Business Strategy

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

A. The five forces analysis comprises of creating a competitive pressure coming in the form of:  Rivalry among competing sellers of performance sports apparel:

The rivalry among the three companies is strong and can be seen through the constant pressure applied by each company through product quality while producing a variety of product line which makes them to compete with others. Doing so could increase the sales as well as brand image.

Potential threat of new entry into the performance athletic apparel marketplace

The pressure associated with this force could be moderate as the three competitors are constantly striving for expansion of their markets globally. Growing demand for performance athletic apparels is also another challenging factor for new entrants to produce their products immediate with a just-in -time production.

Offering substitutes for performance athletic apparel

The products of Under Amour, Nike and Adidas were considered as the premium performance sports apparel creating a value to the customers in the form of quality and reliability. So offering substitutes for these products could only be in the form of cost more than quality so the pressure created through this force is moderate and low.

Bargaining power of suppliers

The competitive pressure associated with the bargaining power of suppliers can be a considerable threat as the suppliers can demand a price for the supplies as the demand for the performance based fabrics with superior features is increasing and also there may be possibilities where the suppliers can copy the products and start marketing and producing the same products.

Bargaining power of buyers

The pressure associated with this type of force seemed to be moderate when compared to the other forces. With the growing demand and competition in the market the firms can compete with cost and quality of their products. This could be an advantage for the buyers to switch between the brands. Another factor could be the retailers bargaining for discounts or leverage in the profits as the sales and demand from that particular retailer is high.

2. Does Under Armour have any core competencies and, if so, what are they?

Under Armour has been successful in creating a competitive advantage through its core competencies some them were

• Creating awareness of its brand, by promoting the uses of its products to high-performance athletes and teams on the high schools, collegiate and professional levels. This way of approach helped the company to grow its sales.
• Establishing contracts with prominent sports teams and making agreements with the celebrities to endorse its products helped in building strong brand awareness which increased the brand image of Under Armour in the market.
• Designing innovative, technically advanced apparel products engineered with a special fabric that provides supreme moisture management has been a major core competencies for the company to have differentiation for its rivals. The company product line strategy in expanding its product offerings at multiple price points was also a key aspect in growing the company’s revenue.

3. What does a SWOT analysis reveal about the overall attractiveness of Under Armour’s situation?

A: The SWOT analysis for Under Armour is explained below

Strengths:

• Under Armour has a great advantage with its product line which can be seen through its variety of products based on climatic conditions, the heat gear, clod gear and all season gear are some of the example. The company’s expansion of its products to footwear and other sports accessories can definitely create sales to gain sales from expanding its market.
• Choosing a specific channel or segments to market its products to athletes, teams on the high-school, collegiate and professional levels and also by sponsoring the major sport events which helps in promoting its products by increasing its brand image.
• The increasing market share of Under Armour to 14.7% in 2013 from 12.7% in 2012 which is more compared to Nike and Adidas can be seen as strength for the company.

Weakness:

• The company has a very limited distribution channel.
• The brand reputational is less compared to Nike and Adidas.
• The variety of products designed are only limited to a particular segments and sports while Nike and Adidas has a wide product line compares to Under Armour.

Opportunities:

• The company can find significant opportunities by increasing its product line by expanding its products to variety of sports like football, cricket, swimming hockey etc.
• The company can find opportunity by growing its supply chain by building production units in new markets where it could find leverage by entering first into the market.

Threats:

• The growing challenges from the rivals with the increasing demand for the performance based apparels.
• The market leaders are spread over money markets like the apparels shoes and accessories, while Under Armour is only limited to performance based sports apparels.
• More costs involved while entering into new markets when compared to established companies like Nike and Adidas.

From the above analysis Under Armour can be seen as a potentially attractive company which a has a wide market opportunity to grow with is growing market share and capabilities defined through its current situation.