Category: Under Armour

Advertising is a way in which a company generates interest in a particular product line in order to encourage greater sales within specific markets, but also to generate a certain degree of hype and product patronage for the products/services that the company is offering. In some product markets though, certain types of consumer goods and services require an extra push so to speak when trying to conduct normal business operations. In such instances, as explained by Professor John Zang from the Wharton School of Business, if customers arent buying, more often than not it is an indication that a company is targeting the wrong people. Taking this into consideration, it can be assumed that in cases where a hard to sell product is involved it is not that the company is experiencing a situation where the consumer does not want to be a customer but rather the company is merely targeting the wrong consumer market. It is in such instances that techniques such as informative, reassuring and persuasive advertising are utilized in order to gain the patronage of the market segment that the company is aiming for. An examination of the methods of advertising utilized by Under Armour reveals that its methods are similar to that of its competitors in that the company utilizes a combination of traditional advertising methods (i.e. print ads, commercials and social media) to corporate endorsement deals such as those seen in its sponsorships involving the football and baseball programs of particular Universities. The main difference through lies in the fact that Under Armour has a greater degree of market penetration and brand recognition in sports such as football and baseball due to its sleek and aggressive designs (Subramanian & Gopalakrishna, 2012). The end result is that while the company has a lower rate of penetration in sports such as basketball (which are the traditional markets of companies such as Nike and Adidas) it has a high rate of penetration into football which makes up for its low rate of penetration in other markets. The reason behind this is connected to its sale of casual outfits with the Under Armour brand on them. Advertising through brand association with a variety of major football programs within the U.S. has resulted in a considerable level of sales for the company (Subramanian & Gopalakrishna, 2012).

Expansion into Foreign Markets

International expansion initiatives such as those done by Nike, Adidas and Reebok all attempt to target new markets within foreign countries due to flat growth in their main consumer markets (i.e. the U.S. and Europe). They do this by utilizing various local pop culture icons in print ads and television advertisements in order to create an association between such stars and the product the company wants to sell thus resulting in a far greater degree of sales and product patronage. In this case, this is a form of informative advertising wherein companies seek to create greater awareness for their products/services. This is of course in combination with other traditional methods of advertising that such companies have utilized in the past. When examining the current rate of expansion of the company into international markets, it is actually rather regrettable that a low rate of market penetration was seen in growth markets such as those in mainland Asia and South East Asia. While the company has attempted an expansion into the European soccer league through its sponsorship deals with the Tottenham Hotspur Football Club as well as becoming the official technical kit supplier of the Welsh Rugby Union, the fact remains that the current European market that Under Armour is expanding into has already been overly saturated with a variety of sporting brands, the least of which is Adidas, Nike and Rebook. The company has little, if any, expansion into the Chinese, Philippine, Malaysian, Indonesian and Thai markets which have all been noted as growth markets that have a considerable level of potential. Such a minimal level of market penetration at so late a period during Asias growth is indicative of a failure on the part of the company to capitalize on potential sales opportunities and does not bold well for its future especially in the face of the aggressive expansion of Nike, Adidas and Reebok into these new markets.

Financial Solvency

At the present, Under Armour has developed a considerable degree of financial solvency in the form of $1,472,684,000 in revenue as of 2011, this is a considerable increase from its net revenue in 2009 which was at $856,411,000. However, a closer examination of the data reveals a trend wherein only 6.1 percent of its 2011 revenue, namely 89,338,000 was derived from sales of its goods within markets outside of the U.S. While this is a considerable increase from its 2009 foreign revenue rate of 48,391,000, the fact remains that it is indicative of a considerable slowdown in offshore sales as compared to other sporting brand companies such as Nike, Adidas and Reebok which derive 30 to 40 percent of their revenue streams from foreign markets. On the other hand, the strength of the companys brand image should not be underestimated. Within the past few years it has set up numerous super stores which exclusively sell their merchandise and continues to expand into numerous new locations within the U.S. This is indicative of a considerable degree of financial solvency in terms of its ability to continue to grow. Such a business model is distinctly different from that utilized by Nike, Reebok and Adidas within the U.S. market wherein they rely on retailers such as Wal-Mart, Target and Foot Locker to be their primary method of selling their products to customers instead of creating their own stores. Thus, the method that Under Armour has chosen to better reach potential customers through the development of its own stores shows how effective its current business model is and how profitable the company has become within its current market (Plank, 2012).

Online Sales

Traditionally the buying and selling of products and services has always occurred either through a face to face transaction, a letter of intent or even a simple phone call where a person places an order and pays upon delivery. Yet due advances in technology where the scale and scope of the retail industry has come to encompass a global market place the traditional processes by which this industry has always followed has started to change. The internet has brought with it an unprecedented level of interconnectivity on a global scale through which more and more transactions such as banking and even retail are conducted. Sites such as Amazon.com, EBay, Craigslist and numerous other online retail suppliers are able to sell items such as computers, books, desks, clothing and even furniture online all of which are growing indicators of a shift in consumer preference from buying their wants and needs through traditional stores to picking the convenience of the internet for all their shopping needs.

As a result numerous companies have shifted various levels of their retail operations to online stores in order to compete with their rivals and take advantage of this growing trend. Compared to other retailers such as Nike, Reebok and Adidas, Under Armour actually has a considerable E-commerce platform in the form of www.underarmour.com which ships to a variety of international locations with a relatively low shipping price. Combined with its online social media campaigns through Facebook, Twitter and Google +, the company has been able to develop the brands online presence to the extent that this has enabled it to capture new consumer segments with a relatively low marketing cost (Plank, 2012). While there are no specific numbers published by the company as to how many sales its online social media marketing campaigns have generated, the fact remains that its Facebook page that has 2,234,038 likes shows just how far its online marketing campaign has reached an impressive assortment of potential consumers. It should also be noted that the current obsession over convenience has manifested itself through the growing number of E-commerce consumers with sites such as Amazon.com bringing in an estimated $48 billion in yearly profits out of the nearly $100 billion online consumer shopping market. While this is merely a manifestation of new technologies interacting with an age practice of increasing consumer convenience, the fact remains that by integrating itself into this new business structure, Under Armour has in effect secured its future in terms of creating a viable means of continuing to be relevant with an increasingly lazy consumer market.

Industry analysis

Bean & Radford (2000) indicate that research and development into new ways of producing and utilizing technology is one of the practices most often seen in technology intensive enterprises (Bean & Radford, 2000). This is due to the fact that technology has as of late been under a constantly accelerating level development and as a result has enabled new players to enter into markets whereas in the past distinct barriers to proper entry would have been present (Bean & Radford, 2000). As such, failure to sufficiently innovate along with new technological trends and products can be thought of as a failure on the part of the managerial practices at a company since being able to anticipate trends and use them to either reach greater market penetration or keep the company relevant to consumers is a necessity in todays technology intensive market economy. In the case of Under Armour it can be seen that the company has been anything but complacent when it comes to the development of its sporting equipment. Utilizing sleek designs, composite materials and a variety of patent protected fabrics, the company has been able to produce products that not only look aesthetically pleasing to the eye, but are known to increase an athletes performance due to the way in which they promote motion instead of inhibit it (Plank, 2012). While other competitors within the same market have also delved into the science of improving human performance through the types of equipment athletes wear, the fact remains that this method of product development has primarily been isolated towards footwear. With Under Armour this encompasses a wider variety of equipment from full body gear, all the way to groin cups. As such, this shows how Under Armour is in a way a better company in terms of being able to provide a wider variety of performance enhancing equipment to their consumers.

Conclusion

Overall, based on this examination of the company, it can be seen that the company does have a considerable degree of solvency and profitability in terms of the companys strength within the U.S. market. On the other hand, its continued lack of sufficient expansion into the Asian market is worrisome. As such, the company should resolve such a dilemma as soon as possible so as to not be left in the dust.

Reference List

Bean, R., & Radford, R. W. (2000). Powerful Products : Strategic Management of Successful New Product Development. AMACOM.

Plank, K. (2012). Under Armours Founder On Learning to Leverage Celebrity Endorsements. Harvard Business Review, 90(5), 45-48.

Subramanian, R., & Gopalakrishna, P. (2012). UNDER ARMOUR. Business Case Journal, 19(2), 62-83.

Under Armour is the international sportswear company that originates from the United States. The company manufactures a range of sports apparel with footwear as its primary product focus. Despite the relatively late market entry and initially modest financial performance, the company is currently in the top tier of the market segment, with its Adidas and Nike being among its closest competitors.

The companys mission is to make all athletes better through passion, design, and the relentless pursuit of innovation (Under Armour, n.d., para. 1). The mission is achieved through a range of strategies and maintained with the help of respective values.

The values include acting like a global citizen (the encouragement to make decisions and act with an international mindset and spread the idea among its customers), thinking like an entrepreneur (focus on performance and end result in order to maintain the competitive advantage associated with the companys status of the underdog), innovating (take risks and adjust actions based on the failures as a part of the pursuit of excellence), and performing as a part of the team (aligning the actions with the brands ambitious goals and participate in a collaborative effort of inspiration and support) (Under Armour, n.d.).

Despite the availability of products for wide demographics, the companys operations are organized in accordance with a highly specific strategy that emphasizes the uniqueness of products rather than a wide appeal. The focus on specific areas of sports offers Under Armour a significant advantage over its competitors who try to cover all major segments of the sports domain (Rothaermel, 2015). The focused strategic approach allows the company to create a clearer marketing message, maintain the viability of operational and delivery techniques, timely react to setbacks in performance, and create a more loyal customer base.

Under Armour is a publicly-traded company and discloses its financial performance in annual reports. According to the latest report, the companys revenues are increasing steadily for the last five years, with a reported gross profit of $ 2,240 million in 2016, a more than $ 200 million increase over the previous year (Under Armour, 2017). A large portion of revenue is attributed to the emphasis on innovation that is especially prominent in the footwear product line, where the company needs to constantly upgrade the characteristics of its products in order not to fall back behind the giants such as Nike and Adidas. At the same time, the report points to the reduction of net income by $1.7 million in 2016 (Under Armour, 2017). Therefore, it would be reasonable to suggest several objectives to improve the companys financial position.

Table 1. Financial perspectives.

The combination of the described initiatives is expected to have a positive impact on the financial performance of the company, both directly (e.g. by appealing to a greater number of customers as a result of greater coverage) and indirectly (e.g. garnering the recognition among the female athletes and, by extension, improving the image of the brand) (MacInnis, Park, & Priester, 2015). Importantly, all three objectives and respective initiatives are consistent with at least one component of the companys mission.

Namely, the outreach to the global market can increase the multicultural aspect of the brands approach and promote the international mindset. The introduction of the products designed to respond to womens needs both relies on and promotes the innovation of development and, to some extent, delivery and manufacturing, of the goods and provide the adjustments necessary to stay ahead of the competition in at least one area (Mata & Woerter, 2013).

At the same time, the appeal to the female audience is consistent with the current global values and the companys approach to diversification in the workplace (Fink, Kane, & LaVoi, 2014). In the long run, it may empower not only the customers but also the employees, thus serving as an inspiration for the team. Finally, the simultaneous enhancement in both offline and online distribution channels is expected to promote entrepreneurial values and ensure consistent performance and optimization of the existing mechanisms and tactical solutions.

References

Fink, J. S., Kane, M. J., & LaVoi, N. M. (2014). The freedom to choose: Elite female athletes preferred representations within endorsement opportunities. Journal of Sport Management, 28(2), 207-219.

MacInnis, D. J., Park, C. W., & Priester, J. W. (Eds.) (2015). Handbook of brand relationships. New York, NY: Routledge.

Mata, J., & Woerter, M. (2013). Risky innovation: The impact of internal and external R&D strategies upon the distribution of returns. Research Policy, 42(2), 495-501.

Rothaermel, F. T. (2015). Strategic management (2nd ed.). New York, NY: McGraw-Hill Education.

Under Armour. (2017). 2016 annual report. Web.

Under Armour. (n.d.). Mission and values. Web.

Executive Summary

Industry Overview

As of early 2018, the sports apparel, athletic and outdoor footwear, and related accessories industry is estimated at $250 billion. There are many niches within the field that are occupied by specialized firms, but Nike, Adidas, and Puma may be considered the biggest competitors in the market. The industry is steadily growing at approximately 4.3% annually, and by 2020 it is projected to hit $283 billion. The companies compete with generally similar products that achieve identical price and performance levels by employing a variety of different proprietary technologies. The industry has stopped growing explosively and established several large players that dominate the market, placing it in the early maturity stage of the product cycle.

The economic and sociocultural aspects of the industry are of the highest significance to a company. Countries other than the United States offer significant opportunities for a firm that is seeking to expand and enlarge its profits. Athletic apparel and footwear manufacturers are also closely linked with sports, signing promotional deals with players, and the popularity of the entertainment branch is essential to their marketing. The technological aspect is of moderate significance, as innovative ideas and technologies always emerge but generally fail to secure an advantage for any one company. The legal and political environments are not significant due to the lack of regulation on apparel and footwear manufacturers. The environmental aspect is also generally not substantial due to the publics disinterest and the generally low pollution of the manufacturing methods employed in apparel and footwear production.

Substitution and rivalry are active within the industry, as many companies sell similar products to whatever offering a company may choose to field. There is generally no cost to switching, though shoes that fit a particular foot type well may secure the loyalty of a consumer base. New entrants can enter the market without significant difficulty and present a competitive offering, a factor that contributes to the large number of participating firms. The variety of choices enables buyers to approach selection carefully, and the ability to try a shoe and determine whether it fits the foot comfortably allows them to make informed choices. As such, buyer power is high, unlike that of the suppliers, who are numerous and interchangeable, offering similar products.

The driving forces in the industry include globalization, the popularity of various sports, technological innovation, and the number of niches that demand specialized products. Entering new markets is now easier for American companies than ever. The advances in information technology also allow various sports to reach people throughout the world and increase their popularity, promoting the associated apparel as a result. New technologies make athletic clothing more comfortable and useful, spurring firms to improve their offerings to match the latest advancements. Lastly, the unique requirements of many sports and occupations mean that many markets can be taken over by a new offering that matches the needs of the participants.

Company Overview

Under Armour is not a market leader, and its competitive strength is currently lower than that of firms such as Adidas and Nike. Its weaknesses are in lacking consumer loyalty compared to the more prominent brands, an inability to secure promotional deals due to financial constraints, and the perceived value that is lagging behind some of the competitors. However, Under Armour has a unique selling point in its ownership of the worlds most popular fitness service and its integration into the firms products, which is unmatched by other companies.

2017 was not a good year for Under Armour financially, as the company did not show the high growth figures that characterized its operations for the 26 quarters before. The firm still grew, exhibiting a CAGR of 2.10% and an overall revenue growth rate of 25.70% between 2014 and 2017. The companys gross profit margin remains significant at 44.98%, but its operating and net profit margins are -0.20% and -0.97%, respectively, showing a dangerous trend. Expedient action by the management is required to address the issue.

Under Armour utilizes a focused strategy based on differentiation, aiming to appeal to athletes and people with active lifestyles who are concerned about sweat and want to integrate fitness trackers conveniently. Its ownership of an application with 160 million users can contribute to the distinction heavily, as the tool can be used to promote physical Under Armour products, which would, in turn, make the program more popular through integration. Under Armour may also appeal to people who live in hot or cold climates by showing its product ranges that are designed for such environments.

Strategic Issues

How can Under Armour enable sustainable growth and become profitable in the conditions of heavy competition, a slowing in the expansion of the industry, and the closure of traditional distribution pathways such as brick-and-mortar retail stores?

Robust Options

• Under Armour can attempt to secure more deals with athletes and teams to supply them with equipment and collaborate on product lines.
• Under Armour can increase the integration of its fitness services into the product and appeal to the market that is using its application without purchasing the companys equipment.
• Under Armour may increase its efforts to expand into markets other than the United States.
• Under Armour can attempt to enter the market for more varieties of sports, seeking to satisfy their specific requirements.

Clear Recommendation(s)

The primary recommendation for Under Armour is to improve the integration of its fitness service into the companys offerings. The investment has become profitable recently, and the firm should capitalize on its financially successful idea. The primary reason why pursuing this strategy is desirable is the inability of the competition to offer services that can compete with the product. They may choose to partner with less popular services or offer products with weakened integration.

The other strategies can also lead to considerable success, but they are more challenging to implement and not as reliable. Both promotion deals and international expansion are costly endeavors, straining Under Armours already insufficient budget. The development of specialized equipment for various sports is also a significant investment that is not guaranteed to pay off and requires time and effort for market penetration after it is completed.

Implementation Strategy

Under Armour has presented smart shoes that integrate fitness services already, giving it a sound base for promotion and data collection. The company should collect data on their popularity and the primary consumer complaints. Then, it should improve upon any issues discovered and work on integrating the functionality in most of its other offerings at a minimal cost. Under Armour should conduct extensive marketing demonstrating the advantages of its services when compared to competing products and fitness-tracking accessories. After the designs are finalized, the company should begin collecting data on their performance and issues and start iterating the designs to eliminate any concerns and make them as appealing to the consumers as possible.

Projected Results from Implementing Recommendation

The innovation is unlikely to allow Under Armour to return to the growth rates it experienced before 2017 immediately. The first generation of smart products, in particular, is likely to meet with significant criticism due to issues that were not discovered during production. The second generation, as well as the ones that follow, should eliminate most of the concerns and offer a unique product that will differentiate Under Armour from the competition and attract a significant consumer base. The revenue generated from the sales is likely to allow it to expand further and invest in traditional strategies. In the best case scenario, Under Armour will eventually become a global company and increase its sales many times over, becoming a high-profile rival to market leaders such as Nike and Adidas.

Industry Diagnostic Analysis

Appendix A: Dominant Economic Characteristics

• Industry: Sports and Outdoor Apparel, Underwear, and Footwear in the United States and Worldwide
• Market Size: $250 Billion as of 2018
• Scope of Competitive Rivalry: Global and International
• Market Growth Rate: Estimated 4.3% annual growth, reaching $283 billion in 2020
• Stage in Product Life Cycle: Early-Maturity Stage
• Number of Companies in Industry: 25 significant brand-name competitors in various market segments such as apparel and footwear. Nike, Adidas, New Balance, Polo Ralph Lauren, Salomon, and Footjoy are notable industry and niche leaders.
• Type of Customers: Consumers seeking high-quality athletic and lifestyle apparel that caters to specific needs and environments, such as the mitigation of hot or cold temperatures
• Key Differentiations: Technology, Dryness, Weight

Market Opportunities:

• Capitalize on the usage of fitness tracking services embedded in the girls smart products
• Expand international presence and sales throughout the world, particularly in countries such as China
• Sign more deals with athletes and sports teams to promote the brand to consumers
• Expand direct online sales by offering better prices and competitive shipping options

External Threats:

• A company has to compete with numerous firms, some of which may eclipse it in terms of size, while others are leaders of their niche markets with sizable experience.
• The closure of large retail chains can damage wholesale distribution results.

The market for sports apparel, athletic footwear, and related accessories was estimated at $250 billion in 2018 and projected to continue growing at a rate of 4.3% per year. It is in the early maturity stage, and large industry-leading companies such as Nike, Adidas, and Puma exist in the environment.

Appendix B: PESTEL Analysis

Political: Little Significance

A lack of significant regulation from any government bodies except for the laws that constrain every business

Economic: Very Significant

Countries other than the United States offer substantial economic opportunities

Sociocultural: Very Significant

Promotional deals with athletes offer significant marketing opportunities because sports are highly popular

Technological: Moderate Significance

Online fitness services that integrate with smart products are becoming more popular among consumers

Environmental: Little Significance

• Most consumers are not aware of the methods used to produce apparel and footwear
• The manufacturing procedures are not significantly harmful to the environment

Legal: Little Significance

There are few or no regulations related to footwear

Market Opportunities

• Countries other than the U.S. offer significant expansion opportunities for the brand
• Consumers are showing an increased demand for integrated fitness services

External Threats

The closure of retail chains harms the manufacturers ability to distribute their products.

The economic and sociocultural aspects of the industry are the most significant due to the opportunities offered by the countries outside of the United States and the popularity of sports that can be used to promote products. The technological aspect is of moderate significance due to the emergence of Internet-based fitness services that can be integrated into products. The other factors are of little relevance because of the lack of stringent regulations and consumer awareness of the influence of apparel manufacturing on the environment.

Appendix C: Driving Forces

• Increasing Globalization
• Popularity of Sports
• Number of Niches
• Technological Innovation

Market Opportunities

• Expand within the industry through international sales
• Become a market leader in the emerging fitness program market

External Threats

• Traditional means of retail are failing, forcing a shift to direct sales
• There is heavy competition in the industry, and it is challenging to create a product that will be a clear market leader

The international market presents significant opportunities for companies that want to expand beyond their original operating regions. Various sports are also becoming more popular, allowing industry participants to capitalize on athlete deals. The number of different disciplines and their associated requirements enable a firm to secure the market for a given sport with a specialized. However, the same type of shoe may not fit all people, and few, if any, products will gain the approval of an overwhelming majority of consumers. Lastly, the popularity of fitness applications among people with active lifestyles allows a company that keeps up with innovations to gain a significant advantage.

Appendix D: Five Forces Analysis

Substitutes: Strong

• Switching is not associated with extra costs
• The quality is comparable, though offerings are significantly different

Rivals: Strong

Under Armour has to compete with companies that are much larger or more highly specialized

Threat of New Entrants: Strong

Under Armour is a relatively new company, and others can enter the market with specialized offerings

Buyer Power: Strong

• Numerous options available for any purchase
• Consumers are price sensitive and know what fits them

Supplier Power: Weak

• There are multiple alternative suppliers available
• Supplier product is not highly differentiated

Market Opportunities

International expansion

External Threats

• Retail stores are closing, leading to difficulties with regards to maintaining the sales volume
• There are many substitutes within the industry of similar quality

The sports apparel and footwear industry has many participants who offer high-quality products, and so substitutes and rivals are powerful. New companies also have little difficulty entering as long as they introduce an innovative technology or approach. Due to these considerations, buyers are influential, as they have a broad array of choices and can determine what fits them best. Unlike them, suppliers are weak due to their similar products, high numbers, and inability to enter the market themselves due to a lack of relevant technology.

Appendix E: Key Success Factors

• Brand Recognition
• Promotional Deals
• Perceived Value to Customers
• Fitness Services Integration
• Sports Teams Partnerships

Market Opportunities

• Expansion within the industry through brand recognition
• Secure additional promotional and supplier deals with athletes and teams to improve consumer awareness
• Capitalize on active fitness service engagement

External Threats

Retail store closures are hurting sales.

Under Armour has to be able to compete with large firms such as Adidas, Nike, and Puma in terms of brand recognition to succeed in the global market. To do so, it should secure more promotional deals with athletes, especially those who participate in sports that are popular worldwide. It should also continue signing supplier deals with teams at all levels to improve awareness among its target demographic of young, athletic people. Under Armour should also differentiate its products by offering consumers considerable perceived value that would attract their interest. Its traditional strong points of adaptability and sweat removal are significant factors, but improved integration of its popular Connected Fitness offerings will also be beneficial.

Appendix F: Competitive Analysis

Competitor: Nike

• Sells: Athletic apparel and footwear
• Market Share: 27%
• Strengths: Brand Power, Advanced Technology, Many Promotional Deals
• Weaknesses: High Prices

Competitor: Adidas

• Sells: Athletic apparel and footwear
• Market Share: 10%
• Strengths: Brand Power, Diverse Selection of Products, Many Promotional Deals
• Weaknesses: High Prices

Competitor: Adidas

• Sells: Athletic apparel and footwear
• Market Share: 5%
• Strengths: Low Prices, Advanced Technology
• Weaknesses: Low Numbers of Promotional Deals

Internal Diagnostic Analysis

Appendix G: Weighted Competitive Strength Analysis

Internal Strengths

• Under Armour uses fitness services to a considerably higher degree than its competitors
• Under Armour puts considerable emphasis on promotional deals, though its efforts are limited by the occasional inability to outbid larger companies

Internal Weaknesses

The brand is not as well known as those of prominent competitors, and the offerings may not be as diverse.

Under Armour is third in this analysis due to its lack of a brand loyalty emphasis. Adidas takes first place due to its focus on a diverse lineup and perceived value of footwear that can be used for general outdoors activities. It has a small lead over Nike, which focuses on sports products and aggressively pursues promotional deals. Both are significantly ahead of Under Armour and Puma, which are close together. However, Under Armour obtains an advantage based on its fitness service integration, which is significantly ahead of every other company in the comparison.

Appendix H: Financial Analysis

Growth

• CAGR: 2.1%
• Growth Rate in Revenue (2014-2017): 25.70%

Profitability

• Gross Profit Margin for 2017: 44.98%
• Operating Profit Margin for 2017: -0.20%
• Net Profit Margin for 2017: -0.97%
• Net Return on Assets for 2017: -0.91%
• Return on Equity for 2017: -2.39%

Sustainability

Liquidity Ratios

• Current Ratio: N/A
• Quick Ratio: N/A
• Inventory Turnover: N/A
• Days in Inventory: N/A

Debt Ratios

• Debt-to-Asset Ratio: .20
• Debt-to-Equity Ratio: .39
• Times Interest Earned: -0.2985

Internal Strengths

The company is still growing, though the rate has slowed compared to previous years.

Internal Weaknesses

The company is operating at a loss.

Under Armour continues growing, but the rate has slowed compared to previous years. However, it is operating at a loss, representing a danger to its continued sustainability and shareholder attitudes. Investor dissatisfaction may lead to further damage to the company, preventing it from recovering from the current issues. The trend is especially likely to manifest because the firm has been reporting stable and significant growth along with considerable profits in previous years, and the sudden failure to maintain the trend is concerning. Swift and expedient action to improve profitability by expanding sales or reducing expenses is necessary to retain Under Armours position.

Appendix I: Product Life Cycle Analysis

Internal Strengths

Under Armour continues growing, albeit at a slower pace than optimal

Internal Weaknesses

The company is approaching its peak, after which it will begin declining and become unprofitable.

Under Armour appears to have exited the growth period of the product life cycle and entered the early stages of the maturity stage. Accordingly, its expansion rate has fallen, as it is approaching the peak of its potential. As the company progresses through the cycle, it will eventually stop growing and begin declining. As such, it is the task of the management to extend the maturity stage and ensure the survival of the company for a period that is as long as possible. It is likely impossible to return to the growth stage, as Under Armour is not introducing any innovative and disruptive products. As such, the firm is unlikely to match its prior growth statistics, but it can continue expanding at a slower rate.

Appendix J: Go-to-Market Strategy

Go-to-Market Strategy: Focused Strategy Based on Differentiation

Uniqueness Drivers

• Brand Recognition
• Fitness Service Integration
• Product Traits

Internal Strengths

• Integrated technology offering that is mostly unmatched by the competition
• Utilization of technologies that cater to specific needs and can be employed in various products

Internal Weaknesses

• Inability to secure sufficient quantities of promotional contracts due to financial limitations
• Competing products offer traits that are absent in Under Armour goods, though they lack some features, as well

Under Armour seeks to appeal to specific segments of the population that would benefit from its apparels and footwears materials and properties. As such, it tries to give its products a stylized, technological appearance to underline their complexity and incentivize consumers to familiarize themselves with the advantages of choosing the brand. It also differentiates itself from the competition by integrating its highly popular fitness applications into footwear and accessories. Doing so enables several benefits that cannot be matched by the majority of other sports apparel companies at little to no extra product cost. As such, it creates a significant advantage, mainly due to the current trend of increasing Internet usage.

Appendix K: Resources and Capabilities Analysis (VRINE)

Internal Strengths

• Recognizable Brand
• Fitness Service

Internal Weaknesses

• The distribution channels are being harmed and not expanding adequately to offset the losses
• The cost of the products provides no competitive advantage

Over time, Under Armour has developed a recognizable brand and claimed a significant portion of the market share. It should leverage this advantage to obtain further growth, though it will have to compete with other recognizable trademarks, partially offsetting the gain. However, its ability to offer integrated fitness services is unmatched in the industry. The fact that Under Armour owns the most popular fitness application in the United States enables it to provide services that cannot be imitated by the competition. They may partner with other companies to substitute the service, but the quality will likely be lower. As such, Under Armour may use the advantage it has to differentiate it from the variety of similar offerings that characterize the industry.

Appendix L: SWOT Analysis

Internal Strengths

• Access to popular fitness services that cannot be matched by the competition
• Unique technologies that address many of the concerns of the customer base and are adaptable
• A recognizable brand that can be used to sell products to consumers
• Sustained growth despite the damage sustained in 2017

Internal Weaknesses

• The products are priced in the same range as those of the competition, and reducing the costs is a challenging task.
• Lacking ability to distribute products via online retail due to insufficient attention paid to the subject
• Poor reputation among investors due to the bad publicity associated with the CEOs devotion to the firm

Market Opportunities

• Expand into other countries to tap into populated markets with significant purchasing power
• Create offerings for specific popular sports that are disregarded by many manufacturers and secure a leading position
• Secure more promotional and supplier deals with athletes and teams, especially in regions outside of the United States

External Threats

• The competition is powerful and well-established, with excellent reputations among consumers
• Brick-and-mortar retail chains are suffering due to the emergence of online marketplaces, hurting traditional product sales
• Investor reactions to Under Armours poor performance are causing its shares to drop further
• Most of the companys products can be substituted by other offerings, as they do not distinguish themselves sufficiently

Biggest Threats

• The number of possible substitutes that make it challenging to continue growing
• Closure of existing distribution channels before new ones can be established and expanded enough to compensate for the loss

Biggest Weaknesses

• Product costing that does not provide Under Armour with a significant advantage over the competition
• Difficulty in competing with platforms such as Amazon in terms of product costing and delivery standards

Strategic Issue

How can Under Armour maintain its growth and possibly return it to the high numbers it had shown previously in the highly competitive environment of the sports apparel industry, where prices are homogeneous, and there is not much differentiation between the offerings, in the circumstances of failing brick-and-mortar retail enterprises and an inability to compensate for the loss in sales?

Perspective Appendix

Appendix M: Growth Analysis

Advertising is a way in which a company generates interest in a particular product line in order to encourage greater sales within specific markets, but also to generate a certain degree of “hype” and product patronage for the products/services that the company is offering. In some product markets though, certain types of consumer goods and services require “an extra push” so to speak when trying to conduct normal business operations. In such instances, as explained by Professor John Zang from the Wharton School of Business, “if customers aren’t buying, more often than not it is an indication that a company is targeting the wrong people”. Taking this into consideration, it can be assumed that in cases where a hard to sell product is involved it is not that the company is experiencing a situation where the consumer does not want to be a customer but rather the company is merely targeting the wrong consumer market. It is in such instances that techniques such as informative, reassuring and persuasive advertising are utilized in order to gain the patronage of the market segment that the company is aiming for. An examination of the methods of advertising utilized by Under Armour reveals that its methods are similar to that of its competitors in that the company utilizes a combination of traditional advertising methods (i.e. print ads, commercials and social media) to corporate endorsement deals such as those seen in its sponsorships involving the football and baseball programs of particular Universities. The main difference through lies in the fact that Under Armour has a greater degree of market penetration and brand recognition in sports such as football and baseball due to its sleek and aggressive designs (Subramanian & Gopalakrishna, 2012). The end result is that while the company has a lower rate of penetration in sports such as basketball (which are the “traditional” markets of companies such as Nike and Adidas) it has a high rate of penetration into football which makes up for its low rate of penetration in other markets. The reason behind this is connected to its sale of casual outfits with the Under Armour brand on them. Advertising through brand association with a variety of major football programs within the U.S. has resulted in a considerable level of sales for the company (Subramanian & Gopalakrishna, 2012).

Expansion into Foreign Markets

International expansion initiatives such as those done by Nike, Adidas and Reebok all attempt to target new markets within foreign countries due to flat growth in their main consumer markets (i.e. the U.S. and Europe). They do this by utilizing various local pop culture icons in print ads and television advertisements in order to create an association between such stars and the product the company wants to sell thus resulting in a far greater degree of sales and product patronage. In this case, this is a form of informative advertising wherein companies seek to create greater awareness for their products/services. This is of course in combination with other traditional methods of advertising that such companies have utilized in the past. When examining the current rate of expansion of the company into international markets, it is actually rather regrettable that a low rate of market penetration was seen in growth markets such as those in mainland Asia and South East Asia. While the company has attempted an expansion into the European soccer league through its sponsorship deals with the Tottenham Hotspur Football Club as well as becoming the official technical kit supplier of the Welsh Rugby Union, the fact remains that the current European market that Under Armour is expanding into has already been overly saturated with a variety of sporting brands, the least of which is Adidas, Nike and Rebook. The company has little, if any, expansion into the Chinese, Philippine, Malaysian, Indonesian and Thai markets which have all been noted as growth markets that have a considerable level of potential. Such a minimal level of market penetration at so late a period during Asia’s growth is indicative of a failure on the part of the company to capitalize on potential sales opportunities and does not bold well for its future especially in the face of the aggressive expansion of Nike, Adidas and Reebok into these new markets.

Financial Solvency

At the present, Under Armour has developed a considerable degree of financial solvency in the form of $1,472,684,000 in revenue as of 2011, this is a considerable increase from its net revenue in 2009 which was at $856,411,000. However, a closer examination of the data reveals a trend wherein only 6.1 percent of its 2011 revenue, namely 89,338,000 was derived from sales of its goods within markets outside of the U.S. While this is a considerable increase from its 2009 foreign revenue rate of 48,391,000, the fact remains that it is indicative of a considerable slowdown in offshore sales as compared to other sporting brand companies such as Nike, Adidas and Reebok which derive 30 to 40 percent of their revenue streams from foreign markets. On the other hand, the strength of the company’s brand image should not be underestimated. Within the past few years it has set up numerous super stores which exclusively sell their merchandise and continues to expand into numerous new locations within the U.S. This is indicative of a considerable degree of financial solvency in terms of its ability to continue to grow. Such a business model is distinctly different from that utilized by Nike, Reebok and Adidas within the U.S. market wherein they rely on retailers such as Wal-Mart, Target and Foot Locker to be their primary method of selling their products to customers instead of creating their own stores. Thus, the method that Under Armour has chosen to better reach potential customers through the development of its own stores shows how effective its current business model is and how profitable the company has become within its current market (Plank, 2012).

Online Sales

Traditionally the buying and selling of products and services has always occurred either through a face to face transaction, a letter of intent or even a simple phone call where a person places an order and pays upon delivery. Yet due advances in technology where the scale and scope of the retail industry has come to encompass a global market place the traditional processes by which this industry has always followed has started to change. The internet has brought with it an unprecedented level of interconnectivity on a global scale through which more and more transactions such as banking and even retail are conducted. Sites such as Amazon.com, EBay, Craigslist and numerous other online retail suppliers are able to sell items such as computers, books, desks, clothing and even furniture online all of which are growing indicators of a shift in consumer preference from buying their wants and needs through traditional stores to picking the convenience of the internet for all their shopping needs.

As a result numerous companies have shifted various levels of their retail operations to online stores in order to compete with their rivals and take advantage of this growing trend. Compared to other retailers such as Nike, Reebok and Adidas, Under Armour actually has a considerable E-commerce platform in the form of www.underarmour.com which ships to a variety of international locations with a relatively low shipping price. Combined with its online social media campaigns through Facebook, Twitter and Google +, the company has been able to develop the brand’s online presence to the extent that this has enabled it to capture new consumer segments with a relatively low marketing cost (Plank, 2012). While there are no specific numbers published by the company as to how many sales its online social media marketing campaigns have generated, the fact remains that its Facebook page that has 2,234,038 “likes” shows just how far its online marketing campaign has reached an impressive assortment of potential consumers. It should also be noted that the current obsession over convenience has manifested itself through the growing number of E-commerce consumers with sites such as Amazon.com bringing in an estimated $48 billion in yearly profits out of the nearly $100 billion online consumer shopping market. While this is merely a manifestation of new technologies interacting with an age practice of increasing consumer convenience, the fact remains that by integrating itself into this new business structure, Under Armour has in effect secured its future in terms of creating a viable means of continuing to be relevant with an increasingly lazy consumer market.

Industry analysis

Bean & Radford (2000) indicate that research and development into new ways of producing and utilizing technology is one of the practices most often seen in technology intensive enterprises (Bean & Radford, 2000). This is due to the fact that technology has as of late been under a constantly accelerating level development and as a result has enabled new players to enter into markets whereas in the past distinct barriers to proper entry would have been present (Bean & Radford, 2000). As such, failure to sufficiently innovate along with new technological trends and products can be thought of as a failure on the part of the managerial practices at a company since being able to anticipate trends and use them to either reach greater market penetration or keep the company relevant to consumers is a necessity in today’s technology intensive market economy. In the case of Under Armour it can be seen that the company has been anything but complacent when it comes to the development of its sporting equipment. Utilizing sleek designs, composite materials and a variety of patent protected fabrics, the company has been able to produce products that not only look aesthetically pleasing to the eye, but are known to increase an athlete’s performance due to the way in which they promote motion instead of inhibit it (Plank, 2012). While other competitors within the same market have also delved into the science of improving human performance through the types of equipment athletes wear, the fact remains that this method of product development has primarily been isolated towards footwear. With Under Armour this encompasses a wider variety of equipment from full body gear, all the way to groin cups. As such, this shows how Under Armour is in a way a better company in terms of being able to provide a wider variety of performance enhancing equipment to their consumers.

Conclusion

Overall, based on this examination of the company, it can be seen that the company does have a considerable degree of solvency and profitability in terms of the company’s strength within the U.S. market. On the other hand, its continued lack of sufficient expansion into the Asian market is worrisome. As such, the company should resolve such a dilemma as soon as possible so as to not be left in the dust.

Reference List

Bean, R., & Radford, R. W. (2000). Powerful Products : Strategic Management of Successful New Product Development. AMACOM.

Plank, K. (2012). Under Armour’s Founder On Learning to Leverage Celebrity Endorsements. Harvard Business Review, 90(5), 45-48.

Subramanian, R., & Gopalakrishna, P. (2012). UNDER ARMOUR. Business Case Journal, 19(2), 62-83.

The definition of success, in general, varies from person to person and the circumstances under which the success is carried out. But, if someone is able to make a way in a company that is held under high esteem by rookies like me, then the success becomes much more rejoicing and motivating. Under Armour (UA) has been relentlessly serving the sporting community with the mission of making ‘all athletes better through passion, science, and the relentless pursuit of innovation’. It is this passion and pursuit that has motivated me to experience the environment of UA. I am a junior George Mason University student with accounting as my major. Though accounting work may not bring me in direct touch with the customers, the backhand job has to be effective enough to provide a helping hand to the customer care executives.

In these competitive times, the customer care executives are supposed to take care of the customer’s preferences and value his/her time while offering him/her the desired services. The entire team of executives is supposed to work like a cohesive team if the company is to expect loyalty from the customer/s. I fully realize the role an accounting intern can play in motivating the workforce to do well in serving the needs of the customer. I do have a US equivalent associate degree in accounting From Ethiopia. The 3 years of work experience in accounting from my country will also help me in learning the specialized techniques at UA in the minimum possible time. My experience includes recording entries to the journal, posting entries from the journal to the ledger, preparing financial reports using excel and peachtree accounting software, and preparing bank reconciliation. This will provide me enough confidence in handling the large volumes at UA. I am quite friendly with some of the routinely used computer programs like excel, word, PowerPoint, outlook, etc. which are a prerequisite for an accounting intern at UA.

PESTEL Analysis

Macro-environmental factors affecting a company’s performance in market are uncontrollable forces from the external operations. These factors cannot be controlled and only require a change in the business marketing, management, operations and production processes. The factors are analysed using PESTEL model; implying analysis of political, economic, social, technological, and legal issues.

Legal consideration

The Under Armour Company is based in Baltimore and it operates within the confines of the State’s laws. The company operates within the business structural laws that govern the business operatives in the state of Maryland.

Since the Under Armour Company also operates in international markets such as Japan, UK, Germany, Canada, and France, it has to adhere to the other laws that govern companies that operative across the globe in order to facilitate smooth operations.

Since the Under Armour Company is a registered local and international business with no record of unethical practices, the legal factors are not intense towards the operation of the business and have minimal impacts. The adherence has facilitated a smooth activity of the Under Armour Company all over the globe. For instance, the company has expanded from the US to continents such as Europe and Asia.

Technological Consideration

Technological macro-environmental factors are designed to affect business operatives in the global sphere. The type of machinery that a company opts to use in the production of its products and offer its services, the strategic measures it takes in the marketing process, and its accessibility has a lot of impact on the market.

Companies with innovative skills in their production lines and those using online marketing strategies are highly likely to have higher number of customers. The Service Oriented Architecture is a technological initiative by the Under Armour Company, which enables the management to monitor general trends in performance at a glance and spot out any existing bottlenecks that could be slowing down business.

The speed with which this happens helps the management to put corrective measures into place that eventually averts losses or negative growth. These technological advances have attracted more customers from diverse sports backgrounds due to the improved product orientation as evident in the success of the football cleats product in the US and European market.

Cultural consideration

The cultural set up and the population are a major key to the social concerns. The Under Armour Company is set against a social background with a population of dynamic social and cultural orientation. For instance, the US, Canadian, European, and Asian markets consist of highly stratified cultures that the company must satisfy in its lines of sportswear and other gaming apparel.

Against this background, the company has ensured that its products are not highly priced while still maintaining quality productions. For instance, despite the high quality products, the prices for the Under Armour Company’s products are flexible to the high-end, middle-end, and low-end customers across the globe. The main advantage that the company relies on is that the targeted population has a big following and fun for sports.

In addition to its base market in the US, the Under Armour Company has extended its sales to the new markets outside American such as Europe (UK, Germany, and France), Asia (Japan), and Canada. In achieving this goal, its products have been customized to be cultural sensitive and be able to be used across the global environment.

Economic consideration

The global market cycles has a great impact on the business operation both in the present and the future. The economic boom, recession, and any kind of inflation cause the business to make drastic measures to withstand the challenges of existence. Predictions of these economic factors are very difficult to estimate since their studies vary a lot based on the school of thought.

The market swings as a result of competition and economic depression are a real threat to the survival of the Under Armour Company since it operates in a very dynamic market that is directly affected by changed customer preferences and economic downturn.

Comparative foreign exchange also affects the Under Armour Company since it conducts global transactions in the foreign markets, that is, differences in the value of money at the points of production and destination markets has immensely impact on the earnings from exports of the company. Measures should therefore be undertaken to ensure that this concern does not create a negative impact to the Company’s operations.

Political considerations

The closer economic relations in the US, Europe, and Asia have benefited the Under Armour’s business performance for a long time. These regions enjoy political stability which is a perfect environment for doing business for the company. This is a good assurance for shareholders, both domestic and foreign, that their investment is safe and it is an incentive to them to add even more.

With continued political stability, the Under Armour Company is poised to grow and expand even more as many investors are assured of safety in the event that they decide to put their money into the venture. There are no fears of political wars and uprisings that can affect the Under Armour Company’s business performance in the current target markets.

Porters Value Chain Analysis

The Under Armour Company is focused on supplying its consumers with premium products that suit their needs and experiences. The company premises are furnished in luxurious manner that attracts potential consumers from all categories in the market. The company’s commitment to high ethical values is demonstrated through the value network and chain.

The company value chain commences with the development of products through own factories, independent manufactures and acquisition of licensed accessory supplies from partners, especially in Japan. As a global company, the Under Armour Company management considers standardised and system supported supply and production process as success factors.

Minority of the company’s full line products are supplied by independent and commissioned producers while majority are produced by the company’s own factories. The high self-production is significant for the Under Armour Company as it covers the portion of its traditional ready-to-wear product range which enables the company to gain expertise and optimise on both the product quality and availability.

As opposed to its competitors which produce their products from central points, the strategy to spread production points around the world consolidates its supply networks and strengthens its long-term partnerships. Moreover, the spread of the sourcing volume across the global network of suppliers spreads risks and makes the company independent of any single sourcing location and manufacturer.

From the manufacturing and supply points, the Under Armour Company products are distributed either through company’s own retail stores or through independent store owners and super markets as in the case in Europe and Asia.

Organization Culture

The physical structures of the Under Armour’s organization culture promotes positive relationship between favourable and effective job performance and work environment as attributes of motivation and congenial conditions. The structure encourages security, comfort and safety, and prevailing physical convenience.

Measuring factors such as interpersonal relations, working conditions, support and trust, welfare provisions, and work environment has greatly contributed to the organizational effectiveness in terms of product innovation and diversification. At present the Under Armour Company has more than six product lines.

The Under Armour Company has three building blocks of learning such as a supportive learning environment, concrete learning processes, and practices leadership that reinforce innovation. The managers play a significant role in setting up the learning environment for their employees.

This culture has created an ideal climate for innovation and communication among the employees. The Under Armour Company’s management has been working to fill the corporate culture with life to instigate individual employees to bring their commitments, personal skills and enthusiasm to the company, contributing to success of the company globally.

Furthermore, the company thrives on employee diversity to beat its rivals. The Under Armour Company is characterised by diversity and internationality, in the local and international product lines in Asia and Europe. The diversity and internationality of the company employees does not only represent the enrichment of the corporate culture, but also demonstrate a clear success factor of the company in its international competition.

The management competency has enabled the company to earn good reputation through provision of well aligned products that ensures consumer experiences. Moreover, the Under Armour Company management emphasise on follow-up of their customers to understand what they say regarding their products. This has enabled the company to improve its products to suit consumer needs.

Business Approach

The business approach of the Under Armour Company is organic growth since its expansion has been necessitated by the increasing customer base and demand for different product lines. For instance, the growth from the year 2005 to 2008 was inspired by market expansion and introduction of extra product lines with high demand in the local and international markets.

Besides, the company has successfully adopted the integrated perspective to launch new product lines targeting different customer segments. For instance, the successful launch of the football cleat in 2006 further expanded the company market to include the women, children, and youths.

From the inception of the company, the business strategy has always followed a strategic plan in physical growth and market growth within the US and external markets. For instance, the company applied its previous expansion plan within the US market to move into the European market. The plan involved proactive market engagement, systematic research, and constant innovation and product improvement.

The company uses the international diversity perspective to ensure that foreign markets are served with products that match their culture and expectations. For instance, in order to penetrate in the European and Asian market, the company partnered with local stores and outlets to ensure that the products sold in such markets are market oriented.

BCG Matrix and Competitors

The Under Armour Company has been strategic in product introduction to minimize cases of failure. As part of its long-term strategic value creation, the Under Armour Company decided to diversify its products to target the women and youth segment in the year 2006. Besides, the company has created several apparels such as the footwear and accessories besides the license revenues.

Apparently, the men wear has the highest market share followed by the women wear. The accessories are categorized in the cash cow matrix since they have high market share of 29% for the company despite the low growth. However, the licensing revenues have the lowest market share in the company’s market control matrix of less that 10%.

The Under Armour Company faces very strong competition from established sports apparel companies in the global market. Moreover, there are still more local companies entering the global apparel market. Given in table 1 below are some of the key competitors in the apparel industry.

Table 1: The Under Armour Company main competitors

Porters Five Forces

Porter’s five forces analysis is necessary for the Under Armour Company as it assists in comprehension of the market strengths and weaknesses. Table 1 below summarises Porter’s five forces with regards to the Under Armour Company.

Table 2: Porter’s five forces analysis

Business Strategy Diamond Analysis

The business strategy diamond analysis reviews the elements of arena, vehicles, staging, differentiators, and economic logic. In relation to the Under Armour Company, strategy diamond analysis encompasses proactive interaction of these elements to create a strategic business.

In relation to the diamond analysis, under the element of arena, the most active product category is that of men and it accounts for 34% of the total revenues. Despite the product presence in Europe, Canada, and Asia, the US market is the most active and commands 96% of the company’s revenues. The apparel category is more active than the footwear and the licensing revenues for the company.

Under the element of vehicles, the company has been proactive in licensing and joint venture, especially with the foreign market as part of its internalisation strategy. This has been successful as evident in its expansion into Germany, Japan, the UK, Canada, and France.

The main differentiation strategies for the Under Armour Company include product reliability, styling, and price. The company has three pricing categories for the high-end, middle, and low-end customers. The Under Armour Company products are developed to guarantee customer comfort.

In addition, all the product lines (footwear and apparel) are very stylish. The company has a sequence of initiatives such as product diversification. In the years 2004, 2005, and 2006, the company managed to roll out new products and stores that were very colourful and easy to notice. The economic logic of the above strategies was to provide premium products at competitive prices to ensure that company survives competition from giants such as Addidas and Nike.

Competitive Advantage Analysis

The Under Armour Company has established a brand image that enables it to attract customers with less effort as opposed to most of its less established rivals. The entrants have to invest heavily in promotion and advertising for them to attract new customers and maintain their customers. The established brand image has enabled the company to cut on its cost and get increased levels of profitability.

Strong commitment to quality and product innovation enables the company to get the right experience for their customers. Moreover, the company conducts more market research to ascertain customer thoughts and changing demands. Having been in the fashion industry for over 10 years, the Under Armour Company has acquired enough experience to compete favourably in the industry.

It has had sufficient time to learn from its weaknesses and develop long-term strategies that will anchor it through the market future. Fast adopting the emergent technological changes, the Under Armour Company has invested in technological creativity to suit its consumer changing needs. Finally, the company has been able to win more customers with its strategically-placed and ambient stores with conspicuous features such as attractive colours besides diverse quality sports apparel and footwear for all ages and gender.

Recommendations

The Under Armour Company should ponder introducing trade-offs to its products in countries which do not have strict laws that protect the business, when expanding further to other foreign markets. Countries like China do not have strict rules which protect business entities from being copied by competitors.

In safeguarding its products’ brands and making sure that it is not imitated by the local firms, the Under Armour Company should ensure that it introduces measures in its operative process that would make it distinct from any firm. The introduction of trade-offs should be applied while ensuring that the amount of revenue collected do not decrease.

The Under Armour Company may partner which medium businesses retailing products similar to those of its competitors. This strategy will expand its market and make it easy for customers to access the products. When properly implemented, the company is likely to counter the strategy of its competitors, such as Nike and Addidas, of reaching the customers through proxy retailers.

Company’s Strategy to Expand Internationally

Under Armour is one of the emerging sportswear firms in the global market. It has a comprehensive strategy to help it expand to the global market. According to Cavusgil, Knight, and Riesenberger (310), a firm may choose different strategies when making an entry into international markets. In this report, the researcher will look at how Under Armour can use franchising as an internationalization strategy to enter the Indian market.

This clothing company cannot afford to ignore the Indian market that has a population of over 1.2 billion people. However, this market is very different from the American and European markets, where this firm has experienced massive success. The majority of Indians are poor, and their purchasing pattern is also very unique. Making a direct entry through export strategy may not register the expected success. This means that this firm will require a unique strategy that will enable it to achieve the expected success. Franchising will offer this firm an opportunity to enter the Indian market at the least cost possible.

Integration-Responsiveness Framework

As this firm seeks to enter the global market, it will have to manage the pressures of global integration and local responsiveness. Some of the pressures from the global integration that this firm will face include the diversified needs of multinational customers, competition in the new market in India, technology intensity, and cost reduction. Managing these pressures will define the ability of the firm to achieve success in this new market.

The firm will also need to deal with the pressures of local responsiveness when making an entry into the market. Issues such as variation in tastes and preferences of the customers will have to be given serious consideration. The management will have to appreciate the fact that there is a difference in traditional practices and infrastructure in this country. The United States and Europe have more advanced infrastructure as compared to India. However, this firm will have to find a way of working with what is available locally. The distribution channels used locally may also be slightly different from what is common in the home country.

Pressures Paramount in this Case

In the case of having a franchise of Under Armour in India, the paramount pressures that will have to be dealt with majorly come from the global integration category. This is so because the local responsiveness pressures can be dealt with by the franchisee who understands the local Indian market. These pressures include competition, cost reduction, and technology intensity. These pressures are chosen because the franchisee may not have knowledge of how to manage them adequately.

Distinct Strategies

Differences in the tastes and preferences of the customers will be given priority over the other three pressures presented in this exhibit. Government demand will not be an issue as long as the franchise is operating within the law. Infrastructural differences and uniqueness of traditional practices can easily be managed because the franchisee understands the cultural practices of the country. The franchisee will also be in a better position to find a way of moving the products into the market despite the challenges that might be present (Cavusgil 76). The pressure of distribution channels may pose a challenge, but the franchisee can easily modify that of the parent firm to fit in the local context.

Works Cited

Cavusgil, S. International Business: Strategy, Management, and the New Realities. New Delhi: Pearson Education, 2009. Print.

Cavusgil, Tamer, Gary Knight, and John Riesenberger. International Business: The New Realities. New York: Cengage, 2015. Print.

Under Armour is the international sportswear company that originates from the United States. The company manufactures a range of sports apparel with footwear as its primary product focus. Despite the relatively late market entry and initially modest financial performance, the company is currently in the top tier of the market segment, with its Adidas and Nike being among its closest competitors.

The company’s mission is to “make all athletes better through passion, design, and the relentless pursuit of innovation” (Under Armour, n.d., para. 1). The mission is achieved through a range of strategies and maintained with the help of respective values.

The values include acting like a global citizen (the encouragement to make decisions and act with an international mindset and spread the idea among its customers), thinking like an entrepreneur (focus on performance and end result in order to maintain the competitive advantage associated with the company’s status of the underdog), innovating (take risks and adjust actions based on the failures as a part of the pursuit of excellence), and performing as a part of the team (aligning the actions with the brand’s ambitious goals and participate in a collaborative effort of inspiration and support) (Under Armour, n.d.).

Despite the availability of products for wide demographics, the company’s operations are organized in accordance with a highly specific strategy that emphasizes the uniqueness of products rather than a wide appeal. The focus on specific areas of sports offers Under Armour a significant advantage over its competitors who try to cover all major segments of the sports domain (Rothaermel, 2015). The focused strategic approach allows the company to create a clearer marketing message, maintain the viability of operational and delivery techniques, timely react to setbacks in performance, and create a more loyal customer base.

Under Armour is a publicly-traded company and discloses its financial performance in annual reports. According to the latest report, the company’s revenues are increasing steadily for the last five years, with a reported gross profit of $ 2,240 million in 2016, a more than $ 200 million increase over the previous year (Under Armour, 2017). A large portion of revenue is attributed to the emphasis on innovation that is especially prominent in the footwear product line, where the company needs to constantly upgrade the characteristics of its products in order not to fall back behind the giants such as Nike and Adidas. At the same time, the report points to the reduction of net income by $1.7 million in 2016 (Under Armour, 2017). Therefore, it would be reasonable to suggest several objectives to improve the company’s financial position.

Table 1. Financial perspectives.

The combination of the described initiatives is expected to have a positive impact on the financial performance of the company, both directly (e.g. by appealing to a greater number of customers as a result of greater coverage) and indirectly (e.g. garnering the recognition among the female athletes and, by extension, improving the image of the brand) (MacInnis, Park, & Priester, 2015). Importantly, all three objectives and respective initiatives are consistent with at least one component of the company’s mission.

Namely, the outreach to the global market can increase the multicultural aspect of the brand’s approach and promote the international mindset. The introduction of the products designed to respond to women’s needs both relies on and promotes the innovation of development and, to some extent, delivery and manufacturing, of the goods and provide the adjustments necessary to stay ahead of the competition in at least one area (Mata & Woerter, 2013).

At the same time, the appeal to the female audience is consistent with the current global values and the company’s approach to diversification in the workplace (Fink, Kane, & LaVoi, 2014). In the long run, it may empower not only the customers but also the employees, thus serving as an inspiration for the team. Finally, the simultaneous enhancement in both offline and online distribution channels is expected to promote entrepreneurial values and ensure consistent performance and optimization of the existing mechanisms and tactical solutions.

References

Fink, J. S., Kane, M. J., & LaVoi, N. M. (2014). The freedom to choose: Elite female athletes’ preferred representations within endorsement opportunities. Journal of Sport Management, 28(2), 207-219.

MacInnis, D. J., Park, C. W., & Priester, J. W. (Eds.) (2015). Handbook of brand relationships. New York, NY: Routledge.

Mata, J., & Woerter, M. (2013). Risky innovation: The impact of internal and external R&D strategies upon the distribution of returns. Research Policy, 42(2), 495-501.

Rothaermel, F. T. (2015). Strategic management (2nd ed.). New York, NY: McGraw-Hill Education.

Under Armour. (2017). 2016 annual report. Web.

Under Armour. (n.d.). Mission and values. Web.

Under Armour is an American company that produces footwear, sports, and casual apparel. Under Armour’s marketing company predominantly includes sponsorship agreements with many celebrity athletes and product placements in series such as House of Cards and numerous Marvel movies. Under Armour’s online presence is quite useful due to its well-functioning web site where customers can view and buy their products online with worldwide shipping. Moreover, their social media pages are actively used in brand promotion.

The strong part of Under Armour’s marketing strategy is User-Generated Content (UGC) in their social media accounts. Nowadays, customers do not care about what the brand says about their products. According to Smith and Anderson (2019), the feedback from their peers and famous athletes is more valuable for the customers. The company has implemented customer reviews, ratings, and feedback on their website, and videos on Instagram from different wear-testers and famous sportsmen like Dwayne Johnson and Stephen Curry. Their marketing philosophy is to inspire athletes to pursue their goals. One of the strengths of the company’s marketing strategy is to apply patient sponsorship, which means they are sponsoring high-profile novice athletes rather than focusing on already famous athletes.

Comparing to other companies, Under Armour has a lot of work to do to develop their online presence. For example, the number of views on the Nike’s latest video on Instagram page reached almost 900 thousand, while Under Armour’s latest video was watched by 73 thousand people. Nike actively posts stories with famous athletes and their workout and daily routine, which attracts many viewers.

Supporting minorities in sport on their Instagram page and publishing their stories of success is also a successful tool in attracting more people to the product. According to Balan (2017), “content that focused on user experience and aspirational values” attract more viewers on Nike’s Instagram page (p.5). Under Armour also posts videos about athletes and their stories of success on their Instagram page. However, not many viewers are attracted, which shows that the company should improve its social media management tools.

The weaknesses of Under Armour’s can be turned into the company’s opportunities if the thoughtful and well-planned strategy will be implemented. The company can use honest storylines about not-yet-famous athletes who wear Under Armour equipment to reach their goals to develop their online presence. Such campaigns can be posted to Instagram, Facebook, and other social media pages. It will increase the number of subscribers and customers that are interested in their products.

Also, the company can encourage customers to give online feedback to their products. Researchers note that many companies offer their customers gifts or discounts for leaving online feedback or review for their products (Marketing News, 2019). This strategy can help to get reviews, photos, or videos from the customers that are using their products.

The main threat to the company’s development is stiff competition. Under Armour produces apparel, footwear, and accessories, which is a highly competitive market. The most significant competitors of the company are Adidas, Nike, Puma, and Columbia Sportswear. Under Armour is not in the best position comparing to other companies in the most influential social media platform Instagram.

While Adidas and Nike Instagram pages have 25.4 and 100 million subscribers relatively, Under Armour has only 7.9 million subscribers, which means campaigns and different products posted on Instagram by Adidas and Nike are more likely to be viewed compared to Under Armour. According to Kell (2016), Nike is now the largest sportswear company with $3.74 billion in sales, while Adidas and Under Armour are generating $877.6 million and $827 million, respectively.

To conclude, Under Armour’s marketing strategy is sufficient enough to be competitive among other sportswear companies like Nike, Adidas, and others. Also, it is implementing new strategies that help them to make their products more selling by sponsoring famous athletes and sharing customer feedback. However, the company should also be aware of some weaknesses and threats to improve them and turn to opportunities for development.

References

A Look At Under Armours International Presence – Forbes. (n.d.). Web.

Balan, C. (2017). Nike on Instagram: Themes of branded content and their engagement power. CBU International Conference Proceedings, 5, 13–18. Web.

Kell, J. (2016). Why Adidas is outperforming Nike, Under Armour. Web.

Smith, A., & Anderson, M. (2019). Online reviews and ratings. Web.

The Reviews Are In: It’s Worth Promoting Customer Feedback. (2019). Marketing News, 53(10), 12–14.

Abstract

Amour is a company that specializes in sportswear and high-performance apparel. The company has experienced significant growth in market size and revenue generation from the process of sales from different sports gear tailored to suit different user needs. Under Amour operates in a highly competitive environment with Nike and Adidas being the greatest rivals. An analysis of the company operations shows that its strategic issue is reflected in the local market concentration, international market penetration strategies, innovation, and outsourcing production activities, which present significant challenges that need to be addressed to maintain its market leadership. The company’s financial statements indicate significant increases in profits and positive prospects in revenue growth and market expansion due to a broad base of product offerings and distribution networks. By exploiting existing expansion and product development opportunities, the company can increase its revenue base by focusing on the success factors such as using innovation and new technologies, investing in research and development, using strong distribution networks, and applying excellent promotional and marketing strategies. Under Amour could optimize its generic strategy by focusing on product customization to suit different market segments for competitive advantage as well as focusing on its grand strategy by directing its efforts on new product development and international market penetration.

Introduction

The case study presents a startup entrepreneurial idea that was converted into a business opportunity by Kevin Plank who formed the Under Amour performance apparel company in 1996 (Gamble, Peteraf, & Thompson, 2015). In its earlier years, the company gained a significant market share because of a broadening demand for its wide range of product offerings. By directing its efforts towards achieving its growth strategy, the company gained a wide market share by investing in product offerings for men, women, and the youth. The company has specialized in sportswear and recreational activities leading to superior profitability. The industry is characterized by Nike and Adidas that have a significant market share as well as a threat from new entrants.

The company continuously revises its product lines, marketing, promotional, and branding strategies to sustainably remain competitive in the market. To address the problem, the investigation focused on establishing the key strengths which include superior product performance, high-quality products, a broad range of sportswear and footwear products, and a strong brand image in the local North American market as well as international markets, which include European soccer and rugby teams such as the Welsh Rugby Union and Hannover 96 and Tottenham Hotspur football clubs, among others.

The goal was to meet the increasing product demands and widen the market share due to the global increase in disposable income and population growth (Babin & Zikmund, 2015). The company used its excellent inventory management systems based on wholesale distributions, direct to customer sales, and product licensing strategies. This underpins the company’s competitive advantage and growing market share. The strategy issue represents the area of focus.

Strategic Issue

In theory, the factors that define strategic issue must be addressed for the Under Armour Company to achieve what is outlined in the mission statement, which reads as follows “to make all athletes better through passion, design, and the relentless pursuit of innovation” (Gamble et al., 2015, para. 5). The company’s outlook shows strong growth prospects in the domestic and international markets. This is due to the positive financial performance as indicated by the annual statements that reflect the objective of the universal guarantee of performance and empowerment of athletes. This is demonstrated in rapid growth in the IPO shareholder value of 2.6 million. The leadership formulates top-notch product development policies and generates new and innovative product offerings such as apparel tailored with specific market needs I mind by continuously adopting new strategies for completive advantage.

According to the case study, the problems and strategic challenges that arise include a high concentration in the domestic market in sales as exemplified in the U and A-brands. Making entries into the international market without proper proprietary rights could be a source of exposure of her products to competing firms which can violate property rights and make cheaper substitutes (Verhoef, Kannan, & Inman, 2015).

Here, the company relies on third-party distributors such as Dome corporations, outlet malls, and First XV rugby store, making the distribution channels costly because suppliers exploit and overcharge and because there is no direct control from the company.

To sum up, the capacity for innovation and product development policies demonstrated by the company is challenged by high saturation of domestic markets and the threat of substitution emerging from proprietary rights issues. The following strategic issue question arises: Should Under Armour acquire proprietary product rights, new distribution channels, and allocate more money to finance expansion for sustained innovation, growth, and international market penetration?

External Environment

This chapter provides a detailed analysis of the attractiveness of the company, its capabilities along with valuable information and data that could resolve the question of the company’s industry competitiveness. Porter’s five forces model is used for competitive analysis in addition to focusing on the key company success factors as summarized in the industry characteristics and analyzed based on Porter’s five forces model.

Porter’s five forces

Competitive Rivalry

Under Amour’s industry’s rivalry players with a significant share of the market are Nike and Adidas. The level of competition varies between high and medium. Nike is the greatest rival with a 7.0% market share closely followed by Adidas, which has a 5.4% market share. However, some products sold by Under Amour with a 2.8% market share have not been patented in a market dominated by 25 brands.

Bargaining Power of Suppliers

The fact that Under Amour has the manufacturing capabilities for various product offerings has ripple effects on the supplier power. This is achieved by diminishing supplier abilities to bargain for better prices, suggesting the low ranking for this force. In addition, the company’s policy of outsourcing the manufacturing of apparel and other sportswear in India, Mexico, and Asian countries attract low costs of labor, taxes, and other production costs. An assessment of the company’s primary sources of raw materials shows that it obtains them from 27 companies distributed across 16 countries. The bargaining strategy is based on a broad base of suppliers with strong competition among themselves, which gives Under Amour better bargaining capabilities.

Buyer’s Bargaining Power

An assessment of the bargaining power of the customers is estimated to be medium. This is because most of the products have a strong presence in North America’s retail stores where the company has its largest share. The products’ presence has had a strong positive influence on the perceptions of suppliers. This has facilitated an increase in demand for the products.

Threat of New Entrants

A strong brand, large market share, brand loyalty, and the high initial investment cost are very strong barriers to entry. Besides, the costs of brand advertisement and endorsement are also high. Despite the promising advantages, modern machinery is cheap to acquire and branding by the use of social media and other outlets provides an emerging environment that increases the threat of new entrants.

In addition, most of the products lack patents, making it easy for firms that want to exploit the opportunities in the market to make entries with rebranded products. Besides, the readily available technologies for sports apparel production make it easy for new companies to enter the market despite the presence of Under Amour’s high-quality products. In addition, the company uses petroleum-based products, which is another serious threat because of the fluctuating oil prices.

Threat of Substitute Products

This force can be classified as medium. The sports industry is global in nature and provides the potential for different companies to grow. This has prompted many companies to invest in the production of substitute products because of the wide range of product offerings and the availability of technology that has made manufacturing of sports apparel cheaper and more efficient. Companies are able to produce more attractive sports apparel with low switching costs. Besides, the demand for footwear and the increase in the youth population provides new investment opportunities.

Key Success Factors

This section provides a detailed analysis of the underlying key success factors that enable Under Amour to remain competitive and to prosper against rival firms.

Innovation and technologically advanced products

Growth in the industry has been propelled by the use of technology, investment in continuous product innovation, success in the provision of the right apparel to the target market, and the ability to demonstrate that the customers are highly valued. The company has invested in the production of innovative products by living to its promise of ensuring that the products are authentic.

In addition, the company has introduced a wide range of products such as the three lines of gear for cold weather, Heat Gear, and Cold Gear, among others. Besides, the company’s innovation is evident in the multiple benefits that arise from the consumption of the products, which constitutes the company’s market growth factor.

Effective marketing and promotional strategies

Retail marketing and promotional activities such as the utilization of increased floor space as well as the use of concept shops, in-store fixtures, and product displays constitute some of the best promotional activities that Under Amour has used to be successful. The company’s products do not have hidden requirements. The ability to work with different retailers and the ability to work in the international markets count for success in the industry.

Distribution network

The company has incorporated branded retail outlets, branded storefronts, and other marketing strategies to reach the market and meet consumer needs and expectations. Besides, the use of more product lines coupled with better and more efficient distribution networks contributed significantly to the success of the company.

Research and development

The sports apparel industry has significantly grown in the number of substitutes, new entrants, and the availability of technology. To counter the effects that come with the changes, the company has invested significantly in research and development to produce high-quality products to address the changing needs and expectations of the market.

Industry Profile and Attractiveness

Due to significant population growth, the global markets for athletic footwear projected to grow from the US$75 billion in 2012 to the US$18 billion in 2018 (Gamble et al., 2015). However, the market for footwear and athletics was expected to reach the US$181 billion mark in 2018 from the US$135 billion in 2012, with Under Amour having 17% in footwear and 4% in the apparel market shares, respectively (Gamble et al., 2015). The industry is dominated by major players such as Nike and Adidas.

However, Under Amour has a significant market share compared with her main rivals, which has grown dynamically. For example, in 2012 revenue from direct direct-to-customer sales hit the 27% increase compared with the 23% revenue growth in 2012. Besides, a net 2.4% revenue growth was recorded in 2012 from the sale of licenses alone. By 2013, the distribution of apparel had hit 12% net revenue. The company generated 59% of its revenue outside North America (Gamble et al., 2015).

Besides, revenue generation was projected to be US$500 million due to the sale of the innovative product line and charged cotton products. Typically, the competitor such as Nike invested US$2.4 billion in 2011 for marketing alone. This demonstrates the fact that the company has significant threats from external competitors.

In conclusion, aside from the presence of several major competitors, the external environment can be considered favorable for Under Armour due to the low bargaining power of buyers and suppliers, low to the medium threat of new entrants, and a high degree of alignment between the company’s capabilities and the identified key success factors.

Table 1. Macro-environment.

Company Situation

This section details Under Amour’s financial performance between 2009 and 2013 to show the trend in its growth and profitability prospects. The profit margin, which is also the gross profit or sales ratio, constitutes the financial accounting tool to assess the profitability of the company which is discussed in this section. Besides, a SWOT analysis is performed for the company to assess the prospects of sustainability, market expansion, and areas of optimization in order to maintain its market share and expand for competitive advantage.

Financial Analysis

A snapshot of the financial performance based on the quarterly revenue between 2010 to mid-2013 shows 33.9% change in the third quarter in 2011 compared to 25.5% change in revenue in 2012. However, the data for 2013 which is not available. A brief analysis of the financial status shows very strong positive improvements due to the significant increases in revenue through the successive years.

Table 2. Financial status.

An assessment of the profit margin ratio shows that the company has a debt/equity ratio of 0.06 against the industry value of 0.58. This measures the company’s financial leverage. The reported value is very low which indicates that the company does not rely heavily on borrowing and is a low-risk venture. Besides, it shows that the company does not depend on borrowing for financing its operations and expansion activities.

On the other hand, the current ratio is 3.33, which indicates that the current total assets compared with the total liabilities are low. Typically, the company has a strong ability to pay any accruing debts on short term and long term obligations. However, when compared with the Quick Ratio, which is equivalent to 1.45, the results indicate a very strong ability of the company to meet its obligations either in the short term or in the long term.

Comparatively, the quick ratio is a better indicator of the liquidity capabilities of the company as opposed to the use of the current ratio. The results lead to the conclusion that the company has a very strong financial performance outlook. The detailed results can be found in the appendix.

SWOT Analysis

Strengths

The company’s good market and growth strategies provide an accurate reflection of the behavior of the market share that has shown significant positive performance and improved profitability. Leadership capacities are demonstrated in the case study because of the good strategic choices that have a positive impact on the growth of the company. The company has an increasing line of performance products, high market penetration rate, and global presence because of an increase in the market size in the foreign territories, and ever increasing and positive effects of brand awareness. Examples include the protective gear, ski vests, and other Under Amour gear apparel.

Innovation is a term that is embedded in the mission statement which is driven by the concepts of new and unique products designed to meet varying customer needs and expectations (Ngai, Tao, & Moon, 2015). The company provides specific market segments with specific footwear and apparel that fit into their needs for different climatic conditions. Examples include the provision of wide variety of shirts aimed at the broadening demand for the company’s products in the local and international markets.

Focus on meeting changing industry needs, use of innovative technologies, new product offerings, and better focus on research and innovation for sports apparels and footwear in an additional strength. This is made possible and exemplified in the provision of diverse product mix for different weather conditions such as the three lines of apparel and the footwear product for men, women, and youth. In addition, the company has sports accessories such as gloves, custom-molded mouth guards, and kneepads. The company also uses high-performing players to market its products.

The broad brand portfolio is based on innovation and the ability to respond to different market needs and expectations. The specific focus has shifted from football and expanded into the production of devices as well as investing in new product design and development methods.

Because of the rapid growth in the market and the use of new product development strategies, the revenue has shown significant growth with the net profits increasing drastically. Under Armour has healthy financial statements. The company has a quality assurance team to verify the quality of raw materials for the manufacture of its products in Asia, Mexico, Middle East, and South America.

Weaknesses

Outsourcing fabric production and the company’s pricing policy, which hurts its growth prospects. This is because its products have a high price compared to substitute offerings by rival firms. Raw materials are manufactured by third party companies. The company is not geographically dispersed because over 90% of the products sold in North America. Penetrating into other markets presents a wide range of costly and time-consuming challenges to address.

Opportunities

A critical analysis indicates a global increase in disposable incomes in addition to an increase in demand for its footwear and sports products that could present a ripe opportunity for the company to exploit. The company has excellent distribution channels, product diversification, excellent space for inventory management, quality assurance, and source manufacturing capabilities, which can be exploited to generate the competitive advantage of the company.

The company has a strong brand name and high-quality products that provide leverage in the market for expansion and exploitation of available opportunities. Technology can leverage the company’s position and ability to make new market entries. Besides, Under Amour has an excellent inventory system for quick product delivery.

There is the positive outlook in the company’s market growth and size because of the increase in revenue from the US, which is the company’s primary market. The company has focused on the youth and female consumers and manufacturing products that address specific needs of each market segment in the US as well as outside of the country.

Threats

Despite the low labor costs, the company transports its footwear and other sports products from five countries, which are the destination manufacturing points. This leads to increases in inventory costs and other supply chain-related management issues and expenses. There is an increase in competition on new product development, product identity, and customer support services.

The identified positive trends in financial performance coupled with several identified strengths such as distribution channels, inventory management practices, quality assurance, and multiple instances of innovative products that address the needs and expectation of the target audience create significant potential for competitive advantage. On the other hand, low market diversification, high cost of new markets penetration, supply chain expenses, and the emerging threat of competition undermine its long-term performance.

Recommendations

The problem with the Under Armour Company identified in the strategy issues section includes different problems associated with the strategic growth and development of the company. This raises the questions on how the company intends to strengthen its market concentration, patent rights, and financing of distribution of the products in international markets.

Strategy Recommendations

The recommendations are based on both the generic and grand strategies.

Generic strategy

The recommended approach is to broaden local and international market size by optimizing the technology and innovation for high-quality products as well as improve its brand portfolio. Besides, there is a need to optimize the positive market outlook because of significant growth of market share and positive revenue generation. The rationale is that the company has several strategies in place which include quality assurance backed by the use of high-tech specialty fabric.

According to Goi (2015), this could enable the company to manufacture high-quality products based on a limited number of suppliers that have been evaluated and known to provide high-quality raw materials. Besides, the company should invest in substitute products that are customized and priced to meet the marketing needs of different customer strata for competitive advantage.

Grand strategy

The generic strategy could require investments in broad product offerings, technology, and innovation for differentiated and high-quality products to address the market needs of the broadening target market that includes market needs of women, men, and the youth (Ngai et al., 2015). There is need for the company to optimize its inventory and supply chain systems to improve market penetration and presence in international markets in Africa, China, and Asian countries.

Besides, the company can capitalize on global demand to increase its market share and revenue generation. In addition, Goi (2015) notes that there is the need to increase the marketing strategy based on the use of effective promotional strategies by targeting professionals, high-performing athletes, and making effective agreements with sports teams and individual athletes. Drastic market growth and positive financial performance could be the expected outcome.

Objectives

In line with the strategic analysis, the strategic objectives include:

1. Establishing effective brand management strategies through innovation and technology
2. Managing the marketing, promotion, and branding of the range of sportswear and footwear products
3. Managing inventory and company supply chain systems
4. Identifying and formulating effective retail marketing and product presentation as well as market penetration strategies

Strategic Justification

It is suggested for the company to adopt the recommended strategies for competitive advantage. According to Ngai et al. (2015), through investment in effective and low-cost inventory systems the company is able to reduce the cost of inventory which has a ripple effect on pricing instead of the current operations and inventory system.

On the other hand, involvement of third-party retail outlets makes the products expensive. Adopting new technologies could enable the company to be more innovative and produce high-quality products that are customized to different markets and customer needs and expectations.

The implementation of the suggested strategies and objectives will enable the company to produce high-quality, low-priced, and competitively-priced products for better competitive advantage. This approach is expected to address the identified weaknesses, position the company at a strategic advantage against rival firms, and increase its market share.

References

Babin, B. J., & Zikmund, W. G. (2015). Exploring marketing research. Boston, MA: Cengage Learning.

Goi, C. L. (2015). Marketing Mix: A review of ‘P’. The Journal of Internet Banking and Commerce, 1(1), 2005-2012.

Gamble, J., Peteraf, M. A., & Thompson, A. A. (2015). Essentials of strategic management. New York, NY: McGraw-Hill.

Ngai, E. W., Tao, S. S., & Moon, K. K. (2015). Social media research: Theories, constructs, and conceptual frameworks. International Journal of Information Management, 35(1), 33-44.

Verhoef, P. C., Kannan, P. K., & Inman, J. J. (2015). From multi-channel retailing to omni-channel retailing: Introduction to the special issue on multi-channel retailing. Journal of Retailing, 91(2), 174-181.