ORGAZATIONAL STRUCTURE & INFRASTRACTURE FOR UNDER ARMOUR PDF

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ORGAZATIONAL STRUCTURE & INFRASTRACTURE FOR UNDER ARMOUR

THE GREAT LAKES UNIVERSITY OF KISUMU
DR KENNEDY AMADI,PHD
10TH JUNE 2020
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ORGAZATIONAL STRUCTURE & INFRASTRACTURE FOR UNDER ARMOUR THE GREAT LAKES UNIVERSITY OF KISUMU DR KENNEDY AMADI,PHD 10TH JUNE 2020

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UNDER ARMOUR Context Introduction. A 23-year old, Kevin Plank (Captain of Maryland football team) founded the Under-Armour Company in 1995 in Washington DC. This was due to his sporting background (Sandford, 2016). Refer to appendix 1 showing Under Armour history logo. SIZE With it headquarter in Baltimore, Maryland, it was able to employ about 16, 400 people worldwide in 2019. It’s still an upcoming enterprise as compared to Nike and Adidas (O’Connell, 2020). Refer to appendix 2 showing number of employees of Under Armour worldwide from 2009 to 2019 MAIN MARKETS. According to Vault.com Inc (2020), Its main markets are beyond North America, more so it operates worldwide. Basically, it sells its products in Germany and the UK. PRODUCTS AND SERVICES. Incorporated Under Armour firm consists of the marketing and supplying of the branded performance apparel, footwear and equipment for all ages and genders (Soni, 2014). Refer to appendix 3 showing products and services COMPETITORS As per Craft.co (2020), Under Armour faces stiff competition from ASICS, New Balance, Puma, Adidas and Nike. Refer to appendix 4 showing Under Armour competitors. MARKET TARGET AND CUSTOMER SEGMENTATION. Demographic segmentation is characterized by age, income, occupation in-order to find potential customers. Geographic groupings such as suburban and exurban would be considered. Psychographic deals with goal-oriented and centered on family and career. Lastly Behavioral which provides desire to have products and services that have benefits of opportuneness. This strategies targets 30-55 year, with disposable income (Emayerishu, 2017).

1. Type of legal formation

Legal formations are groups or organizations formed being in conformity with the law of the land and the public policy; not condemned as illegal. Davies, A. (2017), Public limited companies are usually large companies and shares are traded on stock exchange. Garg, K. (2018), A limited company grants limited liability to its owners and management. Being a public company allows a firm to sell shares to investors this is beneficial in raising capital. A minimum of three Directors are required for establishing a Public Limited Company and it has more stringent regulatory requirements compared to a private limited company. Under Armour was established the same formation. This enables it to expand its roots to wider market due to its publicity all over the dynamic world. The Public Limited Company has many characteristics which most of them are deliberated down below. Members- a minimum number of seven members are required and no restrictions on maximum number of members as per the provisions of the Companies Act, 2013 to start a company. This applies to Under Armour Company. Limited Liability- the liability of each member or shareholders is limited. It means that if Under Armour faces loss under any circumstances then its shareholders are liable to sell their own assets for payment. The personal individual assets of the shareholders are not at risk. Perpetual succession- The Under Armour Company keeps on existing in the eyes of law even in the case of death, insolvency, the bankruptcy of any of its members. This leads to continuous succession of the company. The life of the company keeps on existing forever. Directory of members- a public company is required to maintain an index of its members whereas private company has a privilege over the public company as they don’t have to keep an index of its members. A number of directors –when it comes to directors a public company need to have only three directors. A public company can come into operations with the existence of three directors. Paid up Capital- it must have a minimum paid-up capital of 5 dollars such higher amount which may be prescribed from time to time. Prospectus- prospectus is a detailed statement of the company affairs which is issued by a company for its public. Thus, in the case of public limited company, there is a need to issue by a prospectus. However, in case of Private limited Companies, public is not invited to subscribe for the shares of the company. Minimum subscription- it is the amount received by the company which is 90% of the shares issued within a certain period of time. If the company is not able to receive 90% of the amount then they cannot commence further business. In case of private limited company shares can be allotted to the public without receiving the minimum subscription. Name – it is mandatory for all the public companies to use the word ‘limited’ after its name.

According to Tutor 2u (2018), This Under Armour Company experiences some advantages due to its publicity which includes; Better access to capital, which is, raising share capital from existing and new investors, Liquidity – shareholders are able to buy and sell their shares >if they are quoted on a stock exchange. Values of shares –the value of the firm is shown by the market capitalization >based on the share price. The opportunity to more easily make acquisitions, by offering shares to the shareholders of the target firm. To give Under Armour a more prestigious profile. Limited liability means that owners (shareholders) are not liable for company debts.

2.Factors that Have Influenced Under Amours organizational structure Kenton, W. (2020), A system that outlines how certain activities are directed in order to achieve the goals of an organization is known as an organizational structure. These activities can include rules, roles, and responsibilities. Organisation needs a structure in order to divide the work into meaningful chunks or packages, and they need clear reporting lines to ensure that the work is complete. Structures also provide meaning to those working in the organisation and their specific responsibilities and accountabilities. Having an organizational structure in place allows companies to remain efficient and focused. Jenny (2012), With its CEO Kevin Plank being at the top, of the pyramid, Under Armour follows a simple organizational structure while Mr Plank is the face of the company of directors the board of directors is responsible for much of the decision-making process for Under Armour. The Board of Directors is evaluated annually by a committee to ensure that they are doing the best job for the company. Their leader is in charge of holding Board meetings and is elected by vote of non-management Directors. Directors of the board have free access to management and information and the company tries to keep its lines of communication throughout the entire company as open as possible. Davies, A. (2017), Since Under Armour follows a simple functional structure, which is, the organisation is arranged in business functions- namely areas of business responsible for particular activities of the business, such as human resources, marketing, sales, production, quality control, and research and development- and has authority over the line manager in decision-making. Plank deliberately used this structure since his company UA Company is of more technical orientation. This structure explains that, authority always flows from top to bottom, it shows how a superior gets work done by a subordinate, by clearly explaining what is expected and how the subordinate should go about the task. Moreover, the authority should be accompanied with an equal amount of responsibility. Delegating someone from accountability doesn’t mean it’s an escape route from responsibility. Accountability still rests with the person having the supreme authority. According to Davies, A. (2017), External influences are; Political- political changes on the globe, regions, national and local levels can interfere with the Under Armour Company market and thus low income Economic – factors such as measures of economic growth, for example gross domestic product indicate how well an economy is doing and this could help in control of production. Social- factors such as trends and cultural factors may influence type of products marketed by UA Company. Technological- dynamic changes are likely to occur that might affect the UA firm. Legal- current and impending legislations could affect how The Under Armour Company operates. Environmental- factors such as climate change could affect the kind of products brought to table by UA. Internal influences are; Strengths- the Under Armour company has to identify its strengths or its unique capabilities that they are known and capitalise on them. This includes checking on market demand of some products so as to evaluate the one with highest demand on the market. Thus, more emphasis should be but on the product. Weakness- the UA Company should outlook the things bringing them down and how to improve on them. Opportunity- the UA Company should consider the external factors that can be used as opportunities.

Threats- having in mind that there are tragic external factors distorting the company’s progress, Under Armour should be cautious enough to come up with solutions that can overcome them. Threats such as competition from major apparel, shoes and equipment production companies should be dealt with by producing more favourable products for consumers at all levels of economies.

3.Strategic and Operational Management Davies, A. (2017), Operational management is concerned with planning, organising and supervising in the contexts of production, manufacturing and provision of services. It focuses on delivery, ensuring that the organisation turns its inputs; such as raw materials and labour supply, into outputs; such as a product, in the most efficient way possible. Activities are carried out by middle managers and supervisor. It focuses on ensuring efficiency within the organisation to achieve organisational objectives and also organise, control and monitor activities. Identifies when problem arise and adjusts according to get back on track. Tends to be internally focused. Strategic management is concerned with the leadership of the organisation. It helps to determine the strategic direction of the organisation based on the resources, capabilities and competence that it currently possesses and an appraisal of the external and competitive environment in which it operates. Activities are carried out by senior managers and directors with the involvement of functional managers. It focuses on effectiveness and agility in preparing the organisation to compete and how it operates within its markets and planning activities. Watches for trends, both externally and internally, and plans for the future. Internally and externally focused.

As per Ball, E. (2015), Under Armour combines these key assets (strategic and operational) to achieve their vision of “empowering athletes everywhere.” The operational and strategic management models are discussed below; Targeted Market Segments Under Armour’s strategic model focuses on specific segments of the sportswear market, starting with compression shirts in 1996. The company’s growth drivers have expanded a lot since then and the company’s currently focuses on innovative all-weather clothing, women’s sportswear, footwear and

international. These focuses speak to the strength of the competition, like Nike and Adidas, who try to compete across virtually all sports segments simultaneously. It is a brilliant choice on Under Armour’s part to focus on one area at a time so they can craft a clear marketing message, engineer competitive products, establish the required manufacturing and delivery capabilities, attack gaps in the market, and sign stars that represent these specific messages. Women’s Sportswear The women’s segment currently earns $1 billion in revenue and is expected to expand to 50% of the company’s revenue in the future. The women’s segment has not been traditionally focused on by

sportswear brands. With women being half the potential customers, this is a mistake by the competitors. Under Armour pursued this opportunity gap by signing many women’s sports and pop culture stars and crafted a compelling message around Missy Copeland, a ballet star who overcame adversity to become one of the first African American soloists at the American Ballet Theatre. It was an interesting choice to lead with a non-household name from a sport many have not tried, but the messaging spoke to the edgy, risk taking, younger audience Under Armour was trying to reach. Footwear

The footwear segment, another key market Under Armour is expanding into is very different than women’s sportswear in that it is extremely competitive and requires significant engineering and manufacturing capabilities. Under Armour needed to be re-branded away from a compression clothing company to a company who was innovative enough to be able to compete in the extremely popular footwear segment. Hiring top design and engineering talent, signing sports superstars such as Stephen Curry, Tom Brady and Jordan Spieth and establishing new manufacturing techniques were all key to the footwear expansion plan. Consumers will be willing to purchase shoes from Under Armour because of the innovation and superstar talent vouching for the products. Digital Technology Once of Under Armour’s biggest differentiator in the sportswear market is their digital initiative, called “connected fitness”. It is a customizable application that has over 150 million users, 40 million of which are active. The company hires a lot of thought leaders in the digital technology space and plans to be on the cutting edge, ahead of the competitors in this regard. Athletes recognize that by combining sportswear with digital technology their performance can improve – a fact Under Armour plans to capitalize on.

Direct-To-Consumer Direct-to-consumer sales, which earn much higher margins, make up 30% of Under Armour sales, and the company is looking to grow that percentage. Consumers want products that are readily available and are shopping more and more online. Under Armour draws a higher percentage of its sales direct-to-consumer than any of its main competitors. This gives them a competitive advantage because their customers are more willing to buy online, a huge cost of sales advantage for the company. International Sales Under Armour has experienced rapid growth since its inception and one big question is if they can continue this expansion into the future. Currently, international sales are 12% of overall sales. This is a positive sign that the company has a lot of space to grow into. The company has a very purposeful geographic expansion plan that moves country by country and often leverages international partners to help with the expansion. This allows the company to focus all their efforts on one place at a time to ensure they understand the geographies culture, distribution channels, and local laws. Consumers in these locations will be more likely to purchase Under Armour because of the due diligence they performed prior to selling in each location. Conclusion Under Armour’s strategic model and operating models complement each other, which have allowed the company to rapidly grow and provide value to its customers.

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4.The role of organizational infrastructure Davies, A. (2017), One of the key ways to an organisation can provide guidelines or rules as how employees should operate through policies and procedures, the use of policies and procedures will also enhance the explicit knowledge within the organisation. Examples include standard operating procedures and human resources (HR) policies and procedures. Standard operating procedures: these provide clear guidance on how certain activities should be performed, for example cashing-up procedures in a bank, accounting processes or operation of machine. They may be used for compliance reasons (auditing and accounting processes, for example) but they do enhance efficiency, which means there is less wasted effort in terms of time so individuals can spend more time on the activities that add value or create revenue. HR policies and procedures: these are designed to provide rules for employees to follow to reduce the risk of legal challenge to the organisation. However, they are also designed to reduce potential individual and interand intra- group conflict, which would have a negative impact upon productivity or performance.

Dixon, M. (2013), This section put emphasis on the need for organizations to form a solid infrastructure upon which the basis of services is delivered. Consumers of human service agencies often face a difficult decision when choosing the provider most suitable for the varying needs of loved ones, and due to varying disability types and severities; providers also face the issue of determining the best methods for providing such a wide service array to all with whom they work. Such complexity in adaptation and the need for ongoing responding to varied circumstances may leave administrators and middle managers confused and searching for a solution to organizational issues. Anecdotal reports in the media often suggest the newest theory of how an organization should operate to intervene when crises arise, and plenty of management books exist that promise solutions for all organizational troubles. The overwhelmingly increasing number of theories of “best practice” may sound convincing to those in need of immediate assistance, though end up costing the agency valuable resources and unnecessary amounts of time. Years of research in the science of behaviour offer solutions that best prepare an organization for effective responding in crisis situations, with well-designed, organizational infrastructure and systems processes outlined for predictability. Organizational infrastructure provides the groundwork and major basis upon which performance may be demonstrated, then enhanced, and ensuring a solid infrastructure requires careful consideration and thorough planning, with constant analysis and intervention leading to adaptation, given enough feedback from consumers. This chapter provides an analysis of how agencies may better prepare an organizational system using the work amounted from the fields of behaviour analysis and organizational behaviour management, with emphasis on antecedent or preventative interventions that permit swift and effective responding when crises arise. According to Mnestudies.com (n.d.), Thus, structure is synonymous to a rope that employees hold and binds all employees towards unified direction and aids the identification of Who is Who and What is What• of organization. Structure serves as basis for orchestrating organizational activities. Organizations shall understand importance of structure in carrying out business operations. Organization can choose from variety of structure like, functional, divisional, project teams, holding companies and matrix structure. Failure to choose an effective structure has it consequences on organization as it will not only affect health 4UEO0620 © ABE 2020

of the organization it will also affect employees loyalty, motivation at work and job satisfaction, thus organization when deciding for designing structure needs to take care of all aspects that relates to people and working of organization. Mullins (2005) emphasizes that structure affects both productivity and economic efficiency and also morale and job satisfaction. Important notion stemming from Mullins assertion is that good structure will not only have tangible effects i-e financial but in-tangible affects like motivation thus impacting organizations' operational effectiveness as employees carry out operations/tasks of organization. Bloisi (2007) highlights importance of structure as a mean of getting people work towards common goals thus acting as facilitator in pursuit of organizational goals. Looking simple but organization will have to make sure that employees identify with organizational thoughts and willingly forgo personal interests. Thus putting greater burden while designing structure which accommodates employees and harnesses an environment where staff takes organizational goals as their own and share believe...