Under armour opportunities and threats

Under Armour

Under Armour

22 April 2019

Table of Contents

Executive Summary (3)

Corporate Overview (4)

Internal Audit/Analysis (5)

Management (5)

Financial (7)

Marketing (11)

Resources/Capabilities (13)

External Analysis (14)

Macro Factors (!4)

Micro Factors (15)

Global Core Competencies (17)

Current Global Strategy and Position (17)

Global Potential (17)

SWOT (18)

Core Competencies (20)

Strategic Recommendations (22)

New Global Strategy (24)

Pro Forma Financial projections (29)

References (33)

Appendix (37)

Executive Summary

Under Armour is an Athletic Apparel and Footwear company missioned around the concept of bettering athletes’ lives. Their patented, innovative fabrics, unique logo, and endorsement-stacked advertising have made them a staple of the industry, much to the likes of their most comparable competitors, Nike and Adidas. They operate across five global continents, and sell their products through a variety of distribution channels including, but not limited to, Wholesale and Direct-to-Consumer.

Competition in Under Armour’s consumer market is difficult, both domestically and internationally. Established brands like Under Armour and Nike are being forced to innovate, as “Athleisurewear” companies like Lululemon are stealing domestic market share of women and children’s sales, which now drive the industry. Under Armour has been slow to adapt, and as a result, have taken a hit in domestic sales and market share.

Despite domestic difficulties, Under Armour has enjoyed continued success in international growth. What once accounted for less than 5% of global sales in 2013, International sales are now 28% of Under Armour’s business and brought in $1.4 Billion in 2018 sales.

Under Armour needs to decide on potential next steps. Their domestic sales are on a decline, and the revisions necessary to their recovery will be costly. Additionally, the domestic retail market is quickly shifting towards e-commerce, as retailers offering Under Armour and other comparable products are closing physical stores more than ever before. On the other hand, international business is growing at rapid speed, and many profitable markets remain relatively untapped.

Under Armour prides themselves on domestic sales, but their future success is dependent upon continued international growth. Of all potential international markets, the two geographic regions showing the most valuable year-over-year growth have been Asia and Europe/Middle East. Under Armour already has an established presence in Asia’s most valuable market, China, along with smaller markets like Japan. Their next move needs to be penetrating the Indian market. Undoubtedly the second largest market within Asia, India shows great promise for Under Armour. With a large increase in demand for retail space in 2018 and a pre-established e-commerce agreement with Amazon, India fits Under Armour’s current business model, and should be used as their Asian headquarters. Physical Under Armour storefronts in India’s largest, wealthiest Urban cities featuring their high-quality products at a premium price point will allow for Under Armour to continue growing internationally.

Success of this strategy will have Under Armour on pace to being a predominantly international company within the next decade. Much to the success of Nike, this trend is a good one for Under Armour, and should be expanded upon constantly.

Corporate Overview

Under Armour is a global multi-billion-dollar firm that deals with the sales of footwear, sports, and casual apparel and accessories. The company was founded on September 26, 1996, by Kevin Plank, and is headquartered in Baltimore, Maryland. The company also has numerous international offices in places like Amsterdam, which serves as their European headquarters, London, and Mexico. The idea behind the initiation of the company came from Plank’s days as a football player at the University of Maryland. He noticed that the sports apparel he was using was uncomfortable, and felt that the sports apparel industry was lacking a high-quality alternative for high-level athletic performance. As a result, he started Under Armour, which began as a small-scale business in his grandmother’s yard using only his small car as a means of transporting product to his customers. By the end of his first year, he accumulated a total of $17,000 and moved to Baltimore, where the company is still headquartered to this day. Today, the company stands as one of the renowned companies in sports and casual wear, selling to the United States of America and countries abroad (Under Armour, 2018).

Under Armour’s mission statement is coined around their need to better athletes via passion, design, and their continued efforts to innovate in the market. What motivated Plank was that him and his teammates were constantly struggling with the accumulation of sweat in their performance gear, leaving them wet during games and practices. As a result, he innovated a kit that would absorb most of the athletes’ sweat, making sure that they remain dry during training sessions and playing time. It was his desire to better the lives of athletes during competition, and this is what motivates the company's mission statement. Since founding the company, Plank and his team have constantly been exploring ways to improve their brand, hoping to better the lives of athletes, and society in general. This is recognized within Under Armour as a core value, which drives their continued effort towards excellence.

Under Armour’s short-term objective of emphasis is to offer adequate staffing. This entails a continued effort to diversify the company with building overseas offices to help in the smoothening of the various continued company activities abroad.

The other short-term objectives set by the company include bettering their current revenues, analyzed by setting attainable targets in the next financial year. For instance, in the last quarter of the 2017 financial year, Under Armour aimed to reach a target of $7.5 billion in revenues in 2018, which they achieved.

Moreover, the company has also set a short-term objective to ensure that employee satisfaction is attained and sustained, hoping to therefore improve the company’s productivity. For instance, the company recently decided to refer to employees as ‘teammates’, and feedback suggests that it has increased both employee satisfaction and productivity.

On the other hand, their long-term objective is inclined to their need to achieve adequate revenue growth and remain competitive with other renowned companies in their market like Nike Inc. They believe that in the next five years, it will be the best global sports apparel and casual wear seller in the industry. Tying into that, another long-term objective is to penetrate into a number of its previously untapped markets, including parts of Africa and Asia. Currently, Under Armour is aimed at expanding its market to many countries within Africa, and the interior parts of Asia.

Under Armour’s corporate strategy generally lies within their distribution and marketing strategies. Under Armour entrusts most of its corporate strategy on innovation. The company is using this corporate strategy to innovate high tech products that satisfy the needs of their current and future consumers. The company has been attempting to diversify by selling new products to previously unreached customers. For example, the company has recently indulged in the sale of football cleats, which has shown significant short-term growth.

The company is also investing in a combination of direct-to-consumer categories. As a result, Under Armour has been rapidly opening up new stores and offices in different parts of the world to ensure that they get more direct contact with their consumers. A recent product diversification campaign has also seen the company come up with adapted apparel and footwear tailor-made specifically for women and children.

Under Armour boosts their corporate strategy through brand endorsement strategies like using athletes to advertise their products. Additionally, they offer full uniform sponsorships to various collegiate and professional athletics teams in America, as well as individual sports personnel.

Internal Analysis

Management:

Under Armour’s Board of Directors includes a number of key individuals. They have various responsibilities, beginning with evaluating the company and its management. The board consists of the following individuals:

· Kevin Plank- Chief Executive Officer, Chairman of the Board & President

· George W. Bodenheimer- Former President of ESPN, Inc. and ABC Sports

· Douglas E. Coltharp- Executive Vice President and Chief Financial Officer, Encompass Health Corporation

· Jerri L. DeVard- Executive Vice President, Chief Customer Officer of Home Depot, Inc.

· Mohamed El-Erian- Former Chief Executive Officer and Co-Chief Investment Officer of PIMCO

· Karen W. Katz- Former President and Chief Executive Officer, Neiman Marcus Group LTD LLC

· A.B. Krongard- Former Chief Executive Officer and Chairman, Alex.Brown, Incorporated

· William R. McDermott- Chief Executive Officer and Executive Board Member, SAP SE

· Eric T. Olson- Admiral U.S. Navy (Retired) and former Commander, U.S. Special Operations Command

· Harvey L. Sanders- Former Chief Executive Officer and Chairman, Nautica Enterprises, Inc.

This board is incredibly diverse. It includes CEOs of successful companies, military leaders, and professionals offering expertise within a wide range of industries. This group brings many different perspectives to the table, leading to a well-rounded thought process. The main function of the Board is oversight, which includes “defining and enforcing standards of accountability that enable executive management to execute their responsibilities fully and in the interests of shareholders” (Under Armour, 2017).

Corporate Social Responsibility is embedded into Under Armour’s core values. UA’s guiding goals include:

· “Engaging with suppliers to support the factories that, and workers who, make our products

· Improving our materials and design, which determine a significant share of our impacts from our vision to products’ end of life – and is an area where we have more control to promote cleaner and healthier environments

· Enhancing sustainable practices in our corporate, retail, logistics, and owned manufacturing operations” (Under Armour, 2017)

These guiding goals are used as the framework to which individual goals and strategies are set. Under Armour also has a sustainability vision statement that ties directly to their brand. The statement reads, “WE own a strategic advantage because we WILL innovatively design our products and operate our business in ways that makes athletes better, provides high and long-term stakeholder value, PROTECT our customers, our team and our partners’ teams and ensure that we efficiently use resources to sustainably build OUR HOUSE” (Under Armour, 2017). Along with these overarching themes and goals, the CSR report identifies strategic priorities. They aim to align with the Fair Labor Association’s code of conduct. Specially, Under Armour is looking to work with suppliers on promoting ethical and continuous improvement in supply chain practices, as well as enhancing internal environmental initiatives to reduce emissions (Under Armour, 2017). In March of 2019, Under Armour’s efforts were proven successful as the company was accredited by the Fair Labor Association (FLA). According to the FLA, this recognition “confirms the company has strong policies and practices in place to set goals, monitor, and remediate problems to improve conditions for the workers within its global supply chain” (PR Newswire, 2019).

Under Armour set near-term goals in 2017, many of which are still in progress. The near-term goals are separated into five categories. These different categories include social and labor standards, advance materials sustainability, reduce energy and water consumption, reduce waste, and improve packaging. Certain goals, such as meeting FLA requirements, have been hit. Others, such as increasing the use of recycled polyester to at least 15% of sourced polyester by 2020, are still in progress (see Table 1).

Financial:

A financial analysis of Under Armour focuses on profitability, liquidity, efficiency, leverage, and investor performance for the years 2017 and 2018.

Profitability

Ratio

2017

2018

Gross margin

44.99

45.07

Net profit margin

-0.97

-0.89

Return on Assets

-1.26

-1.12

Return on Equity

-2.38

-2.29

Profitability ratios indicate the ability of the firm to achieve profits from the generated revenues. First is Gross Margin, which compares gross profit to revenues (Watson, and Head, 2010). Despite a rise in the cost of goods sold from $2,737,830 in 2017 to $2,852,714 in 2018, Gross Margin has increased from 44.99% to 45.07% (About.underarmour.com, 2018). A rise in the gross margin (though very slightly) is favorable. In the case of Under Armour, the gross profit was positively influenced by the reduction in promotional activity, improved product cost, increase in international and Connected Fitness operations, and reduced air freight. However, the positive effect was offset by charges related to restructuring.

Second is Net Profit Margin, comparing Net Profit to the total revenues of the firm. Under Armour realized net losses of $46,302,000 in 2018, compared to $48,260,000 in 2017 (About.underarmour.com, 2018). Thus, net loss has affected the net profit margin as shown by ratios of -0.89 in 2018, compared to -0.97 in 2017. This ratio is unfavorable, as it indicates poor management of operating and non-operating expenses. Expenses exceeded the revenues collected leading to net loss (Rich et al., 2011). Therefore, it can be said that UA has profitability problems.

Return on Assets (ROA) was -1.26 in 2017, compared to -1.12 in 2018. Despite a rise in total average assets in 2018, UA did not manage to improve its Net Income in the same proportion. Thus, UA is less than satisfactory in generating profits from total assets investment, hence poor profitability.

A similar trend is observed whereby the Return on Equity (ROE) was -2.38 in 2017 and -2.29 in 2018. Even though total shareholders’ equity declined in 2018, net income is extremely low. This implies that Under Armour has failed to optimally utilize equity finances to improve the profitability problems evident by net losses in both years. Operating segments such as North America and EMEA made massive operating losses in 2018. Furthermore, operating expenses such as selling, general and administrative expense rose by 4%. Another reason for the high net losses is restructuring costs of $203.9 million, which have massively reduced net operating incomes (About.underarmour.com, 2018). Overall, the profitability is lacking, hence management must work out a plan to reduce operating costs and improve performance of loss-making segments.

Efficiency

Ratio

2017

2018

Receivables Turnover

8.08

8.23

Days Sales Outstanding

45.19

44.36

Payables Period

64.71

71.78

Inventory Turnover

2.64

2.62

Days Inventory

138.39

139.34

Efficiency ratios show how management utilizes working capital items to improve operating results. The first ratio is the Receivable Turnover whereby a higher turnover is preferable as it would indicate increased conversion of credit sales into cash. The ratio has increased from 8.08 times in 2017 to 8.23 times in 2018. This implies that Under Armour has higher effectiveness in collection of cash from sales made in credit. This is also evident by fewer days sales outstanding of 44 days in 2018 compared to 45 days in 2017. Overall, the firm has slightly improved its efficiencies in collection of debtors.

Second is the accounts payables period, which increased from 64 days to 71 days. This means that Under Armour is taking longer to pay suppliers. This is favorable as the firm would have collected all credit sales from the same credit suppliers, and thus would have cash to pay creditors. Overall, the firm is efficient in payment of payables as a longer period allows it to collect debt before making payments to creditors.

Last is the management of inventory. To improve cash flow, it is important to quickly turn stocks into cash (Collier, 2015). The Inventory Turnover has remained stable at 2.6 times during the period, whereas the Days Inventory has also remained at around 139 days. As Under Armour takes an average of 139 days to convert its inventories into cash, yet its payable period is around half of the same period, the firm is not efficient in management of inventories. Such a high Days Inventory is unfavorable, as it shows that cash is held in unsold trading stocks for too long, yet the firm is expected to make payment to creditors in a shorter period. Evidence shows that inventories represent 39.3% of total current assets, which is substantial, and could affect liquidity.

Liquidity

Ratio

2017

2018

Current Ratio

2.20

1.97

Quick Acid Ratio

0.87

0.92

Liquidity is necessary in meeting financial dues that fall within the current financial period. The Current Ratio is the primary indicator of liquidity, comparing current assets to the current liabilities. The ratio has declined from 2.20 in 2017 to 1.97 in 2018. Despite the declining trend, which is not favorable, the Current Ratio remains strong, as current assets are almost twice the amount of current liabilities. With ratios of close to 2, it means that Under Armour has enough current assets for dues that fall within the current financial year.

Liquidity is also shown by the Quick Ratio. Mainly, quick assets (assets that are convertible into cash within 90 days) are compared to the total current liabilities. The quick ratio has increased from 0.87 in 2017 to 0.92 in 2018. It implies that Under Armour has strong liquidity as shown by ratios close to 1.

Leverage

Ratio

2017

2018

Financial Leverage

1.98

2.10

Debt/Equity

0.98

1.10

Debt to Total Assets

49.61

52.49

The Debt- to- Equity Ratio is the primary determinant of leverage. A comparison of total liabilities to equity shows a ratio of 0.98 in 2017, rising to 1.1 in 2018. This means that the company tries to keep equal proportion of debt to equity financing, but with a slight increase in debt in 2018. A ratio of 1.1 implies Under Armour is not taking too much debt (relative to equity), especially during a period where profitability has been low, hence the need to avoid the burden of excess interest payments.

Looking at the proportion of Debt to Total Assets, the firm had financed 49.6% of its total assets through debt in 2017, compared to 52.49% in 2018. Mostly, a ratio below 0.5 is considered good, hence the ratio is acceptable at 0.52. Additionally, since the ratio has not increased significantly in the 2017-18 period, Under Armour is still not a risky investment, as the firm could still secure loans for future projects.

Last is Financial Leverage. It compares the total assets of the company against the shareholders' equity (Rich, 2012). The ratio has increased from 1.98 in 2017 to 2.10 in 2018. A ratio of 2.1 is fairly conservative, hence no significant financial risk. Specifically, it implies that for every dollar in equity, there is $2.1 in total assets. Since the ratio has increased, it means that Under Armour is trying to use more leverage but at a fairly conservative level.

Investor (Market)

Ratio

2017

2018

Earnings per Share

-0.11

-0.10

Dividends per share

-

-

Book Value Per Share

4.75

4.47

First are Earnings per Share (EPS). EPS is -0.11 in 2017 and -0.10 in 2018. This is because the company made net losses (About.underarmour.com, 2018). This is unfavorable, as investors will have to go without returns from their investment. It could result in negative perceptions about company performance, and thus adversely affect the firms’ value of shares. With losses, dividends were not paid, hence negative stock value following negative earnings announcements (Collier, 2015).

Lastly, the Book Value per Share shows share value has declined from 4.75 in 2017 to 4.47 in 2018. The Book Value per Share of Under Armour has declined due to losses in 2018. Thus, the stocks may appear overvalued and become less attractive to investors.

Under Armour had good revenues in 2018 that increased by 4%. The strategy of the company is to raise sales through product innovation, investment in distribution channels, as well as international expansion. With the ongoing restructuring of operations, profitability was hit hard, as was the returns to investors. Profitability has been poor, as shown by net losses, and this is attributable to high operating costs such as the rise in SG&A expenses by 4% (About.underarmour.com, 2018). Therefore, profitability and efficiency are two performance areas where the company needs to strategize to overcome current inefficiencies. As for the financial position, the company has good liquidity, and its gearing position is fairly conservative. The rise in use of leverage is a critical issue, given the challenges in generating enough operating income to meet high operating costs and finance costs. The effect of poor profitability is lack of earnings to investors, which translates to a drop in stock value in the markets.

Marketing:

Under Armour aims to offer performance alternative products geared towards an active lifestyle for male, female, and youth consumers. Their collection of apparel, footwear, and accessories are primarily targeted towards consumers for use in athletic or training activities (Under Armour, 2018).

Under Armour generated $3.74 Billion in Net Sales within the United States during 2018. This represents a $1.55 Billion increase since 2013, but a $.26 Billion decrease since their peak in 2016. Their 2018 United States Sales accounted for 72% of their Global Sales, representing a 15% decrease since 2015. Internationally, Under Armour generated $1.34 Billion in 2018 Net Sales, representing a close to $1 Billion increase since 2013. International sales have increased by at least 20% every year since 2013, and accounted for 26% of Global Sales in 2018, doubling its 11.5% in 2015 (Statista).

More specifically, the EMEA (Europe, Middle East and Africa) and Asia-Pacific geographic segments continue to account for a greater portion of Under Armour’s sales year-after-year. Just 4 years ago, those geographic segments only accounted for $350 Million, or 9%, of Under Armour’s sales. In 2018, they were responsible for 22% of all Global Sales, bringing in just over $1.1 Billion (Statista).

Latin America accounted for roughly 4% of Global Sales in 2018, but growth in that segment has been minuscule.

Under Armour sells their products through a variety of distribution channels. A majority of their business is done with Wholesalers, which accounted for 60% of their sales in 2018. This represents an 8.6% decrease from 2012. An increasing amount of Under Armour’s business is now being distributed directly to the consumer. This accounted for 35% of their sales in 2018, and represents a 6% increase from 2012. The remaining 5% of sales comes from Licensing and their “Connected Fitness” application (Statista).

67% of Under Armour’s sales in 2018 came from their various apparel brands, representing an 8.6% decrease from 2012. Their footwear sales accounted for 20% of their business in 2018, representing a 7% increase from 2012. Over the last 7 years, roughly 87% of all Under Armour sales have come from these two product categories. The remaining 13% of sales comes from their Accessories, Licensing, and Connected Fitness application. Those figures have remained relatively stagnant since 2012, never increasing or decreasing by more than 1% of Net Sales Share (Statista).

As Under Armour’s sales have increased over the last 5 years, so has their marketing budget. Although they do not allocate a fixed percentage of profits towards marketing, Under Armour has invested anywhere from 8-12% of their sales towards marketing since 2012, depending on the year. In 2017, Under Armour spend $565 Million on marketing, more than doubling their investment in 2012. The increase in marketing spending can be linked to their global expansion. Since 2012, Under Armour has entered geographic segments like Europe, Asia, and Latin America. Because of that, along with domestic expansion, Under Armour has nearly tripled its global workforce in the last five years. What was once 5,900 employees in 2012 is now just over 15,000 employees (Statista).

Under Armour is also highly involved in supplying products for the NFL, NBA, and MLB, along with many high-level collegiate conferences. They are involved in sponsorships with some of the most highly respected professional athletes in the world, like Stephen Curry, Bryce Harper and Jordan Spieth.

Under Armour also has a large media presence in order to promote their products globally. “We feature our products in a variety of national digital, broadcast, and print media outlets. We also utilize social and mobile media to engage consumers and promote connectivity with our brand and our products” (Under Armour, 2018).

Resources/ Capabilities:

Under Armour developed a competitive advantage as an early mover in the industry. CEO Kevin Plank personally marketed his synthetic-based shirt to individual athletes as well as teams. His efforts spread through word of mouth and endless positive reviews to spark interest in the athletic community (Baer, 2015). As the first athletic company to create clothing that is sweat-resistant, Under Armour was able to make immediate strides in the market. This early mover advantage through the use of material that the athletic community had not previously seen led to Under Armour’s greatest capability: innovation. They originally used their synthetic material to create t-shirts, but then expanded it to everything from long-sleeve shirts to compression shorts and leggings, creating gear for warm temperatures and cold temperatures. There were sizes and styles for men, women, and children. Under Armour was able to target a wide range of demographics with clothing that had superior performance to anyone else in the industry. Under Armour was an innovator.

One of the main problems that Under Armour is facing is that other companies have caught up to them in that space. Under Armour has failed to stay ahead of the curve. In fact, Under Armour is now being criticized for a lack of innovation in comparison to Nike, Lululemon, and Adidas (Lango, 2019). Under Armour has failed to follow the consumer shift to the athleisure market. As an innovator of performance-based apparel, Under Armour has continued its focus on performance. Performance will always be an important driver of sales for athletic companies so this focus should be profitable. The problem is that Under Armour is lagging in this segment as well, falling behind competitors such as Nike in areas such as technology (Lango, 2019).

Under Armour’s competitive advantage can still be innovation and this innovation still falls under the performance category. Despite recent struggles, Under Armour has not shied away from this mission. Their recent focus has been on performance sneakers. They released new models of their HOVR running shoes in 2019. These shoes are built for performance with different types of runners in mind. They are technology driven, with the ability to be paired via Bluetooth to Under Armour’s MapMyRun app (Alvarez, 2019). The idea behind the shoes is that the technology will attract hardcore runners who want to be able to track their performance. The technology in the shoes transmits key data to the app, including measures such as cadence, distance, pace, stride, and steps. The app then takes this information and provides tips on how to improve performance, such as advice on how to improve your stride. Along with performance advice, the app also provides information pertaining to injury-prevention (Alvarez, 2019). Overall, the technology paired with the HOVR shoes is impressive and innovative. This is Under Armour’s latest attempt to regain market attention through an innovative, breakthrough product.

External Analysis

Macro Factors:

Among the main macro factors that this analysis reviews includes institutional considerations, demographic, economic, and technological forces, alongside other country-specific considerations. Some of the key institutional considerations include accounting/financial analysis and business analysis. From a financial perspective, there is a concern about the declining profit margins of Under Armour, with a subsequent decrease in asset turnovers, and an increase in leverage (Gray, 2018). The decreasing turnovers for the firm’s assets are mostly attributed to the growth in capital and investment expenditures which in turn increases the company’s leverage due to the expansion efforts (Statista, 2019). Notably, UA ranks amongst its peers in terms of solvency and liquidity.

From an accounting perspective, the firm’s revenue recognition approaches are rather conservative, given the substantial deductions resulting from expected discounts, rebates, and returns. One of the concerning metrics in the firm’s FIFO accounting system is the conversion cycle for cash which has grown by over 14% from 2014 to 2018 (Statista, 2019).

The business analysis perspective, on the other hand, shows that the company has a diversified product mix that spans more than eighteen countries globally. Most of Under Armour’s sales are through wholesale distribution channels that are made up of retailers. Under Armour has also made focal investments through its technology-based platform, Connected Fitness, thus aiming at being an industry leader regarding wearable technology.

The demographic factors facing Under Armour include age, population and sex. Regarding age and population, Under Armour’s main target is people who love sporting activities, including competitive and recreational sports (Lyons, 2019). In a recent advertising campaign, UA’s main target was women between the ages of eighteen and thirty-four, a segment that generates notable revenues for the company. In terms of sex/gender, Under Armour was primarily founded as a brand to exclusively serve men involved in competitive sports. However, in 2003, the firm changed its strategy and began producing products for women, a segment that has significantly grown over the years to account for about 30% of the firm’s revenues (Under Armour, Inc., 2019). This has led to more intensive marketing campaigns aimed at growing the women’s products segment.

The economic forces that face Under Armour are mostly concerned with the income of the firm’s target audience. According to a 2014 survey, the average income of UA customers was above $50,000 per annum (Lyons, 2019). Albeit being a restrictive demographic for the firm’s goods, Kalogeropoulos (2019) posits that the growing awareness of the need to keep fit and healthy has led to a projected growth in the sports and apparel sector, thus marking a huge opportunity for the firm.

Technological forces for UA mostly revolve around the growing need to integrate digital innovations into sporting activities as a way of improving monitoring and outcomes. As such, as part of its central strategy of being an industry leader in wearable technologies, UA has partnered with tech firm HTC to create the UA HealthBox, a wearable wristband that features capabilities to monitor an individual’s heart rate, among other vitals (Under Armour, Inc., 2019). The company is also investing significantly in 3D Printing technologies to improve the efficiency and effectiveness of manufacturing processes (Withers, 2017). Other country-specific considerations include social-cultural issues that include workforce inclusivity through diversity, norms, and improved health awareness.

Micro Factors:

Competitive analysis assesses the intensity of rivalry from close competition against the firm and its interests. Competition rivalry from established firms, such as Nike and Adidas, is medium to high, while that posed by upcoming firms such as New Balance is lower, albeit growing over the last two years (Under Armour, Inc., 2019). According to Gray (2018), wholesale outlets such as Dicks Sporting Goods also have a specific level of bargaining power against UA since they have the liberty to substitute the firm's goods with those from companies offering better markups for similar products.