CASE STUDY

Nonesa, Quennie Sandra L.

;
Lasmarias, Mylene P.

Paracuelles, Jay Mark T.

Sayson, Caesar Neil B.

 VISION TO EMPOWER
ATHLETES EVERYWH

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
SHOES. In 2007, UA entered
expanded Under Armour
footwear, a notoriously
into footwear, womens
competitive market. It began
apparel, and even
with football cleats like the
hunting and fishing wear.
Click Clack, but now makes
At left: the original
everything to high-tops.
compression T-shirt
Plank to NFL equipment
managers. ON THE HUNT. Also in
2007, Under Armour put
out a hunting and
fishing line, including
camo gear, hunting
HOT TO COLD. The original SUPER BOWL. In gloves, and leggings.
shirt kept players cool as they 2008, UA had its first This Ridge Reaper
sweated; in 1997 UA came Super Bowl commercial jacket is from the 2011
out with ColdGear, made to featuring almost every line.
do the opposite: insulate in athlete on the UA roster.
the cold.

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
500
Net Sales (in Million)

Other
400
Canada
300 US
200
100
0
2005 2006 2007
Year
 Net Sales by Region

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

90%

88%
2005 2006 2007
Sales by Product Category
Year 2007

License Rev.
5% 57% Footwear

7% 84% Accessories
Men's
4% 8% Women's
19%
Youth
 Apparel Net Sales

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

900
800
700
600
Sales (in millions)

500
400
300
200
100
0
2004 2005 2006
2007
2008
Year 2009
Product Positioning Map
High Price

Low Quality

High Quality

Low Price
 Financial Ratios Interpretation
2008

The previously mentioned financial ratios show

that Under Armour is in a good financial
position to pursue International Expansion.
UNDER ARMOUR INDUSTRY Currently:

Gross Profit Margin 50.10% 37.50% Not highly financed through debt

Return on Equity (ROE) 18.18% 10.3% Company is able to pay short-term liabilities
as determined by their positive working
Return on Assets (ROA) 13.47% 3.8% capital

Total Debt/Equity 0.03 0.41 Highly efficient production processes

Highly profitable company

Efficient use of assets by management to

generate earnings as shown by ROA
 Organizational Structure
CEO CFO
Kevin Plank Brad Dickerson
Director COO
Douglas Coltharp Kip Fulks
Director Supply Chain
Harvey Sanders James H. Hardy, Jr.
Director President, International
Regional Operations Head
Byron Adams Karl-Heinz Maurath
Director Executive VP- Global marketing
Anthony Deering Matthew C. Mirchin Marketing Manager
Lead Director Senior VP- Sales, NM
A. Krongard Adam Peake HR Manager
Director President, North America
Bill McDermott Henry B. Stafford Financial Manager
Director
Thomas Sippel Sales manager

Production Manager
 Value-Chain Analysis

Inbound Manufactu Outbound Marketing After-sale

Elements Logistics ring Logistics & Sales Services

Strength MODERATE MODERATE MODERATE MODERATE

STRONG

Currently, UA UA has great

has many reputation for
Activities Third Party Third Party Third Party sponsorships
and
customer
service and
endorsements after-sale
service

Strong Firm Infrastructure

Support
Activities Very Creative Limited Number of Highly
Engineering Trained Employees
 IFE MATRIX
Strength Rating Weight Weighted score
Good leadership 4 .08 .32
SAP system 3 .05 .15
Core competence in Innovation 4 .06 .24
High Quality Apparel 4 .07 .28
Increase in Sales Every Year 4 .07 .28
Brand Loyalty 4 .05 .20
Wide Range of Apparel 3 .05 .15
Athlete and Team Sponsorships and Endorsements 3 .05 .15
Very Intelligent and Efficient R&D Team 3 .06 .18
Brand Equity 4 .06 .24
Weakness Rating Weight Weighted score
Small Total Sales and Net Income compared to Nike/Adidas 2 .06 .12
Heavily Dependent on Domestic Market 1 .07 .07
High Prices 2 .05 .10
Not a Synergistic Marketing Campaign 2 .05 .10
Heavily Dependent on PA for Sales (80%+) 1 .07 .07
Target Male Market more than Female Market 2 .05 .10
27% of Sales come from 2 Distributors; Dicks and The
1 .05 .05
Sporting Authority
Total = 2.80
 EFE MATRIX
Opportunity Rating Weight Weighted
Potential market for basketball shoes 2 .04 .08
Increase in Retail Sales 2 .08 .16
Growth of PA Industry (Domestic and International) 3 .06 .18
Female Market 3 .08 .24
Consumers focus on Quality, not Price 4 .07 .28
Corporate Social Responsibility 3 .06 .18
Economic recovery 2 .06 .12
Consumers becoming more health conscious 4 .05 .20
Sport participation is a key aspect of U.S. culture 3 .05 .15
Increase in sports participation in emerging markets 3 .06 .18
E-commerce and media 3 .05 .15
Threat Rating Weight Weighted
Too much dependence on few third-party suppliers 1 .07 .07
Lack of Proprietary Product Rights 2 .08 .16
Increase in cost of raw materials and resources; shipping costs
1 .06 .06
i.e. cotton, all man made fibers, and the big one being OIL/GAS
Inflation in China Increasing 1 .04 .04
Chinese Labor Costs Increasing 1 .04 .04
Obesity Rates in U.S. 1 .05 .05

Total = 2.34
How will Under Armour stay on top of its
game?
 Strengths

SWOT
1. Good Leadership
2. SAP system
3. Core competence in Innovation
4. High Quality Apparel

analysis 5.
6.
7.
Increase in Sales every Year
Brand Loyalty
Wide Range of Apparel
8. Athletes and Team Sponsorships
9. Intelligent and Efficient R&D Team
10. Brand Equity

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

SWOT
1. Small Total Sales and Net Income
compared to rivals
2. Dependent on domestic market
3. High prices

analysis
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

Opportunities Strategy Recommendations

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

SWOT 1.
2.
3.
4.
Good Leadership
SAP system
Core competence in Innovation
High Quality Apparel

analysis 5.
6.
7.
Increase in Sales every Year
Brand Loyalty
Wide Range of Apparel
8. Athletes and Team Sponsorships
9. Intelligent and Efficient R&D Team
10. Brand Equity

Threats Strategy Recommendations

1. Continue on establishing premium

1. Too much dependence on few third-party
branding image. (s3,s4,s6,t3)
suppliers
2. If possible, avoid product innovation
2. Lack of Proprietary Product Rights
requiring much labor intensive production
3. Increase in cost of raw materials and
and high material costs than the current
resources; shipping costs
production system. (s3, s9, t4, t5)
4. Inflation in China Increasing
3. Seek for other trusted suppliers offering
5. Chinese Labor Costs Increasing
standard quality to strengthen the firms
6. Obesity Rates in U.S.
supply chain and achieve greater
production. (t1, t2, s7, s5)
 Weaknesses

SWOT
1. Small Total Sales and Net Income compared to
rivals
2. Dependent on domestic market
3. High prices

analysis 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

Threats Strategy Recommendations

1. Too much dependence on few third-
1. Expand product line and further diversify to be
party suppliers
distributed into wide range of possible target
2. Lack of Proprietary Product Rights
markets to spread fixed component of labor
3. Increase in cost of raw materials and
costs. (w1,w2,w5,w6, w7 & t3, t4, t5)
resources; shipping costs
2. Maintain high product quality to compensate
4. Inflation in China Increasing
high selling price and at least maintain or
5. Chinese Labor Costs Increasing
increase sales. (w1, w3, t2,t3,t4)
6. Obesity Rates in U.S.
3. Consider marketing on fitness activities
involving women rather than focusing on
athletic activities alone. (w4, w6, t6)
 Product BCG Matrix
Market Share
High Low

Performance Apparel
Footwear
High

Accessories

Market
Growth
Star Question Mark

Low

Cash Cow Dog

 Grand Strategy MATRIX
Rapid Market development
Market Market penetration
Growth
Product development
Forward integration

Weak Strong
Competitive Competitive
Position Position

Slow
Market
Growth
Major Problems:
1. Lack of Proprietary Product Rights
2. Concentration to Domestic Sales
3. Too much Dependence on
third-party suppliers
 Problem:
Lack of Proprietary Product Rights

Pros Cons
Gives the legal right to stop Takes time and money to
others using your invention establish
Maintain an innovative No assurance of greater
brand image economic return
The patent holder can High chances in getting into
license the patent to others patent infringement
for use and earn income
 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 2010 2011 2012 2013 2014

Open-up Retail outlets in China

Open-up Retail outlets in
Malaysia/India/Singapore
Sponsorship to China Football League
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 2005
2006
1200000 2007
1000000 2008
2009
800000
2010
600000 2011
2012
400000
2013
200000 2014
0 2015
2016
 Gross Profit Analysis

1400000
1200000
1000000
800000
Gross Profit
600000
Operating Expense
400000
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-a-
focus-on-geographies.html
http://www.atkearney.com/consumer-products-retail/global-retail-
development-index/full-report/-
/asset_publisher/oPFrGkbIkz0Q/content/2013-global-retail-development-
index/10192
http://shrinkthatfootprint.com/average-electricity-prices-kwh
http://blog.euromonitor.com/2013/03/new-apparel-research-part-1-a-
focus-on-geographies.html
END