CASE STUDY

Nonesa, Quennie Sandra L. ;

Lasmarias, Mylene P.
Paracuelles, Jay Mark T. Sayson, Caesar Neil B.

VISION

ATHLETES EVERYWH

TO EMPOWER

MISSION
TO MAKE ALL ATHLETES BETTER

THROUGH PASSION, DESIGN AND RELENTLESS PURSUIT OF IN

IT ALL STARTED WITH A T-SHIRT

Since creating his company from one shirt in 1996, Kevin Plank has expanded Under Armour into footwear, womens apparel, and even hunting and fishing wear. At left: the original compression T-shirt Plank to NFL equipment managers.

SHOES. In 2007, UA entered footwear, a notoriously competitive market. It began with football cleats like the Click Clack, but now makes everything to high-tops. ON THE HUNT. Also in 2007, Under Armour put out a hunting and fishing line, including camo gear, hunting gloves, and leggings. This Ridge Reaper jacket is from the 2011 line.

HOT TO COLD. The original shirt kept players cool as they sweated; in 1997 UA came out with ColdGear, made to do the opposite: insulate in the cold.

SUPER BOWL. In 2008, UA had its first Super Bowl commercial featuring almost every athlete on the UA roster.

HELLO, LADIES In 2005, UA launched womens apparel. Items like Duplicity Bra were meant to conform well to the female body

Sales Chart
800 700 600

Sales (in millions)

500
400 300 200

100
0 2004 2005

2006

2007

Year

2008

Net Sales by Region

700 600

Net Sales (in Million)

500 400 300 200 100 0 Other Canada US

2005

2006

2007

Year

Net Sales by Region

100% 98% 96% 94% 92% 90% 88% 2005 2006 2007 Other Canada US OBSERVATION
Net Sales to other countries increases for an average of 94% per year

Sales by Product Category

Year 2007

License Rev. 5% 7% 4% 84% 8% 19% 57%

Footwear
Accessories Men's Women's

Youth

Apparel Net Sales

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2005 2006 2007 OBSERVATION
Net Sales of womens apparel increases for an average of 47.7% per year.

Youth
Women Men

Year

Sales Chart
900 800 700 600 500 400 300 200 100 0 2004 2005 2006 2007

Sales (in millions)

Year

2008

2009

Product Positioning Map

High Price

Low Quality High Quality

Low Price

Financial Ratios
2008

Interpretation
The previously mentioned financial ratios show that Under Armour is in a good financial position to pursue International Expansion. Currently: Not highly financed through debt Company is able to pay short-term liabilities as determined by their positive working capital Highly efficient production processes Highly profitable company Efficient use of assets by management to generate earnings as shown by ROA

UNDER ARMOUR Gross Profit Margin Return on Equity (ROE) Return on Assets (ROA) Total Debt/Equity

INDUSTRY

50.10% 18.18% 13.47% 0.03

37.50% 10.3% 3.8% 0.41

Organizational Structure
CEO Kevin Plank Director Douglas Coltharp Director Harvey Sanders Director Byron Adams Director Anthony Deering Lead Director A. Krongard Director Bill McDermott Director Thomas Sippel CFO Brad Dickerson COO Kip Fulks Supply Chain James H. Hardy, Jr. President, International Karl-Heinz Maurath
Executive VP- Global marketing

Regional Operations Head Marketing Manager HR Manager

Matthew C. Mirchin Senior VP- Sales, NM Adam Peake President, North America Henry B. Stafford

Financial Manager
Sales manager Production Manager

Value-Chain Analysis
Elements Strength
Inbound Logistics Manufactu ring Outbound Logistics Marketing & Sales After-sale Services

MODERATE

MODERATE

MODERATE

MODERATE

STRONG

Activities

Third Party

Third Party

Third Party

Currently, UA has many sponsorships and endorsements

UA has great reputation for customer service and after-sale service

Strong Firm Infrastructure

Support Activities

Very Creative Engineering

Limited Number of Highly Trained Employees

IFE MATRIX
Strength Good leadership SAP system Rating 4 3 Weight .08 .05 Weighted score .32 .15

Core competence in Innovation

High Quality Apparel Increase in Sales Every Year Brand Loyalty Wide Range of Apparel Athlete and Team Sponsorships and Endorsements Very Intelligent and Efficient R&D Team Brand Equity Weakness Small Total Sales and Net Income compared to Nike/Adidas Heavily Dependent on Domestic Market High Prices Not a Synergistic Marketing Campaign Heavily Dependent on PA for Sales (80%+) Target Male Market more than Female Market 27% of Sales come from 2 Distributors; Dicks and The Sporting Authority

4
4 4 4 3 3 3 4 Rating 2 1 2 2 1 2 1

.06
.07 .07 .05 .05 .05 .06 .06 Weight .06 .07 .05 .05 .07 .05 .05

.24
.28 .28 .20 .15 .15 .18 .24 Weighted score .12 .07 .10 .10 .07 .10 .05

Total

2.80

EFE MATRIX
Opportunity
Potential market for basketball shoes Increase in Retail Sales Growth of PA Industry (Domestic and International) Female Market Consumers focus on Quality, not Price Corporate Social Responsibility Economic recovery Consumers becoming more health conscious Sport participation is a key aspect of U.S. culture Increase in sports participation in emerging markets E-commerce and media Threat Too much dependence on few third-party suppliers Lack of Proprietary Product Rights Increase in cost of raw materials and resources; shipping costs i.e. cotton, all man made fibers, and the big one being OIL/GAS Inflation in China Increasing Chinese Labor Costs Increasing Obesity Rates in U.S.

Rating
2 2 3 3 4 3 2 4 3 3 3 Rating 1 2 1 1 1 1

Weight
.04 .08 .06 .08 .07 .06 .06 .05 .05 .06 .05 Weight .07 .08 .06 .04 .04 .05

Weighted
.08 .16 .18 .24 .28 .18 .12 .20 .15 .18 .15 Weighted .07 .16 .06 .04 .04 .05

Total

2.34

How will Under Armour stay on top of its game?

SWOT
analysis
Opportunities
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11.

Strengths
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Good Leadership SAP system Core competence in Innovation High Quality Apparel Increase in Sales every Year Brand Loyalty Wide Range of Apparel Athletes and Team Sponsorships Intelligent and Efficient R&D Team Brand Equity

Strategy Recommendations Potential Market for Basketball shoes Increase in Retail Sales 1. Continue Developing Innovative Products Growth of PA Industry (Domestic and International) to existing and emerging Female Market markets(S3,010,08) Consumers focus on Quality, not Price 2. Sponsorship as a form of advertisement Economic Recovery and promotion. (S8,01,09) Corporate Social Responsibility 3. Increase advertising using social Consumers becoming more health conscious networking and infomercials (S8,01,011) Sport participation in U.S. culture Increase in sports participation in emerging markets E-commerce and media

SWOT
analysis
Opportunities
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11.

Weaknesses
1. Small Total Sales and Net Income compared to rivals 2. Dependent on domestic market 3. High prices 4. Not a Synthetic Marketing Campaign 5. Heavily Dependent on PA for Sales (80%+) 6. Target Male Market more than Female Market 7. 27% of Sales come from 2 Distributors; Dicks and The Sporting Authority

Potential market for basketball shoes Increase in Retail Sales Growth of PA Industry (Domestic and International) 1. Expand into International Market (W2,02,010) Female Market 2. Establish larger female market Consumers focus on Quality, not Price Economic Recovery (W6,04) Corporate Social Responsibility 3. Focus on basketball foot wear to Consumers becoming more health conscious increase sales on shoes ( W5,01) Sport participation is a key aspect of U.S. culture Increase in sports participation in emerging markets E-commerce and media

Strategy Recommendations

SWOT
analysis
Threats
1. Too much dependence on few third-party suppliers 2. Lack of Proprietary Product Rights 3. Increase in cost of raw materials and resources; shipping costs 4. Inflation in China Increasing 5. Chinese Labor Costs Increasing 6. Obesity Rates in U.S.

Strengths
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Good Leadership SAP system Core competence in Innovation High Quality Apparel Increase in Sales every Year Brand Loyalty Wide Range of Apparel Athletes and Team Sponsorships Intelligent and Efficient R&D Team Brand Equity

Strategy Recommendations 1. Continue on establishing premium branding image. (s3,s4,s6,t3) 2. If possible, avoid product innovation requiring much labor intensive production and high material costs than the current production system. (s3, s9, t4, t5) 3. Seek for other trusted suppliers offering standard quality to strengthen the firms supply chain and achieve greater production. (t1, t2, s7, s5)

SWOT
analysis
Threats
1. Too much dependence on few thirdparty suppliers 2. Lack of Proprietary Product Rights 3. Increase in cost of raw materials and resources; shipping costs 4. Inflation in China Increasing 5. Chinese Labor Costs Increasing 6. Obesity Rates in U.S.

Weaknesses
1. Small Total Sales and Net Income compared to rivals 2. Dependent on domestic market 3. High prices 4. Not a Synthetic Marketing Campaign 5. Heavily Dependent on PA for Sales (80%+) 6. Target Male Market more than Female Market 7. 27% of Sales come from 2 Distributors; Dicks and The Sporting Authority
Strategy Recommendations

1. Expand product line and further diversify to be distributed into wide range of possible target markets to spread fixed component of labor costs. (w1,w2,w5,w6, w7 & t3, t4, t5) 2. Maintain high product quality to compensate high selling price and at least maintain or increase sales. (w1, w3, t2,t3,t4) 3. Consider marketing on fitness activities involving women rather than focusing on athletic activities alone. (w4, w6, t6)

Product BCG Matrix

High

Market Share

Low

Performance Apparel

High

Footwear

Market Growth

Star
Low

Accessories

Question Mark

Cash Cow

Dog

Grand Strategy MATRIX

Rapid Market Growth Market development Market penetration Product development Forward integration

Weak Competitive Position

Strong Competitive Position

Slow Market Growth

Major Problems:
1.
Lack of Proprietary Product Rights Concentration to Domestic Sales Too much Dependence on third-party suppliers

2.
3.

Problem:
Lack of Proprietary Product Rights

Pros
Gives the legal right to stop others using your invention Maintain an innovative brand image The patent holder can license the patent to others for use and earn income

Cons
Takes time and money to establish No assurance of greater economic return High chances in getting into patent infringement

Problem:
Lack of Proprietary Product Rights Recommendations:
Due to constraints, the company would be in a difficult situation in obtaining proprietary property rights. Instead, they should establish a secured relationship with its suppliers and producers to whom the quality of final product depends. This involves constant monitoring, evaluation and upkeep of security among their products.

Problem:
Concentration to Domestic Sales Recommendations: Increase Efforts Toward International Markets
Establish retail outlets to Other Foreign Countries Sponsorship to international sports teams Increase international advertising Partner with international companies in the same industry

Establish Retail Outlets to Foreign markets Observing Trends: Apparel Sales

Establish Retail Outlets to Foreign markets Observing Trends:

Establish Retail Outlets to Foreign markets Observing Trends:

Establish Retail Outlets to Foreign markets Observing Trends:

Establish Retail Outlets to Foreign markets Implementation

Establish Long-Term Expansion Program regarding Latin America & Asia Expansion
2009 Open-up Retail outlets in China
Open-up Retail outlets in Malaysia/India/Singapore Sponsorship to China Football League

2010

2011

2012

2013

2014

Establish Apparel Production Facilities (India/China)

Establish Retail outlets in Brazil

Sponsorship to Brazilian National Sports Teams Put-up Asian corporate headquarter

Increase international advertising

Implementation:

INFOMERCIALS

Partner with international companies & Third-Party Distributors

Implementation:

Problem:
Too much Dependence on few third-party suppliers Recommendations:
With existing suppliers: Maintain good relationship Establish long-term contracts With new efforts: Find potential and reliable supplier

Find potential and reliable supplier Implementation:

Allow suppliers to participate in the company's corporate social responsibilities activities Establish close communication with firm's suppliers

Seek new potential suppliers and evaluate the quality of products that they supply. If possible, research on the most feasible suppliers in terms of its geographic location

Other Strategic Recommendations:

Consider increased marketing efforts for women's product category Increase Footwear Sales by giving more focus toward the Basketball-oriented market Host more local marathons

Projected Gross Profit

1400000 1200000 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

1000000
800000 600000 400000 200000 0

Gross Profit Analysis

1400000 1200000 1000000 800000 600000 400000 Gross Profit Operating Expense

200000 0

References:
http://investor.underarmour.com/annuals.cfm https://www.facebook.com/underarmour http://www.uabiz.com/company/managementTeam.cfm http://blog.euromonitor.com/2013/03/new-apparel-research-part-1-afocus-on-geographies.html http://www.atkearney.com/consumer-products-retail/global-retaildevelopment-index/full-report//asset_publisher/oPFrGkbIkz0Q/content/2013-global-retail-developmentindex/10192 http://shrinkthatfootprint.com/average-electricity-prices-kwh http://blog.euromonitor.com/2013/03/new-apparel-research-part-1-afocus-on-geographies.html

END