-armour-hasgrowth-but-is still-a 53-stock/
Under Armour, Inc. - Our Mission. (n.d.).Under Armour, Inc. - Our Mission. Retrieved
December 13,
2013, from http://www.uabiz.com/company/mission.cfm
Under Armour, Inc. ClassA.(n.d.).Growth,Profitability,and Financial Ratios for( UA)
from
Morningstar.com. Retrieved December 13, 2013, from
http://financials.morningstar.com/
ratios/r.html?t=UAion=USA&culture=en-US
Under Armour(UA). (n.d.).www, Barchart.com. Retrieved December 13, 2013, from
http://www.barchart.com/profile.php?sym=UA&view=ratios
Under Armour: challenging Nike. (n.d.).Global Business Strategy Simulation Game.
Retrieved from /
http://www.glo-bus.com/Book2012

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