Under Armour: SWOT analysis
Under Armour, Inc. is an American company that designs, develops, markets, and distributes a range of apparel and accessories using synthetic microfiber fabrications in the U.S. and internationally. Under Armour was founded in 1996 by Kevin Plank, a then 23-year-old former special teams captain of the University of Maryland football team. Its products for men, women, and youth extend across the sporting goods, outdoor, and active lifestyle markets and come in three fit types: compression (tight-fitting), fitted (athletic cut), and loose (relaxed) for use by professional football, baseball, hockey, and soccer players, as well as athletes. It offers T-shirts, sweats, socks, performance bags, baseball batting gloves, football gloves and cleats, and other related products; and products for use in outdoor activities, such as hunting, fishing, and mountain sports. The Company’s segments include North America, consisting of the United States and Canada; Europe, the Middle East and Africa (EMEA); Asia-Pacific; Latin America, and Connected Fitness. The Company’s products are sold across the world and worn by athletes at all levels, from youth to professional, on playing fields around the globe, as well as by consumers with active lifestyles.
Under Armour is proving its mettle as an apparel warrior. The maker of performance athletic clothing and technology has risen to the top tier of the industry in clothing athletes and active consumers from head to toe. Under Armour is the official footwear supplier of the NFL and MLB and partners with the NBA. Its locker room of athlete endorsers includes top performers in football, basketball, soccer, and baseball. Products, made from its moisture-wicking and heat-dispersing fabrics, keep athletes dry and relatively comfortable during workouts. The company is adding technology to apparel to help customers track their fitness. Under Armour sells online, by catalog, through its own retail and outlet stores, and in more than 25,000 retail stores worldwide.
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This SWOT analysis shows Under Armour’s strengths, weaknesses, opportunities, and threats. The SWOT analysis will give you a clear picture of the business environment Under Armour is operating in at the present time.
Innovation – With ever increasing innovation in the sporting goods market Under Armour has built its way up to the front of the pack. High tech materials that regulate body temperature and wick away moisture from your skin are the backbone of Under Armour’s offerings. However, in more recent years they have expanded with new footwear offerings that reflect this same innovation, lightweight and durable materials that help athletes perform their best in all conditions. They’ve also started offering cold weather gear that can handle the most extreme conditions whether they are wet or cold.
Expansion – The expansion plans of the company across many sports will help it increase its revenues and profits while helping it to strengthen its base. The company is expanding to other sports, it has huge potential to expand since it’s a new company.
Business Acquisitions – The business acquisitions made by Under Armour are highly strategic and focuses on helping the brand to diversify its risks across verticals.
Limited Presence – UA is a relatively new company with limited stores and presence in few markets. The company has yet to establish itself around the world. Over 90% of its 2013 revenues came from North America. Under Armour also doesn’t manufacture its own products. This leaves the company vulnerable to disruptions in its supply chain that may or may not be under its control. It also lacks a personal fitness device like the NIKE FuelBand.
High Prices – The very high prices it sells its products for be one of its weaknesses since the market it targets to sell its product is highly niche. This is highly risky on the long run.
Outsourcing – The next weakness is that manufacturing processes are outsourced. This leaves Under Armour susceptible to disruptions in their supply chain and some of their innovative materials may be vulnerable to the competition. While it’s hard to know the reliability of UA’s material providers and manufacturers it leaves an element up for debate in Under Armour’s current strategy.
Growth of the Sporting Goods Market – Under Armour is expanding very rapidly, in 2016 they showed they are committed to long-term growth and have continued investing in footwear, women’s apparel, fitness technology, geographical expansion and direct to consumer sales. All of these avenues are great opportunities for UA. These business moves solidify they are a key player in the sporting goods industry and are destined to continue to grow. With trends in sporting goods and fitness trackers growing UA is positioned to have a growing market segment in the next few years along with a greater global market.
More Markets – While the brand’s competitors are struggling with their business strategies across the various regions of the world, Under Armour may use their experience to penetrate into these markets with more comfort level learning lessons from the competitors. Relatively a Company that is formed recently, it has huge scope to establish its presence in more markets like Europe, Australia and Asia.
Footwear – Under Armour’s share of the footwear market is fairly small, likely still in the low single-digits. That’s a good thing, though, since it means that the company has a huge opportunity in this competitive sector. And we expect big strides to be made in the years ahead (sales growth of 30% a year seems reasonable), which should help Under Armour gain ground in key international geographies and underpenetrated sports realms, such as golf, tennis, basketball, and soccer. (Thus far, most of the footwear gains have been in the running space.)
Strong Competition – Substitute products are a threat to Under Armour as Nike, Adidas, Reebok and other competing brands are all fighting for market shares. A competitor with similar product offerings, prices, and technology poses a great threat to UA’s sales and revenues. This directly ties into an increase in competition and rivalry within the sporting goods market. As the market grows and more people are interested in sporting goods competition is going to ramp up as well. UA cannot rest on its laurels at this point, neither can the king of the market, Nike. Even big companies must continue to innovate and compete in order to sustain growth.
Low Brand Awareness – Under Armour is relatively a young company and so the brand awareness in the society is very low. This acts as a detrimental point to the brand since its sales and revenue from the same may get affected. Under Armor must work hard towards investing in branding activities to overcome this threat.
Government’s notice – US Government’s notice issued about the durability of the brand and the high probability levels for its product giving up while usage is a detrimental problem to the brand. This may cause ambiguity in the user’s mind regarding the safety levels Under Armour brand products offer. This is expected to have a huge negative impact on the brand pulling down its credibility levels as well as revenue and profit margins
- Under Armour Inc. Profile [http://www.reuters.com/finance/stocks/companyProfile?symbol=UA]
- Under Armour Wikipedia [https://en.wikipedia.org/wiki/Under_Armour]
- Company Overview of Under Armour, Inc. [https://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapId=8740684]
- Under Armour Inc. Overview [http://www.vault.com/company-profiles/general-consumer-products/under-armour,-inc/company-overview.aspx]