Under Armour Case Study

free essayUnder Armour is a company founded by a football player Kevin Plank. This organization specializes in sports apparel, gears, and equipment necessary for sportsmen. Under Armour was created for the people who want to be active and physically healthy. Adidas and Nike are the major competitors of this company, and they encourage it to further development and growth. Under Armour is an exceptional organization due to its powerful and authentic brand. It managed to expand its narrow product line. Moreover, this company penetrates markets outside North America.

External Analysis

To reveal the features of the external environment of Under Armour, one should consider the following analysis: Porter’s 5-Forces Analysis, Strategic Group Map, and Key Success Factors.

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Porter’s 5-Forces Analysis

The Degree of Competitive Rivalry

The major competitors of Under Armour are Nike and Adidas that control more than 12% of the market. Consequently, the degree of competitive rivalry is from medium to high. Under Armour controls only 2, 8% of the market (Thomson, 2013). Moreover, it does not have the patent on the cooling shirt, and this proves that the company should struggle for its competitive rivalry. The main competitors of Under Armour have a large capital and strong influence on retailers. Nike and Adidas have higher total sales than Under Armour does.

Bargaining Power of Suppliers

The bargaining power of suppliers is low as the company has its own manufacturing in many countries. Moreover, they have the diverse base of suppliers that proves that Under Armour does not depend on them directly. One should say that higher quality suppliers have more leverage than others. As a result, Under Armour can target the suppliers that provide lower prices. The disadvantage of dealing with many suppliers is that they can sell the same materials to Under Armour’s competitors as well.

Buyers’ Bargaining Power

Buyers’ bargaining power is medium as the target market of Under Armour includes athletes. The strength of the company is that it collaborates with such sports shops: Dick’s Sporting Goods and Sports Authority (Thomson, 2013). Under Armour should provide a wide variety of products as its brand name is less recognizable than Nike or Adidas.

Threats of New Entrants

The new entrants are not dangerous for Under Armour due to the strong barriers in the apparel business. First, new companies need large capital and patents for apparels and equipment. Second, it is impossible to start the business without the proper advertisement. The apparel industry is restricted by the legal regulations. Consequently, new entrants suggesting cheap materials cannot replace such company as Under Armour (Thomson, 2013). The new organizations should have a significant amount of financial and human resources to enter into the apparel industry.

Threats of Substitutes

The threat of substitutes is high due to the emergence of new companies specializing in clothing manufacturing and the increase in demand for the sports apparels. Clothing is always in demand; therefore, one can find it in many companies. Consequently, Under Armour should provide a unique approach to the quality and design of their products.

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Strategic Group Map

Strategic group map presupposes identifying direct and indirect competitors of Under Armour. It is evident that Nike and Adidas are the major rivals of the company. One should admit that prices and quality of Under Armour are different. Russell and Reebok are less expensive than Adidas, Nike, and Under Armour. Under Armour pays much attention to the quality of their products that enhance sportsmen’s performance. Adidas and Nike are brand companies, and their image and prestige are included in the price policy. Moreover, Under Armour promotes not only their sports products but also the active and healthy lifestyle.

Key Success Factors

One can distinguish the following key success factors of Under Armour: innovative performance-based gears and apparels, good marketing and promotion, strong brand name, research and development of new patents, and the proper marketing strategy. Under Armour

helps all the athletes perform and look better due to innovation, design, and passion. The strength of this company is that it manufactures clothes and apparel that enhance the athletic performance. Moreover, Under Armour creates the positive public image through the partnership with schools and universities, production of the innovative and qualitative products, and being one of the first in the market. The success of Under Armour is in its promotion strategy that presupposes partnership and sponsorship of public organizations. One should say that the innovative performance-based gears and apparels are adapted to the athletes’ needs and demands enhancing their sports results. The marketing and promotion are done with the help of public relations.

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Internal Analysis

Company Value Chain Analysis

Value chain analysis of Under Armour includes activity analysis, value analysis and evaluation of changes. Company’s activities include the manufacture of sports equipment, gears, and clothes. The tangible resources of Under Armour include physical and financial resources. The intangible resources and competencies of the company consist of its partnership and sponsorship of public organizations and sports shops. The unique resources of Under Armour include synthetic fibres (natural gas, oil) and natural fibres (silk, wool, cotton) (Thomson, 2013). The inbound logistics of the company is based on stock control and high quality. However, they pay much focus to the design that makes the brand different from their competitors. Manufacturers receive only raw materials for making the sports goods. Consequently, the products of Under Armour are unique. The company sends the finished products to retailers and owned stores. Moreover, Under Armour collaborates with many sports teams worldwide that are their constant customers. The company uses social media and the website for the interaction with clients.

Competitive Strength Assessment

The key competitors of Under Armour are Adidas and Nike. The advantage of all these companies is that they operate in the competitive apparel business. Nike, as well as Adidas, has the impressive market share that proves the popularity of both brands among the customers. The benefit of Adidas is that it operates in the European market and  owns such brands as TaylorMade and Reebok. The disadvantage of this brand is that it is expensive. Nike is more competitive comparing with Adidas and Under Armour as it operates globally. Moreover, it is a direct rival of Under Armour as it also manufactures apparels and gears in North America. Nike is the owner of Converse and Jordan.

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Conclusion

In conclusion, one should admit that Under Armour is a successful and competitive apparel business that opens new opportunities for sportsmen. The external analysis shows that the company has the medium degree of competitive advantage, the medium power of buyers, low power of suppliers, and high risk of substitutes. Besides, the company puts the high barriers to new entrants. The internal analysis reveals such weaknesses of Under Armour as quality and price strategy. Moreover, such powerful competitors as Adidas and Nike encourage the company to innovation, improving marketing strategy, and introducing new products. Under Armour has a lot of unique resources that distinguish it from its rivals. Furthermore, it is a manufacturer and retailer at the same time.