Swot and Value Chain Analysis of Under Armour
Under Armour can became the first in US is because they have great product. Under Armour has a significant impact, so an analyst should put more weight into it. This statement will has a short-term positive impact on this entity, which add to its value.
This statement will lead to an increase profits for this entity. Loyalty Under Armour have their own market, they will not loss the any customer from this market, and this type benefit also became their strength, can let the Under Armour became the first sport equipment in US.
Innovative culture A company with an innovative culture continuously produces new and inventive products.
An innovative culture can boost a company’s brand value, because consumers associate the company with the latest products. Besides the brand boost, new products can help a company stay competitive in a tough market. If a company has the best product in a segment, they are likely to gain market share in that segment.
Innovative culture has a significant impact, so an analyst should put more weight into it. Innovative Culture will have a long-term positive impact on the entity, which adds to its value. This qualitative factor will lead to a decrease in costs. Free Endorsements
Free endorsements have a significant impact, so an analyst should put more weight into it. Free Endorsements will have a long-term positive impact on the entity, which adds to its value. These statements will have a short-term positive impact on this entity, which adds to its value. This qualitative factor will lead to a decrease in costs. This statement will lead to an increase in profits for this entity. Free Endorsements is an easily defendable qualitative factor, so competing institutions will have a difficult time overcoming it.
W – Weaknesses Geographic Distribution Limited of sales outside of the North American market were primarily the result of an emerging international penetration plan that received new emphasis in 2006 with the opening of a European headquarters. In order to increase the graphic diversity of sales, some of the headquarters in Hong Kong, China, Canada, and Netherlands were opened to manage sales and distribution channels, and additional experienced industry talent was brought on board in 2007. Besides that, under Exhibit 6 diagram, we can see that most of the sales that come from Under Armour are from men’s apparel.
This look like the company major target customer more is on men. Major Competition Under Armour have competitor such as Nike, Adidas, Columbia Sportwear, SportHill etc. The company let low barrier to entry that many competitor easier entry into the market. Under Armour has let Nike become the industry leader that is continually striving to stay ahead of the competition. They become known as high quality, innovative product that consumer and athletes to wear and were willing to pay a premium price to own. Adidas is the second largest athletes apparel manufacturer in the world. Adidas product line includes shoes and athletic apparel.
Business Strategies Under Armour facing a degree of economic risk associated with the premium pricing and Under Armour is feeling the effects of the current declining retail consumer market that is affecting the broader economy. Additionally, Under Armour is exposed to a degree of risk by offering closely related, nonessential products that are, to a degree, subject to the fashion whims of its customers. O – Opportunities Diversified Since the Under Armour Brand was perceived as a male-targeted product, Under Armour now had a great opportunity to expand its product lines into various segments.
For example, Under Armour introduced a loose-fit clothing line and added women’s clothing to its product. Furthermore, Under Armour accessories category is developed. The primary accessories products are performance gloves for football, baseball, running, and golf aligned to the Heatgear and Coldgear product lines with unique performance features. Under Armour also licenses its brand name to independent manufacturers for other miscellaneous products such as bags, socks, headwear, eyewear and watch. Expanding into various product lines would aid in increasing both sales and Under Armour‘s overall product portfolio.
International Expansion Under Armour get opportunity through international expansion. Under Armour not just focus on United States market they also look for other market. Even under Armour put the company headquarters in the United States, Under Armour also focus on open the company stores in Europe, Japan, Canada, South Africa, Australian and New Zealand. Besides that, Under Armour also sells products in 13 countries, including in-house distribution in the United Kingdom, Germany and France. In order to facilitate its international expansion, Under Armour hired several new executives with experience in international business, most notably Peter Mahrer.
Mahrer was appointed as president and managing director for Under Armour Europe and will oversee Under Armour European operations headquarter in Amsterdam. Under Armour has placed major emphasis on international expansion. International diversification can lead to greater financial performance. Under Armour is pursuing a worldwide scope via regionalization. Over the past three years, revenues from foreign sales other than Canada have increased at a rate of 100 percent per year and are expected to increase even more quickly with the international growth emphasis.
Under Armour is fortunate because performance sports apparel to transcend any jingoistic trends and exporting does not require an in-depth knowledge of local customer’s service. Additionally, Under Armour products are already manufactured overseas in China. Operation and Distributions Under Armour possess and efficient operations and distribution network. For example, for the first ten years of its existence, the company was able to sustain operations by using “off the shelf” software programs, but after it went public in 2006, Under Armour invested in a new SAP systems.
This system is key to the company ability to add products to its list of offerings, as it allow Under Armour to manage a more diverse inventory and to ship directly to distributors. T – Threats Economic downturn -Weak global economy hurt growth prospects of Under Armour. Under Armour products are consider as premium goods, therefore while economic downturn people will try to cut off the expenditure on those luxury goods. This factor will lead to an increase in cost and decrease in profits because of the low demand of their products during economic slowdown.
Increase competition The larger competitors like Adidas/Reebok, Nike and Columbia Sportswear keep continuously increase the competition by spending large amount of money on product innovation, advertising and sponsorship. Nike and Adidas make up the majority of the apparel industry because of their quality advantage over other competitors. There are also smaller competitors such as SportHill that possibly become threats to Under Armour. SportHill’s products focus main on quality, comfort and reliability.
SportHill can be found in any major retailer stores and can be purchase online too. Because of this reason, Under Armour believes SportHill also one of the challenging competitor. Lacking protection over intellectual property Intangible assets such as trademark, licensing arrangement and other legal agreements are very important to the Under Armour brand. However the lack of proprietary products rights, intellectual property rights in foreign countries and a heavy reliance on relatively few third-party suppliers and manufacturers are threatening Under Armour.
Based on information, there are no long term contracts with suppliers or manufacturing sources and compete with other companies for fabrics, raw materials, and production. As we know that fabrics and manufacturing technology are not patented or copyrighted and it can be imitated by competitors Under Armour’s success because of their ability to innovate new products have caught the attention of the major competitors like Nike and Adidas. However, Under Armour has no patents on its technology to prevent these competitors from reproducing similar products.
Also, around 75% of the fabrics used in its products come from only six suppliers, this situation will put Under Armour at risk for price fluctuation to make its product. Value Chain Analysis The Value Chain allows a firm to see where the greatest possible value is for their consumers, as well as the best route to profit maximization. In terms of delivering values, Under Armour carry out activities include inbound logistics, operations, outbound logistics, marketing and sales and service. While supporting activities is also taken place which is procurement, technology development, human resource management and firm infrastructure.
Inbound logistics deals with the receiving and warehousing of raw materials and their distribution to manufacturing. This internal function is the first step to getting materials together to create added value that customers will receive in the final product. The raw materials that make up sporting apparel would be the fabric and threads necessary to create the unique finished good. For Under Armour, the raw material that is being used is the PolyArmour materials and special fabrics that create the moisture wicking clothing. These materials will then go through operations which are the processes of transforming inputs into finished products.
On the other hand, outbound logistics refers to where the finished goods are warehoused and distributed. It is important to have an efficient system of distribution and enough inventories to satisfy the receiver. Marketing and sales is anther internal function of the primary activities. This is where the identification of customer needs and the generation of sales occur. For Under Armour, outside marketing has been done since they are an internally based company. The last primary activity is service. Service allows for support to customers after the products and services are sold to them.
The easiest way to provide service being in the manufacturing industry is the ease of communication. It is most critical to have a website that is user friendly and customized for consumers. In terms of supporting activities, the infrastructure of a firm deals with the organization structure, control systems, company culture, etc. In creating new ideas and producing quality finished goods, the management must be excellent throughout the core of the company. Under Armour’s manufacturing structure is ideally affiliated only with direct buyers and suppliers therefore the inside isn’t seen by daily consumers and the wearers of the finished goods. Furthermore, technology development allows technologies to support value-creating activities.
For an industry like Under Armour, this is essentially the most important part in the value chain. They are technically driven to provide the world with advanced products that are engineered with superior fabric construction, exclusive moisture management and proven innovation. In defining a global value chain analysis for Under Armour, the pressing issue is the company’s ability to limit the limitation of its product and the fact that its resources are easily accessible by competing companies.
Under Armour’s main differentiating resource is its style and product design. Under Armour has a strong brand image that is considered a top brand by its customer base. Under Armour also carries a strong “in house” mindset which helped to establish its unique design and marketing abilities. However, the fact still remains that due to Under Armour’s inability to establish contracts with its manufacturing subsidiaries, Under Armour is having a difficult time in sustaining its competitive advantage.
