External Five Forces - Positioning of UnderArmour PDF

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Positioning of UnderArmour...

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Position External Five Forces  to analyse the industry attractiveness (how high the forces are an if they are attractive or not) Threat of new entrants: Barriers to entry/ High capital requirements/ Economies of scale/ product differentiation/ access to supply& distribution channels -requires… a large investment, a huge supply chain and distribution network and advertisement -there are already well known brands and it will take time and capital to create an image and a customer loyalty like Under Armour or other big brands have => will make it difficult for the new entrants to enter (smaller companies may choose to target specific areas such as yoga) -for companies that are already in the clothing market it may be easier to enter the performance apparel market

Bargaining power of suppliers: Switching costs/ concentration/ product differentiation -outside of the U.S. 70 to 72 % of UnderArmours fabric used in its products come from only six suppliers -Suppliers spread all over the world -products are nearly similar and competitors may have the same supplier Under Armour holds significant clout over its suppliers that have top depend upon it and follow its prescribed code of conduct for the suppliers.

Bargaining power of buyers: distinguish between costumers & end-user/ switching costs/ few buyers leads to high bargaining power/ product differentiation -high customer brand loyalty; -competitors have a significant breadth of marketing coverage -product differentiation in technologies -switching costs are low -al lot of performance apparel buyers Under Armour has built a great reputation over time through marketing campaigns and by sponsorship.

Threat of substitutes: Prices performance characteristics -high pressure in the athletic apparel industry -high pressure due to a significant increase in the demand for performance apparel -most products can easily substitutional by other any other clothing manufacturer -products from the leading competitors might have similar quality The only factor that acts to moderate this threat to some extent is the research and innovation that Under Armour carries out. ==HIGH Competitive rivalry: Pricing battles/ advertising -larger companies try to capture the whole market - just a few big competitors, but they are all offer similar product quality and have an impressive presence in the market -larger companies continuously increase the competition by spending large amounts of money on product innovation, advertising and sponsorship. If Under Armour is able to obtain a patent on all its products, they will be able to stop the big competitors from completely copying their product. ==HIGH

Internal Resource Auditresource audit identified resources Tangible: physical / financial resources/ organisational/ technological -complex technology (clothes which regulate athletes body temperatures, lending to improve performance)  Rare, Valuable, costly to Imitate, Sustainable=advantage -selling in 13 countries not rare, valuable, costly to imitate, substitutable -many product lines and footwear (men’s /women’s apparel, footwear, youth products, accessories, licensed products and its name -organisation grow rapidly (from 2005 : 281,053,000$ to 2007:606,561,000$)

Intangible: human resources/ brand/ knowledge/ reputation/ culture -complex technology; innovation (cold/warm) -> unique product -hired several executives with experience in IB -hundreds of professional athletes (differentiation in marketing)->marketing resource/ development gives them an edge over other competitors -athletic experience & connections -Product placement in movies/ guerrilla tactic ->lower cost->good advertisement-manage with a unique team drive style -> good team atmosphere

Value Chain  to Identify organisational capabilities Primary activities Inbound logistics: material handing Petroleum Operations: product/ manufacturing -complex technology; innovation (cold/warm) -> unique product Outbound logistics: distribution -possesses an efficient operations &distribution network

-Primary sales are achieved through wholesale distribution and licensing to distributors -Products are offered through website, retailers and stores -focus on retail outlets and department stores Sales& Marketing: branding/ advertising/ sales (how do they sell) -Product placement in movies/ guerrilla tactic ->lower cost->good advertisement-hundreds of professional athletes (differentiation in marketing)->marketing resource/ development gives them an edge over other competitors - sales in13 different countries Aftersales: customer service/ market education Respond to product requests of customers

Support activities HR-Management: Selection/Firms / Training Procurement –Purchasing Technological development-r&d Infrastructure-finance, formal,planning, legal departments =Find the core strength and the potentional threats

Valuable :exploit market opportunities Rare: engineering brand Non Imitable: hard to copy Non substitutional >Go through the activities and find the strength & capabilities and use the heading structure High quality product, low production costs, significant brand recognition

SWOT Strenghts: -leader in providing high-tech apparel for athletes competing in diverse climates -using innovative technology and high quality -high selling power through buyers loyalty to the brand -customized products -rapidly growth (133 percent compound annual growth rate between 2003 and 2007) -customers are high professional athletes  advertisement -product placement in movies Weakness: -lack of patent/ lack of proprietary product rights and intellectual property rights in foreign countriescompetitors could come up with better products -just a few product lines in comparison to the competitors -weak position relative to its suppliers outside the United States -international market presence (13 countries) compared to its competitors (Nike 160 countries) -financial strength compared to the major competitors Opportunities: -growing number of customers through great reputation -expansion into international market -reputation to make performance gear has given them an advantage over their competitors Threats: -need for product differentiation -risk of substitutes (higher risk because of the lack of patents) -current economic downturn -high prices for materials -price fluctuation for materials (petroleum based ones)

Choice (Business lvl) Competitive Strategiesmore for a market than for a single company Cost leadership: cost reduction/ economies of scale focused on narrow target markets (Ford)/ Experience Curve

Differentiation: uniqueness/ premium pricing/ high costs focused on differentiator (Mercedes)/Innovation/ Image

(Corporate lvl) Direction of growth (Ansoff) product/ market matrix

1Existing market penetration -2 new market) market development-----entering the existing market with innovation New product development--- new technologic and high performance apparel Conglomerate diversification Related diversification Unrelated diversification

Methods of growth Organic; Merger; Acquisitions; strategic Alliances

International Strategies Integrative/ responsiveness Global, Multidomestic, Transnational

Implementation The cultural web to analyse & interpret organisational culture The cultural web is a representation of the taken-for-granted assumptions, or paradigm, of an organisation and the physical manifestations of organisational culture. Johnson et al. Stories: Kevin Plank founded it in 1996, started with a laboratory in his grandmothers basement in Maryland. First big sale to Georgia Tech University After the first year of operations…five product lines and move into a manufacturing warehouse Plank is the big influencer (he knows every aspect of the business) 1998 official supplier to the NFL Europe, 1999 contract with Warner Brothers 2000 supplying performance apparel for the “big” sport leagues in America

Symbols: U + A –Logo Slogan is to bring complex technology and high performance with a simple message. Image of high performance apparel and high quality Offer Products that are better than what is currently in the market

Power structure: personally driven leadership (plankone of them rather than a CEO)- helped to earn loyalty quickly and manages his team with a unique team drive style. Plank seeks feedback regarding products Plank embraces the connection to its customers respectfully and gracefully Important roles in management are filled by college classmates and teammates of plank Organisational Structure: HQ in America HQ in Europe

Stores in 23 Countries Control System:

Rituals:

PARADIGM

Types of Strategic Change

Apparel enhance performance Complex technology but simple message Has been able to successfully penetrate the market (by using the image an influence of professional athletes Products sold world wide HQ in the U.S., support offices in Hong Kong and Guangzhou Primary sales are achieved through wholesale distribution and licensing to distributors Products are offered through website, retailers and stores Highly competitive industry 2007 increased its marketing initiatives by opening self-owned retail and outlet stores Under Armour is identified with performance—Advantage in entering new categories 93percent of sales in U.S. Sells products in 13 countries Emerging international penetration plan---opening a European HQ Possesses an efficient operations & distribution network By providing its licensing partner, UA can provide a wider range of products to its customers Keen selection and effective partner relationships developed a unique product Under Armour doesn’t have a patent in any of the materials used in its products. Needs to be cautious in its licensing agreement, that companies do not steal its know-how Respond to product requests of customers Deliver on promise (Atl Falcons wanted long-sleeves) Plank uses his athletic experience& connections for marketing Differentiation strategy through innovation Attains physical differentiation through the vc activities of technological development & procurement Identifies itself with team sport rather than individual sport Mayor emphasis on international exporting...