Under armour raw materials

Group 4: Mark Keck Contribution

Instructor Merriman

MGMT479

February 9, 2017

Under Armour Strategic Audit (Team Suggestions)

Under Armour Current Situation

Current Financial Performance

18.1% increase net revenue over 2008, US$856,411,000

.71% decrease in gross margin in 2009 (attributed to liquidation of shoe inventory)

78% market share in the performance apparel clothing segment (UA created the segment)

94% of revenue generated from Canadian and domestic markets

Sports apparel industry down 4.3% as a whole due to recession

Strategic Position

Brand Mission:

“To make all athletes better through passion, science and the relentless pursuit of innovation.”

Objectives

Launch and establish a running shoe line to capture some of the $5 billion running shoe segment, and at least 3% of the $31 billion international branded footwear market

Strategies

Keep retail pricing aligned with competitors in apparel and foot wear

Policies

Strategic Managers

Board of Directors

8 Person Board of Directors including:

Kevin A. Plank, Chairman of the Board of Directors

Top Management

Kevin A. Plank, President & CEO

Wayne A. Marino, COO; Brad Dickerson, CFO

Henry B. Stafford, Senior VP of Apparel

Gene McCarthy, Senior VP of Footwear

Dan J. Sawall, VP of Retail

John S. Rogers, VP/General Manager of E-Commerce

J. Scott Plank, Executive VP Domestic and Global Business Development

External Environment

Natural Environment

Societal Environment

Sports apparel market is highly correlated to disposable income, recession had an industry wide negative net effect to revenues, recession ending

Primary target consumers for Under Armour are 15 to 25 year-old males. However recent trends show increases in female and older age segment of the sporting apparel and gear market

Task Environment

Rivalry

Though Under Armour controls 78% of market share in performance sports apparel, rivalry is intense because the market is fragmented by Nike, Addidas and Champion who are large competitors.

The switching cost is fairly low at consumer and retail level with all major competitors already controlling shelf space at retail and the relatively low cost to consumers for purchasing the sports apparel.

Manufacturing is outsourced by all competitors eliminating drastic differences in product or product manufacturing quality.

Brand identity is a big factor in rivalry as some people favor brands and the product is branded. Under Armour established the segment of apparel, but Nike has much larger brand equity.

Performance sports apparel is an under-developed segment globally

Under Armour wants to be a competitor in the larger, more competitive branded footwear segment worth $31 billion annually

Threat of Substitutes

Under Armour and its largest competitors have brand equity to create price inelasticity. Consumers prefer and place value on Under Armour brand. There are substitutes for the performance sports apparel products, but none offer the same benefits of temperature control, and weight advantage.

Buyer Power

Buyer Power is of little significance to the overall sale of goods because individual consumers do not form large centralized buying groups. Retailers may play a part through exclusivity agreements, but consumers dictate different brands due to brand preference at retail as well. Buying Power exerted by large organizations like the NFL, MLB, or NCAA, can create a shift in the balance of advertising power by shifting consumer brand preference (co-branding).