S7-Under Armour in 2020 F2021 To Post PDF

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Lecture 7 notes from the week 7 discussion on the Under Armour case. These notes are directly from the professor....

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Class It ems & Cour se Sch edule & SSyllabus yllabus Items Course Schedule • TODAY: Monday (9/13): Case: Under Armour in 2020 • Wednesday (9/15) • Exam 1: Chapters 1-4 • Bring your fully charged laptop to class • Exam is administered through Blackboard • Monday (9/20) • BSG Workday. • Regular class does not meet.

• Wednesday (9/29) • WRITTEN CASE #1 DUE (Twitter in 2020) • Monday (10/4) • Case: Ford Motor, Inc. • Wednesday (10/6) • Read: Chapter 7 – International Strategy • Case: Netflix • Monday (10/11): BSG Work Day

• Wednesday (9/22) • Read: Chapter 5 – The five generic strategies • DO NOT USE GOOGLE DOCS for assignments • D0 NOT COPY AND PASTE as IMAGE or PICTURE • Monday (9/27) • Read: Chapter 6 – Strengthening a firm’s position

• Wednesday (10/13) • Read: Chapter 8 – Corporate Strategy • Case: The Walt Disney Company

GBA Business GB A 490 Class Busin ess • EXAM #1 • Multiple Choice, 60 minutes, closed book/closed notes, administered in-class • Bring to class: Fully Charged Laptop that can access blackboard over the wireless connection in the room. Test this out in the room or in another BidGood room prior to class. • If you are here and unable to access the exam you will be allowed to take the comprehensive exam at the end of the semester • PRELIMINARY CRAFT BEER CASE FEEDBACK • Review Strategic Group Mapping • Course Policies for Written Work • NO CREDIT WILL BE GIVEN FOR: • Copy and pasting figures and tables as images or pictures • Hand drawn tables and figures • PDF documents – Use MS Word, PPT, and Excel • ACADEMIC CONDUCT: No outside sources at all allowed • FOR WRITTEN CASE #1 (TWITTER) • Use the required writing structure posted on Blackboard – this is required to meet the university writing requirement ©Jeffrey A. Martin, PhD

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The SGM Diagram is Required. Informed in part by: 5-Forces

Price / Perceived Quality

Appendixx D D:: STRA STRATEGIC GR ANALYSIS REQUI QUIRED FORMAT Appendi TEGIC G ROUP ANAL YSIS RE QUI RED FORMA T High

Medium

Low Local

Value Net Driving Forces Competitor Analysis

Regional National International

Note: Circles are drawn roughly proportional to the sizes of the chains, based on revenues. Be sure not to choose axis that are correlated with each other or with size (revenues) of firm.

Scope of Geographic Distribution

Provide a brief narrative describing the rationale for choosing each axis and how that in turns positions the firms in relationship to each other. Add other details that may help with further interpreting your strategic group map.

Strategic Message: “what are the 1 or 2 key takeaway(s) from your strategic group map that you want to draw the readers attention to?”

MS Excel

PowerPoint

Copy aand nd P Pas as asting ting D Diagr iagr iagrams ams an and d TTabl abl ables es into your rreport eport – Illus Illustt rations

OK Formats

OK Formats

Cover Page

GBA 490 Writing Structure Illustration and Requirements Organization of table: Left to right and then down to the next row. Each box represents approximately one page. When figures and tables are used in appendices include a brief narrative summarizing your analysis (this could be part of a table or figure). A “bottom-line strategic message” is required at the end of each analysis framework that incorporates the key ‘takeaway(s)’ from your analysis.

Table of Contents

Issue #1 With Justification that references appropriate appendices (note: all appendices must be referenced at least once across the three issues)

Issue #2 With Justification that references (note: all appendices must be referenced at least once across the three issues)

Executive Summary Stands on its own, identifies the three issues, provides overall recommendation. (no more than one page) Issue #3 With Justification that references appropriate appendices (note: all appendices must be referenced at least once across the three issues)

Form One Key Recommendation (identify 3 possible recommendations and form/select one recommendation that must be implementable and supported by your overall case analysis)

External Analysis

External Analysis

Appendix A: PESTEL Analysis (with strategic message)

Appendix B: Five Forces Analysis (with strategic message)

External Analysis

External Analysis

External Analysis

Appendix C: Driving Forces Analysis (with strategic message)

Appendix D: Strategic Group Map (with strategic message)

Appendix E: Competitor Analysis (with strategic message)

External Analysis Appendix F: Key Success Factors & Industry Outlook for Profitability: - at least 5 KSF’s (with strategic message)

Internal Analysis Appendix G: Financial Analysis Ratios: at least 2 profitability, 2 leverage/liquidity; and 2 activity/other (with strategic message)

Internal Analysis Appendix H: Resources & Capabilities Analysis (in VRIN(E)) format)

Internal Analysis Appendix I: Weighted Competitive Strength Assessment (with strategic message)

Internal Analysis Appendix J: Value Chain Analysis (with strategic message)

Internal Analysis Appendix K: SWOT (TOWS format optional) (with strategic message)

Includes your name and section

Appendix L: Current Strategy (State and discuss specific generic strategy pursued (with strategic message)

(with strategic message)

Any additional appendices related to other frameworks (e.g., ch3-Value Net, TOWS (SWOT), ch6-12 – must be complete and correct) (with strategic message(s))

Issues & Recommendation (25% of Total Grade) Executive Summary (cove rs situation, issues , and recommendation)

GBA 490 Illustrative Case Rubric

…………………………………..……….…….….

Issue #1 + justification (reference to appendix) Issue #2 + justification (reference to appendix) Issue #3 + justification (reference to appendix)

…………………………………………..……….………………………. …………………………………………..……….………………………. …………………………………………..…….………………………….

Strategic messages are the “so what” result of your analysis. Hint: Lable it “Strategic Messsage”

12 345 12345 12 345

Form 1 Key Recommendation: (identify 3 possible re commendations and select/comb ine into 1 that is implementable) …………………..….……..

Selected Clarifications

_________ 12 345

Identify and Describe 3 Major Issues:

Appendix: Industry and Competitive Analysis (75% of Total Grade)

12345

_________

External Analysis: Analysis of the Macro-environment, Industry & Competitors A. PESTEL Analysis (use table + bottom-line strategic message) ………………..………………… 1 2 3 4 5 B. Five Forces Analysis (includes rationale + bottom-line strategic message) ……………….… 1 2 3 4 5 6 7 8 9 10 C. Driving Forces of Change (+ bottom-line strategic message) ………………………..…………… 1 2 3 4 5 D. Strategic Group Map (+ bottom-line strategic message) ………………………………..………… 1 2 3 4 5

Note: Clarification for number of KSF’s required Note: Clarification for financial analysis ratios. If data not available for 2 in one of the 3 categories do an additional one in the other 2 categories Note: Clarification for use of KSF’s in WCSA Note: State the overall generic strategy supported by the different strategies the company is pursuing that distinguish what the firm is doing from the other generic strategies(see Table 5.1 in textbook). (e.g., Growth strategy, Product Line strategy, Marketing strategy, Promotion strategy, Management strategy, Distribution strategy

E. Competitor Analysis (uses table + bottom-line strategic message) ………………..………… 1 2 3 4 5 F. Key Success Factors & Industry Outlook for Profitability (describe at least 5 KSF’s, rationale for outlook, + 1 bottom-line strategic message) …… 1 2 3 4 5

Internal Analysis: Analysis of the Firm and its Strategy G. Financial Analysis (2 profitability, 2 liquidity/leverage, & 2 activity/other + bottom-line strategic message) …..…………………………………………………………………….… 1 2 3 4 5 6 7 8 9 10 H. VRIN(E) Analysis (uses table, 5 resources + bottom-line strategic message) … ….………… 1

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I.

Weighted Competitive Strength Assessment (incorporates KSF’s + bottom-line strategic message)………………………………………1 2 3 4 5

J.

Value Chain Analysis (+ bottom-line strategic message) ……………………………...……..……. 1 2 3 4 5

K. SWOT Analysis (TOWS format optional (+ bottom-line strategic message) ………………... 1 2 3 4 5 L. Current Strategy (Generic Strategy stated w/support + bottom-line strategic message). 1 2 3 4 5 6 7 8 9 10

Other Elements ………………………………………….……………………………………………… (_________) Additions for Optional Analysis Appendices (potential additional points) Deductions for Writing Deficiency Ø Ø Ø Ø Ø

Content not clearly labeled to match ru bric Excess ive Grammar/punctuation/spelling errors Language and word choice inappropriate for senior-level business students Content not p res ented pro fes sionally Other______________________________

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Illustration of Issue Development from prior student case Note: There may be content errors in this illustration.

7

Illustration of developing your 1 key recommendation

Note: There may be content errors in this illustration.

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Illustration of a complete financial analysis. Note: There may be content errors in this illustration.

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Underr Armour in 2020 Unde Competitive Strength Assessment VRIN(E) Framework SWOT (TOWS) Matrix Dr. Jeffrey Martin

“How Under Armour Overcame Its Underdog Odds / How I Made It.”

https://www.youtube.com/watch?v=Q3VO2pGMIok

How Well in Under Armour’s Strategy Working?

What is your assessment of Under Armour’s Performance? Calculate at least six financial ratios – 2 profit ratios, 2 liquidity/leverage ratios, and 2 activity ratios and/or other measures of performance and show trends over multiple years. downturn in North America that first appeared in the 4th quarter of 2016? Causes? Reasons?

Strategic Message: “what are the key takeaway(s) from your analysis?” 12

3. Do a complete five forces analysis:

4. What is the collective strength of the five competitive forces facing Under Armour, Nike, and Adidas-Reebok in the North American market for performance sports apparel?

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

6. Does Under Armour have any resource strengths or competitive capabilities that qualify as a distinctive competence?

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THE VRIN(E) MODEL

Test

Valuable?

Rare?

Competitive implication

Does the resource or capability allow the If so, it satisfies the value requirement. firm to meet a market demand or protect Valuable resources are needed just to compete in the industry, but value by the firm from market uncertainties? itself does not convey an advantage

implication Valuable resources and capabilities convey the potential to achieve “normal profits” (i.e., profits which cover the cost of all inputs including the cost of capital)

Assuming the resource or capability is valuable, is it scarce relative to demand? Or, is it widely possessed by most competitors?

Valuable resources which are also rare convey a competitive advantage, but its relative permanence is not assured. The advantage is likely only temporary.

A temporary competitive advantage conveys the potential to achieve above normal profits, at least until the competitive advantage is nullified by other firms

Assuming a valuable and rare resource,

Valuable resources and capabilities which are difficult to imitate, or substitute provide the potential for sustained competitive advantage

A sustained competitive advantage conveys the potential to achieve above normal profits for extended periods of time (until competitors eventually find ways to imitate or substitute or the environment changes in ways that nullify the value of the resources)

Inimitable how difficult is it for competitors to either and non- imitate the resource or capability or substitute for it with other resources and substitut- capabilities that accomplish similar able? benefits? Exploitable?

Performance

Resources and capabilities that For each step of the preceding steps satisfy the VRINE requirements but of the VRINE test, can the firm actually exploit the resources and capabilities that itwhich the firm is unable to exploit actually result in significant opportunity owns or controls? costs (other firms would likely pay large sums to purchase the VRINE resources and capabilities). Alternatively, exploitability unlocks the potential competitive and performance implications of the resource or capability

Firms which control unexploited VRINE resources and capabilities generally suffer from lower levels of financial performance and depressed market valuations relative to what they would otherwise enjoy (though not as depressed as firms lacking resources and capabilities which do satisfy VRINE)

Appendix H: VRIN(E) Analysis Illustration Netflix

Valuable

Rare?

Inimitable and/or Non-substitutable

Exploitable

Competitive Outcome

YES

?

YES

?

YES

?

YES

?

NO

?

Using a table format, such as the one above, is a required part of your resources and capabilities analysis. You can elaborate on your analysis in the table cells or in a narrative below it. A narrative alone (without a table) is not sufficient.

Narrative describing your overall resource and capabilities analysis

Strategic Message: “what are the key takeaway(s) from your analysis?”

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VRIN(E): Analyzing Resources and Capabilities for possibility of achieving a Competitive Advantage Firm’s Resource

Valuable

Rare

I nimitable & Non-

the Firm?

Potential Competitive Outcome

Exploitable by

substitutable No

No

No

No

Disadvantage

Yes

No

No

No

Competitive Parity

Yes

Yes

No

No

Potential Advantage

Yes

Yes

No

Yes

Temporary Advantage

Yes

Yes

Yes

Yes

Sustainable Advantage

The above table is to assist you in analyzing resources and capabilities. See illustration of the type of VRIN(E) table that is required in your report on the following slide. 21

Under Armour Resources and Capabilities Analysis: Analyzing Resources and Capabilities for possibility of achieving a Competitive Advantage Under Armour Resource

Valuable

Rare?

Inimitable & Non-substitable

Exploitable

Competitive Outcome

Using a table format, such as the one above, is a required part of your resources and capabilities analysis. You can elaborate on your analysis in the table cells or in a narrative below it. A narrative alone (without a table) is not sufficient. Strategic Message: “what are the key takeaway(s) from your Resource and Capabilities Analysis?”

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7. As of 2018, how does Under Armour’s competitive strength in the global market for sports apparel and athletic footwear compare against that of Nike and The adidas Group? Do a weighted competitive strength assessment using the methodology presented in Table 4.4 in Chapter 4 to support your answer. Based on your assessment and calculations, does Under Armour have a net competitive advantage or disadvantage in competing globally against Nike and The adidas Group?

STEPS IN THE WEIGHTED COMPETITIVE STRENGTH ASSESSMENT PROCESS 1. Make a list of the industry’s key success factors and measures of competitive strength or weakness. 2. Assign weights to each competitive strength measure based on its perceived importance. 3. Score competitors on each competitive strength measure and multiply by each measure by its corresponding weight. 4. Sum the weighted strength ratings on each factor to get an overall measure of competitive strength for each company. 5. Use overall strength ratings to draw conclusions about the company’s net competitive advantage or disadvantage and to take specific note of areas of strength and weakness.

Weighted Competitive Strength Assessment Under Armour Key Success Factors/ Strength Measures

Importance weight

Competor A

Strength Weighted Strength weighting Rating Score

Weighted score

Competitor B Strength Weighted Rating Score

Competitor C Strength Rating

Weighted Score

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8. What are the key issues confronting Under Armour’s top management team as of mid- 2018?

9. What recommendations and suggestions for improvement would you make to Kevin Plank regarding the turnaround strategy put in place at Under Armour?

The Steps Involved in applying the TOWS framework to develop possible strategies:

List the SWOT elements you’ve already identified in your analysis in their respective cells.

Compare SWOT elements to come up with SO, ST, WO, and WT possible strategies.

Use these to identify 3 potential strategies and then come up with an overall strategy to recommend and how to implement it.

SUMMARY OF EXTERNAL ANALYSIS FRAMEWORKS

SUMMARY OF INTERNAL ANALYSIS FRAMEWORKS

SWOT (TOWS) Analysis Opportunities (0) Favorable Industry Trends O1: O2: O3: …. Etc.

Firm Strengths (S) S1: S2: S3: …. Etc.

Firm Weaknesses (W) W1: W2: W3: …. Etc.

SO Possible ways

WO Areas internally that

ST Threats (T) Unfavorable Industry Trends T1: T2: T3: …. Etc.

organization can use its strengths to take advantage of opportunities and favorable trends

Possible ways in which WT strengths can be used to protect the organization from threats

need to be tackled to take advantage of opportunities

Point to defensive tactics to address how weaknesses make the organization most vulnerable against threats

QUESTIONS

©Jeffrey A. Martin, PhD

Department of Management Culverhouse College of Business The University of Alabama 101 Alston Hall Box 870225 205-348-8928 www.culverhouse.ua.edu 29...