Under Armour Inc

Under Armour

Mission: To improve all athletes’ performance by fusing desire, design, and unrelenting pursuit of invention (Under Armour, 2021).

Kevin Plank created Under Armour, Inc. in 1996. Their headquarters and warehouse moved to Baltimore in 1998. In 2005, it went public. In 2007, they opened their first trade store in Annapolis, Maryland (Madhav, 2021). They bought MyFitnessPal, Endomondo, and MapMyFitness. So they’ve gained popularity among fitness trainers. In this year’s Ex awards, Under Armour won the gold for ‘Best Press Event’. It went to Under Armour’s “Unique” campaign. Poems were read to the top female athletes. By 2020, Under Armour will employ over 16,000 people. In order to keep his T-shirts dry and fresh, Plank, a former football player, set out to design them. His goal was to solve a common problem among athletes: ill-fitting T-shirts. The product’s high quality was Under Armour’s unique selling point (USP). No other firm can match it. Under Armour’s goal is to enhance the performance of all athletes by combining passion, design, and an unrelenting pursuit of innovation. In order to Empower Athletes Around the World, the company’s goal is to.

VRIO analysis

The VRIO analysis tool is used to assess a company’s competitiveness and strategic advantage. The strategic tool assists in identifying the company’s core competences and assessing the company’s in-house resources and capabilities to make this determination in order to establish a long-term competitive advantage. The following criteria are used by VRIN/VRIO to evaluate resources and competencies:

Valuable

Under Amour’s financial resources are extremely valuable when it comes to investing in outside opportunities. These also help Under Armour defend itself. Customers perceive their value to be higher as a result of this. Because of their uniqueness, customers value these products more than competitors. Customers value these products more because they are one-of-a-kind. According to Under Armour, the most valuable asset of employers is their employees. Productivity is higher because the workforce is well-trained. Employees have a strong sense of loyalty to their employer. All of this adds to the value of Under Armour’s merchandise.

As a result of its patents, Under Armour can market its products without any other competitors. The earnings of Under Armour are rising. With the help of these patents, Under Armour is able to make money. Under Armour’s distribution network is a significant asset. This increases the number of people who can buy from the company. The earnings of Under Armour are rising. Accessibility is the key to sales. In the opinion of the VRIO Analysis, its cost structure is worthwhile. In other words, a company’s overall profitability are influenced by its production practices. As a result, its pricing strategy puts it at a disadvantage in the marketplace. R&D is a waste of time, according to the Under Armour VRIO Analysis, and innovating is more important. There haven’t been many new products introduced in the last few years. As a result of their R&D spending, Under Armour is losing market share.. Increase R&D teams while decreasing costs.

Rare

Armour’s financial resources are limited. There are only a few companies in this market with significant financial resources. Local food products are not uncommon, according to Under Armour VRIO Analysis. Other companies in the industry can easily give these. If competitors use these resources in the same way as Under Armour does, competitive advantage can be squandered. As a result, Under Armour can compete with local food providers on an equal footing. Under Armour will continue to utilise this resource due to its high value.

Under Armour believes that its personnel are a valuable commodity as a result of its VRIO Analysis. This company’s employees have much more education and experience than their counterparts at other organizations. Because of their greater salary and working conditions, employees at this company are more inclined to stay. Under Armour’s patents are classified as a rare resource in the VRIO Analysis. Because these patents are not available to rivals, obtaining them is tough. Because of this, Under Armour may use them without fear of being outperformed by the competitors. Under Armour’s VRIO Analysis has discovered a scarce resource in its distribution network, according to an analysis. To duplicate Under Armour’s distribution network would necessitate a significant effort and financial investment.. Only a small number of companies in the industry have these as well.

Costly to Imitate

The company has acquired these resources through sustained profits. Newcomers and competitors would need to produce similar profits over an extended period of time in order to acquire enormous sums of money. Replicating local delicacies isn’t that pricey, according to Under Armour’s VRIO Analysis. If they invest extensively in R&D, competitors can gain these as well. These don’t require years of experience either. It is also possible for competitors to acquire a short-term advantage from Under Armour’s local food goods. Furthermore, according to VRIO Analysis, personnel of Under Armour can be easily copied. So that other companies can train their own workers. They can lure Under Armour employees with better compensation, perks, and possibilities for promotion. In other words, employees of Under Armour have a short-term advantage over the competition. They could be taken over by rivals. With the help of VRIO Analysis, Under Armour claims that its patents are tough to replicate. Because it is illegal to imitate a patented product. Developing and patenting similar resources is also a costly endeavor. Competition can’t readily replicate Under Armour’s distribution network, according to Under Armour VRIO Analysis. This is something that Under Armour has been working on for some time now. Competitors would have to spend a lot of money to duplicate such a distribution system.

Organizational Competence & Capabilities to Make Most of the Resources 

They’ve arranged their financial resources using Under Armour’s VRIO Analysis to maximize the company’s value. These funds have been wisely allocated in order to take advantage of current possibilities and mitigate potential threats. As a result of these resources, Under Armour is able to preserve its competitive advantage. The company’s patents are unorganized, according to the Under Armour VRIO Analysis. This suggests that the company isn’t maximizing the value of its patents. Under Armour will be able to leverage an unused comparative advantage into a long-term competitive advantage if it begins selling patented products before the patents expire. According to the conclusions of the VRIO Analysis, Under Armour’s distribution network is arranged. Under Armour ensures that its items are available in all of its stores in order to reach out to clients. As a result, these resources give Under Armour a long-term competitive advantage.

SWOT analysis

Internal and external strategic factors, including strengths and weaknesses, opportunities, and threats, can be identified and analyzed. The SWOT model assesses both internal and external factors in the micro and macro environments of the company. Under Armour is a sportswear company based in the United States. North America led Europe, the Middle East, and Asia in revenue in 2017. Premium T-shirts keep athletes dry, light, and comfortable even in the most extreme conditions. Under Armour has a diverse product offering, numerous distribution channels, and rising revenue. Under Armour has a distinct advantage in the apparel and footwear industries. In addition to the digital app, Under Armour offers a nutrition and fitness app (Abdul Mutalib, 2021). Unlike Nike and Adidas, Under Armour does not have a retail presence or market penetration. The majority of profits are generated by sales in the United States. Under Armour’s flaws include uncustomized products, high prices, and a lack of female customers. Under Armour sees opportunities in new sports, product line expansion, and expanding its target market from men and women to children. Products from competitors with stronger brand recognition harmed sales and jeopardized the company’s bottom line.

Strength

1. A diverse product portfolio that includes apparel and sportswear.

Under Armour has evolved from clothing to footwear and accessories. In 2019, apparel, footwear, and accessories sales accounted for 66%, 21%, and 8% of net revenue, respectively. The remaining 5% was generated by licensing and Connected Fitness revenue. The availability of a wide range of products reduces the risk of product dependence. These products are created by third-party companies. Pay attention to product development, fit, climate, and end-use (Omar Salim Labra Salgado, 2020).

2. Distribution via multiple channels

Under Armour has two channels of distribution. Revenue is generated by wholesale channels such as sporting goods chains, independent and specialty retailers, department store chains, and institutional athletic departments. The company has e-commerce websites in addition to brand and factory outlets. In fiscal year 2019, wholesale, direct to consumer, licensing, and Connected Fitness revenue accounted for 60%, 34%, 3%, and 3% of net revenue, respectively. Their products are permitted in countries other than the United States. The company’s growth is aided by distribution networks (Dommer, 2015).

3. Consistent revenue growth:

Under Armour has increased revenue and investor returns on a consistent basis. In six years, the population increased from 2.3 billion to 5.3 billion. To maintain growth, Under Armour intends to restructure around category management. Accountability will be shared across categories and regions as a result of this global model (Miloch et al., 2012). The Covid-19 pandemic will have an impact on revenue in FY2020, and Under Armour is considering a 2020 cost-cutting initiative to improve profitability. Under Armour’s products are primarily marketed to elite athletes and teams of all levels. Athletes and influencers are sponsored by the company in order to sell directly to team equipment managers and individual athletes. Other consumers can see Under Armour products in action through the internet, television, magazines, and live sporting events. No advertisement can compete with the authenticity of Under Armour products on the field. The NFL requires its players to wear shoes and gloves. It has the ability to use NBA players’ in-game uniforms to promote products such as

Weaknesses

They had fewer physical locations before the pandemic than Under Armour competitors like Nike. After COVID-19, sales fell 41%, and many analysts predict another 25% drop. Female athletes may not find Women’s Under Armour to be the best choice. Many buyers are turned off by their high product prices (Weedon, 2012). Under Armour apparel customization options are limited. The company is new and has a limited number of markets. Due to the possibility of serious injury, Under Armour athletic cups have been voluntarily recalled.

• Expensive beginnings

It has significantly increased its investment spending over the last three years. In two years, it spent $847 477,000 and $153 312,000. Its restructured plan for 2017 increased costs. This investment boosts revenue. It has a limited ability to make new purchases and generate new revenue.

• Physical presence

The company is relatively new and has a limited international presence. The United States accounts for 83 percent of their revenue. Globally, the company has struggled to compete. This is critical for long-term development.

Opportunities for Under Armour

A “fit” way of life is becoming increasingly popular. The importance of social media grows in tandem with the number of fitness enthusiasts and influencers. Under Armour can easily target children. Diversifying the company’s products and sports can help it succeed. They can also market to unappealing female customers.

• Launch of a new product

Under Armour values innovation. Its products have always been state-of-the-art. As a result, it is able to improve and revise products as needed. Customer base will grow as the product line expands.

• Global Market

Global expansion is essential for Under Armour. Sales increased by 57% in the second quarter. This figure is encouraging.

• Collaboration

Since 2017, Kohl’s has carried Under Armour. Kevin Marshall, CEO of Kohl’s, praised the collaboration. Under Armour products, for example, are sold at JC Penney. Future Under Armour collaborations should aim to increase market share and revenue.

Threats

Many other companies have caught up, bringing the price of this equipment down. The ability of a brand to distinguish itself from competitors will be put to the test. Furthermore, they, like any other company, are affected by Covid-19’s primary challenge (Under Armour PESTLE Analysis 2021: Succumbing to the Competition, no date). Because Under Armour is a small, local company, it finds it difficult to compete globally with Adidas and Nike. Items such as chin straps and athletic cups can taint a brand’s image. Such as well-known clothing and shoe brands.

• Rivalry

Their competitors are more well-known and have more operational experience. Under Armour’s consumer base has grown, but this may jeopardize the company’s survival.

• Polarization

The company was recently chastised for its support for Trump. The political schism has hampered and jeopardized the corporation’s operations.

• Product Advantages

Injuries are being caused by Under Armour chin straps and sports cups. If these products cause harm, the brand’s reputation and endorsements may suffer.

PESTLE ANALYSIS

Politics and Under Armour

Under Armour, like any global business, is subject to currency fluctuations. It’s hard to predict success when it comes to taxes and duties. The political affiliations of Under Armour must be scrutinized. After referring to Donald Trump as “an asset to America” in 2017, Mr. Plank drew criticism from the public and even brand ambassador Stephen Curry. This lowered the morale of many employees at the time. In fact, in 2017, Under Armour was slammed for making another bland statement about NFL protests (Abdul Mutalib, 2021). Under Armor tried to play it safe with the “American Flag” and “American Athletes,” which backfired and made the brand look weak.

Economic impacts on Under Armour

Despite being one of the most successful brands for many years, Under Armour lost money in 2017. Their stock price fell 44% from 2017 to 2020. Despite spending $300 million in 2017 to help other areas grow, the brand only increased revenue by 4% in 2018. They had to cut around 680 jobs due to bad news. The covid-19 pandemic has hampered almost every business, but Under Armour has been hit the hardest. They have suffered huge losses. Due to lockdowns, many stores had to close during the pandemic. In many countries, due to Covid-19, gyms were closed, so Under Armour suffered the most. No need for sportswear. The company claims pandemic is only partially at fault. 2020’s revenue fell 23% year-on-year from $1.2 billion to $930.2 million. Experts say that after the new CEO, Under Armour started losing money(Omar Salim Labra Salgado, 2020). Frisk increased marketing expenses by 15% to $154 million. They are reorganizing to manage better and reduce costs.

Socio-cultural factors affecting Under Armour

A famous brand like Under Armour must always be liked by its customers. The company has had odd scandals while Dwayne Johnson and Stephen Curry have endorsed it. Under Armour used to pay for top executives and athletes to go to strip clubs. It used to be a win-or-deal party. Female employees were prevented from forming close bonds with peers and subordinates, both demeaning and sexist. So, it isn’t clear if the company will still pay for such events A little late. To please some essential guests and executives, they only invited attractive younger female staff. They even hired go-go dancers, which upset many. In response to the allegations of sexism and inequality, Under Armour hired Tchernavia Rocker as their first female C-level executive. Its female executive team (26%) and workforce (49%) appear to be conscious of balancing these numbers (Dommer, 2015). In 2020, they signed WNBA rookies Bella Alarie, Kaila Charles, and Tyasha Harris as brand ambassadors. Unlike Nike, they don’t prioritize female brand ambassadors. Experts claim that Under Armour has lost its luster due to misdirected efforts and digital tardiness. Recently, they have focused on digital presence. They were also late to the “athleisure” party, where yoga pants and joggers could have been introduced. For example, stores like Marshalls and TJ Maxx harm their image by selling cheaper items. For the brand image, they now try to be in sportswear stores.

Technological factors affecting Under Armour

The pandemic’s slowdown has allowed Under Armour to rethink its strategy, which includes more technology. Artificial intelligence (AI) is a key empowering agent for problematic advancement that prompts game changing items and administrations ready to serve low-end or unserved purchasers and move to the standard market. This technology is the catalyst or driving force behind what we are at present seeing (Khamis, 2019). Paul Fipps, who is currently the Chief Technological Officer(CTO) for Under Armour, has mentioned that AI and machine learning are game changers and Under Armour are proud to be at the leading edge of the digital health and fitness companies in the world (High, 2017). Fitness apps and digitally connected footwear enable users to track their daily steps, distance traveled, and runs. Customers used 150 percent more features in 2020 than in 2019. This app provides insights into changing consumer expectations and preferences, allowing the company to invest more wisely in R&D to make precisely what is required. The “HOVR Machina” shoe is designed to help runners sprint while remaining comfortable. Another app helps the runner avoid injuries (Wild, 2016). Wearing “Rush” clothing helps improve circulation, strength, and endurance. Our Under Armour SWOT Analysis shows that the brand has always had fantastic clothing technology.

Legal factors affecting Under Armour

The Wall Street Journal accused Under Armour of accounting fraud in 2017. The 2016-2017 sales and revenue numbers were inflated to make the brand appear better. There’s not much public information on this, but it harmed the brand’s credibility (Weedon, 2012). The Portnoy Law Firm in LA warns investors in Under Armour to be cautious with their funds and to know their legal rights. The US Securities and Exchange Commission also notified the brand of alleged securities law violations.

Environmental factors affecting Under Armour

Their sustainability team is strategically located throughout their supply chain. They have a strict responsible sourcing policy to avoid using illegal suppliers. The brand has been a member of the Sustainable Apparel Coalition (SAC) since 2008. Some say they work with the FLA to ensure that all employees, direct or indirect, are paid fairly and are not exploited (Mitchell, 2017). Seventy-four industry-leading CSR/ESG data sources were used to compile this ranking of 19,001 companies from 148 countries.

Marketing

Under Armour, like many other companies, will be forced to rely completely on its online store in 2020 as the majority of its 15,000 retail locations close for many weeks or months at a time. The brand had planned to spend 12 percent of its annual revenue on marketing before the outbreak. They wanted to focus on activities at the top of the funnel, forgo sports marketing contracts, and focus on the company’s brand identity. The firm used an omnichannel strategy to develop one of the largest online athletic communities because it had no physical means to communicate with its customers.

The goal was not to sell things, but rather to establish the brand as a destination and a means of community that went far beyond the company’s traditional focus on sporting goods. They were able to do this by putting their brand at the heart of as many digital customer experiences as possible. Under Armour has invested $710 million in three fitness applications (MyFitnessPal, MapMyRun, and Endomondo) and has more than 120 million athletes as a result of their social media efforts. As a result, Under Armour is the most popular.

Reference list

Abdul Mutalib, M. I. (2021) ‘Technology Entrepreneurship Project (ENT 600) : Under Armour / Mohamad Ismail Abdul Mutalib’.

Dommer, H. (2015) ‘UNDER ARMOUR CONSULTING REPORT’, Undergraduate Theses and Capstone Projects. Available at: https://digitalshowcase.lynchburg.edu/utcp/142 (Accessed: 17 November 2021).

Madhav (2021) Under Armour SWOT Analysis 2021 | SEOAves. Available at: https://seoaves.com/under-armour-swot-analysis/ (Accessed: 17 November 2021).

Miloch, K. S. et al. (2012) ‘Click clack: Examining the strategic and entrepreneurial brand vision of under Armour’, International Journal of Entrepreneurial Venturing, 4(1), pp. 42–57. doi: 10.1504/IJEV.2012.044817.

Mitchell, D. (2017) ‘Sneaker Life: The Critical Analysis of Marketing Strategies Administered by Nike and Under Armour’.

Omar Salim Labra Salgado (2020) SWOT-analysis-of-the-use-of-competitive-intelligence-in-small-enterprises-in-the-clothing-industry.pdf. Available at: (Accessed: 17 November 2021).

Under Armour PESTLE Analysis 2021: Succumbing to the Competition (no date). Available at: https://pestleanalysis.com/under-armour-pestle-analysis/ (Accessed: 17 November 2021).

Weedon, G. (2012) ‘“I Will. Protect this House:” Under Armour, Corporate Nationalism and Post-9/11 Cultural Politics’, Sociology of Sport Journal, 29(3), pp. 265–282. doi: 10.1123/SSJ.29.3.265.

Wild, J. J. (2016) ‘Financial accounting : information for decisions’.