UNDER ARMOUR

Group Case Report

Business Policy COMM 4005 Section 15

Professor: Glenn Coltman

Due: October 30, 2016
Word Count: 4,225
Prepared by Group D:
Laurel Benny I/R
Terri-Lynn Miller
Kumana Nadarajah
Christopher Price
Michelle Rill
Ivana Stosic
Ying Yang

Table of Contents
Executive Summary.................................................................................................... 2
Identification.............................................................................................................. 3

Under Armour Case Study Group D

Background............................................................................................................. 3
Current and Past Strategies..................................................................................... 3
Current Issues......................................................................................................... 4
External Analysis........................................................................................................ 4
Industry Overview................................................................................................... 4
Key Success Factors................................................................................................ 4
The Five Forces Analysis.......................................................................................... 5
Market and Competitive Environment.....................................................................6
Strategic Group Map................................................................................................ 6
PESTEL Analysis...................................................................................................... 7
Internal Analysis......................................................................................................... 7
Current Strategy and Key Elements........................................................................7
SWOT Analysis........................................................................................................ 8
Financial Analysis.................................................................................................... 9
Resources and Capabilities Analysis........................................................................9
Value Chain Analysis............................................................................................. 10
Key Decision Criteria and Alternatives......................................................................11
Key Decision Criteria............................................................................................. 11
Alternatives........................................................................................................... 11
Recommendation..................................................................................................... 13
Action Plan................................................................................................................ 15
Contingency Plan...................................................................................................... 17
Appendix.................................................................................................................. 18
References

Page 1 of 20

Under Armour Case Study Group D

Executive Summary
Under Armour (UA) was founded by Kevin Plank in 1996. UA was the originator of an innovative performance
fabric t-shirt for athletes. UA has since expanded its product line and increased its distribution and marketing
activities. Despite its rapid success, UA continues to trail in third place behind the industry leaders, Nike and the
Adidas Group (AG). To penetrate the market further and close the gap with the leaders, UA needs to improve its
inventory management; increase its brand awareness, production and distribution capabilities internationally;
and increase its footwear sales. Key industry success factors are aggressive marketing; brand awareness;
advanced R&D to provide technology innovative products; effective distribution networks; and customer
loyalty. An in-depth internal and external review was done on UA using various analytical tools with a summary
of the conclusions as follows:
Five Forces Analysis - UA faces the strongest competitive pressures from rival sellers and overall moderate to
strong forces in the sports apparel and the athletic footwear industry. However, these forces do not pose
significant risk to gaining market shares and industry profitability.
Weighted Competitive Assessment UAs strength in providing technologically advanced products is
overshadowed by its lack of established international distribution systems compared to its rivals.
Strategic Group Map - UAs quality products that are competitively priced, positions it to increase its market
share but it will also have to increase its presence at a global level.
PESTEL - Consumers trends towards more athletic lifestyles and technological advances increase the need for
high performance sports apparel products. Also, political and economic changes globally can affect industry
profitability
SWOT - While UA has numerous strengths, the company must overcome problems relating to inventory
management and increase its brand awareness to capitalize on opportunities to increase its foreign market
shares
Financial Analysis -UA continues to have high return on sales and ROE but there could be savings available in
inventory management as well as cash management.
There are three alternatives being presented for UA, which are: large scale expansion into international market;
purchase/develop an advanced inventory management system; and acquire other companies.
It is recommended UA purchase/develop the inventory management system. The new system can be leveraged
into reducing costs and undercutting competitors prices to gain more market shares. This would be enhanced
with push advertising across all mediums and followed up with more athlete endorsements. The footwear
market would also be aggressively targeted. The action plan provides a structure for implementing this
recommendation over a two year period. Should this alternative not be successful, it is recommended that UA
proceed with large scale expansion in global markets as detailed under alternative one.

Page 2 of 20

Under Armour Case Study Group D

Identification
Background
In 1996, Under Armour (UA) founder, Kevin Plank, formed KP Sports and seized the opportunity to
produce and sell an innovative, high performance t-shirt that was cooler, drier and more comfortable for
athletes and sports teams.
Over the next 13 years, UA evolved its product line to include shirts, shorts, underwear, outerwear, gloves
and other offerings for men, women and children. It also expanded its marketing and distribution and was
successful at becoming the outfitter of various colleges and professional sports teams. In late 2005, KP
Sports changed its name to Under Armour and became a public company.

Past and Current Strategies

Growth Strategy
Past Started with sales of shirts to former teammates which evolved into an expanded product line
including apparel, accessories and foot wear. Distribution was through UA factory outlets, website,
specialty stores and retailers in North America, Latin America, Asia, Europe, Middle East and Africa.
Current Further expansion into product offerings to target additional consumers in different sports and
recreational activities.
Product Line
Past UA initially offered t-shirts that were engineered to keep athletes cool and dry in different sports
and conditions. UA then incorporated footwear and athletic accessories into their product line.
Current UA plans to continue broadening its product offerings at multiple price points.
Distribution
Past Initially, products were sold through Kevin Plank then expanded its distribution inside and outside
of North America.
Current UA plans to continue expanding within North America and into foreign markets.
Marketing, Promotion and Brand Management Strategy
Past Use of athletes and teams to showcase its products. UA also utilized traditional advertising means
as well as product placement in movies, TV shows, video games and social media.
Current Continue with sports marketing activities (i.e. endorsements, sponsorships) and carry on
working with retailers and social media to promote brand recognition.

Current Issues
UAs strategy in 2014 may not be potent enough to win market share from Nike and AG
Page 3 of 20

Under Armour Case Study Group D

UA had difficulties forecasting number of units to order which resulted in inventory amounts

consistently increasing from 2009 to 2011

Revenues outside of North America dropped in both 2012 and 2013
Compared to the industry leaders, UAs products are not as well known internationally and its

manufacturing and distribution capabilities are not as vast

UAs footwear sales are lagging far behind the industry leaders

External Analysis
Industry Overview
The multi-segment global market for sports apparel, athletic footwear, and related accessories has been
divided among 25 brand-name competitors, with multiple product lines and varying geographic regions.
There are many small competitors with specialized-use apparel lines that usually operated within a single
country or geographic region. In 2012, the global market for athletic footwear was about $75 billion and
was forecasted to reach about $85 billion in 2018. Athletic and fitness apparel, estimated to be $135
billion in 2012 was forecasted to grow about 4% annually and reach about $178 billion by 2019.
Nike was the global market leader in the sporting goods industry, with a global market share in athletic
footwear of about 21% and a sports apparel share of about 4.8%. In 2013, Nikes global sales were
approximately $25.3 billion, including its footwear sales of approximately $16 billion. AG was the
second-largest global competitor in the sporting goods industry, with business that produced athletic
footwear, sports apparel and sports equipment that was marketed globally. Its brands consist of Adidas,
Reebok, TaylorMade-Adidas Golf, Rockport and Reebok-CCM Hockey. In 2013, AG had global sales of
14.5 billion, including 6.9 billion in athletic footwear.
UA was positioned third in the sporting goods industry and offered high quality, technologically
innovative products to keep up with its competitors and meet its customer demands. The company
designed and merchandised three lines of apparel: HotGear, ColdGear and AllSeasonGear. It also
marketed footwear and accessories. Its 2013 global sales were approximately $2.3 billion, of which $299
million was attributed to footwear.

Industry Key Success Factors

Aggressive marketing, promotional activities, sponsorships and athlete endorsements to promote

their products
Advanced research and development activities to provide technologically innovative products that

benefit customers
Effective distribution networks to minimize costs and adequately stock stores
Customer loyalty high performance and good quality products
Brand awareness established brand in the athletic apparel industry
Page 4 of 20

Under Armour Case Study Group D

Overall, UA draws strength from these key success factors as they offer superior products compared to
their competition and have a growing number of sports teams to build brand awareness. The company has
a strong distribution strategy however needs to improve their capability to accurately forecast future sales
and improve management of total inventory.

Five Forces Analysis

Competition from rival sellers High
The sporting goods industry is highly competitive and UA faces intense competition from Nike, and AG.
Both companies offer wide product lines and specialize in specific sports. Key factors in competitiveness
include brand image, product quality and performance.
Competition from potential new entrants to the industry Low to Moderate
The sports apparel industry is large and dominated by well-established players. It would be very expensive
for new companies to compete with these rivals because a higher capital is required to enter the market
and the ability to secure shelf space with retailers and build a network of distributors would be more
difficult. Additionally, it would and take a long time to establish strong brand recognition and market
share.
Competition from producers of substitute products Moderate
There are many substitute athletic apparel products available for consumers at varied prices however, the
quality and comfort level of these substitute products are lower. UA offers customers high-tech,
performance fabrics, where the competition does not.
Supplier bargaining power Moderate to high
UA obtains its fabric from 6 fabric suppliers and their products are produced by 26 manufacturers. Their
manufacturers must abide by a code of conduct in regards to quality, working conditions and social
concerns. Limited number of suppliers decreases the bargaining power, as well UA have no long-term
contracts giving them the option of switching suppliers quickly at a low cost but there is increased risk of
price fluctuations and volatility.
Customer bargaining power Moderate
Consumers purchasing sports apparel can be classified into three categories: retailers, sports teams, and
individuals. Large retailers have strong bargaining power as they carry many different brands and can
choose to switch brands or discontinue sales of a specific brand at low cost. They have the ability to order
in large quantities giving them more control when negotiating lower prices. Sports teams have moderate
bargaining power because they could choose to use a different company if they were willing to offer a
better sponsorship. Individual customers have low bargaining power because they are not in a position to
bargain for lower prices at retail stores. However, they are well informed and can switch to other brands
at no cost.
Page 5 of 20

Under Armour Case Study Group D

In conclusion, UA faces the strongest competitive pressures from rival sellers and the overall moderate to
strong forces in the sports apparel and the athletic footwear industry. These competitive forces do not
pose significant risk of gaining the market share and industry profitability.

Market and Competitive Environment

Weighted Competitive Strength Assessment
After completing the competitive assessment for UA in comparison to its two main rivals, UA falls behind
Nike and AG with the score of 7.93. UA has a slight competitive advantage over AG for providing
technologically advanced products made from high quality material. This advantage is overshadowed by
its lack of established international distribution systems compared to its rivals.
See appendix for the detailed Weighted Competitive Strength Assessment.

Strategic Group Map

UA is currently well positioned in the market to chip-away at the market leaders in an effort to
gain market share in the global stage with their well-recognized, quality product that is

competitively priced.
The market leaders are taking note of UAs threat and taking actions to safe guard their market
share; UA should look for ways to increase the presence at a global level in the emerging markets
such as Asia to increase their own market share.

Page 6 of 20

Under Armour Case Study Group D

PESTEL Analysis
Political Factors

Risk from change of political landscape in all geographic areas that they operate in
66% of manufacturing outside of US which is subject to import restrictions and laws controlled by the
government
Economic Conditions

Majority of UA global sales are in European market where the Euro has been stressed by economic
failure within the European nation

UA will likely experience a drop in sales due to European consumers choosing to save disposable income
(Inman)
Sociocultural Forces
Change in trends towards living healthy active lifestyle supports UAs marketing campaign and current
strategy
Technological Factors

UA took advantage of the improvements in technology by acquiring MapMyFitness

Integrating improved technology into products to respond to consumers need to track personal
performance

Similar strategy as Nike who has the chip Nike+ for their footwear to track footsteps (McClusky)
Environmental Factors
Use of cargo ships and air transportation at risk from bad weather or environmental disasters, which
could lead to lost cargo or lengthened shipping periods.
Legal/Regulatory Conditions

Risk of law suit because of third party manufactures not abiding by local labour laws
**Scrutiny is required to ensure manufacturers are accountable and adhere to local laws

Internal Analysis
Key Elements of Current Strategy

Technologically innovative to gain consumers with high-performance products

Expansion of geographic market to grow outside North America
Expansion of product offerings to meet needs of individuals and sports teams
Marketing campaigns to increase brand awareness
Strong distribution network and efficient supply chain

UA is moving from a focused differentiation strategy to a broad differentiation strategy.

Page 7 of 20

Under Armour Case Study Group D

SWOT Analysis
Strengths:

Originator of performance sports apparel including innovative synthetic performance fabric

used to maximize comfort and control
Powerful and authentic brand built within a short period
Effective marketing strategies which include pro-athlete endorsements
Product Development team has extensive knowledge of industry

Weaknesses:

Narrow product line

Weaker brand recognition than Nike and AG
Weak market share in athletic footwear
Difficulties in accurately forecasting demand resulting in large year-end inventories
Poor execution and timing of excess inventory shipments to outlet store
Long lead times for the design and production

Opportunities:

Expansion of companys product line with diverse product offerings

Expanding interest in athletic apparel and casual footwear industry worldwide
Growing retail opportunities in foreign markets

Threats:

Intense competition in the industry primarily from Nike and AG

Large number of substitute products that are available to consumers at lower prices
Unknown future endorsement and sponsorship costs
Fluctuating crude oil prices affect product cost
Fluctuations in cotton availability can negatively affect production
Foreign exchange costs

This SWOT analysis shows that UAs situation is very attractive. They have great strengths; primarily the
quality and functionality of its products, to be able sustain the rapid growth and opportunity to expand into
international markets. UA is taking measures to deal with weaknesses and is capable of taking appropriate
actions to overcome the threats.
UAs core competencies include strong distribution channels, innovative R&D, and efficient marketing
strategies to always strive to offer the best product and bring it to the market first. UA has a distinctive
competence because of the proprietary fabric used in performance apparel creating competitive advantage.

Financial Analysis
After review the financial data including the key financial ratios, it revealed the following.

Page 8 of 20

Under Armour Case Study Group D

Return on sales is strong at the end of fiscal year 2013 however there is no improvement from 2012;

UA has declined to levels lower than what was reported in 2011

ROE has also decreased but is still high in comparison to years prior to 2012
Debt has been significantly reduced while equity continues to grow
Holding onto large amounts of inventory as noted in Days of Inventory, likely due to slow turnover
Continuous increase in cash on hand sitting idle

UA is performing well but still has room to improve. Their stockholders should be happy overall as the
company continues to have high return on sales and ROE. Evidence suggests that there could be savings
available in inventory management as well as cash management.
See appendix for Key Financial Ratios analysis

Resources and Capabilities Analysis

UAs main strengths are its innovative high performance products, brand loyalty, and a successful
marketing approach. Innovation technology, product R&D, high performance fabric and long-lasting
products are UAs valuable resources.
Intangible Resources - Innovative Technology - With innovatively designed products that incorporate a
variety of technologically advanced fabrics, UAs sales growth and building a stronger brand name is a
key to driving success. The UA product development team has a wealth of industry experience at leading
athletic apparel and footwear companies throughout the world.
Physical Resources - Supply Chain - UA has weak supply chain management with limited suppliers
causing a decrease to its bargaining power and lowered profit margin.

Page 9 of 20

Under Armour Case Study Group D

Capabilities -Strengths
Production - with specialized manufacturing techniques, third parties manufacture UAs products with
technologically advanced specialty fabrics produced from a limited number of preapproved third party
manufacturers.
Distribution - UA used a combination of distribution facilities and third-party logistics providers to serve
their customers throughout the world.
Capabilities -Weakness

A lack of diverse product,

A limited number of distributors
Narrow geographic markets outside North America

Concentration on domestic sales accounted for UAs smaller sales volume and net income. Most of UAs
income was generated from wholesale to domestic, regional, independent and specialty retailers. By
comparison, in 2013, Nike generated about 55% of its revenue outside the United States, and AG, earned
60% of its sales outside its home market of Europe.

Value Chain Analysis

Product R&D
UAs R&D team has significant industry experience and does the following:

Develops innovatively designed apparel, footwear and accessories with special fabric to enhance

the comfort and performance of athletes/consumers with active lifestyles in various climates
Works with fabric suppliers to ensure functionality and high quality is maintained and upgraded
when new product trends and market needs are identified.

Supply chain management

UA sources its specialty fabrics and other raw materials from a limited number of specialty fabric
manufacturers outside North America. Fabric costs are subject to crude oil price fluctuations and

cotton availability.
UAs products are manufactured by 26 manufacturers with approximately 66% manufactured in
Asia, 14% manufactured in Central and South America, 15% in the Middle East and 5% in
Mexico. UAs quality assurance team evaluates all manufacturers for quality systems, social

compliance, and financial strength.

UA also has a US location where it has the capability to make and ship customized apparel on
short deadlines to priority athletes.

Page 10 of 20

Under Armour Case Study Group D

Sales and Marketing

UA has in-house marketing and promotion departments that produce most of its ad campaigns.
UA markets its products through TV, print, radio and social media ads, as well as, through
sponsorship of events, sports teams and athlete endorsements. Social media, taglines, slogans and

trademarks are used to increase brand awareness.

UA secured the use of its products in movies, television shows and video games to build brand
recognition.

Distribution

UAs distribution channel includes sales to retailers and directly to consumers via UA Factory

Outlets, company owned retail stores, its website and UA catalogs.

UA has wholesale distribution to retailers in North America, Latin America, Asia, Europe, Middle
East, andAfrica. It leases distribution facilities in North America and has contracts with third party

logistics providers to service markets outside of North America.

UA has licensing agreements to manufacture and distribute UA products but ensures company
personnel pre-approve all licensed products to ensure brand standards are upheld.

Overall UA brings superior value to its customers with its innovatively designed products but improving
its supply chain management and distribution channels may be able to achieve cost savings to better
compete with the industry leaders.

Key Decision Criteria and Alternatives

Key Decision Criteria
A. Increases Brand Presence Brand presence has always been the first goal of UA
B. Increases Market Share Growth in market share is the best way to determine success
C. Speed UA is successful but lengthy turnaround in the strategy may cause a loss of current
market share which can be very disruptive in a volatile marketplace

Alternatives
1. Expand into International Market
Target international markets and focus resources on opening large scale distribution warehouses at
strategic locations. At the same time, reinforce these with strengthened push into both independent
and chain retail stores and open both company and outlet stores. Once the infrastructure is in place,
follow up with advertising through traditional mediums as well as endorsements with local athletes
and sports clubs.

Page 11 of 20

Under Armour Case Study Group D

Pros

Brings UA directly into a vast market that has a lot of sales potential
Focuses on building up fixed assets which will have less of an effect on net income
Cuts down on some of the shipping costs from international manufacturers.
Raises international brand awareness

Cons

Very expensive
Long term plan that will likely carry deficits for the first few years
Raises the effects of foreign exchange

Well entrenched competitors

2. Purchase/Develop Advanced Inventory Management System

Solve critical inventory issues with either off the shelf or internally developed software that better
supports the companys needs. Then, leverage the new system into cutting costs and undercutting
competitors prices. Push advertising across all mediums and follow up with more athlete
endorsements. Aggressively target the footwear market with both advertising and production.
Pros

Possibly the cheapest of the options depending on software project

Potentially quick turn around and should see gains within only a few years
Low risk as biggest investment is software
Good synergy with green initiatives (i.e.; cuts down on waste, reduces use of harsh
chemicals/dyes)

Cons

Customers may see lower price point as lesser quality

Competitors may copy the software/improvements and eliminate competitive advantage
No significant impact on international sales or brand awareness

Little control over main component of strategy (i.e.; depends mainly on the developers abilities
whether off the shelf or by a contracted developer)

3. Acquire other Companies

Begin aggressively bidding on and acquiring smaller successful companies that are in similar niche as
UA. This will create an umbrella of companies and brands under UA for them to use to open up new
markets never before considered. To be successful, UA will need to be frugal with their choices and
do thorough due diligence of all potential candidates. The end goal is to have UAs products across
multiple markets and build up a larger brand presence.
Page 12 of 20

Under Armour Case Study Group D

Pros

Opens up markets never before considered by UA

Brings in new people and ideas
Provides a link for consumers back to UAs main product lines
Can open international markets by purchasing companies located internationally

Cons

UA adopts any negative aspects of acquired companies

The most successful companies are often not available
Difficult to budget and prices are highly negotiable
Exposes UA to complicated intercompany trading which is made more difficult when conducted

across borders
Consolidated financial reports are exponentially more expensive and regularly audited

Key Decision Criteria Scoring

A. Increases Brand Presence Brand presence has always been the first goal of UA
B. Increases Market Share Growth in market share is the best way to determine success
C. Speed UA is successful but lengthy turnaround in the strategy may cause a loss of current
market share which can be very disruptive in a volatile marketplace
Each alternative is scored between 1 and 5 with 5 being the best and 1 being the worst

Alternatives

Key Decision Criteria

A

Total

1.

2.

10

3.

Recommendation
It is recommended that UA choose option 2 which is to purchase and develop an inventory management
system because it not only can boost the current market share substantially, but can also bring products to
a portion of the market that was not available previously. There are difficulties to overcome, mainly
consumers perception, but a well thought out and executed advertising plan can counter most of these
issues. Top tier celebrity athlete endorsements would be a good advertising vehicle but will also be costly.
To fund this strategy, they have to use debt financing and the cash stockpile but it should find returns well
over expectations, as price conscious shoppers will grow UAs market share. The best aspect of this
strategy is that it has a relatively short turnaround of less than five years. This will give added stability to
UA which will allow more security if they decide to pursue option 1 afterwards.

Page 13 of 20

Under Armour Case Study Group D

Option 1 was also a strong strategy but it included a lot of financial risks as the addition of international
contracts and fixed assets in foreign countries would create a work-or-bust type of scenario. Funding for
this strategy would also have to be more widespread and likely put UA in a difficult situation. It would
work best after option 2 has wrapped up and UA has grown further in the North American markets.
Option 3 is not recommended because of the amount of unknown elements that couldnt be readily
quantified. Although it scored as well as Option 1, it depended on the availability of strong companies that
are accessible to being acquired. It also required a significant amount of capital given the rate that the
companies would need to be acquired at to see any turnaround in the near future. Before option 3 can be
considered, there needs to be extensive research done into what companies could be available as well as
the significant assistance of specialized accountants and lawyers.

Page 14 of 20

Under Armour Case Study Group D

Action Plan
Date
Immediately

Item
Set the objectives of

Description
Senior management will determine what

Inventory improvement team

inventory objectives are currently not being met

which will develop into the goals of the new

Immediately

1-2 weeks

Create project team to lead

inventory analysis team

Senior management assemble a team of

the inventory system changes

individuals who have appropriate knowledge to

Initial meeting of Inventory

analyze the shortfalls of current inventory system

Facilitator/Leader - Team members are introduced

Improvement Team

with their backgrounds announced. Areas of

expertise should be identified so group is fully
aware of resources they have available on their

2-4 months

Weaknesses in current

team.
Inventory Improvement Team - look at all facets

inventory system as well as

of inventory related functions and identify areas

future needs identified

where system is not meeting expectations causing

weaknesses in value chain. As well consider
future needs & matters of inventory system (i.e.
reducing costs related to inventory, reducing

4-5 months

Selection of inventory system

waste to be more environmentally friendly).

Inventory Improvement Team - select best option

development method

to address weaknesses and future needs of

inventory system. Decision will be made if it
should be purchased or developed internally. If
developed internally, patent protection should be
considered to minimize competitors from using

Source out options for

same system(s).
Inventory Improvement Team - a vendor will be

inventory management

selected or internal team formed to develop

system

software.

6 months 18

Inventory management

Software team or vendor - Timing of this will

months

system created/purchased

depend if option is to purchase or to develop

6 months

internally. During this period, the software

(whether it purchased or developed) will be
tailored to meet needs of UA. This includes test
Page 15 of 20

Under Armour Case Study Group D

prior to implementation and creation of standard
8-10 months

10 months

Develop strategic plan for

operating procedures
Senior Management: Set the business strategy for

growing their presence in the

growing UAs presence in the footwear market.

footwear market.
Develop plan

R&D, Procurement, Marketing & Sales Managers

Develop the functional strategy that will enable
UA to meet the goals set in the business strategy
pertaining to expansion in footwear market. This
includes any new R&D requirements,
purchasing/production requirements and

12 months

Set operating activities for

advertising campaigns.
Plant Managers, Mgr. of Distribution &

expansion in footwear market

Purchasing - Develop the operational strategies

that will link the function strategy on expansion in
the footwear market. This includes production
schedules, shipping deadlines, purchasing of raw

18 months

18-20 months

24 months

Implement new inventory

materials, etc.
Applicable functional managers: training and

system

communication out to staff of new inventory

Implement plans for footwear

system.
Functional & operation managers: set applicable

expansions

plans into action that pertains to aggressively

Promote the new UA system

targeting the footwear market.

Senior mgmt./marketing team: should the new
system achieve expectations (i.e. cutting costs,
being a greener company), if prices are
reduced, customers need to be informed of UAs
more efficient systems means savings to customer
and not a reduction in product quality. The use of
endorsements with athletes that support green
initiatives should be publicized making UA more
desirable to customers who also support saving

24 months

24 months

Assess the new inventory

the environment.
Senior mgmt. team: Evaluate the new inventory

system

system to ensure it is meeting the objectives of

Assess market share of

addressing previous weakness and future needs.

Senior mgmt. Evaluate if UA has made any
Page 16 of 20

Under Armour Case Study Group D

footwear segment

impact in the footwear segment and initiate any

corrective actions if not achieving goals.

Contingency Plan
Should the above recommendation not be successful, it is recommended that UA follow alternative #1
which is to focus on expansion into international markets. This alternative is more of a long-term plan
than the original recommendation. This involves opening large-scale distribution warehouses while
pursuing entrance into both independent and chain retail stores simultaneously. The warehouses would be
strategically placed to see reductions in shipping costs from international manufacturers. Once this
infrastructure is in place, advertisements and athlete endorsements would follow to bring international
brand awareness to consumers. Hedging should be considered to minimize foreign exchange risk.

Page 17 of 20

Under Armour Case Study Group D

Appendix
Weighted Competitive Strength Assessment

Key Success
Factors/
Strength
Measure
Quality/ Product
performance
Reputation/
Image
Technological
Skills
Dealer network/
Distribution
capability
New product
innovation
capability
Financial
resources
Relative cost
position
Sum of
importance
weights
Overall weighted
competitive
strength rating

Imp.
Weight

Competitive Strength Assessment

(rating scale: 1 = very weak, 10 = very strong)
Under Armour
Nike
AG
Strength Weighted Strength Weighted Strength Weighted
Rating
Score
Rating
Score
Rating
Score

0.20

8.50

1.70

9.00

1.80

7.00

1.60

0.20

8.50

1.70

10.00

2.00

9.00

1.80

0.10

10.00

1.00

9.00

0.90

7.00

0.15

6.50

0.98

10.00

1.50

8.00

1.20

0.05

8.00

0.40

9.00

0.45

7.00

0.35

0.10

6.50

0.65

9.00

0.90

8.00

0.80

0.20

7.50

1.50

8.00

1.60

7.00

1.40

0.85

1.00

7.93

9.15

8.00

Page 18 of 20

Under Armour Case Study Group D

Key Financial Ratios

Profitability Ratios
Return on sales
Net return on total assets (ROA)
Return on stockholder' equity
(ROE)
Leverage Ratios
Total debt-to-assets ratio
Debt-to-equity ratio
Activity Ratios
Days of Inventory
Inventory Turnover

Key Financial Ratios

FY2013 FY2012
FY2011 FY2010
FY2008
11.37%
11.37% 11.05%
10.56% 10.61%
10.29%
11.13% 10.54%
10.14%
7.84%
15.41%

15.76%

15.23%

13.78%

11.55%

3.35%
5.02%

5.35%
7.58%

8.46%
12.21%

2.36%
3.21%

9.35%
13.77%

143.2
2.549

122.0
2.993

155.8
2.342

147.4
2.477

178.7
2.042

References
Inman, Phillip. Eurozone consumer spending slows but exports rise. 6 09 2016. Web. 22 10 2016.
<https://www.theguardian.com/business/2016/sep/06/eurozone-consumer-spending-slows-butexports-rise>.
Morgan Stanley. Research: Athletic Lifestyles Keep Apparel Sales Healthy. 30 10 2015. Web. 22 10 2016.
<http://www.morganstanley.com/ideas/global-athletic-wear-geared-for-growth>.
Office of the United States Trade Representative. U.S.-APEC Trade Facts. 2016. Web. 22 10 2016.
<https://ustr.gov/trade-agreements/other-initiatives/asia-pacific-economic-cooperation-apec/usapec-trade-facts>.
Shaw, Hollie. Joe Fresh, lawsuit must answer arms-length legal questions. 01 05 2015. Web. 22 10 2016.
<http://business.financialpost.com/news/retail-marketing/joe-fresh-lawsuit-must-answer-armslength-legal-questions>.
Thompson, Arthur; Peteraf, Margaret; Gamble, John; & Strickland III, A.J. (2016). Crafting and
Executing Strategy: The Quest for Competitive Advantage: Concepts and Cases. (Twentieth
edition). Canada: McGraw-Hill Ryerson Ltd.

Page 19 of 20