Under Armour

Strategic planning case study

Submitted to: Dr. Wassim Alwan

Presented by: Mohamed Zayed

1. Introduction about the business assigned in the Case Study.

Under Armour is a renowned athletic apparel and sportswear company that has positioned itself
as a major player in the global market. Founded in 1996 by Kevin Plank, the company has gained
recognition for its commitment to innovation and performance-driven products. Under Armour is
dedicated to enhancing athletes' performance by developing technologically advanced sportswear
designed to regulate body temperature, wick away moisture, and provide optimal comfort across
various activities.
Despite being a relatively new entrant in the industry, Under Armour has quickly risen to
prominence, securing a position within the top 10 in both the apparel and footwear sectors. The
brand's appeal products, characterized by their innovative design and functionality, aim to keep
wearers dry and comfortable in diverse conditions. Under Armour's success is not only rooted in
its product excellence but also in strategic partnerships with high-profile athletes, including
basketball stars and soccer athletes such as Kelley O'Hara.
While the majority of its revenues are generated from the US market, Under Armour faces
challenges in the domestic market due to the dominance of industry giant Nike and the influence
of wholesalers. However, with one-third of its revenues coming from international markets and a
keen eye on growth opportunities in the Asia Pacific region, Under Armour remains poised for
further expansion and success in the dynamic and competitive sportswear industry.

linkedin.com/in/zayedmohamed
 2. Evaluate the Vision Statement and propose a new one.
UA vision: to empower athletes globally by providing innovative products
Vision Evaluation
Characteristics Evaluation Comments
Clear  Vision reveals that firm operates in the sports industry.
Vision outlines a broad and overarching goal but doesn't explicitly specify specific
Futuristic  achievements within a five-year period
Concise 
The terms "Empower and innovative" shows that the company differentiates itself by
Unique  offering more than just standard athletic gear
Statement shows that UA is helping individuals reach their full potential and achieve
Inspiring  success.

Proposed new vision: Fueling greatness worldwide through innovation and empowerment.
Under Armour: where every athlete rises
3. Evaluate the Mission Statement and Propose a new one the is consistent with what discussed
in class.
UA mission: to enhance athletes’ performance through exemplary design and relentless
pursuit of innovation.

Pillar Evaluation My Comment

The mention of "athletes" clearly identifies the target audience for Under Armour's
Customers  products and services.
Products  Statement revolves around creating and providing athletes products.
statement does not explicitly specify markets in terms of demographics or geographical
Markets  locations, however the context implies a dedication to serving customers within the sports
industry.
Technology  The mention of "relentless pursuit of innovation" implies focus on latest technology.
Survival,
Statement doesn't explicitly mention any, however the term "pursuit of innovation" may
growth, and  refer to UA's commitment to growth.
profitability
Statement reveals a philosophy that revolves around two key principles: exemplary design
Philosophy  and relentless pursuit of innovation.
Distinctive Statement reveals that research, development, and technology utilization is their
competence  distinctive competence.
Public image
(Social
it is not explicitly articulated. Although social responsibility and environmental
responsibility  sustainability have become increasingly important considerations for many businesses.
and
Environment)
Employees  It doesn't explicitly mention a commitment to employees.

linkedin.com/in/zayedmohamed
 Proposed new mission: Empowering athletes globally through cutting-edge innovation, Under
Armour is dedicated to delivering top-quality products in diverse markets. Our mission
prioritizes sustainable growth, driven by a philosophy of exemplary design and relentless
innovation. Rooted in a commitment to social responsibility and environmental stewardship,
we value our employees, aiming to be the brand of choice for those who seek excellence in
both performance and corporate responsibility

4. What are the firm’s most important external opportunities and threats?
UA EFE as follow:
Weighted
Key External Factors Weights Rating
Score
Opportunities
Industry is projected to reach $231.7 billion by 2024, Asia-Pacific
region is expected to be fastest growing region. The trend in 10% 2 0.2
performance products is increasingly global
Raising eCommerce and digital business 9% 2 0.18
Footwear industry is growing at about 10 % annually, shoe store
industry in the US generates over $15 billion in revenue annually
10% 2 0.2
with growth around 3 % expected through 2022. Foot Locker and
Nike accounting for 32 and 18% of sales
Yoga pants and activewear category is growing faster (Lululemon) 10% 3 0.3
Emerging markets such as India and Thailand are growing fastest 9% 3 0.27
Threats

Brand Polygamist, decrease in brand loyalty over the last decade,

Customers are now purchasing increasingly on price or extra 10% 3 0.3
product features, consumers can switch brands easily
Lululemon, Fabletics, and Gap apparel for women are seen as
13% 4 0.52
more fashionable
Nike is providing customized shoes, 1,000 designers 12% 3 0.36
UA growth is largely dependent on sales from Dick’s and Foot
10% 2 0.2
Locker, 65% of revenues
Patent disputes and conflicts 7% 2 0.14
Totals 100% 2.67

2.67 is (>2.5), it means this external environment is favorable to work for.

linkedin.com/in/zayedmohamed
 5. What are the organization’s major strengths and weaknesses?
UA IFE as follow:
Weighted
Key internal factors Weights Rating
Score
Strengths
Strong brand value, different geographical HQs 10% 4 0.4
Strong financial position 4% 3 0.12
Strong marketing capabilities 7% 3 0.21
Innovative performance products – strong R&D 6% 3 0.18
High sales of UA’s men’s training, women’s Armour Bra categories 8% 2 0.16
Asia-Pacific is the strongest international segment 8% 3 0.24
Direct sales, 31 % of revenue 10% 3 0.3
Weaknesses
High operating expenses compared to COGS (70% in 2016, 80% in 2017) 10% 3 0.3
Functional organization hierarchy while financially reporting divisional, 3
executives resigned after Q3 2017 results, in 2017,
Chief Product Officer was on vacation 6% 3 0.18
New COO coming from shoe retailer
Discrimination issues, all 11 top executives are male 4% 3 0.12
No control over Wholesale channels 10% 3 0.3
Seasonality: UA generates a large portion of its revenue during Q3 and
Q4 (football season, fall, winter) 7% 3 0.21
Low market share Vs Nike & Adidas 5% 3 0.15
Most sponsores from US, US football 5% 3 0.15
Totals 100% 3.02

2.67 is (>2.5), it means this internal environment is favorable to work for

linkedin.com/in/zayedmohamed
 6. How would you describe the organization’s financial condition?

2016 2017
Sales Revenues 4,825,335 4,976,553 3%
COGS 2,584,724 2,737,830 6%
Gross Profit 2,240,611 2,238,723 0%
Operating Expenses (Selling,
1,823,140 2,210,880 21%
admin expenses, depreciation)
EBIT (Operating Income) 417,471 27,843 -93%
I&T 160,492 76,103
Net Income 256,979 -48,260 -119%
The company experienced a net loss in 2017, indicating financial challenges.
Assets
Cash 250,470 312,483 25%
Accounts Receivable 622,685 609,670 -2%
Inventory 917,491 1,158,548 26%
Other Current Assets 174,507 256,978 47%
Total Current Assets 1,965,153 2,337,679 19%
Property land, building & Equipment 804,211 885,774 10%
Goodwill 563,591 555,674 -1%
Intangibles 64,310 46,995 -27%
Other Long-Term Assets 247,066 180,245 -27%
Total Fixed Assets 1,679,178 1,668,688 -1%
Total Assets 3,644,331 4,006,367 10%
Liabilities
Accounts Payable 409,679 561,108 37%
Other Current Liabilities 276,137 499,267 81%
Accruals
Total Current Liabilities 685,816 1,060,375 55%
Long-Term Debt 790,388 765,046 -3%
Other Long-Term Liabilities 137,227 162,304 18%
Total Liabilities 1,613,431 1,987,725 23%

2016 2017 Evaluation Comments

Liquidity Ratios
Current ratio above 1 suggests
that the company has more
assets than liabilities in the
short term, which is generally
considered a positive indicator
Current Ratio 2.9 2.2 declining
of liquidity and the ability to
cover short-term obligations.
However it has been decreased
which suggesting a potential
decrease in short-term liquidity.
Quick ratio above 1 indicates
that the company has an
acceptable level of liquidity,
Quick Ratio (acid test ratio) 1.5 1.1 declining
However compared to 2016 it
shows High level of liabilities in
2017.

linkedin.com/in/zayedmohamed
Activity Ratios

Inventory turnover 2.8 2.4 declining Company is building inventory

DIO - Days Inventory expected to jump to 180 days
outstanding (Average Age of 130 154.5 declining
this year.
Inventory)
DSO - Days Sales Outstanding 47 45 favorable
(The average collection period)
DPO - Days Payable
Outstanding (the average 58 75 favorable Delays in payments in 2017
payment period)
Total asset turnover 1.3 1.2 declining
Debt ratio 44% 50% declining
Profitability Ratios
Gross Profit Margin 46% 45% declining
Operating Profit Margin 9% 1% declining
Net Profit Margin 5% -1% declining
ROA - Return on total assets 7% -1% declining

Overall, the financial performance shows a mixed picture, with increasing sales but a significant
decline in net income in 2017. Increased operating expenses and a net loss suggest potential
operational challenges that should be carefully addressed. The balance sheet indicates growth in
assets and liabilities, with a slight decrease in long-term debt.

7. What are the firm’s existing strategies and objectives?

All of UA, Nike and adidas depend on product development followed by heavy marketing. UA
mainly focus on producing innovative products to increase performance of athletes to wick
water away from the wearer to keep them as dry and comfortable as possible in any
temperature or type of activity to regulate body temperature. The main UA strategies are:
• UA attempts to drive demand through brand equity.
• Product Innovation and Performance Enhancement.
• Athlete endorsements contracts with NFL, NBA, MLB, Cam Newton, Tom Brady.
• Grassroots level by hosting camps, clinics, and other activities for young athletes.
• Broadcast, print, and social media advertising.

linkedin.com/in/zayedmohamed
 SPACE Matrix

internal strategic position external strategic position

Financial Position (FP) Ratings Stability Position (SP) Ratings
Return on investment (ROI) 1 Technological changes -3
Leverage 3 Rate of inflation -4
Liquidity 3 Demand variability -5
Working capital 2 Price range of competing products -4
Cash flow 2 Barriers to entry into market -3
Inventory turnover 1 Competitive pressure -5
Earnings per share 1 Ease of exit from market -2
Price earnings ratio 1 Risk involved in business -3
(FP) Average 1.75 (SP) Average -3.6

Competitive Position (CP) Ratings Industry Position (IP) Ratings

Market share -3 Growth potential 6
Product quality -2 Profit potential 5
Product life cycle -2 Financial stability 6
Customer loyalty -3 Extent leveraged 3
Capacity utilization -3 Resource utilization 4
Technological know-how -2 Ease of entry into market 3
Control over suppliers and distributors -5 Productivity, capacity utilization 4
(CP) Average -2.9 (IP) Average 4.4

X-Axis = (CP) Average + (IP) Average 1.6

Y-Axis = (FP) Average + (SP) Average -1.9

linkedin.com/in/zayedmohamed
 8. Who are the firm’s competitors, and what are their strategies?
UA CPM as follow:
Competitive Profile Matrix (CPM)

NIKE ADIDAS UA
Critical success factors Weight
Rating score Rating score Rating score
Financial position 15% 4 0.6 2 0.3 1 0.15
Market share 5% 4 0.2 3 0.15 1 0.05
Product quality 10% 4 0.4 4 0.4 3 0.3
Price competitiveness 10% 4 0.4 4 0.4 4 0.4
Customer loyalty 8% 4 0.32 3 0.24 3 0.24
Global expansion 18% 4 0.72 4 0.72 3 0.54
Product diversity 6% 3 0.18 3 0.18 4 0.24
Marketing strategies 12% 3 0.36 3 0.36 2 0.24
E-Commerce 6% 4 0.24 4 0.24 2 0.12
Innovation -R&D 5% 4 0.2 3 0.15 3 0.15
Sustainability 5% 3 0.15 2 0.1 2 0.1
Total 100% 3.77 3.24 2.53
The two rival firms, Nike and Adidas, receive higher ratings than UA on several critical success factors,
such as financial position, Market share and E commerce.

linkedin.com/in/zayedmohamed
 9. What objectives and strategies do you recommend for this organization?

SWOT Analysis
Strengths Weaknesses
Strong brand value, different
S1 geographical HQs
W1 High operating expenses
S2 Strong financial position W2 Organization structure
S3 Strong marketing capabilities W3 Discrimination issues
Innovative performance No control over Wholesale
S4 products – strong R&D
W4 channels
High sales of UA’s men’s
S5 training, women’s Armour Bra W5 Seasonality
categories
Asia-Pacific is the strongest Low market share Vs Nike &
S6 international segment
W6 Adidas
Most sponsors from US, US
S7 W7 football
Opportunity WO Strategies WO Strategies
Industry growth as the trend in (W1, Build factories in Asia-Pacific
(S3, Contract local marketing
O1 performance products is
O1) sponsors from local countries
O1, to reduce costs and minimize
increasingly globally O5) export
Raising eCommerce and digital (S3, Make special discounts when (W7, Contract local marketing
O2 business O2) buying on line O1) sponsors from local countries
(S4, Innovate new technologies for (W6, Do more marketing
O3 Footwear industry is growing O3) footwear O1) campaigns
Yoga pants and activewear (W2,
(S2, Hire top executives from rival
O4 category is growing faster O4)
Acquire Lululemon W3,
firms / Females
(Lululemon) O1)
Build factories in Asia-Pacific to
Emerging markets such as India (S2,
O5 and Thailand are growing fastest O5)
reduce costs and minimize
export
(S2,
O6 Direct sales, 31 % of revenue O6)
Build more UA stores
Threats ST Strategies WT Strategies
Brand Polygamist, decrease in (S3, Lunch Loyalty programs and (W1, Recycling raw material to
T1 brand loyalty T1) develop more online apps T1) gain a competitive advantage
Lululemon, Fabletics, and Gap
(S3,
T2 apparel for women are seen as
T1)
Grassroots marketing
more fashionable
Nike is providing customized (S4, Innovate new technologies for
T3 shoes, 1,000 designers T3) footwear
UA growth is largely dependent on
(S2, Acquire wholesale Distributors (W4, Acquire wholesale
T4 sales from Dick’s and Foot Locker,
T4) - Dick’s T4) Distributors - Dick’s
65% of revenues
(S2, Hire lawyers to solve control
T5 Patent disputes and conflicts
T5) Patent disputes

linkedin.com/in/zayedmohamed
 The Quantitative Strategic Planning Matrix (QSPM)
Strategic Alternatives
Strategy 1 Strategy 2 Strategy 3 Strategy 4 Strategy 5

Forward Horizontal Market Market Product

Integration Integration Penetration Development Development

Weigh Ratin Scor Ratin Scor Ratin Scor Ratin Scor Ratin Scor
Key Factors
t g e g e g e g e g e
Strengths
Strong brand value, different
10% 4 0.4 4 0.4 4 0.4 4 0.4 4 0.4
geographical HQs
Strong financial position 4% 3 0.12 3 0.12 3 0.12 3 0.12 3 0.12
Strong marketing capabilities 7% 4 0.28 4 0.28 4 0.28 4 0.28 4 0.28
Innovative performance products
6% 3 0.18 3 0.18 4 0.24 3 0.18 4 0.24
– strong R&D
High sales of UA’s men’s training,
women’s Armour Bra categories 8% 2 0.16 2 0.16 4 0.32 2 0.16 4 0.32
Asia-Pacific is the strongest
8% 2 0.16 2 0.16 2 0.16 4 0.32 2 0.16
international segment
Direct sales, 31 % of revenue 10% 4 0.4 4 0.4 4 0.4 4 0.4 4 0.4
Weaknesses
High operating expenses 10% 2 0.2 2 0.2 2 0.2 4 0.4 2 0.2
Organization structure 6% 2 0.12 2 0.12 2 0.12 2 0.12 3 0.18
Discrimination issues 4% 2 0.08 2 0.08 2 0.08 2 0.08 3 0.12
No control over Wholesale channels 10% 4 0.4 2 0.2 2 0.2 3 0.3 2 0.2
Seasonality 7% 4 0.28 4 0.28 2 0.14 4 0.28 2 0.14
Low market share Vs Nike & Adidas 5% 4 0.2 4 0.2 3 0.15 4 0.2 4 0.2
Most sponsores from US, US football 5% 2 0.1 2 0.1 4 0.2 4 0.2 2 0.1
Opportunities
Industry growth as the trend in
performance products is increasingly 10% 4 0 4 0 3 0 4 0 3 0
globaly
Raising eCommerce and digital
9% 2 0.18 2 0.18 4 0.36 4 0.36 3 0.27
business
Footwear industry is growing 10% 2 0.2 4 0.4 2 0.2 2 0.2 2 0.2
Yoga pants and activewear category is
10% 2 0.2 4 0.4 2 0.2 2 0.2 2 0.2
growing faster (Lululemon)
Emerging markets such as India and
9% 2 0.18 2 0.18 2 0.18 4 0.36 2 0.18
Thailand are growing fastest
Threats
Brand Polygamist, decrease in brand
10% 3 0.3 3 0.3 3 0.3 3 0.3 3 0.3
loyalty
Lululemon, Fabletics, and Gap apparel
for women are seen as more 13% 2 0.26 2 0.26 3 0.39 3 0.39 4 0.52
fashionable
Nike is providing customized shoes,
12% 2 0.24 2 0.24 3 0.36 3 0.36 4 0.48
1,000 designers
UA growth is largely dependent on
sales from Dick’s and Foot Locker, 10% 4 0.4 2 0.2 2 0.2 2 0.2 2 0.2
65% of revenues
Patent disputes and conflicts 7% 2 0.4 2 0.2 2 0.2 2 0.2 4 0.2
Totals 100% 5.44 5.24 5.40 6.01 5.61

linkedin.com/in/zayedmohamed
 Recommended Strategies
1 Corporate Strategy
Adopt Market developments strategy to harness the rapid growth opportunities in the emerging Asia-Pacific markets.

2 Business Strategy
Implement Differentiation strategy by developing Differentiation opportunities anywhere along the value chain

Goals & Objectives

3 Goals KPIs
Increase Revenue by 15% extra Sales KPI: 5.7b $
Reach 50% digital Digital KPI: 50.0%
Reach 60% the Direct To Customer DTC KPI: 60.0%
More workforce diversity 50% Diversity KPI: 50.0%
Reduce Operating Expenses by 20% Costs KPI: 20.0%

Functional Action Plan

4 Marketing department
Engage local celebrities as marketing sponsors.
Develop e-commerce channels for selling products to customers through UA website and app.
Make special discounts when buying on line
Lunch Loyalty programs and develop more online apps
Develop Grassroots marketing campaigns in international markets
Improve digital marketing by 10% per year.
Increase revenues by 15%
5 Operation department
Outsourcing manufacturing to countries with lower production costs, such as
India or Egypt.
Reduce manufacturing costs and operating expenses
Enforce the Direct to Customer strategy.
Recycling raw material to gain a competitive advantage
Reduce Days Inventory outstanding to 90 days.
6 HR department
Hire top executives from rival firms
Convert to flat organization
Attract, retain, and reward the world’s most innovative people by creating programs to help them thrive.
Accelerate company growth as stewards of culture, organizational effectiveness, talent, and change.
Increase workforce diversity by 10% every year.
7 Finance department
Acquire needed funds to implement strategies.
Drive near-term profitability, strategic investment for long-term growth, and risk management.
Manage investment portfolio, debt and equity instruments, and other growth-enhancing treasury activities.
Reduce Days Sales Outstanding to 30 days
8 Sales department
Continue using the Direct to Customer sales to reach 50%
Maintain relationships with wholesale partners around the world.
Reduce Days inventory Outstanding to 90 days
9 R&D department

linkedin.com/in/zayedmohamed
 Continue to develop new products and innovations to differentiate from rivals.
Innovate new technologies for footwear
Find ways to produce less expensive products than the current products.
Develop new ways to make better-performing products faster and more efficiently.

10. How is your firm unique to the competition? What products and services are different?
Under Armour has built its reputation on a commitment to innovation in athletic performance.
The brand invests significantly in research and development to create technologically
advanced products aimed at enhancing athletes' performance. This includes innovations in
fabric technology, moisture-wicking properties, and other performance-enhancing features.
The brand has ventured into the technology and fitness tracking space with acquisitions like
MapMyFitness, MyFitnessPal, and Endomondo. This move has allowed the brand to offer a
more comprehensive ecosystem that integrates fitness tracking, nutrition, and social
connectivity into the overall athletic experience.

linkedin.com/in/zayedmohamed