Under Armour:Internal Analysis, SWOT Analysis,

Competitive Position, and Conclusions/Recommendations

Brian TeufelMGT 490-004Assignment #3

Professor McDermottMarch 17, 2011

Year PA Sales(in millions)

Total Sales (in millions)

Net Income from PA(in millions)

Total Net Income(in millions)

% of Net Income from PA

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 Performance

• Under Armour’s PA sales and net income have increased every year since 2006.

2006 2007 2008 2009 2010$0.00

$200.00

$400.00

$600.00

$800.00

$1,000.00

$1,200.00

Licensed RevenueAccessoriesFootwearPerformance Apparel

Under Armour’s Performance

• On average, around 80% of Under Armour’s net income comes from PA.

Year PA % inc.% dec.

Footwear

% inc.% dec.

Access-ories

% inc.% dec.

Licensed Revenue

% inc.% dec.

Total Sales

% inc.% 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%

Change in Sales by Product• All $ amounts are in millions

• 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.

Year N.A. Sales(in millions)

% inc.% dec.

% of Total Sales

Foreign Sales

% inc.% dec.

% of Total 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%

Change in Distribution of Sales by Region

• International sales have increased every year since 2008 but UA is still heavily reliable on North America for about 90% of their total sales.

30%

15%32%

11%

12%

Asset DistributionCash and Cash Equiva-lents

Accounts Receivable

Inventories

Property and Equipment

Other

Under Armour’s Assets

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

2200; 56%600; 15%

900; 23%

200; 5%

Factory House and Specialty StoresDistribution FacilitiesResearch and De-velopmentOther

Employee Distribution

# 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.

Strength Impact (1=Low; 5=High)

Brand Loyalty 4Brand Equity 5Core competence in Innovation 5High Quality Apparel 4Increase in Sales Every Year 3Wide Range of Apparel 3Athlete and Team Sponsorships and Endorsements 3Very Intelligent and Efficient R&D Team 4

SWOT Analysis – Strengths and Weaknesses

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

Opportunity Impact (1=Low; 5=High)

Economic Recovery 3Growth of PA Industry (Domestic and International) 5Consumers focus on Quality, not Price 3Aging population and increase in physically active seniors 2Increase in physically active women 3Consumers becoming more health conscious 3Sport participation is a key aspect of U.S. culture 3Increase in sports participation in emerging markets 4Increase in e-commerce and m-commerce 4

SWOT Analysis – Opportunities and Threats

Threat Impact

FDI Policies 2

Increase in cost of raw materials and resources; shipping costsi.e. cotton, all man made fibers, and the big one being OIL/GAS

5

Inflation in China Increasing 3

Chinese Labor Costs Increasing 3

Obesity Rates in U.S. 3

Rank in respect to entire SWOT Analysis

Factor S/W/O/T

1 Core Competence in Innovation S

2 Increase in cost of Raw Materials, Resources, and Shipping Costs . . . OIL/GAS!!!!

T

3 Brand Equity S

4 Heavily Dependent on U.S. Market; Small International Presence

W

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 Markets

O

10 Increase in Electronic and Mobile Commerce O

SWOT Analysis - Summary

Moving Here

Started Here

Generic Strategy Competitive Advantage

Low Cost Differentiation

Competitive Scope

BroadTarget

Narrow Target

• 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.

Star Question Mark

Cash Cow Dog

Product BCG Matrix

Market Share

High Low

Market Growth

High

Low

•Performance Apparel

•Footwear

•Accessories

Value Chain• 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.

Support Activities Weak/Moderate/Strong

Under Armour

Firm Infrastructure Strong UA is structured very well and has great company culture

Human Resources Management

Moderate UA is limited by only having 3,900 employees but they hire and train very well

Technology Development, Engineering

Very Strong Innovating and producing technologically advanced products is what UA does

Procurement Moderate Third Party

Value Chain AnalysisPrimary Activities Weak/Moderate/

StrongUnder 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

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

Grand Strategy

Strategy Products, Market

Under Armour

Market Penetration Existing Products, Existing Market

Very Strong Existing products are high quality and UA holds majority of existing market (U.S.)- Continue increasing U.S. market share

Market Development Existing Products, New Market

Strong Existing products are high quality but UA needs to increase market share in international and emerging markets

Product Development

New Products, Existing Market

Very Strong All new products are technologically advanced from previous products-U.S. market receives new products extremely well (Loves Innovation)

Diversification New Products, New Market

Weak Very difficult to introduce new products into new markets without having a decent market share of existing products

Ansoff’s Matrix

Existing Products New Products

Existing Market 2 3New Market 4 1

Ansoff’s Matrix (cont.)1 = Lowest Level of Effort4 = Highest Level of Effort

Market Penetration

Market Development

Product 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.

Domestic Sponsorships/Endorsements

International Sponsorships/Endorsements

Sponsorships/Endorsements

Athlete/Team Association/Sport Type of Deal

All Teams NFL Official supplier of Footwear

Auburn, Boston College, Maryland

NCAA Official Outfitter

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

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

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.

Conclusions

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.

Recommendations