Under Armour Strategic Audit

Current Situation

Current Performance

Under Armour has demonstrated itself as one of the most powerful companies in the field of sport apparel production in North America. The entire performance demonstrates significant increase in revenues, reaching 38.4 %. Although the organization could increase the number of house stores by 48 %, as well as update e-commerce website and revenues, the decrease in growth margin rates became the result of following company’s strategies. Similar to other companies producing sports apparel, Under Armour admits that revenue growth is predetermined by the sale time. Its revenues rely on the net revenues, which are composed of license venues and net sales. The latter is acknowledged in terms of transfer of ownership, including the customers and risk related to the goods production. The transfer and risk of loss depend on the shipment condition of board or freed shipping for the majority of goods. In certain cases, loss risk and title transfer are associated with sale rates, particularly for retail stores. Sale taxes are imposed on revenues and are drawn from product sales. They also present next basis of consolidated statement, which does not affect net revenues.

Strategic Posture

Mission

As it has been mentioned in the beginning, the main goal of Under Armour is to “make all athletes better through passion, design, and relentless pursuit of innovation”. The main purpose, therefore, is to enhance athletes all over the world. Such approach is successful in terms of the company’s constant development of new merchandise conditions for consumers to surpass the performance of its major competitors.

Objectives

The company’s major objective is to introduce the “universal guarantee performance” (Under Armour, 2016, n. p.). Under Armour is currently striving to win a greater market share as each product they launch must be more innovated in comparison to the products, which are already available it the market. The main goal is to reach the prime quality in the class because the company is focused on increasing its presence and growth in the retail market. Under Armour’s strategies correlate with the company’s aspiration to deliver the best products for its clients. Such strategies have provided the company with a sustainable competitive advantage over its rivals. In this respect, the priority of expanding into international markets is the key objective of the company.

Strategies

The company’s strategic framework is composed of four major principles, including act, think, create, and perform. To begin with, the company acts as global citizen, encouraging the various multi-cultural strategies aimed at strengthening the brand. Furthermore, the company should think as an entrepreneur to realize the importance of being accountable and undertake responsibilities for both failure and success of the ventures initiated by the organizational hierarchy. What is more important, the company is guided by innovation because it is the key of attracting new clients and retain the regular ones. Finally, Under Armour supports the idea of a teamwork, which means that the brand values such aspects as integrity, transparency and respect. Consequently, such values are constantly supported, empowered, and undermined by the members of the company’s working staff. As a result, the company manages to create a strong vision and strategic framework for enriching organizational culture.

Policies

Under Armour has a distinct code of ethics updated in February 2016. The Code focuses on the main updates, which comply with the currently estimated global nature of reforms and business, delivering the new experience for those who have become a member of the company. The code of ethics discussed the new principles where member of the team is responsible for complying with and understanding the policies, regulations, and rules of conducting business and adhering to the employment agreements. The Codes is also spread on the U.S. offices, which are located all over the world. The managers take a special responsibility for educating and leading the team, as well as serving as a valuable example to follow.

Strategic Managers

Board of Directors

The Board of Directors is headed by Kevin Plant who guarantees equal employment and is committed to delivering equal employment opportunities.

Top Management

Kerry Chandler is the Chief Human Resources Manager who guides the company since 2015. Brad Dickerson is the Chief Financial Officer and Chief Operating Officer who is in charge since 2015. Kip J. Fulks takes controls of Footwear and Innovation and is concerned with the production development. James Hardy is appointed as the Executive Vice President of Global Operations. Karl-Heinz Maurah deals with the international relationship and spread of stores in Latin America and other regions (Subramanian & Gopalakrishna, n. d.). Further, Matthew C. Mirchin has been introduced as the President of North America since 2014, whereas Adam Peaks takes control of Global Marketing operations, holding major activities in North America. Finally, Henry Stafford takes the position of Chief Merchandizing Officer (Under Armour, 2016).

External Environment

National Environment

Owing to the significance of the external environment affecting the UA’s ability to sustain competition, the external environment analysis of the sport apparel will focus on the attractiveness and uniqueness of the manufacturing field, as well as on the threats and opportunities by delivering reliable data related to the industry.

Societal Environment

Economic

While considering the economic perspective, the attention should be paid to the peculiarities of the economic development of the regions, in which Under Armour plans to integrate its business activities and launch a specific product line. The economic environment in Asian region, for example, differs from that accepted in Europe. As a result, the competition and customer preferences will differ, as well. The analysis of these initiatives could promote a new outlook on the economic climate which should be taken into consider while establishing a retail store.

Technological

The technological environment plays an important role for Under Armour that should take sufficient measures for surpassing its rivals and offering practical and genuine technologically advanced products.

Political-Legal

The political and legal environment is associated with the involvement of government and other municipalities in the production process. The high standards and the legal issues should be considered in regard to irresponsible athletes who often fail to adhere to the highest morality norms. Yet, they are popular professional athletes, whose personal life affects the company’s reputation. As a result of such inconsistencies, the company risks to become less demanding among the clients, since the political issues and lawsuits surrounding the company do not allow manager to sustain the rigid competition.

Socio-Cultural

Social and cultural environment shapes an important element contributing to the effectiveness of the strategic framework proposed. In this respect, the ongoing list of recommendations should be connected with the social environment, including the adherence to the principles of eco-friendly production and technologically innovated development of new apparel. All these approaches must be included into the program to sustain the company and help it expand the international market. Additionally, while arranging different partnerships, it is important for the company to consider the social situations and culturally-predetermined factors to avoid conflicting situation and rely on the major principles of corporate social responsibility and transparency in decision-making and trouble-shooting. As a result, it could be helpful for manager to consider social and cultural backgrounds of the regions they are planning to invade.

Task Environment

The company is currently working on the potential weaknesses and gaps, and there should be organized a team that will work on eliminating inconsistencies and enhancing the company’s capability to introduce changes. Change management, therefore, is the key in controlling task environment. The task environment also implies constant testing and inspection, which would certify the quality of production. In its turn, it is the sign of higher quality and excellence of manufacturing process.

Summary of External Factors

While focusing on threats and opportunities, which are encountered by Under Armour, it becomes evident that the company deals with the high risk of substitute product, rigid competition, and the ongoing need for integrating diversification strategy. The industry demonstrates its numerous advantages, which are notable through the diverse activities the company is involved in. In case the company focuses on changes and copes with the gaps, it can be doomed to prosperity and growth regardless of a highly competitive environment. There is a range of factors contributing to the company’s success, such as authentic brand, space for growth, international partnership, narrow-focused marketing, and company’s integration. Despite the fact that the industry is currently facing serious threats, the external analysis provides favorable outcomes for further development.

Internal Environment

Corporate Structure

The corporate structure and organizational hierarchy is focused on the activities and arrangements which are concluded by the Board of Directors. The Board is elected by the shareholders, which decide what position each manager should take. The Board of Directors chooses the Chief Executive Officers, as well as other team members of the company, which are imposed with the responsibilities of performing business activities. The major function of the Board is confined to arranging and enhancing the quality and accountability standards, which promote executive control and monitoring of the duties and responsibilities supporting the interests and concerns of all stakeholders involved. The selection initiative should be considered with the identified function, paying attention to the major responsibilities of the Board of Directors. Specifically, the latter should evaluate the performance of the UA and the quality of executive management, which relies on the assessment of the Company’s business performance. Moreover, it evaluates the efficiency of management through regular meetings of Directors who discuss peculiarities of regular planning and evaluation, and form the analysis of specific professional decisions. Furthermore, the company is committed to reviewing Under Armour’s strategic goals and objectives, engaging the principal risk exposures of the organization. It should also provide and guide the work of the Chief Executive Officer by evaluating its competence and overall performance. Finally, the task of the Board of Directors is to assist management in controlling the compliance of the company in regard to laws, regulations, and ethical codes.

Corporate Culture

The company is oriented on professional athletes, but it does not exclude the clients who prefer wearing professional clothes and footwear of the highest quality. From the very beginning, football was the only sport which provided the successful start for the Under Armour. It did not only dominate the UA products development, but has also been perpetuated in its culture. As an example, employees were called ‘teammates’ which contributed to the company’s collaboration and integrity. Furthermore, the company is working on developing posts on the walls, which can motivate workers to be more enthusiastic and creative regarding highly innovative and authentic ideas. The CEO Plank and Marion has established an aggressive strategy for the organization by ignoring other competitors and introducing its exclusive and non-comparable product lines. In addition, the company’s director of women’s sports apparel and clothes was concerned with the economic and political environment which contributes to the current attitude to the sport. The CEO was also striving to educate the sports spirit within the organization by motivating workers to lead an active and healthy lifestyle.

Corporate Resources

Marketing

The report for 2009 delivers the UA’s vision as “The athletic brand of this next generation. And next”. Therefore, the market for sporting gear and apparel advanced the entire population despite the fact that primary users involved were sport-oriented, active, and health-aware clients. Young males created the larger segment of the market, despite of the recent trends focused on upsurge in the older age group segments and females. The company has targeted individuals in the age category from 15 to 25 years old. In 2009, UA produced over 78 % of its entire revenues due to its distribution operations in the United States. The company relied heavily on two major retailers, namely The Sports Authority and Dick’s Sporting Goods, which reached for over 30% of company’s entire wholesale distribution. In addition to these retails, the Under Armour promoted its product to such stores as Academy Sports and Modell’s Sporting Goods. The company’s distribution channels also involve specialty retails, leagues and teams, and institutional athletic departments, along with the company-owned stores and a website for sale.

Finance

Under Armour has determined itself as one of the most powerful producers in the sphere of sport apparel in North America. The entire performance of the company for the recent period demonstrates a net revenue advance of almost 25 % for the period from 2011 to 2012, which equals to 362 million. The constant growth of the company shows the righteous activities and strategies introduced by the managers who are aware of the potential gaps and weaknesses of the industry.

Operations

The company has outsourced all of its production to conclude agreements with manufacturers in Latin America and Asia. In 2009, 22 producers operating in 17 countries have launched the company’s products. The group from UA assessed potential candidates for manufacturing in terms of social compliance, quality, and financial strength before creating the team. The teams in Guangzhou, China, and Hong Kong provided monitoring and supported company’s activities for producing footwear and apparel. The producers provided materials, such as the relevant canvas and fabrics and delivered the final products to the company’s distribution premises. The manufacturing agreements were short-term in the majority of cases, ensuring multiple producers for a specific project. Moreover, Under Armour controlled a small operating facility in Glen Burnie, in Maryland, which was called Special Make-Up Shop with the 17,000 square-foot facility producing apparel products for the company’s professional teams, high profile athletes, and leagues. The major goal of these activities was confined to delivering high quality services to the regular and long-term customers. The company also evaluated the cost of operating activities as a marketing expense.

Human Resources

In the end of 2010, the company employed approximately 3,000 people. Half of them worked for the company’s production facility, including Special Make-Up Shop and different company-owned shops. At the same time, the other half worked as company’s distributors, who should deliver products to the subsidiaries. The point is that the company’s employed individuals were not presented as unionized. The company received 26,000 resumes and only 215 employees were accepted.

There are eight executives, who form the company’s managerial team. The President, CEO, and the Chairman of the Board was Kevin Plank. Wayne Marino guided the Chief Operation Department, and Brad Dickerson was appointed as CEO. The operations of the companies were distributed between two people, namely Stafford and McCarthy. The distribution of responsibilities was done among Sawall, Rogers, and Plank’s brother Scott who headed the UA’s global and domestic business departments, performing the responsibilities of the Executive Vice President. In general, the human resources have introduced a helpful guide for understanding how the internal processes occur and how they could contribute to the overall profitability of the company.

Information Systems

Jody Gile is appointed as CIO and was characterized as a strong and charismatic leader who understands the certain methods, which encourage technology development for reaching business goals. The manager has initiated the deployment of database systems at public-sector and corporate giants where the logo priorities business which pledges technologies (Loveland, 2014). In order to advance and succeed in technological progress, the employees are focused not only on technology, but on the potential gaps which should be solved. The computer science, therefore, should be confined to constant upgrade of information system resulting in business growth and high level of competitiveness.

Summary of Internal Factors

The internal analysis demonstrates that the company has a strong ground and excellent product line and distribution given low product costs, space for further growth, and significant brand recognition. Additionally, the analysis provides factors that influence the company’s activities, such as sustainability, manufacturing, and bigger rival companies, including Adidas and Nike. With regard to the external analysis, the company distinguishes itself from rivals by exploring its activities, growth, and operations with the effective application of resources and the possibility of introducing core competences and unprecedented expertise. Many product lines could be introduced through the analysis of innovation technologies and extreme market development.

Analysis of Strategic Factors

Situational Analysis (SWOT)

Strengths

Unique Technology implies that the company is determined to constantly search for new innovative decisions and develop genuine technological advances.

Brand Recognition supports the ideas of developing unique features of the brand that would attract new customers and make them follow it to save company’s uniqueness and exclusiveness.

Athletes Endorsement suggests that the company invites celebrities for participating in marketing and promoting company’s products, which contributes to the company’s image and reputation.

Product Delivery is the key in spreading and establishing new market segment, which is supplied with diverse and high quality products.

Community Relations prove that the company is involved in establishing partnership with different companies and connecting with the community for meeting their concerns, preferences, and needs via accumulating helpful information about them.

Eco-Friendly Operations constitute the key factors contributing to the strength and success of all activities and operations as the consumers are currently environmentally aware.

Weaknesses

Narrow Line of Footwear – although the company strives to develop new product lines, it still lacks diversity as compared to its competitors, namely Nike and Adidas.

Material Limited – the company lacks materials and resources for manufacturing process. It also lacks suppliers that are ready to cooperate with them.

High Competition – although the company is aimed at delivering uniqueness, sports apparel is manufactured by many other global producers, which are famous all over the world.

No Standout Products – the products are technologically advanced but not recognizable.

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