Under Armour Case Write Up

Problem

Under Armour has become one of the most successful performance apparel brands in the United States. Despite its recent successes, Under Armour does have a few problems that could adversely affect its future sales. One general environment issue is how the current economic situation in the United States will affect Under Armour's sales. As consumers change their buying habits it could hurt its sales severely. Two, Under Armour needs to consider how its lack of a diversified supply group impacts its bargaining power. Roughly 75 percent of its fabric is purchased from only six distributors. Three, the company should consider diversifying its product line beyond its current sports apparel majority. Under Armour doesn't have as much brand recognition in spring/summer sports such as soccer and basketball. Lastly, Under Armour should be more aggressive in expanding to European and Asian markets. Currently, Under Armour heavily relies on U.S. market and there are tremendous potential consumer power in Europe and Asia.

General Environment Analysis

There are a variety of different external factors that influence the amount of success Under Armour is able to achieve. One of the biggest factors negatively affecting the firm is within the economic sector. Consumers are spending less money in the retail market. This decrease in spending is causing a broader economic downturn. As a company who sells its products at premium prices, this downturn threatens to damage the company's sales and decrease profits.

There are also several different opportunities offered by the general environment. Under Armour products are useful to athletes. Regardless of the country in which a sport is played, high quality, breathable apparel and durable, innovative equipment are always useful. Because of the cultural transcendence of its products, Under Armour is pursuing international diversification. Their strategy is one of regionalization, allowing top managers within each region to run almost like a subsidiary, reacting to local preferences and competitors. "Researchers have found that international diversification can lead to greater operational efficiency, which ultimately leads to higher financial performance." The move toward a more global firm should help the firm to grow, increase profits, and improve brand recognition worldwide. Additional threats and opportunities facing Under Armour are exhibited in Appendix A.

U.S Apparel, Footwear, and Equipment Analysis

The sports apparel and footwear industry is proving to be continually growing due to the advances in products as well as the increased presence companies are having on sports teams. Sports apparel for Under Armour made up for eighty-four percent of its total sales in 2007 with the majority of fifty-seven percent being from men's apparel and nineteen percent from women's. Footwear is part of Under Armour's non-apparel segment which represents sixteen percent of their sales and is expanding to specialize in a wider variety of sports after proving success with football and running. Being that sports apparel and footwear are complimentary items, the two combine an estimated seventy billion dollars with sales growing at a pace of around two percent annually with the exception of 2008's four point three percent decrease. With established competition, Under Armour faces the challenge of keeping up with and taking market share from sports companies such as Nike and Adidas. Supplier presence within this industry is low, making supplier power