Business Strategies of Under Armour - Case Study Example

‘Under Armour’s Strategy in Q1 a. Product line This is an American company founded in 1996 dealing with footwear, apparels and accessories for men, women and children. Categorization of apparels makes them fall into Coldgear, Hotgear and Allseasongear depending on the season of use.Largely it provides players with specially developed wears needed in sporting events. The company has products for all ages with differing specification for men, boys, women and girls categories. a. Marketing and promotion The company develops markets and distributes its branded products to sports men and women in USA, Japan, Canada, and UK. In marketing the brands, the company uses many strategies. First, the target to achieve higher scores in already flooded market by using the slogan ‘I will’. Creation of better products with continued innovation that accommodate variety of people enables the brand to stand out. Use of media and retail presentation also account for part of marketing strategy. b. Distribution Main distribution channels for the company have been through regional and national sporting whole sales, special stores, chain stores and institutions. Additionally, sales directly to customers also take place through factory stores in Asia and North America. c. Product Design and Development Third parties produce fine fabrication for company and this production undergoes through collaborative check. Thus, the company ensures usage of only high quality fabrication in manufacturing of their products. Most of the products the company uses are advance technologically through the third parties or on short term to limited sources, which get them from limited suppliers. d. Sourcing and manufacturing The third parties provide the company with technologically advanced fabrication used in production. These supplies take place through short term only from limited suppliers. Manufacturing of the products takes place through unaffiliated 14 companies in 65% of the products.Locations of the manufacturing companies are in Philippines, China, Malaysia, Jordan, Cambodia, Vietnam, Indonesia Nicaragua and Mexico. e. Inventory management Management of the company inventory is through consideration of various factors, which include current orders, sales expectations and delivery requirement by the customers. By December 31 2013, the company had 117 factory houses and 6 brand stores in North America. Meeting customers’ demands form the basic strategy in inventory management that is a continuous process. System in inventory management enables the company to forecast and planning supply process. Q2 During the start of the company, funding for its operation came from the owner but growth and expansion of the business later depended on going public. The company’s way of marketing the product includes use of more superior products to penetrate the market and remain relevant. Strategic marketing through use of stars like Eric Ogbogu in their first advertisement gave the company an advantage in competitive market. Continuous search of new way to satisfy the customers need has kept the company aloft in the business. This goes along with better decision in case of problem with their customers. An example of this decision is in action of introduction of mach39 after skaters complain in Sochi Olympic Games. The company in any way did not blame the customers for their comments but used it in finding ways make their products better. The strategy enables the company to maintain required reputation and customers. The need to maintain high quality standards pushes the company to have strict rules in sourcing materials used in their production. Through introduction of the public system in 2004, the company acquired the needed capital in strategic expansion of the business through outlets. In such expansion, the company managed to maintain the ability in satisfy customers need. Expansion also considers the market potentials in the products introduced with time. Each product introduction considers the current factors and introduction takes place one at a time.The company also ensures maintenance delivery schedule to the inventories and to customers winning the customers loyalty through being reliable. The company continues to succeed in the market due to continually considering the customers need and continuously improving their product perfection. The company also has great flexibility due to its nature of being generally liquid compared to Nike. This offers potentiality to new all-time liabilities (Wahlen,Jones, & Pagach 20159-5). Q3 The company has continuously grown for the past five years while other companies are having problem. This gives the company competitive edge in shareholders market and getting more resources for expansion. Continuous growth also improves the customers’ confidence in company products and that of stock buyers. Under Armour Company has a competitive advantage is consideration of the retailers profit margins. Such action will lure the retailers’ to provide more space for UnderArmour products hence higher sales and market capturing. This is a good consideration by the Under Armour company management system. The company has a good brand image and recognition like the competitors yet they have limited resources compared to competitors. Understanding factors affecting the customers’ decision also gives the company an advantage in fighting for market with other competitors. Continued innovation like other competitors is also important in gaining patent of some products that will keep the company more competitive. Q4 The company has strengths by continuous growth in the past five years. Furthermore, the company is developing and introducing new products to the market. The top-profile endorsement and strong marketing campaigns launched by the company enables customers to notice the company products. In the company weakness, most of the revenues, over 90 percent, come from North America, which is not good for a company with establishment around the world. Manufacturing of the products does not take place in the company that can easily cause disruption in supply. Under Armour Company should find a way of processing and producing everything in their company. Under Armour have great opportunities in expanding their market out of north America.Currently the company only gets 6 percent of total revenues from outside North America. Global expansion and capturing the market will enable the company to increase income base and creating global brand. The company also still has potential in increasing women wear sales. The company faces threat in lack of competitive innovation that assist in building awareness of the brand. Growth ability in competitors market remains limited for the company. Higher cost of labor in Asia, where the company sources most of its product poses a great threat in company’s growth. At the same time, currency difference in international market has effect in the company income. Q5 Generation of thenet revenue mainlycamefromthewholesaleof the products toregional,national, specialty and independent retailers.The total net revenue for the company in 2013 is $ 2,332,051. The wholesale business gave 68%net revenue, direct consumer gave the company 30% and channels for licensing gave 2% of the total revenue.The company had the high sale in North America constituting 94.1% of net revenue amounting to$2,193,739. Other foreign businesses and countries contributed 5.9% leading to net revenue of $138312. The amount of net revenue keeps changing with increase every. Out of this growth, two customers The Sports Authority and Dick’s Sporting Goods contributed to 22% of the revenue. Under Armour Company net profit in the year, 2013 is $ 162330. The net profit in percentage is 7%. This was also the highest profit margin the company achieved in relation to previous years. Q6 At end of 2013, the organization had a cash or cash equivalent of $ 347489. In comparison with previous years, this is the highest cash or cash equivalent in the company. In 2012, the amount was $ 341841 hence there was small, but significant increase in the cash or cash equivalents. Continuous increase shows steady growth in the company. Q7 In the year 2013, Under Armour gained differing net revenue from all the product lines they deal with. Footwear gave net revenue of 13% accessories 9% licensing 2% and apparel formed the main part of business giving 76%. The differing revenues show that apparels form the largest sales for the company. Work cited Wahlen, J., Jones, J. & Pagach, D. Intermediate Accounting: Reporting and Analysis. Boston: Cengage Learning. 2015. Print Read More