Under Armour Strategic Analysis Paper

Analyzing the industry using Porter’s Five Forces, it can be seen that the Outdoor Apparel industry is very competitive. The threat of entry is very high, with several large conglomerates making acquisitions in the industry and established apparel companies such as Polo Ralph Lauren making expansions into sports apparel. With several brands such as North Face in the high end of the industry, as well as Columbia and several private labels dominating the middle and lower ends, a large number of substitutes are available. Buyers have large bargaining power, as end consumers could easily switch to another brand, while at the same time wholesalers are

How strong are the competitive forces confronting Under Armour, Nike, and The Adidas Group? Do a five-forces analysis to support your answer.

Companies like Under Armour, Nike and Adidas/Reebok have high threats of substitute´s products. These companies share the sport apparel industry and are vulnerable to competitive pressure from the actions of buyers whenever they view that their products can be substituted for others. The availability of substitutes invites the costumer to compare performance, features, and ease of use as well as price. Under Armour’s major competitors are Nike and Adidas/Reebok because they have a similar or competing product offerings. The top sport apparel brands offer similar products and that is why each one of them needs to keep a high standard and produce good quality products in order for customers to keep buying their product.

Under Armour’s business strategy towards market segmentation is broken down into three different basis; Age, Gender, Uses. The first major market segmentation is by age, different age groups demand different products and Under Armour has produced certain merchandise to appeal to each generation. The second is Gender, both male and female respectively make up roughly 50% of the market equally.To appeal to females UA produces apparel in brighter colo, as a fashion forward athletic wear. While for males they they cater toward masculine vibe of tight fitting and resistant to wear and tear. Lastly, UA segments by the range of uses for their products.

When our professor first presented this project paper to us my mind began to wonder. What is a good company to research and present it to my fellow classmates. My first selection was “Chik-fil-a”, but I wasn’t sure if we could write about fast food franchises. So I continued to brainstorm about a topic to expound on, even going as far as in asking my buddies and co-workers for suggestions. “Walmart”, “National Football League”, “National Basketball Association”, “Nationwide Insurance”, and “LG” were a few ideas that were presented to me. A few of those sounded ok but none really grasp my attention. As I was visiting an outlet mall, I came across Nike store. “Wow that’s going to by my topic of choice”, is what I told myself. Week

As the brand name of Nike continue to soar, other companies in the industry; learning from the success Nike has experienced, start focusing more on brand development to keep up with the increasing levels of competition. These companies resort to brand maintenance, which has become the main target in this industry due to product differentiation made by Nike. Nike, being market-advantaged, produces an extensive range of products, through which it gains a balanced level of profits. This has influenced rival companies to initiate a new range of products in their businesses too. Previously these companies had high risks of failing in business, if their single products did not appeal to the market. Due to the impact of Nike’s business strategy, the other companies are also enlarging their product range,

In early development, Under Armour shoes weren’t able to hold up after continual wear and tear and they were ripped apart. Many people lost respect for that area of the company and this has hurt them as that stigma still sticks with them even after further innovations. • Under Armour has not yet completely extended into the world markets yet, so they will be able to increase their profits once they become a big force in those markets. • Recently there was a feud between Kevin Plank and other stock holders over a proposed stock split that would guarantee he would stay in control of the company. Opportunities: • Like I mentioned in the last section, Under Armour hasn’t become a big force in foreign markets yet.

Porter’s five forces refers to five forces which can affect a company in relation to external factors. These forces help review the strengths of a market position for a company. The forces are: threat of new entry, competitive rivalry, bargaining power of suppliers, power of buyers, and threat of substitution. These five forces vary in terms of threats from low to high as they relate to Nike (Rowland, 2016). First is the threat of new entry which is relatively low. There has been some but now much new competition recently. This is seen by Under Armour and Lululemon which demonstrates that threat of new entry is possible but not easy. Due to the difficulty of entry into a market overshadowed by the big names of Nike, Adidas, and Reebok the threat is relatively low for this force (Dalavagas, 2015) (Rowland, 2016). This joins the high threat of competitive rivalry. There are existing brands such as Adidas and Reebok which are among Nike’s biggest rivals (Friesner, n.d.). Next is the force associated with supplier power which is weak. There are many sources for the items used to produce Nike equipment and merchandise. This allows Nike to have the choice of suppliers. If one supplier does not work, Nike can go with a variety of other suppliers (Rowland, 2016). The fourth force is buyer power. The customer determines how well Nike will do as a business. The customer can choose which company to buy their shoes and clothing from and can switch companies throughout the process (Rowland, 2016). Last is the threat of substitution which is high. The high price of Nike shoes makes them inaccessible to many people. There are “knock” off versions of the name brand shoes which look very similar to the expensive Nike brand. A person could go to a different store and find a similar shoe at a less expensive price (Friesner, n.d.).

The following is my five forces analysis of the competitive forces confronting the companies that operate in the industry that Under Amour, Nike and Adidas operate in.

Since the evolution of the company, Under Armour rapidly expands their business while some internal problems still exist. For example, unprotected intellectual property right issue and supplier relationship management. Also, the current business strategy was focusing on marketing, international expansion, product differentiation, and other expenses while they have weak financial management. These will certainly pose future problems to the company.

Under Armour, Inc. is an American sports clothing and Accessories Company. The company is a supplier of sportswear and casual apparel. Under Armour began offering footwear in 2006.

The athletic apparel industry is also defined by a moderate threat of new entrants. As mentioned earlier, the industry is extremely concentrated, with large companies (Nike, Adidas, Under Armour) at the top and several smaller companies following. While the costs for starting a local company is low, as the company grows, it will become harder to compete and be profitable in this industry. The incumbent firms in this industry have the advantage of existing production, distribution, and supply chain processes. New companies would consider the large upfront costs of these processes while incumbent firms take advantage of economies of scale due to having the benefit of already securing a large market share. These large costs in turn cause the company to have low profits, which discourages new entrants. Additionally, the threat of new entrants is low because of the brand preferences of consumers in the economy. This industry

Porter’s five model is defined as the framework that evaluate the position of a company in the external environment with focus drawn on the level of competitiveness (Roy 2011). The framework considers factors such as rivalry, substitute goods, the power of suppliers and buyers as well as new entrants. Four forces can influence the success of Michael Kors. The first one is competitive rivalry. Here, the struggle is about maintaining performance despite different tactics used by different companies to increase sales. For instance, Ralph Lauren uses premium prices for quality products to differentiate itself, while Coach uses product variety within the line of handbags to remain competitive (Stewart 2016). Also, when the industry is flooded with similar companies producing similar merchandise, the probability of a company stagnating is high because consumers have a variety to pick from. Hence, the need to establish loyal customers.

1. To evaluate the competitive environment in which adidas launched the “mi adidas” pilot I will use the five competitive forces model.

The term competition cannot be avoided in any business set up. This term in economic may allude to a rivalry which exists between sellers with their intention of achieving certain business objectives. The objectives may incorporate maximization of profits and increasing the sales volume of the company’s products. When two businesses contend, each has the intention of offering the best favorable terms to woe more customers. The sports industry is not any exception. The industry confronts lots of competition amongst its key players. The major players as discussed in the industry analysis paper are Puma, Adidas, AON, and Nike. This essay entails a discussion of the competitive strategies each firm has over the others, giving reasons why the brands have been exceptional in the market.