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Strategic Analysis & Recommendation

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Strategic Analysis & Recommendation

  1. 1. CASE 3 : UNDER ARMOUR Strategic Analysis & Recommendation SONY SUPRINVIL
  2. 2. APPENDIX I
  3. 3. APPENDIX II Force Industry Examples Rivalry among competitors Athletic apparel Sport footwear Accessories Nike Adidas Threat of Substitutes Athletic apparel Sport footwear NB Puma Reebok Old Navy Threat of New Entrants Athletic apparel Sport footwear Accessories Maverik Lacrosse Athleta Bargaining power of suppliers Manufacturers Materials Asia(Taiwan, China etc.) Central and South America Middle East Bargaining power of buyers Retailers Wholesalers Internet sales Sport Authority Dick’s Sporting Goods Mall Outlets Walmart Macy’s
  4. 4. APPENDIX III FORCE 1: Rivalry among competitors DETERMINANT 1 for FORCE 1: ( Number of competitors) The industry is growing rapidly; it is expected to exceed $180 billion in worldwide industry sales by 2020 (Strider, 2016). 2 "Rivalry is usually weaker when buyer demand is growing rapidly" (Thompson, 2015, p. 37) DETERMINANT 2 for FORCE 1: (Newer competitors) in the industry are growing in size, thus increasing their market share (Strider, 2016). 4 "Rivalry usually becomes more intense as competitors become more equal in size and capability, and as the number of competitors increases” (Thompson, 2015, p. 39). DETERMINANT 3 for FORCE 1: (Brand Recognition )In the industry, consumers want more value from their current brands in terms of key product/image attributes (Salmon, 2013). 3.5 The most important value in a brand is the value that it holds for actual customers. This value is very difficult and expensive to build (Salmon, 2013). DETERMINANT 4 for FORCE 1: (Consumers switching cost) consumers can easily switch to a competitors offering for little cost (Arline, 2012). 4.5 "Rivalry increases as it becomes less costly for buyers to switch" and vice versa (Thompson, 2015, p. 38) Overall strength of FORCE 1: Rivalry among competitors 3.5
  5. 5. APPENDIX III (CNT) FORCE 2: Threat of New Entrants DETERMINANT 1 for FORCE 2: (High capital requirements) Large capital cost are required for branding, advertising and creating demand in the sport apparel industry (trefis, 2016). 1.5 " The larger the total dollar investment needed to enter the market successfully, the more limited the pool of potential entrants" (Thompson, 2015, p. 41). DETERMINANT 2 for FORCE 2: (Enormous disparity) Top competitor in the industry earn $31billion in sale while the runner up earn $16billion and third place earn $4billion (trefis, 2016). 2 "Industry conditions often cause existing competitors to struggle to earn a decent profit" (Thompson, 2015, p. 41) DETERMINANT 3 for FORCE 2: (Market share) Although it is possible for new companies to enter smaller niches of the industry; It is very difficult to reach achieve a sizeable market share (Strider, 2016). 2.5 "The industry’s outlook is risky or uncertain or offers limited profit opportunities for newcomer" (Thompson, 2015, p. 41). DETERMINANT 4 for FORCE 2: (Distribution) It is difficult for new entrants with low brand recognition to reach the three main distribution channels: (1) corporate-owned retail stores (2) Direct-to-consumer (or DTC) sales, which include online sales (3) wholesale, franchise, and other channels (Sani, 2014). 2 "A potential entrant can face numerous distribution channel challenges. Wholesale distributors may be reluctant to take on a product that lacks buyer recognition Retail dealers must be recruited and convinced to give a new brand ample display space and an adequate trial period" (Thompson, 2015, p. 41). Overall strength of FORCE 2: Threat of New Entrants 2
  6. 6. APPENDIX III (CNT) FORCE 3: Threat of Substitutes DETERMINANT 1 for FORCE 3: (Counterfeit) The value of seized counterfeit footwear dropped in 2012, but counterfeited goods is still still a major factor and is accounted for $54.9 million in 2012 ( Salmon, 2013). 4 "Low switching costs make it easier for the sellers of attractive substitutes to lure buyers to their offering"(Thompson, 2015, p. 45) DETERMINANT 2 for FORCE 3: (Casual Clothing) The demand for casual wear segemnt as grown as employers have relaxed the formal wear ( Ibisworld). 2.5 "The availability of substitutes inevitably invites buyers to compare performance, features, ease of use, and other attributes besides price." (Thompson, 2015, p. 45) DETERMINANT 3 for FORCE 3:( High end luxury clothing and footwear) luxury market such as footwear, clothing and accessories increased by 3.2% in 2014 (luxury market,2015). 3 "Buyers are growing more comfortable with using substitutes" (Thompson, 2015, p. 45). DETERMINANT 4 for FORCE 3: (Brand Loyalty) Brand names can increased consumer loyalty, consumers are more loyal than ever to the brands that have delivered for them time and time again (Salmon, 2013). 2 "Substitutes lack comparable or better performance features" (Thompson, 2015, p. 45). Overall strength of FORCE 3: Threat of Substitutes 2.6
  7. 7. APPENDIX III (CNT) FORCE 4: Bargaining power of Buyers DETERMINANT 1 for FORCE 4: (Price Increase) 64% of consumers in the US (excluding Los Angeles) would switch if prices increase in the industry increase by 10% or less. 4.5 "Buyers have low costs in switching to competing brands or substitute products." (Thompson, 2015, p. 49). DETERMINANT 2 for FORCE 4: ( Inbound Marketing) Newly launched websites are fast, and exceptionally easy to compare prices throughout the industry. 4 "The more information buyers have about the comparative product offerings of industry members, the better bargaining position they are in" (Thompson, 2015, p. 49). DETERMINANT 3 for FORCE 4: Mass retailers are paying close attention and will likely stock their shelves with more athletic gear; retailer and manufacturer across the board know that active wear is active and they all want a piece of the action (Cohen, 2014). 4 "The products of industry members are “commodities” or else weakly differentiated." (Thompson, 2015, p. 49). DETERMINANT 4 for FORCE 4: Over time, consumer develop loyalty to brand that provide a consistent, high-quality experience; although consumers do not buy mass quantities, they expect durability. (Kokemuller, 2013). 3 "Buyers purchase the item in small quantities (Thompson, 2015, p. 49)." Overall strength of FORCE 4: Bargaining power of Buyers 3.875
  8. 8. APPENDIX III (CNT) FORCE 5: Bargaining power of Suppliers DETERMINANT 1 for FORCE 5: (Raw material) such as internal and external foam are being produced by vast amount of suppliers in the industry (Unido, 2000) 1.5 The item being supplied is a “commodity” obtainable from many different suppliers at the going market price"(Thompson, 2015, p. 46). DETERMINANT 2 for FORCE 5: (Leather Quality) Trend of mid-quality leather is expected to increase throughout industries in the next couple years (Future trend in the leather industry 2010). 3 Suppliers are not dependent on industry members for a large portion of their revenues (Thompson, 2015, p. 46). DETERMINANT 3 for FORCE 5: (Athletic performance gear) such as balance band demand is increasing, but there are limited manufactures (Cohen, 2015). 3.5 Certain suppliers either have a differentiated input that enhances the quality or performance of sellers’ products or provide equipment/services that deliver valuable cost-saving efficiencies (Thompson, 2015, p. 47). DETERMINANT 4 for FORCE 5: Firms in the industry can choose to outsource or manufacture their own products (Inc. Magazine, 2014). 2 "Industry members incur low costs in switching to alternative suppliers" (Thompson, 2015, p. 47). Overall strength of FORCE 5: Bargaining power of Suppliers 2.5
  9. 9. Industry Analysis Score 2.9
  10. 10. APPENDIX IV (STEEP) Area 1: Sociocultural Trends SOCIOCULTURAL Trend 1: 81% of Millennials say that they exercise regularly, compared to only 61% of Boomers. 76% of all regular exercisers are Millennials (brightmarkconsulting.com) probability of occurrence is High: Consumer preferences shift, often unpredictably (smallbusiness.chron.com) the Probable Impact of the Millennial population on the active wear apparel industry is High: According to Goldman Sachs, as their consumption in other areas drop, they're willing to pay more for athletic gear (Goldman Sachs). SOCIOCULTURAL Trend 2: The global apparel industry is a notorious sweatshop employer, with millions of workers laboring under terrible conditions in dozens of developing countries, making products sold in the Global North (Publicseminar.org) probability of occurrence is High: Sweatshops are often used in the clothing industry because it is easy to separate higher and lower skilled jobs and contract out the lower skilled ones (fashion- history.lovetoknow.com) the Probable Impact on UA of Trend 2 is High: From a business perspective, sweatshops are overwhelmingly lucrative since they capitalize on low-wage labor in developing countries and significantly reduce production costs (globalethicsnetwork.org) SOCIOCULTURAL Trend 3: consumers are wearing athletic gear, such as yoga pants, for non-athletic activities in a trend called “athleisure.” This is one of the fastest- growing product categories in the apparel and shoe sector (plunkettresearch) probability of occurrence is Medium: Retail businesses do their best to stay ahead of consumer buying trends, but all the research and marketing in the world can’t replace simply being in the right place at the right time (smallbusiness.chron.com) the Probable Impact on UA of Trend 3 is Medium: the never ending list of trends and innovations reflects the rapid pace of change in the retail industry (business.com) SOCIOCULTURAL Trend 4: According to the CDC, life expectancy is 78.8 years (cdc.gov) probability of occurrence is Low: There are many factors that can affect your life expectancy, and our scientific understanding of life expectancies is still evolving (cbsnews.com) the Probable Impact of a higher life expectancy on UA is Medium: According to a study by a team of researchers led by the National Cancer Institute (NCI), Leisure-time physical activity is associated with longer life expectancy, even at relatively low levels of activity and regardless of body weight (cancer.gov)
  11. 11. APPENDIX IV Area 2: Technological Trends Technological Trend 1: designers should work with intellectual property counsel to build a protocol for determining whether copyright, trademark or patent registration might be a suitable form of federal protection for their creations, and if so, seek to obtain those registrations (apparel edgl, 2016) probability of occurrence of Technological Trend 1 Medium: Samples are the heart of apparel production. They make up the collection, lead to the perfect fit, instruct production, and act as the showpieces that bring in business (Clark, 2014). Probable Impact on UA of Technological Trend 1 is Low: Many of the specialty fabrics used in Under Amour’s products are technically advanced textile products developed by third parties (Nasdaq, 2015). Technological Trend 2: Cloud Computing is the greatest tech shift since the dawn of the Internet is underway as the cloud takes over from packaged software and discrete IT services (Forbes, 2016). probability of occurrence of Technological Trend 2 Medium: In 2016, spending on public cloud Infrastructure as a Service hardware and software is forecast to reach $38B, growing to $173B in 2026 (Forbes, 2016) Probable Impact on UA of Technological Trend 2 is Medium: UA can increase its revenue as Worldwide Public IT Cloud Service Revenue in 2018 is predicted to be $127B (Statista, 2016). Technological Trend 3: E-commerce is becoming a growing trend; consumers can make purchases with just one click (internet retailer, 2016). probability of occurrence of Technological Trend 3 High: more than 3.17 billion people worldwide access the internet (Statista, 2014) Probable Impact on UA of Technological Trend 3 is Low: The rise of Internet shopping and growth of off- price retailing are mega-trends reshaping the retail industry. In 2016, retailers who want to survive will have to respond by restructuring (Forbes, 2015) Technological Trend 4: 3D printing is getting cheaper and its market will grow over the next three years. The expansion will be biggest in industrial, biomedical, and consumer applications helping companies reduce costs (Forbes, 2015) probability of occurrence of Technological Trend 4 Medium: 3D printing companies have partnered with Nike to start manufacturing large scale to continue their innovative designs using (Armstrong, 2016). Probable Impact on UA of Technological Trend 4 is Medium: UA Mitigate Risk by Being able to verify designs before investing in an expensive molding tool; Printing a production-ready prototype builds confidence before making these large investments (dragon innovation, 2014).
  12. 12. APPENDIX IV (CNT) Area 3: Ecological Trends Ecological Trend 1: According to the Organic Trade Association (OTA), the growth of traditional cotton crops uses 16 percent of the world’s total insecticides, more than any other individual crop. (sharprint.com) probability of occurrence of Ecological Trend 1 is High: Cotton is considered the world's dirtiest crop due to its heavy use of pesticides (Rodle Institute, 2014) Probable Impact on UA of Ecological Trend 1 is Low: Unsafe use of agricultural chemicals has severe health impacts on workers in the field and on ecosystems that receive excess doses that run-off from farms (wwf.panda.org) Ecological Trend 2: 300 cities in China that badly failed air-quality standard measurements in 2015, according to data collected by Greenpeace. (Gustke, 2016) probability of occurrence of Ecological Trend 2 is High: Outdoor air pollution contributes to the deaths of an estimated 1.6 million people in China every year (Levin, 2015) Probable Impact on UA of Ecological Trend 2 is High: Air pollution is clearly very costly, though, to its $11-trillion-plus economy. Those costs are mainly driven by lost productivity, since factories are shut down on bad hair days to avoid the dangerous health effects of breathing the dense, toxic air. (Gustke, 2016) Ecological Trend 3: Using renewable energy sources, especially in manufacturing and industrial activities, is critical to slowing and hopefully reversing the devastating impacts of climate change (Armstrong, 2015) probability of occurrence of Ecological Trend 3 is High: Green’ consumers may have been a niche group in the early years of this century, but awareness and consumer expectations of green products have become a mega-trend driving demand (lane, 2015) Probable Impact on UA of Ecological Trend 3 is Medium: Many consumers are becoming aware of the carbon footprint their garments are leaving and are looking to minimize their “brown impact" (Beneath the under amour: A green ethical company,2011) Ecological Trend 4: Strong scientific evidence shows that global warming is increasing certain types of extreme weather events, including heat waves, coastal flooding, extreme precipitation events, and more severe droughts (Union of concerned scientists, 2016) probability of occurrence of Ecological Trend 4 is Medium: In 2016, the National Academies of Science, Engineering, and Medicine announced that it’s now possible to confidently attribute certain weather events, like some heat waves, directly to climate change (MacMillan, 2016) Probable Impact on UA of Ecological Trend 4 is Medium: Links in global economic chains and world markets mean that extreme weather in one place can have repercussions elsewhere (Levermann, 2014)
  13. 13. APPENDIX IV (CNT) Area 4: Economic Trends Economic Trend 1: Outsourcing will be an approximately $524.4 billion global industry in 2015 (plunkettresearch.com) probability of occurrence of Economic Trend 1 is Medium: Labor costs are the main driver of corporations sending jobs overseas (americanprogress.org) Probable Impact on UA of Economic Trend 1 is Medium: Product quality is vital to the UA brand, and product quality is tied to manufacturing costs. And cheap labor makes product quality sustainable (Rodricks, 2015) Economic Trend 2: The highly skilled in the United States earn a much larger wage premium over unskilled workers than in most, if not all, other advanced nations (Porter, 2013) probability of occurrence of Economic Trend 2 is Low: low-cost labor matters more to firms that make clothes, whereas cheap energy is much more important to the chemicals industry (economist.com) Probable Impact on UA of Economic Trend 2 is Low: American wage restraint and newly cheap energy have improved its attractiveness to manufacturers (economist.com) Economic Trend 3: Prices for U.S. imports increased 1.4 percent in May, primarily driven by higher fuel prices (bls.gov) probability of occurrence of Economic Trend 3 is Medium: Our economy’s heavy reliance on fossil fuels means that the impact of rising fuel prices extends far beyond the higher cost of a tank of gas (reurbanist.com) Probable Impact on UA of Economic Trend 3 is Medium: Rising energy prices means higher retail prices, increasing the burden on retailers and consumers alike (reurbanist.com) Economic Trend 4: Since the start of 2015 the U.S. dollar has gone up in value about 14% (money.cnn.com) probability of occurrence of Economic Trend 4 is High: According to Citibank, America's greenback is enjoying its fastest rise in 40 years (money.cnn.com) Probable Impact on UA of Economic Trend 4 is High: When the dollar strengthens, net exports -- and, therefore, demand for U.S. goods and services -- should fall (Thoma,2014)
  14. 14. APPENDIX IV (CNT) Area 5: Political-legal Trends Political-legal Trend 1: National-security concerns can have an impact on consumers' buying and saving habits throughout the economy, trends in politics can heighten security fears (Ingram, 2016). probability of occurrence of Political-legal Trend 1 is Medium: People and parties in power at any time have a direct influence over the relationships of a nation with its neighbors in the global community, including hostile rivals (Ingram, 2016). Probable Impact on UA of Political-legal Trend 1 Low: Since half of UA product is produced in unstable countries, Violence could cause UA's factories to shut down, destroyed shipments and delayed or confiscated product (Farren, 2009). Political-legal Trend 2: Since the early 1990s, decreasing tariffs on a global scale has been a trend as evidenced by the passage treaties such as the "GATT and "NAFTA" (Allen,20013). probability of occurrence of Political-legal Trend 2 High: International trade is largely free from tariffs in 2012, 40% of international trade was fully liberalized under MFN terms (United Nations Conference on Trade and Development, 2013). Probable Impact on UA of Political-legal Trend 2 High: Foreign companies can import their product paying a very low tariff, thus enabling them to compete against U.S. companies such as UA (United Nations Conference on Trade and Development, 2013). Political-legal Trend 3 Change in political environment can affect business organization by adding risk factors and lead to major lose, it can also affect government policies on the local and federal level (pestle analysis, 2015). probability of occurrence of Political-legal Trend 3: Medium Businesses can be affected by many aspects of government policy; businesses must comply with the law. This may require taking action before the legislation comes into effect (change in market environment, 2016). Probable Impact on UA of Political-legal Trend 3 Medium: Change in political environment can directly affects the relationship between UA’s employees, its customers, and its suppliers (Neva, 2014). Political-legal Trend 4 Corruption has been a longstanding barrier to economic development in many countries. Some companies prosper by bribing government officials (Neva, 2014). probability of occurrence of Political-legal Trend 4 Medium: Although the number of foreign bribery cases resulting in a punishment has fallen since its peak in 2011, it remains historically high (Ferdman, 2014). Probable Impact on UA of Political-legal Trend 4 High: This gives UA an unfair advantage as bribing is illegal in the U.S.; the most common reason observed among the bribes was that companies wanted to gain an advantage landing public contracts with foreign governments (Ferdman, 2014).
  15. 15. APPENDIX V
  16. 16. APPENDIX VI (EFAS)
  17. 17. APPENDIX VII
  18. 18. Key Insights: ● Under Armour shows an annual average growth rate of 325% and a CAGR of 23% vs. Nike with an average growth rate of 49% and a CAGR of 6%. Lastly Adidas annual average growth rate of 17% and a CAGR of 2.3%. Nike and Adidas show sign of mature companies vs. UA is still capturing markets. APPENDIX VIII (Sales)
  19. 19. APPENDIX VIII (Stock Price) Key Insights: ● Information retrieved from Yahoo Finance ● Under Armour shows an annual average growth rate of 184% and a CAGR of 16%.
  20. 20. Key Insights: ● Under Armour shows an annual average growth rate of 444% and a CAGR of 27% vs. Nike with an average growth rate of 43% and a CAGR of 5%. APPENDIX VIII (Net Profits)
  21. 21. APPENDIX IX
  22. 22. APPENDIX X (Equity Spread)
  23. 23. APPENDIX XI
  24. 24. APPENDIXXII Inventory of Resources Strengths and Weaknesses S 1. Excellent brand recognition (UA.com) S 3. Solid financial standing and easy access to capital (Yahoo Finance) S 7. Strong information and technology systems as well as efficient and effective inventory tracking systems (Forbes.com) S 6. Strong distribution and selling channels in the US (Yahoo Finance) S 16. Workforce efficiencies S 5. Unique Technology (UA.com) S 11. School and university endorsements S 10. Athlete endorsements S 17. Eco-friendly operations (UA.com) S 4. Customer Loyalty S 19. Trendy Advertising (UA.com) S 2. Uses high performance and high quality materials (UA.com) S 14. SAP System (Yahoo Finance) S 18. Good Leadership/Experience top level management S 13. Core competence in innovation (UA.com) S 9. Increase in net sales every year (Yahoo Finance) S 12. Very intelligent and efficient R&D team S 15. Attractive logo and image (UA.com) S 8. Brand Equity (Yahoo Finance) S 20. Under Armour's Programs/Legacy partners (UA.com)
  25. 25. APPENDIXXII Inventory of Resources Strengths and Weaknesses W 1. Small revenue, sales and income compared to Nike/Adidas W 3. Heavily dependent on domestic market/No International presence W 5. High Prices W 4. Lack of strong intellectual property rights W 8. Too much dependence on few third party suppliers W 10. Target male market more than the female market W 9. 27% of sales come from 2 distributors; Dicks and Sports Authority W 2. Smaller company relative to main competitors W 8. Low Barriers to Entry W 7. Weak online presence
  26. 26. APPENDIXXIII Internal Factors Weight Rating Weighted Score Strengths Excellent marketing strategies and brand recognition 0.08 4 0.32 Core competence in innovation 0.05 3 0.15 Uses high performance and high quality materials 0.06 4 0.24 Increase in sales every year 0.07 4 0.28 Solid financial standing and easy access to capital 0.07 4 0.28 SAP System 0.05 4 0.2 Unique Technology 0.05 3 0.15 Athlete endorsements 0.05 3 0.15 Very intelligent and efficient R&D team 0.06 3 0.18 Brand Equity 0.06 4 0.24 Weaknesses Small total sales and net income compared to Nike/Adidas 0.06 2 0.12 Heavily dependent on domestic market/No International presence 0.07 1 0.07 High Prices 0.05 2 0.1 Low Barriers to Entry 0.05 2 0.1 Too much dependence on few third party suppliers 0.07 1 0.07 Weak online presence 0.05 2 0.1 27% of sales come fron 2 distributors; Dicks and Sports Authority 0.05 1 0.05 Total scores 1.00 2.8
  27. 27. APPENDIX XIV
  28. 28. APPENDIX XIV (CNT)
  29. 29. APPENDIXXIV(CNT) Under Armour Nike Adidas Key Success Factors and Strength Measures Importance Rate Strength Rating Weighted score Strength Rating Weighted score Strength Rating Weighted score Brand Image 0.10 7 0.70 8 0.80 5 0.50 Price 0.25 3 0.75 2 0.50 1 0.25 Product Quality/Performance 0.15 9 1.35 10 1.5 8 1.2 Distribution Capability 0.05 6 0.30 7 0.35 1 0.05 Innovation 0.10 9 0.90 8 0.80 5 0.50 Customer Loyalty 0.10 8 0.80 10 1 6 0.60 Financial Resources 0.05 5 0.25 6 0.30 2 0.10 Advertising/ Promotion 0.20 7 1.4 9 1.8 5 1 Sum of Importance Rates 1.00 Weighted overall strength rating 6.45 7.05 4.2
  30. 30. APPENDIX XV Potential move Offensive Type Horizontal integration KSF Solid financial standing and easy access to capital (5) Alternative Penetrate the international apparel market by developing a strong presence in European countries Potential move Defensive Type Differentiation KSF Uses high performance and high quality materials (S3) Alternative Use 3D printing to create unique, high quality and differentiated product in order to continue competing in the industry
  31. 31. APPENDIXXVI(TOWS) STRENGTHS – S 1. Excellent marketing strategies and brand recognition 2. Core competence in innovation 3. Uses high performance and high quality materials 4. Increase in sales every year 5. Solid financial standing and easy access to capital 6. SAP System 7. Unique Technology 8. Athlete endorsements 9. Very intelligent and efficient R&D team 10. Brand Equity WEAKNESSES – W 1. Small total sales and net income compared to Nike/Adidas 2. Heavily dependent on domestic market/No International presence 3. High Prices 4. Low Barriers to Entry 5. Too much dependence on few third party suppliers 6. Weak online presence 7. 27% of sales come from 2 distributors; Dicks and Sports Authority OPPORTUNITIES – O 1. Rapid growth in the Industry 2. High capital requirements 3. Increase amount physical fitness activities 4. Trend of wearing athleisure clothing 5. Brand Image SO STRATEGIES 1. (S1:O4) Use of the excellent marketing strategies and brand recognition to keep up with athleisure clothing trends. 2. (S8:O5) Increase brand image with the use of athlete endorsements. 3. (S4: O2) By increasing sales every year, UA will continuously overcome high capital requirements. WO STRATEGIES 1. ( O4:W6) Penetrate athleisure wear through E- commerce. 2. ( O1:W3) Use the rapid industry growth to gain market share by offering discounts 3. ( O2:W2) Use the high capital requirement to enter the industry as a means to develop an international presence THREATS – T 1. Consumers switching cost 2. Counterfeited goods 3. Easily produced raw material 4. Tariffs Barriers 5. Prices for U.S. imports increased ST STRATEGIES 1. (S5:T4) The use of their solid financial standing and easy access to capital to surmount tariff barriers. 2. (S9:T2) Outwitting counterfeited goods with their efficient and very intelligent R&D team. 3. (S3:T3) Conquer competitive raw materials with the use of high performance and high quality materials. WT STRATEGIES 1. ( T1:W3) Pay close attention to competitors price in order to adjust 2. ( T2:O1) Produce unique product to increase sale and minimize possibility of counterfeiting 3. ( W4: O7) Use low trade barrier rate to gain international distributors
  32. 32. APPENDIX XVII (SFAS) Strategic Factors Weight Rating Weighted Score S 1. Excellent marketing strategies and brand recognition 0.1 4 0.4 S 2. Increase in sales every year 0.1 4 0.4 S 3. Solid financial standing and easy access to capital 0.1 4 0.4 W 1. Heavily dependent on domestic market/No International presence 0.1 1 0.1 W 2. Too much dependence on few third party suppliers 0.1 1 0.1 W 3. Small total sales and net income compared to Nike/Adidas 0.1 2 0.2 O 1. High capital requirements 0.05 1.5 0.075 O 2. Rapid growth in the Industry 0.1 2 0.2 O 3. Brand Image 0.1 2 0.2 T 1. Tariffs Barriers 0.05 4 0.2 T 2. Counterfeited goods 0.05 4 0.2 T 3. Consumers switching cost 0.05 4 0.2 Total scores 1.00 2.675
  33. 33. APPENDIX XVIII (Recommendations) ● Increase Efforts Toward Global Markets -Focus efforts on establishing distribution channels through Europe -Consider acquisition of established company in Europe e.g. Joma Sports in Spain ● “Intelligent Assistant” Customer Service -Valuable for consumers with inadequate knowledge of Under Armour products and high-performance apparel . 24/7 availability ● Establishing Larger Share in Female Market -“ Women’s apparel some day will be larger than our men’s apparel business, which is our goal” - Kevin Plank -Women account for 80% of buying decisions, which includes shopping for family members, as well as purchasing for own use. Women athletes are much more particular about what they wear for working out. Don't just make decisions based on what looks good, rather the functionality of the item
  34. 34. APPENDIX XVIII (Recommendations) ● Open More Factory House Locations -Less than 100 total locations in 34 states. Expansion builds distribution channels without having to compete for shelf space at retail stores . -Attempt to Become Official Apparel Company for Professional Leagues. Penetrates a market held by competitors ● Focus on basketball footwear to grow shoe sales -Run more ad campaigns focused on basketball footwear to educate consumers. Continue to sign young elite athletes as endorsers. -Continue to gradually introduce footwear to generate hype. Brand can grow as the athlete grows and becomes more successful ● Implement Critical Sales Events (CSE) -Customer loyalty -Lower cost through customer retention -Positive word of mouth
  35. 35. THE END
  36. 36. REFERENCES •http://www.prnewswire.com/news-releases/consumer-study-shows-apparel-brand-loyalty-has-increased-consumers-seek-more-from- brands-they-currently-own-75652392.html •http://www.cbc-group.net/papers/brand.php •http://www.trefis.com/stock/ua/articles/186040/under-armour-through-the-lens-of-porters-five-forces/2013-05-16 •http://www.investopedia.com/articles/markets/020316/analyzing-porters-five-forces-under-armour-ua.asp •http://www.businessnewsdaily.com/5446-porters-five-forces.html •http://www.trefis.com/stock/ua/articles/186040/under-armour-through-the-lens-of-porters-five-forces/2013-05-16 •https://www.atkearney.com/gbpc/detail/-/asset_publisher/0cePdOWatojD/content/top-12-global-trends-to-watch-in-2016/10192 •https://www.fas.org/sgp/crs/natsec/R41589.pdf •http://www.wikinvest.com/stock/Under_Armour_(UA) •http://www.inc.com/magazine/201607/liz-welch/robert-herjavec-shark-tank-better-entrepreneur.html •http://pestleanalysis.com/political-factors-affecting-business/ •http://smallbusiness.chron.com/political-trend-affect-small-business-64909.html
  37. 37. REFERENCES •https://www.linkedin.com/pulse/20140421211746-655694-business-continuity-the-effects-of-the-political- environment-whats-your-backup-plan •https://www.washingtonpost.com/news/wonk/wp/2014/12/03/how-the-worlds-biggest-companies-bribe- foreign-governments-in-11-charts/ •https://makersrow.com/blog/2014/06/5-tips-for-creating-an-apparel-prototype/# •http://www.forbes.com/sites/louiscolumbus/2016/03/13/roundup-of-cloud-computing-forecasts-and-market- estimates-2016/#7256aea874b0 •https://www.internetretailer.com/2016/02/17/us-e-commerce-grows-146-2015 •http://3dprintingindustry.com/fashion/

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