Under Armor operates in the sports industry dealing in performance sportswear gear designed to keep athletes cool, dry, and light throughout the course of a game, practice, or workout. Based on Under Armour’s announced sales objective and initiatives, which are to broaden the company’s product offerings to men, women, and youth for wear in a widening variety of sports and recreational activities, Targeting additional consumer segments for the
company’s ever-expanding line-up of performance products and Increasing its sales and market share in the athletic footwear segment, the company has been able to build an incredibly powerful and authentic brand in a relatively short time. This coupled with the ever-increasing demand for better sportswear and the increasingly competitive sports industry, Under Armor should be able to build its market share provided they continue with their strategy of aggressively stepping up their competition and being able to sign high profile athletes to market their products.
The porter’s value chain model analyzes some of the company’s internal activities and their relationships with one another. The following aspects of porter’s value chain are evident in the company:
- Inbound logistics where the company has elaborate process of receiving, storing and distributing inputs internally.
- Operation where the company undertakes transformational activities that change their inputs into outputs that are sold to their customers.
- Outbound logistics whereby the company delivers their product and service to customers
- Market and sales that involves the persusion process of clients to purchase from them instead of their competitors.
Under Armour (UA) Company, the originator of performance sports apparel-gear intended to keep athletes light, cool and dry during a match, workout or practice through the application of Porter’s Generic Strategies which are lower cost leadership, differentiation and focus strategies. These strategies made the company have advantages potent enough to win market share from Adidas and Nike. Firstly, the company implements the cost leadership strategy approach of high asset utilization which leads to the advantage of building an authentic and powerful brand within a very short period of time. Through this action, the company enjoys economies of scale and concurrently creates barrier to its major competitors, who are unable to reach the scale required to match the firm’s low costs and prices. However, this strategy has the drawback of lower customer loyalty since price-sensitive customers will switch once lower-priced substitute is available. Additionally, the advantage stem from the company’s competency in being able to maintain the status quo of its low cost.
Secondly, the company applies differentiation strategy by expanding its brand name appeal and narrow product line up into product categories where it had little market presence. It results into the advantage of unique products even though the physical product is the same as the competitors’. The advantage is static, rather than dynamic since purchase is a one-time event. This advantage depends on the firm’s level of competency and when it lacks the capacity for continual innovation, it fails to sustain its competitive position, thus gets overtaken over time.
Lastly, the company uses focus strategy which blends between the above cost leadership and differentiation strategies by offering specialized goods in a niche market. Additionally, the company penetrated markets outside North America. This strategy has the advantage of not facing competitions and substitutes are equally unavailable hence it earns above-average return on its investment. The advantage is not based upon the company’s level of competency due to the limited level of competition.
To enhance profitability of the Under Armor Company, it needs to incorporate both internal and external environmental business factors which include rapid technological advancements, increased mobility, political, social and economic factors.
To enhance profitability of the Under Armor Company, it needs to incorporate both internal and external environmental business factors which include rapid technological advancements, increased mobility, and political, social and economic factors. Manouvering in between the three Porter’s strategies based on market needs would ensure best returns in terms of sales. Technological advancements as an internal factor would ensure the company manufactures fast moving goods to the target group.