1. Under Armour Strategic Analysis
Porters Competitive Forces
Threat of New Entrants(low)
I do not believe that Under Armour faces a high threat for new entrants although it could still happen.
The reason for this is because of the high barriers to entry such as the large capital requirements needed
for inventory, manufacturing and research and development to name a few. Along with the capital
requirements, product differentiation is a key barrier to entry. Because of the fact that the sports
industry is dominated by 3 main competitors (Nike, Under Armour, Adidas) they have been set apart as
the best in quality, innovation, and uniqueness. It would be incredibly hard for a new company to begin
operations, and make any significant dent in the perception of value and differentiation provided by
these leading firms. They would likely have to start off as low cost, and gradually increase diversity and
differentiation after they have proven themselves. This is highly unlikely however. Another main barrier
to entry would be the lack of effective distribution channels. Many retailers that carry sports related
products would be extremely picky about who they allow to sell in their stores. They know that Nike,
Under Armour and Adidas sells, and they will quickly turnover inventory. However, if a new company
were to seek out distribution from one of these retail channels, they would need to have a proven track
record of success in sales prior to being accepted. This may not be too challenging if the new company
could utilize a niche market as well as a highly-targeted marketing strategy through online channels.
Nonetheless, being accepted by a large retail channel would be extremely difficult. Lastly, the expected
retaliation would be rigorous. The few large competitors would retaliate in a manner that a smaller firm,
who is trying to make headway in the athletic market, could not shield. They own such a large stake of
the market that the smaller firm would have a hard time answering any strategic or tactical act.
Bargaining Power of Suppliers(high)
The bargaining power of suppliers would be high because Under Armour relies on its suppliers for
practically all of its product lines. Many of the Intellectual property rights are often owned and
controlled by these same suppliers. Approximately 70 – 75 percent of Under Armours fabrics come from
only 8 suppliers meaning that they are in a weak position when compared to their suppliers. Lastly,
Under Armour has many products that rely on commodities, such as petroleum-based material, that are
subject to price fluctuations. Because of these factors, the bargaining power of Under Armours suppliers
would be high.
Bargaining Power of Buyers (high)
The bargaining power of buyers is very high in this industry because of the fact that the customers
purchase a very large quantity of the industry total output. The industry has two main revenue sources
for the most part: wholesale and retail. In both channels, the customers, whether a consumer or a
business, purchase a large portion of their products. This make the buyer very powerful. The athletic
industry also makes revenue through licensing deals, however the largest portion of their revenues
come from their sales. This is another reason why the bargaining power of buyers is powerful. Lastly,
because of the many offerings by other companies in the industry, a customer could easily switch to
purchasing product from one of the other firms. If Under Armour were to quit offering innovative

2. products, or it increased its prices disproportionately, then their customers could begin to give business
to other firms that are more competitive.
Threat of Substitute Products (medium)
Firms in this industry do face a threat of substitute products, although it is not as high as it would be in
other industries. What substitutes have against their favor is the fact that top companies have great
brand perception. The substitutes are mainly being purchased by people who could not afford to
purchase brand name products in the first place. For this reason, the threat of substitute products is a
medium threat. There will be some customers that settle for substitute products simply on the basis of
price.
Intensity of Rivalry Among Competitors (high)
Intense rivalry is very high in this industry because it is dominated by many equally balanced
competitors, there are high fixed and storage costs, the switching costs are relatively low, strategic
stakes are high, and exit barriers are also high. The main competing firms, such as Nike, Under Armour
and Adidas/Reebok, hold large portions of the athletic market. These companies engage a daily war to
increase their share of the market. Also, the fixed costs and storage costs are high because the firms try
to maximize their cost of manufacturing by producing excess capacity and then selling it off at a
discounted price. This is because storage costs are high. The strategic stakes are high because
consumers across the world rely on the products that these top firms offer. If any one of these
companies were to completely fail, there would be a large segment of the market that would suffer.
Lastly, exit barriers are high because of factors such as specialized assets (technology based assets),
fixed costs of exit (such as licensing agreements) and strategic interrelationships (such as partnerships
with other organizations or sponsorships).
Company Analysis
Vision/Mission/Strategic Intent
Under Armours stated mission is “to make all athletes better through passion, science, and the
relentless pursuit of innovation. Every Under Armour product is doing something for you; it’s making
you better.” Under Armour desires to become the world’s leading performance athletic apparel brand.
Their key to success is to offer products that are better than what is currently in their market. They want
to be the best in class. Every single action the company makes is focused around performance.
Current Goals/Objectives
Under Armour is focusing on retaining customers by keeping its products fresh, such as taking more
fashion risks in order to modernize its vision. They are also trying to compete against Nike by attracting
customers that where the clothing for purposes other than performance. According to one of the
studies in the case, 80 percent of activewear is worn for non-sports activities. With Under Armours focus
on performance, they will need to find a way to bring the two together by marketing to peoples desire

3. to be fashionable while also providing high performance products. They also have plans to double their
growth over the next three years to more than $2 billion.
Strategies
To achieve their goals, they have offered their first cotton garment by using their Charged Cotton. Until
2011, they had never used cotton because of its lack of performance during athletic activities. However,
they were innovative in producing a cotton product that had the same moisture-wicking as their original
clothing lines. They believe that the key to their growth will be apparel sales, and direct-to-consumer
business. Because of this, they have spoken about expanding their products to include water-repellent
hoodies, sports bras and yoga pants for women, and underwear line made with their moisture wick
technology, and a line of t-shirts featuring a new coldback technology. Other strategies include
remodeling their stores and launching a new website so that they can improve their direct-to-consumer
sales. As one last major strategy, Under Armour plans to increase its share of the footwear market by
rolling out a new footwear line.
Situational (SWOT)
Strengths
 Image
 Impressive publicity
 Efficient operations
 Efficient distribution
 Broad range of products
 Physical differentiation
 Innovative
 Authenticity
 Unique products
 Drive for success
 Experience in athletic realm
 Customer loyalty
 Respondent to feedback
 Team-driven management style
 Master of product placement
 Key sponsorships
Weaknesses
 Small market share in footwear
 Financially small
 Heavy reliance on third-party suppliers
 Limited ability to obtain patent
protection
 Lack of proprietary product rights
 Lack of intellectual property rights in
foreign countries
Opportunities
 Growth in footwear market
 Increase product lines
 Leverage licensed products

 Increase brand image in footwear line
 Extended growth in women’s, youth and
international markets
Threats
 Nike has strong foothold in footwear
market
 Low brand-loyalty for footwear
 Shortage from Suppliers
 Under-engineered running shoes
 Intense competition from leaders

4. Philosophical/Value Base
The main Philosophy that Under Armour has is that they want to make sure that all of their products are
doing something for the athlete. They are not just going to make a product to bump up sales. This fact
goes back to their authenticity. They are not in the business to simply make money; they want to make
athletes better. Everything that Under Armour does is centered around the performance of the athlete.
Noreen Naroo-Pucci said, “Ultimately, we will never compromise the performance aspect of what we
offer.”
Core Competencies/Competitive Advantages
It’s clear that one of Under Armours core competencies is its ability to market its product. To have
started in 1996 and have already made a significant mark on the athletic market shows that Under
Armour has been able to market their product effectively. Along with their strengths in marketing, they
are also innovative. The company has been able to stay up to date with industry trends and customer
wants. This is seen in their move toward developing a cotton-based performance t-shirt. Under Armour
also knows how to get endorsements that increases their brand image. As far as competitive advantages
are concerned, I would say their ability to market themselves as an “authentic” brand is something that
sets them apart from other firms and is a key to their continued growth. Also, their ability to have
efficient operations and distribution networks is a great competitive advantage for the long-term.
Porter’s Value Chain
Supply Chain Management
A key issue that Under Armour faces in this area is the fact that they rely on a few suppliers. The
company needs to work on branching out to other suppliers so that they do not have to worry about
have problems with getting supplies if one supplier decides to raise its prices or stops carrying a certain
material or product.
Operations
Under Armour has extremely efficient operations. They have been able to achieve this by having a blend
of physical location metrics and strategic qualities. The provide a wide variety of branded products to
their customers by leveraging their licensing partners.
Distribution
Under Armour has been able to maintain and increase the efficiency of their distribution by investing in
a new SAP system that allows them to add products to their list of product offerings as well as manage a
very diverse inventory that can be shipped directly to distributors. This cuts the cost of logistics and
allows for a lower cost of goods sold.

5. Marketing
The marketing initiatives of Under Armour are quite extensive. They have been able to grow a
recognized brand in little to no time. By the late 90’s, hey had already become a nationally recognized
company. In 1998 they had become the official supplier of performance apparel to the NFL Europe. They
have been featured in Warner Brothers movies as well. Sports organizations love Under Armour. It could
be because Under Armours focus is all about the performance of their products rather than simply the
fashion aspect. Sports organizations want to know that their products are doing something for the team.
Sports stars want to use Under Armour. This helps the company because it provides them with an
incredible word of mouth platform; something that their CEO believes is the most effective form of
advertising. These marketing initiatives translate into sales. About 73 percent of their sales came
through wholesale business from major retailers. They plan on increasing this direct-to-consumer
approach in the future in order to satisfy demand and grow the company. Under Armour retains its
customers by never sacrificing their quality, constantly innovating, and always listening to feedback for
the purpose of improving. They are always listening to their customers needs and creating products that
serve a performance purpose. This is why athletes love Under Armour.
Follow-up Services
As previously mentioned, Under Armour is continuously seeking feedback from their customers in order
to improve their products. Especially in the early days of Under Armour, Kevin Plank often tended to his
customers personally. When a customer would request a product he would make sure they were able to
provide that product for them, even if they did not currently offer that product. Saying no to business
was never an option. That same drive is what continues to prove that Under Armour is a company that
cares about the needs of their customers.
Support Functions
In the beginning, Kevin Plank started with $60,000 in total capital. Fast-forward to 2005 when Under
Armour went public, they sought to sell $100 million in shares of common stock. Their CEO and founder,
Kevin Plank is also their largest shareholder, with 75 percent ownership of the company. From a Human
Resources standpoint, the company always seeks to work with people who have experience in the
athletic industry. Doing this helps Under Armour maintain their “Authenticity” as a brand. They also seek
to provide a work environment that is centered around being team-driven and unique. They want
everyone to have the same understanding of the goal and mission in order to operate as an efficient and
cohesive unit. The SAP system that Under Armour uses is an example of some of the MIS that they use.
This system helps Under Armour to operate at an incredibly efficient level. It also allows them to
increase what products they can offer and makes inventory management more simple.

6. Company Analysis
Corporate-level
From a corporate-level strategic view, Under Armour experiences low-levels of diversification. All of
their revenues come from directly under the Under Armour brand, with about 95 percent coming
directly from merchandise sales. While a majority of those sales come from their wholesale operations,
Under Armour has also chosen to integrate forward into opening company-owned retail stores, and
increasing their use of e-commerce in order to increase apparel sales. The only real partnership being
built is between Under Armour and a marketing firm called Optimum Sports. The reason for this
partnership is for Optimum Sports to manage Under Armours media accounts. Aside from that, Under
Armour does partner with athletes for endorsement deals, but when it comes to operations, Under
Armour relies on its own people and management to gain a competitive edge.
Business-level
Under Armour definitely operates under the differentiation/niche business-level strategy. They use this
strategy for many reasons. First, they know that their target market will pay more for high quality,
performance gear that guarantees to perform. Their main focus was to maintain differentiation from
Nike. In order to do that, they have built their brand around the idea of “Authenticity”. They want their
brand to be the one that is associated, not with just fashion, but also with functionality. It’s great if the
product look good, but if it doesn’t perform well, then Under Armour will not sell it. They use their
marketing initiatives to pull in support from major athletes. By doing this, they position themselves in a
way that makes them synonymous with authenticity and performance.
Functional Level
In the areas of superior efficiency, quality, innovation and customer responsiveness, I would give Under
Armour an A+. Through a successful corporate-level strategy, and their SAP system, they have been able
to achieve efficiency in both their operations and their distribution. Their ability to provide superior
quality and innovation rests in their desire to always provide the athlete with a product that does
something. Under Armour was started out of a mindset of innovation and performance, and that is
something that they have always kept at their core along the way. Under Armour has been able to
provide superior customer responsiveness by always accepting feedback, and watching their
competition. Simply put, they listen to their market. This fact is evident in their branching out into new
product lines and their usage of materials that they once swore they would never use. Something that
they will need to be sure to do is to never lose their focus on performance because that is what sets
them apart from all of the other top firms.
Cultural Assessment
In the case, marketing consultant was quoted as saying, “ Under Armour is identified with performance
the way that Starbucks is identified with better coffee..”. This is the basic idea behind the culture of
Under Armour. As previously stated, the company has an intense focus on performance and usability.

7. The company surrounds itself with people who are known to perform. This can be seen by looking at the
qualifications of their top executives. Everything they do is based on performing and accomplishing a
task as a team. With Kevin Plank as their dedicated leader, Under Armour has been able to maintain
their focus. This is due to Planks intense desire to always become better. Every day he asks himself if he
is making a great product, telling a great story about the product, servicing he business, and building a
great team. If he determines that he has not done those things then he knows he is off focus.
Organizational Structure
Under Armour utilizes a functional structure that they use to implement their differentiation-based
strategy. Within that structure, there is a strong focus on the research and development of new and
innovative technologies as well as marketing. Under Armour has surrounded its company with
employees who have years of expertise because companies who use this structure are often involved in
decision making that is based on incomplete information. This is because the competitive environment
of their market is always changing. They look at a combination of information from the market,
suppliers, customer and competitors in order to make effective decisions. They often have to have a
great deal of strategic flexibility in order to handle the quick changes in the environment and to move
quickly on opportunities that can help growth. There is very little centralization and decision making is
often made in an informal manner because of the fast environmental and strategic changes. This is why
Under Armour has surrounded itself with workers who have large amounts of experience in the apparel
and sports industry.
Strategy Formulation/Recommendations
1.) Under Armour continues to grow but they are lacking a a few major areas. One of which is their
footwear. Currently, Nike maintains the majority share of the athletic footwear industry and Under
Armour wants to start getting a larger cut of the market. In order to do this, they need to work on
marketing this product segment as being better performing that Nike. Currently Nike has brand image
working in its favor because of the fact that they have been in this market for so long. Customers are
loyal to the Nike name. However, Under Armour could make a significant impact in this market if they
are able to convince people that their product is superior. I would suggest pricing their shoes at a level
that is comparative to Nike. They want to create value. In order to do that, they need to offer a better
product at the same cost. Once they have loyalty in this segment, then they can think about charging a
premium price
2.) Second, Under Armour really needs to focus on increasing its research and development into
wearable and performance technology. Companies like Nike and Adidas are already making great strides
in this area and Under Armour is getting left in the dust. Under Armour should consider entering into a
horizontal complementary strategic alliance with a company like FitBit. Currently, FitBits stock prices are
on the decline. They have been over the past 3 years or so. Investors believe that FitBit may have been a
“one-hit wonder” of sorts. However, they do have valuable resources and capabilities that Under
Armour could use to get ahead in the technology market. This alliance would be mutually beneficial for
both firms in the long-run.
3.) Under Armour needs to seriously work on guarding its intellectual property and its products through
patents. This has historically been hard for Under Armour, but with technology changing so much, it is a
must for them to cover their innovations.

8. 4.) They also need to focus on finding more suppliers. Under Armour has very few suppliers which gives
those suppliers a large advantage over Under Armour. In the event of cost increases from those
suppliers, Under Armour has absolutely no bargaining power because they fully rely on those suppliers
for their materials. Therefore, Under Armour should begin research into finding more suppliers to
partner with.
5.) Lastly, Under Armour needs to branch out into more product offerings. It is understandable that they
have historically focused on more team sport products, but in order to become a major player, they
need to have a presence in more specialized sports as well. Adidas made a great move for their company
when acquired TaylorMade and Salomon group and Maxfli. Under Armour should look into doing the
same thing and getting into the golf, track and field, and fitness industries. Currently, Under Armour has
not acquired any companies. If they do not start now, I fear that they will be at a great disadvantage
when compared to their top competitors.