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+ER. Stephanie Light, Dana Cook, Austin Bastian, Philip Winfield, Tyler Bushman Jordan Jones, Ian Walraven , Bryson Bell. UNDER ARMOUR. History of Under Armour. Founded in 1996 by Kevin Plank Former Maryland football player Originated what we know as performance apparel

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slide1

+ER

Stephanie Light, Dana Cook, Austin Bastian, Philip Winfield, Tyler Bushman

Jordan Jones, Ian Walraven, Bryson Bell

history of under armour
History of Under Armour
  • Founded in 1996 by Kevin Plank
    • Former Maryland football player
  • Originated what we know as performance apparel
    • The superior shirt was designed to keep perspiration off your skin
    • Works to regulate body temperature and enhance performance
  • Mission: to make all athletes better through passion, science, and the relentless pursuit of innovation
industry environment
Industry Environment
  • Economic environment
    • Sporting apparel industry has suffered less than other industry’s through the most recent recession
    • Sales of equipment, apparel, and footwear is only down 4%
    • This is due to the growing popularity of exercise and fitness
industry environment1
Industry Environment
  • Political characteristics
    • The industry has been under scrutiny for sweat shops and violation of labor laws
    • NIKE is the most well known case
  • Demographic characteristics
    • Aging population has realized the importance of staying fit
    • More and more women are working out
      • Due to American culture that is obsessed with fitness
driving forces for change
Driving Forces for change
  • Going global
    • Under armour relies heavily on overseas manufacturing but only 5% of their sales are international
    • Adidas is wanting to use the 2010 World cup to help generate sales
    • Nike is stepping up their footwear market across China
    • All firms realize the importance of having a global presence
driving forces for change1
Driving Forces For Change
  • Marketing Efforts
    • Becoming more popular within the industry to have interactive websites and get consumers involved in the decision making process
      • Ex. NIKE Plus, NikeID
      • Ex. Adidas Originals Website
      • Ex. Under Armour “boom boom tap” that leads to exclusive women’s website
evaluating strength of competitive forces
Evaluating Strength of Competitive Forces
  • Top Competitors:
  • 1.) Nike
    • #1 shoemaker in the world
    • Sells athletic apparel and equipment along with Cole Haan dress and casual shoes
    • Owns a variety of stores
    • Nike acquired soccer star Umbro in 2008
top competitors cont d
Top Competitors (cont’d)
  • 2.) Adidas
    • #2 maker of sporting goods worldwide
    • They have deals with a variety of sports
    • Had sponsorship rights to the Beijing Olympics in 2008
    • Purchased Reebok in 2006
    • Signed an 11 year agreement with the NBA and WNBA
    • They are currently trying to strength their brand in western European markets
top competitors cont d1
Top Competitors (cont’d)
  • 3.) Columbia Sportswear
    • One of the world’s largest outerwear makers
    • Includes a variety of brand names
    • They licensed their name to RC pet products in 2007
    • About 40% of sales are outside of US, which is why they focus on worldwide expansion
    • They are looking to expand more on their footwear line
strategic issues
Strategic Issues
  • Under Armour’s strategies are:
  • 1.) Expanding their product line
    • Footwear and innovation
  • 2.) To continue the growth of the company
    • Since 2006, UA has been signing distribution agreements to increase their international expansion
    • Since Dec. 31 2009, their products are sold in 20,000 retail stores worldwide
porter s f ive forces
Porter’s five forces
  • Threat of substitute products or services
    • Compression t-shirt
    • UA claims 79% of market for compression sports apparel
      • Nike
      • Adidas
      • Columbia Sportswear
        • Omni-Tech
        • Omni-Dry
porter s five forces
Porter’s five forces
  • Threat of entry of new competitors
    • Help of customers/supporters (Roger Clemens/Jerry Rice)
  • Five year growth rate is increasing 40% above the industry average
porter s five forces1
Porter’s five forces
  • Intensity of competitive rivalry
    • UA
      • HEATGEAR®, COLDGEAR®, and ALLSEASONGEAR®
      • Protect this House
    • Columbia
      • Omni-core technologies
    • Adidas
      • Clima365 and TechFit
      • Impossible is Nothing
    • Nike
      • Dri-Fit and Pro Combat
      • Just Do It
porter s five forces2
Porter’s five forces
  • Bargaining power of customers
    • Companies compete with each other using price ranges
  • Bargaining power of suppliers
    • UA has 22 manufacturers in 17 countries
      • No long term contracts
      • Distributors: 31% sales go to Dick’s and Sports Authority
    • Nike has independent manufacturers in 34 countries
      • 16% of sales occur in Sojitz America (Trading Company)
key success factors
Key Success Factors
  • Innovation of material
  • Brand Equity
  • Quality Products
  • Marketing Strategies
    • Team/School sponsorships, commercials, Olympics, etc.
  • Brand Control and Expansion
    • Current and future markets
slide17
SWOT
  • Strengths
    • Innovation
    • Brand name/logo
    • Brand equity
      • Growth
    • Marketing
      • Sponsorships/Promotions
slide18
SWOT
  • Weaknesses
    • Pricing
      • Expensive
    • Narrow Focus
    • Advertising
      • Sometimes to intense
slide19
SWOT
  • Opportunities
    • Emphasis on a variety of sports
      • Not just football
    • Marketing
      • More sponsorships - colleges, soccer, etc…
    • Lowered pricing
slide20
SWOT
  • Threats
    • Economic recession
    • Competition
    • Highly dependent
    • Pricing on raw materials
current strategy evaluation
Current Strategy Evaluation
  • People, Product, Drive
  • “Our people are smart, innovative, and frankly, not sure of what they cannot accomplish”
  • 5 key growth factors
    • Men’s Apparel
    • Women\'s Apparel
    • Footwear
    • International
    • Direct-to-Customer
current strategy evaluation1
Current Strategy Evaluation
  • Some important accounting/financial data
    • Revenues=$856,411(thousands), increase of 18% from 2008.
    • Gross profit=$413,025(thousands), increase by a comparable rate of 16%.
    • EPS=$0.094
    • Diluted EPS=$0.92(Class B convertible stock)
    • Cash and cash equivalents make up nearly half of the company’s current assets.
    • Cash on hand at year end=$187,297(thousands)
current strategy evaluation2
Current Strategy Evaluation
  • Financial Ratio Analysis
    • Quick ratio=2.49
    • ROA= 8.5% (not very good)
    • ROE=12%
    • PE ratio= 34.30
      • Suggests that investors can expect higher earnings growth in the future.
  • All of UA’s ratios show that there has been an increase in profitability and financial health for UA.
ua s relative cost position
UA’s Relative Cost Position
  • UA has never had a low-cost market strategy.
  • Factors that influence UA’s cost position
    • Seasonality
    • Source of manufacturing
    • Competition
    • Distribution/inventory management
relative competitive strengths
Relative Competitive Strengths
  • Brand recognition
  • Founder
strengths
Strengths
  • Passion
  • Pay cut
under armour s options
Under Armour’s Options
  • Broaden Their Brand
  • Debt Management
  • Costs
broadening their brand
Broadening Their Brand
  • Women’s Apparel
  • Children’s Apparel
  • Footwear
  • International Sales
debt management
Debt Management
  • Credit Agreement
  • Focus on Liquidity
costs
Costs
  • Ability to lower prices
  • Cutting Costs to Produce
conclusion
Conclusion
  • Heavily saturated industry, yet UA continues to expand rapidly
  • Top 3 Competitors:
    • Nike
    • Adidas
    • Reebok
key success factors1
Key Success Factors
  • Innovation
  • Brand Equity and Image
  • Marketing Strategies
  • Industry Attractiveness
building a sustainable competitive advantage
Building a Sustainable Competitive Advantage
  • Focus on their strengths and improve their weaknesses
  • Use opportunities in their industry to expand their brand
  • Create a strategy with both innovation and low prices
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