Under Armour Internal and SWOT Analysis

1. Under Armour:
Internal Analysis,
SWOT Analysis,
Competitive Position, and
Conclusions/Recommendations
Brian Teufel
MGT 490-004
Assignment #3
Professor McDermott
March 17, 2011

2. Year PA Sales Total Net Total Net % of Net
(in Sales (in Income Income Income
millions) millions) from PA (in from PA
(in millions)
millions)
2006 $373 $431 $32.4 $39 83%
2007 $513 $607 $40.5 $52.6 77%
2008 $579 $725 $31.5 $38.2 82%
2009 $652 $856 $38.2 $46.8 82%
2010 $853 $1,064 $55.1 $68.5 80%
• Under Armour’s PA sales and net income have increased every year since 2006.

3. $1,200.00
$1,000.00
$800.00
Licensed Revenue
$600.00 Accessories
Footwear
$400.00
Performance Apparel
$200.00
$0.00
2006 2007 2008 2009 2010
• On average, around 80% of Under Armour’s net income comes from PA.

4. • All $ amounts are in millions
Year PA % inc. Foot % inc. Access- % inc. Licensed % inc. Total % inc.
% dec. wear % dec. ories % dec. Revenue % dec. Sales % dec.
2006 $373.2 - $26.9 - $14.9 - $16 - $430.7 -
2007 $513.6 27% $40.9 34% $29.1 49% $24 33% $606.6 29%
2008 $578.9 11% $84.8 52% $31.5 8% $30 20% $725.2 16%
2009 $651.8 11% $136.2 38% $35.1 10% $33.3 10% $856.4 15%
2010 $853.5 24% $127.2 (7%) $43.9 20% $39.4 15% $1,063 19%
• Footwear sales increased every year from 2006-2009 but decreased by 7% in 2010.
• PA and accessories sales have increased every year; PA had a huge increase of 24%
from 2009 to 2010.

5. Year N.A. Sales % inc. % of Total Foreign % inc. % of Total
(in millions) % dec. Sales Sales % dec. Sales
2006 $415 - 100% $0 - 0%
2007 $582.5 29% 100% $0 N/A 0%
2008 $692.4 16% 95% $32.9 100% 5%
2009 $808 14% 93% $48.4 32% 7%
2010 $997.8 19% 91% $66.1 27% 9%
• International sales have increased every year since 2008 but UA is still heavily
reliable on North America for about 90% of their total sales.

6. Asset Distribution Cash and Cash
Equivalents
Accounts Receivable
12%
30%
11%
Inventories
15% Property and Equipment
32%
Other
Asset $ in Millions
Cash and Cash Equivalent $203.870
A/R $102.034
Inventories $215.355
Property and Equipment $76.127
Other $77.992
Total Assets $675.378

7. 200, 5%
Factory House and
Specialty Stores
900, 23%
Distribution Facilities
2200, 57%
600, 15%
Research and
Development
Other
# of Employees, % of Total Employees
• Under Armour has a total of 3,900 employees.
• Factory House and Specialty Stores employees are increasing rapidly because
UA is opening more branded stores.
• Almost ¼ of UA’s employees are devoted to research and development.

8. Strength Impact (1=Low; 5=High)
Brand Loyalty 4
Brand Equity 5
Core competence in Innovation 5
High Quality Apparel 4
Increase in Sales Every Year 3
Wide Range of Apparel 3
Athlete and Team Sponsorships and Endorsements 3
Very Intelligent and Efficient R&D Team 4
Weakness Impact
Small Total Sales and Net Income compared to Nike and Adidas 4
Heavily Dependent on Domestic Market; Small International Presence 5
High Prices 3
Not a Synergistic Marketing Campaign 3
Heavily Dependent on PA for Sales (80%+) 4
Target Male Market more than Female Market 2
27% of Sales come from 2 Distributors; Dick’s and The Sporting Authority 4

9. Opportunity Impact
(1=Low; 5=High)
Economic Recovery 3
Growth of PA Industry (Domestic and International) 5
Consumers focus on Quality, not Price 3
Aging population and increase in physically active seniors 2
Increase in physically active women 3
Consumers becoming more health conscious 3
Sport participation is a key aspect of U.S. culture 3
Increase in sports participation in emerging markets 4
Increase in e-commerce and m-commerce 4
Threat Impact
FDI Policies 2
Increase in cost of raw materials and resources; shipping costs 5
i.e. cotton, all man made fibers, and the big one being OIL/GAS
Inflation in China Increasing 3
Chinese Labor Costs Increasing 3
Obesity Rates in U.S. 3

10. Rank in respect to entire Factor S/W/O/T
SWOT Analysis
1 Core Competence in Innovation S
2 Increase in cost of Raw Materials, Resources, T
and Shipping Costs . . . OIL/GAS!!!!
3 Brand Equity S
4 Heavily Dependent on U.S. Market; Small W
International Presence
5 Growth of PA Industry O
6 27% of Sales come from 2 Distributors W
7 Heavily Dependent on U.S. Market for PA Sales W
8 High Quality Products S
9 Increase in Sports Participation in Emerging O
Markets

11. Competitive
Advantage
Low Cost Differentiation
Broad
Target Moving Here
Competitive
Scope
Narrow
Target
Started Here
• UA is moving from niche to mainstream
in an attempt to compete with Nike and
Adidas on other product lines (footwear and
accessories) other than performance apparel.

12. Market Share
High Low
•Performance
Apparel
High •Footwear
Star Question
Mark
•Accessories
Market
Growth
Low Cash Cow Dog

13. • UA creates value for the consumers and gains its competitive advantage
against the competition primarily through technology development.
• Innovation is what made UA what it is today, and Innovation is the
key for future success.

14. Primary Activities Weak/Moderate/Strong Under Armour
Inbound Logistics Moderate Third Party
Operations/Manufacturing Moderate Third Party
Outbound Logistics Moderate Third Party
Marketing and Sales Moderate Currently, UA has many
sponsorships and endorsements but
no synergy in marketing plan
After-Sale Service Strong UA has great reputation for
customer service and after-sale
service
Support Activities Weak/Moderate/Strong Under Armour
Firm Infrastructure Strong UA is structured very well and
has great company culture
Human Resources Moderate UA is limited by only having
Management 3,900 employees but they hire
and train very well
Technology Development, Very Strong Innovating and producing
Engineering technologically advanced
products is what UA does
Procurement Moderate Third Party

15. Component Comment
Innovation UA is extremely reliant on producing
innovative products that will continue to
impress their consumers and hold on to
high brand equity and brand loyalty
Market Development UA is really focused on selling their
products to emerging markets; 90%+ of
UA’s products are sold in the U.S.
Market Penetration UA would love to improve their market
share in the U.S. for PA and improve their
footwear and accessories sales as well
Product Development UA is devoted to continue to introduce
new products to the U.S. and also other
emerging markets around the world
Research and Development UA plans on continuing to produce new
and technologically advanced products
which are superior to the competition

16. Strategy Products, Market Under Armour
Market Penetration Existing Products, Very Strong Existing products
Existing Market are high quality and UA holds
majority of existing market (U.S.)
- Continue increasing U.S. market
share
Market Development Existing Products, Strong Existing products are
New Market high quality but UA needs to
increase market share in
international and emerging markets
Product Development New Products, Very Strong All new products
Existing Market are technologically advanced from
previous products
-U.S. market receives new products
extremely well (Loves Innovation)
Diversification New Products, Weak Very difficult to
New Market introduce new products into new
markets without having a decent
market share of existing products

17. 1 = Lowest Level of Effort
4 = Highest Level of Effort
Existing Products New Products
2 3
Existing Market
Market Penetration Product Development
4 1
New Market
Market Development Diversification
• UA is focused on all of these strategies but they
must prioritize according to what will achieve them
the greatest amount of success and what will put them
in the best position to grow in the future.

18.  Domestic Sponsorships/Endorsements
Athlete/Team Association/Sport Type of Deal
All Teams NFL Official supplier of Footwear
Auburn, Boston College, NCAA Official Outfitter
Maryland
Brandon Jennings NBA Endorsement
Lindsey Vonn Skiing Endorsement
Tom Brady NFL Endorsement
Michael Phelps Swimming Endorsement
Hunter Mahan PGA Endorsement
Cam Newton NCAA/NFL Endorsement
 International Sponsorships/Endorsements
Athlete/Team Association/Sport Type of Deal
Tottenham Champions League PA and Accessories Provider
Hockey Canada National Team Official Outfitter
Hanover 96 Bundesliga PA and Accessories Provider
All Teams Welsh Rugby Union PA and Accessories Provider

19.  PA sales and overall sales have increased every year
since Under Armour has been founded.
 PA sales account for more than 80% of total sales.
 International sales account for less than 10% of sales
but they have been increasing slightly since 2008.
 Under Armour is attempting to make a push into
international and emerging markets.
 The two main strengths for Under Armour are its core
competence in innovation and its brand equity.
 UA is moving from niche to mainstream in an attempt
to compete with Nike and Adidas on other product
lines (footwear and accessories) other than
performance apparel.

20.  Under Armour’s primary focus should be to
increase their U.S. market share in other products
such as footwear and accessories while
maintaining market leadership in PA.
 Under Armour should move into international
and emerging markets with caution to assure
they do not expand too quickly.
 Under Armour needs to continue to provide value
to consumers through innovation and research
and development.
 Under Armour needs to integrate their marketing
plan and make sure than all sponsorships and
endorsements contribute to the value of the
brand.