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ANALYSIS OF UNDER ARMOUR, INC. 2
Introduction
regardless of their economies of scale (Glancy 2016). However, different companies use various
competitive strategies depending on the nature and competition of the industry that they operate.
Those companies that enjoy economies of scale utilize price skimming, product differentiation,
diversification as well as expansion to operate in foreign market with the aim of gaining
competitive advantage over their competitors in the market. All these strategies are aimed at
improving the market share of the company which improves its profitability and productivity.
For example, diversification enables the company to produce a wide range of products hence
increasing the available markets by meeting the expectations of the company (Lustig et al.,
2015). In addition, other strategies which includes price skimming and penetration allowing the
companies to lure and maintain customers hence increasing their market share.
The main method of determining the effectiveness of the competitive strategies of the
company is through quarterly or annually assessment of its performance (Hlavacs and Christhilf,
2015). The objective of this paper is to analyze the Under Armour Company which produces and
distributes sports clothing as well as accessories in the United States and the world. This paper
starts with the analysis of the mission and vision statement of the Under Armour, Inc and then
provides a detailed analysis of the companys internal and external environments. Possible
options and recommendations are discussed in the final stages of this paper.
ANALYSIS OF UNDER ARMOUR, INC. 3
The Under Armour, Inc. is based in Baltimore, Maryland. This is an American sports
clothing, accessories and footwear Company which was established in 1996. The company has
about one hundred and forty house factories stores in the North America with over ten brand
house. The company distributes its products through websites, retailers, online shopping and
other independent distributor who distribute the company products to different countries. Under
Armour Inc. has revenue that is approximated to be over five billion dollars as at the close of
2016. This marks twenty five percent increases in the company revenue when compared to the
previous years returns. The company is ranked among the top ten cloth producing companies in
America and is one of the new entrants in the clothing industry that are making great strides.
Just like any other successful company, Under Armour, Inc. has a well defined mission
and vision statements which has ensured the company remain focused on fulfillment of its
objectives and achieves its short-term and long-term goals. The vision statement of the company
is to Empower Athletes Everywhere (Dombrow 2013). This vision statement contains the
recommended wording of the suitable vision statement and is built on the principal of
performance with purpose. The outstanding points of the company vision statement are customer
satisfaction, corporate social responsibility and sustainability. The vision statement shows that
the company has effectively integrated sustainability and corporate social responsibility in its
The mission statement of the Under Armour, Inc. is to Make All Athletes Better through
passion, Design and relentless pursuit of innovation. This mission statement is well-structured
and contains the recommended number of words which is less than ninety nine words for a
suitable mission statement. The main focus of this mission statement is to ensure customer
satisfaction. Therefore, the main elements that are included in the mission statement is
commitment to serve the customers all over the world and improve affordability of the company
products. Under Armour, Inc. just like other companies focuses on the improvement of product
to ensure safety of athletes as well as other users of their products. However, Under Armour, Inc
can still improve its mission statement by including more information regarding its specific
approaches and strategies towards achieving the set goals and vision. Nevertheless, the vision
statement is well defined as it includes the goals of Under Armour, Inc. of empowering all
athletes everywhere.
Internal assessment
Financial performance is one of the key factors in the internal assessment. The financial
performance of Under Armour Inc. has steadily improved over the last four years (Coates 2014).
In December 2015 the company recorded net revenue of 3.96 billion dollars up from 3.08 billion
dollars in 2014 which shows the good performance of the company especially for the medium
company like Under Armour, Inc. the table below shows the financial performance of Under
M M
M M M
M M M
M M M
It is evident from the above income statement that the financial performance of the Under
Armour, Inc. has been rising exponential since 2012 (Glancy 2016). The company had revenue
of 1.83 billion dollars in 2012 which has increased to3.96 over the subsequent financial years.
ANALYSIS OF UNDER ARMOUR, INC. 6
This exponential financial growth may be as a result of increased marketing strategies of product
diversification which has served to increase the market outreach of the company.
The company generally has good ratios as shown from the financial performance table.
By use of the Under Armour, Inc. net revenue, gross profit, net income, operating profit. Total
assets and the shareholders equity for the year 2015 the important profitability ratios can be
dollars)
dollars)
dollars)
The table above reveals that the working capital exponential increased from 2011 to 2014
Return on Investment (ROE) = 100 Net income Total s h are h olders ' equity
The table below shows the key ratios and profitability analysis of Under Armour, Inc.
Return on sales Gross Profit margin 48.4 47.9 48.7 49.0 48.0
(percentage)
(percentage)
(percentage)
ANALYSIS OF UNDER ARMOUR, INC. 8
Return on investment Return on Equity (ROE) 17.1 17.7 17.4 17.3 15.4
(percentage)
(percentage)
48.74 percent in 2013 to forty nine percent in 2014 although it declined in 2015 to forty eight
percent. This depicts that the capability of the company to cover its operating expenses as well as
other expenditures increased between 2013 and 2014 and further projected growth was witnessed
in 2016. The Return on Equity also increased between 2013 and 2014 however, it dropped in
2015. In addition, the company witnessed bad ratios as the operating profit margin and the net
profit margin ratios were unstable between 2011 and 2015. The companys return on Equity
ratios was unstable between 2011 and 2015. Its ROE also dropped considerably from 2014 to
The financial position of Under Armour Company has increased by thirty one percent
during the last quarter of the 2015 financial year (Dombrow 2013). This represented an increase
in its revenue to 1.17 billion dollars. The overall growth of the company during the very year was
twenty eight percent with the company earning revenue of 3.96 billion dollars. This represented
the highest net revenue earned by the company. From this trend the company anticipates the net
revenue of 4.95 billion dollars representing twenty five growth relative to the previous years
revenue. It is forecasted based on the previous financial performance for five years it is expected
that financial position will continue to grow at a rate of 24.13 percent yearly. Therefore, the
ANALYSIS OF UNDER ARMOUR, INC. 9
Under Armour, Inc.s projected financial growth over the next four years is represented in the
table below.
25.00% 24.13%
20.00%
15.00%
9.36%
10.00%
5.00%
0.20%
0.00%
2016 2017 2018 2019 2020
The Under Armour, Inc. improved significantly to 0.46 during the first quarter due to
repaying its liabilities of approximately -34.47 percent. This is below the companys average
leverage ratio and the leverage may increase even further in the subsequent financial years.
Table 3: Under Armour Inc.s Leverage trends between 2011 and the first quarter of 2016
The Under Armour, Inc.s stock has performed well in the last five years that has attracted
many shareholders in order to purchase shares. The company currently sells its stock at 39.75
dollars although its stock value may reduce as a result of its increased desire for growth, recent
strategies require additional investment and expenditure. Under Armour has been increasing its
revenues by over twenty percent for the last five years which is impressive. This shows that the
company has the ability its debt low and reinvests most of its money into new products. In
addition, Under Armour has not been paying dividends which show stockholders have
The company main strengths is that it has recorded high growth rates for the past five
years. The revenue of Under Armour has increased steadily from 2010 and the revenue is
forecast to increase further in the future. Under Armour has maintained its brand and launched
conspicuous marketing campaigns, top profile endorsements and publicity blitzes which will
ensure that the brand becomes a household name throughout the world.
Nevertheless, the company enjoys a strong customer loyalty hence increasing its overall
sales which is strength of Under Armour. The positive response garnered indicates that the
company has already established a strong relationship with its customers (Dombrow 2013).
Another strength of Under Armour is that it is financial strong which help it to address any
emerging problems for example, a dip in profit would not ground the company.
ANALYSIS OF UNDER ARMOUR, INC.
11
The major weakness of Under Armour is that the company is reluctant to establish itself
across the world like their major competitors in the market (Clayton 2015). This can be
witnessed in the revenue realized from various countries of the world. Unlike its competitors
who earn a sizeable proportion of its revenue from all over the world, Under Armour gets a large
chunk of its revenue from North America. For example, the company recorded ninety percent of
its revenue from North America in 2013. In addition, the company does not manufacture its own
products and depend solely on its suppliers making it vulnerable to disruptions in the supply
chain where they lack control. Under Armour also has a limited line of product only restricted to
male sportswear which forces the youths and women to consider other companies. Finally, the
Under Armour incurs high cost compared to its competitors because the company cannot reduce
Under Armour was founded in 1996 and it is younger when compared to its competitors
in the market, Nike and Adidas (Hlavacs and Christhilf 2015). This notwithstanding, the
company is among the top five companies in the world producing and marketing high quality
products in the world. The company was ranked fifth in 2014 after Adidas, Nike, ESPN and Sky
sports beating other established brands such as Reebok. The company dominates the two percent
of the sportswear industry because of its increased innovation in using fabric technologies. Nike
dominates eleven percent of the market while Nike dominates ten percent of the market.
Under Armour uses marketing mix to eliminate stiff competition in the sportswear
industry to market its products to its customers (Glancy 2016). This strategy allows the company
to exploit all the means available to increase its market outreach. The company uses product
improvement strategy to enter into new markets through continuous innovations. In addition, the
company uses online marketing strategies to reach younger generation customers. This entails
placing their advertisements on the social media page such as twitter and Facebook. Online
shopping which enables the customers from other countries to purchase products from Amazon
or the website of the company is another strategy which gives the company a competitive
Under Armour, Inc. boasts of excellent promotion and marketing strategy. The company
exploits any opportunity to showcase their brands (Lustig et al., 2015). Furthermore, the
company has an in-house marketing team which produces and design adverts as well as
marketing campaigns in order to promote the growth of the company. The company also
sponsors teams and teams making the customers to be enlightened about the product. The
company spent about one hundred and sixty eight million in 2011 in marketing activities.
Moreover, the company has liaised with retailers to showcase their products at the retail stores as
External Assessment
The major competitors of the Under Armour, Inc. are the Adidas and Nike who control a
large sportswear market. The other competitors that pose stiff competition to the company
ANALYSIS OF UNDER ARMOUR, INC.
13
include Puma, VFC, Reebok, Sports Network, Gildan and Yankees Entertainment (Whittington
et al., 2014) Despite being young in the industry, Under Armour is ranked fifth in the world way
ahead of most of its competitors in the market. The company has a room to increase its size
Under Armour has a small market share for the footwear products which shows that the
company has an opportunity of investing more in the sector. It is important for the company to
allocate more capital resources in the production of tennis, basketball, rugby, golf and tennis
footwear since most of the company product target athletes as potential customers. The company
can also use direct-to consumer distribution to penetrate the market and boast its sales. The
company relies on the retail stores, other sportswear outlets and online stores as the distributers
and sellers of its products (Hlavacs and Christhilf 2015). These strategies have proven effective
for the oversea markets. The company may explore direct selling methods to the local customers
in America. The company is focused in male athlete sportswear and has an excellent opportunity
to increase demographic outreach by producing and distributing sportswear for the children and
Under Armour faces threats from the more established and better performing companies
such as Adidas and Nike. These companies are continuously expanding their market share which
is a threat to Under Armour. In the event that economy recession is witnessed Under Armour
would be highly affected since the prices of its products is high and lack patent rights.
ANALYSIS OF UNDER ARMOUR, INC.
14
The substitute products are flooded in the market which poses a major threat to this
company. Increase in the government tax rates compounded with the increase in interest rate will
pose a major threat to the company because of the additional financial burden. The customers
may alter their shopping lifestyle and shopping pattern which will be a threat to the performance
of the company.
The company should expand its market into the new world markets by exploiting the
export opportunities. The company is focused on controlling the North America market and
exploiting other markets will help increase its revenue like its competitors. Under Armour should
increase the number of retail outlets by increasing the number of its outlet factories and issuing
favorable terms to their distributors so as to lure more distributors (Hlavacs and Christhilf 2015).
The company should consider increasing its product line in a bid to increase its target
market to eliminate perception that they are male dominated. The company should also consider
collaboration with fabric manufacturers in order to ensure minimal disruption in the supply chain
Recommendations
The company can improve its activities by adopting different strategies in their business
activities. Based on the SWOT analysis of the Under Armour, Inc. the following
recommendations will ensure that the company achieves competitive advantage and penetrates
ne markets. Moreover, the recommendations will enable the company to fulfill its long-term
ANALYSIS OF UNDER ARMOUR, INC.
15
goals of becoming the leading producer, distributor and marketer of the sportswear to athletes
3. Increasing their product line and target market in order to avoid the perception that its a
male-oriented firm.
Reference List
Coates IV, J. C. (2014). Cost-Benefit Analysis of Financial Regulation: Case Studies and
Dombrow, D. (2013). U.S. Patent No. D690,091. Washington, DC: U.S. Patent and Trademark
Office.
Glancy Jr, M. M. (2016). U.S. Patent No. D761,542. Washington, DC: U.S. Patent and
Trademark Office.
Hlavacs, J., & Christhilf, G. (2015). U.S. Patent No. D727,609. Washington, DC: U.S. Patent and
Trademark Office.
ANALYSIS OF UNDER ARMOUR, INC.
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Lustig, D., Trippel, C., Pellauer, M., & Martonosi, M. (2015, June). Armor: Defending against
SIGARCH Computer Architecture News (Vol. 43, No. 3, pp. 388-400). ACM.
Whittington, W. R., Oppedal, A. L., Turnage, S., Hammi, Y., Rhee, H., Allison, P. G., ... &
Horstemeyer, M. F. (2014). Capturing the effect of temperature, strain rate, and stress
state on the plasticity and fracture of rolled homogeneous armor (RHA) steel. Materials