Major Components of the Companys Strategy - Case Study Example

Module Case Study Question One: Describe the Major Components of the Company’s Strategy in the Following Areas: a. Product Line UnderArmour has several products ranging from heatgear, coldgear and Allseasongear, to footwear among others serving both male female and males. The strategy of adopting up-stretch product line in which superior qualities have been produced has worked to the benefit of the company. This has improved its long-term image in the market although the increased pricing may have lowered its sales volume a little bit. The strategy to innovatively improve the quality of the products from the previous is a move that has since brought the company into the limelight in sport garment production. Customers have since identified the company with high-quality products. The wide range of products ensured they capture a large market share. b. Marketing/Promotion & Brand Management The company has sought to market its brand using several methods that have seen it grow profoundly. With only about two decades since its inception, the management team has tirelessly worked to see the business gain dominance in the industry. With over $200 million invested each year for the last five years, the company has entrenched itself quite well in the market. The management realized that spending considerably in sport sponsorship as well as in advertisements would make it identify itself in the target market. This has since been done through organizing and sponsoring numerous sport events. In the process, printed jerseys with the company logo have caught the targeted customers’ attention. Additionally, the company has used several media platforms to advertise and reach out to their target market. Electronic media have been mounting intensive campaigns that seek to promote the company’s brand and ‘Protect This House’ is among them. c. Distribution UnderAmour understands that having clear and effective distribution channels is critical to market success. It is for this reason that it has availed its products in over twenty five thousand retail outlets all over the globe. A large portion of UnderAmour’s products pass through wholesale before getting to the retailers who avail them to the consumers. Between 2011 and 2013, large sales of about seventy percent came from the intermodal sales made to large store retailers. Moreover, the company also engages in ‘direct to consumer sales’. This involves enabling consumers to directly acquire the products from the stores within the factory. An equally big percentage has been recorded through this; the highest being thirty percent. Worth noting is the e commerce trade in which customer can order or products and shop online. The company has also pierced the international markets by distributing through the exclusive rights gains from licensing. d. Product Design and Development UnderAmour’s product design was embedded on the notion that a product’s technical and aesthetic elements give it the best value and reputation. It is for this realization that the company has continuously sought technological expertise to produce high quality products. For example, it shifted into manufacturing ‘charged cotton products’ which were more sophisticated. It has also deployed ‘coldback technology’ that has been a major contribution to the companies’ product design. e. Sourcing/Manufacturing/QA Ensuring quality of a company’s product is key to high brand performance. UnderAmour executives realized that getting quality materials from a trusted manufacturer would ensure they produce quality products. The company understands that the need to source from outside would give it highly quality raw materials that will improve their value chain activities. It Quality Assurance department it has ensures that everything that is received and transferred to the production department is safe and of high quality. f. Distribution Facilities and Inventory Management The North American market received the company’s products through its own distribution facilities centered in two regions. However, European market involved the use of a logistics company. The inventory structure put in place to monitor the product lines developed included putting up adequate inventories to complete the request coming as well as setting efficient structures schemes that would ensure active operations. Logistical amenities that can assist fasten delivery of the company’s products and gather information from the market are well placed in every cranny of its market. There are representatives of the companies in most of the nations where the firm distributes its products and this help manage the external operations pretty well. Question Two: How was UnderArmour able to grow in 15 years to become a significant player in the market for sports apparel, active wear and athletic footwear in the United States? Why do you think they were able to achieve this success? The growth the company has recorded in fifteen years’ time is phenomenal. Notwithstanding being young in the area that is full of experienced gurus like Nike, the company has astounded many with its accomplishments especially in the United States. With no utter doubt, the company management can be attributed to this fast growth. The marketing team management to create a good reputation on the face of the customers by making them feel the company is puts their priority first. The many advertisements and promotions held that even involved the celebrities captured a wide audience. Moreover, the company was found on strong faith and trust of excellence by the pioneer that reinforced its walk toward success. The strides the organization has made are primarily due to its commitment and determination that the founder set right back in 1993. This has enabled every stakeholder to believe in the organization and positively contribute to its success. Question Three: What do you think is/are the competitive advantage(s) of UnderArmour vs. the competition such as Nike and Adidas? Explain. The main competitive advantage the company has over competitor is the constant innovations. While other companies are producing the same products over time, UnderAmours exploits its technical capacities to produce much more sophisticated products that aesthetically appeal to customers. Also, its market expansion strategies give it the needed advantages over its competitors. Penetrating through the global market has enabled it earn reputation as well as great revenue that has seen its development. The innovation it has engaged in has rendered most competition irrelevant as some of those products are not produced by its competitors (McGrath, p.123). Question Four: Perform a SWOT analysis on UnderArmour Strengths Technological Endowment Good reputation Effective management Weakness Low customer loyalty Low capital Opportunities More expansion space Wide range of customers Threats Stiff Competition Fluctuating sales Question Five: For the company in 2013, what were the: a. Net Revenue $ 2,232,051 b. Net Profit $162,330 c. Net percentage Profit 7.13% Question Six: How much cash/cash equivalents did the company have on hand at the end of 2013? $347,489 Question Seven: Of the Net Revenue in 2013, what percentage came from each of the following categories? a. Apparel 76% b. Footwear 13% c. Accessories 9% d. Licensing Accessories 2% Work Cited McGrath, Rita G. The End of Competitive Advantage: How to Keep Your Strategy Moving As Fast As Your Business. Boston, Massachusetts: Harvard Business Review Press, 2013. Print. Read More