UA Strategic Plan |1

Under Armour
Student Name BUSN 620

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Overview Under Armour is a worldwide distributor of athletic apparel, footwear and accessories. The company got its start when a young University of Maryland football player got tired of constantly changing sweat-soaked shirts between practices. Since then, the now CEO of Under Armour, Kevin Plank, has taken the company that started with a single product engineered out of synthetic fibers and transformed it into a global competitor in the market place. Under Armour is a rapidly growing business reporting annual revenue of $1.83 billion at the end of 2012, up from their $856.41 million published at the end of 2009 ("Under Armour, Inc," 2012). This is a far cry from the early days of the company in

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1996 when UA was lucky to generate a meager $17,000 in sales. Since UAs entry into the market, they have made serious progress to establish themselves as a successful business and a real competitor to other companies within the market such as the athletic giant, Nike. Today, Under Armours inventory has expanded from the original compression tshirt to a product line including a full line of athletic shirts and shorts, to footwear, jackets, bags, cold weather garments, and more. Kevin Planks products are sold in nearly every athletic apparel story across the United States and in many international market places. Additionally, UA has secured its place in the professional arena by becoming the official footwear supplier of the NFL and MLB and partners with the NBA ("Yahoo finance," 2013). This company has successfully claimed a prominent place in the market and has shown no signs of slowing their expansion and determination to achieve business success. History As mentioned earlier, the concept that sparked the Under Armour Company was based upon a problem involving consistently soaked shirts from sweat. Kevin Plank was determined to find an easier way for him, and fellow athletes, to push themselves physically without having to tolerate wet, hot, and uncomfortable under garments. After

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researching the benefits of synthetic materials and their applications, he developed a tshirt he named #0037 ("Under Armour, Inc," 2013). The innovative shirt helped keep athletes cool and dry even on the hottest of days. This product quickly became popular with athletes serving as the first test for the emerging business. UA continued to conduct business on a relatively small scale until his advertising strategy caught traction. In 1999, Under Armour partnered up with the movie industry providing apparel to the cast of Any Given Sunday. In the movie, Mr. Planks products were worn during iconic scenes in the movie, inspiring UA to expand their advertising to ESPN magazine. For the small growing business at the time, this move was risky but paid off in the end by spreading the word of Under Armour products and boosting sales by $750,000 ("Under Armour, Inc," 2013). Between 2002 and 2004, UA opened product lines dedicated to women, children, and golfers. These strategic moves positioned Under Armour to make a serious business move. In 2005, the company went public, thrusting the company into an entirely new level of business operations. In the years to follow, UA set its sights on developing products to provide for the elite from head to toe. The company publicly outfitted athletic greats such as Ray Lewis, Georges St-Pierre, and even Michael Phelps. To further the success of the firm, Under Armour opened a European Headquarters, extending the companies reach. By the end of 2010, UA broke the $1 billion market on their yearly revenue.

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Presently, UA continues their success by expanding and remaining true to athletes. Kevin Planks dedication to improving products to help competi tors excel has served as the foundation for how the company operates on a daily basis. Mission Statement To make all athletes better through passion, design and the relentless pursuit of innovation ("Under Armour, Inc," 2013). UA publicly advertises their company mission and it has served them well. Providing broad guidance, to keep their employees motivated and innovative to address the needs of the athlete: from the elite professional to the average everyday active person. Corporate Values Under Armour sports a thorough Code of Conduct, realizing the success and reputation of a business lies in the hands of each and every one of the companys employees. The company goes so far as to outline a Code of Conduct for their suppliers and subcontractors, refusing to do business with outside parties that do not comply with the firms values. Business Objectives Although it is difficult to find a well defined formal business objective published for the masses, there are general directions the company is heading. In an article from 2011, Kevin Plank revealed the goal for the company is to break the $2 billion market for annual revenue. After a successful year in 2012, where Under Armour produced an

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annual revenue of $1.83 billion, the company is well on its way to achieving that milestone. All throughout the internet and from interviews with Kevin Plank, its obvious UA has its sights set on Nike. Nike is one of the most well-known athletic apparel companies in the world and one of the main competitors for Under Armour. Its no secret Mr. Plank wants to be on the same level as Nike. This is a lofty goal considering Nikes annual revenue is over 12 times that of UA, reportedly topping out at approximately $24 billion (Burke, 2013).

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SWOT Analysis

Strengths
Customer loyalty Brand equity Innovation High quality apparel Consistent improvement of sales (Annual reports show consistent growth from year to year) Wide range of apparel Athlete and team sponsorships and endorsements

Weaknesses
Small company compared to Nike and Adidas Heavily dependent on domestic market; small international presence High prices Loss of military market (UA products are not fire retardant) Advertising and marketing Target male audience more so than a female audience

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Opportunities
Economic recovery Consumer focus on quality (not price) Lower prices of products Patent and license UA products and technology Consumers becoming more health conscious Sport participation is a key aspect of US Culture Diversify: branch outside of sporting apparel

Threats
Intense competition (Nike, Adidas, etc) Male dominant focus Obesity rates in the US Substitute products within the market Increased cost of raw materials Inability to properly manage rapid growth rate

Key Strategies Moving forward, Under Armour wants to be on a level playing field with big companies like Nike and Adidas. In order to do this, UA needs to expand and gain control of the market. There are many different avenues and opportunities available to Mr. Plank and his team to gain ground against UAs competitors. The most obvious key to long term success is expansion. According to an investor day presentation given by UA reps, the company currently expects to expand from 114 stores to 141("Investor day 2013," 2013). This strategic move will nearly double the square footage of Under Armour stores; with each store averaging 7,700 square feet per store. This will increase the ability of Under Armour to sell directly to the customer and bypass distributors like Dicks or Sports Authority.

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UA admitted in their 2012 Annual Report that expanding too rapidly can cause more harm than good. For this reason, it is critical for Under Armour leadership to ensure the company has a solid foundation in their management, processes, and suppliers to support rapid growth. Since UAs induction to the present day, the company has done a good job managing the rapid growth and success. However, if the company truly wants to break $4 billion in revenue in 2016, which they stated during their last Investor Day conference, management needs to take the proper steps now to ensure all the logistics are accounted for. The projected $4 billion is vastly less than UAs main competitor Nike; however, Nike has already solved the problem of sustaining such a large operation. Under Armour on the other hand, has yet to implement processes to adequately manage an organization of that caliber. Another key strategy which will significantly aid in the overarching objective of expansion is for UA to further diversify their product line. There are many opportunities within the market for Under Armour to attract new customers and gain their loyalty and business. For example, UA is primarily focused towards a fit male target audience with a drastically smaller percentage of their inventory dedicated to women and children. Placing additional emphasis on product lines for a non-adult target group could prove beneficial to the company. Major Goals The strategy goal of Under Armour is to grow to a level that can produce an annual revenue larger than Nike and all other competitors within the industry. In order to accomplish this, it requires UA to expand and continue their upward trend of success.

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The major goal, and overall focus of the company, should be to solidify all of the logistics and external factors involved with Under Armour operations. Those external factors include, but are not limited to, securing suppliers so UA can continue to stock their shelves on a larger scale, hiring and developing more employees to manager operations, working with the international community to ease entry into new markets, etc. It may be easy for a firm to build more stores and produce additional items, but what is not as simple is creating a process and establishing contracts and relationships to sustain the surge in operations. The development of this sustainable process could be one of the most challenging aspects of Under Armours growth and success into the future. Once Under Armour can guarantee all the aspects to support continued growth, only then can management divert their focus elsewhere. Management can then look to diversify the company, possibly expanding to a product line outside the realm of sports. The diversification of Under Armour could be an excellent source of revenue and a chance to earn the loyalty of a new kind of consumer. Regarding a tentative time line for these major goals, the key to success will be having patience and staying on track. To the aspect of securing logistics for large scale operations, there is no defined timeframe; it will be an ongoing process requiring continual evaluation. In a market where business can be done real-time from across the world and partners can interact on a daily basis from afar when business decisions need to be made quickly. To ensure the logistics of the company are stable and always

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available, UA leadership needs to take a proactive stance to managing the relationship and contracts with all parties involved. At this point in time, the decision point for diversifying the Under Armour inventory has passed until after 2016. From the Investor Day presentation, Under Armour has a plan to get them to 2016 and continue their success to achieve the $4 billion revenue goal. Because the company most likely has a detailed plan of attack, it is best to not deviate, but rather include diversification in the plan post 2016. The other benefit to waiting to implement a plan of branching out is the additional time provided to map a detailed plan and gauge how that plan will affect future operations. All of this will be for not if Under Armour loses sight of their mission. Innovation and design are two defining aspects to the UA business. Fortunately, evidence from an article posted on dvice.com shows the company is holding true to their promise of dedication to athletes. Linked to the article is a commercial showing a vision of incorporating technology into an interactive suit, which for UA is not as far-fetched as many would believe (Strange, 2013).

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Strategic Actions What is important to take into account is Under Armour already has a plan of action to carry them through to 2016. As briefed during their Investor Day, Under Armour has already laid out where they anticipate to make their revenue. See the graphics below to gain a better grasp on where UA expects to make their money. In the graphical depictions from UAs Investor Day 2013 below, it is easy to notice the additional revenue UA anticipates to bring in from womens apparel, youth apparel, footwear and accessories. Although mens apparel will remain the prominent avenue for profit for UA, it is important to note through 2016, UA will be spreading the focus of the products to place an increased focus on product lines outside that of mens apparel.

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Furthermore, to address strategic actions already in place, UA has recently launched a new marketing campaign. The I Will slogan and campaign has cost Under Armour, however, the new marketing approach is expected to draw in additional crowds

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and revenue for the company. Leadership is confident this strategic move will aid in helping the company reach the $4 billion in revenue by 2016 goal. Under Armour has also just recently adopted a new product line to add to their inventory. The new product is the Alter Ego line, a rather simple concept, but it has already had huge success. According to a recent article in The Baltimore Sun, the manufacturer found it had tapped into a new market, selling out of the limited -edition shirts within hours (Korman, 2013). The line is merely UAs common compression tshirt with superhero logos on them, using the success of all of the recently released superhero movies to spring board the companys sales.

Beyond 2016, Under Armour needs to continue their growth rate and not stumble if they are to catch up with a giant like Nike. This will involve UA securing the necessary level of support from their suppliers. Once the company can confirm their raw materials will be available to them to support growth in operations, the company can press forward.

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In order to accomplish this, UA should conduct a thorough review of the suppliers stability and product quality. These quality assurance reviews should occur annually at the very least. Additionally, Under Armour needs to review the standards of the suppliers as outlined in UAs code of conduct. These reviews should be executed as outlined in the companys regulations. The regulation states the inspections will be carried out by a independent third party to verify the supplier is in accordance with all application legislation and adhering to UAs code of conduct. On the other hand, the last thing UAs needs is a case of unethical behavior on part of their supplier to ruin the good name UA has worked so hard for ever since 1996. Secondly, Under Armour must develop their management staff to oversee the growth of the company and supervise the influx of new employees that will inevitably occur to facilitate the expansion. A trustworthy and competent staff is essential to the success of a business and the foundation of that staff comes from effective leadership and training. Upper management must handpick the right people to put in positions of responsibility to ensure this training program is established and the company stacks the odds in its favor to maximize sales. Once the organization is confident in their selected team of supervisors, the company can take the steps of expanding globally. Under Armour should, by this time, have the appropriate funds to purchase facilities to serve as headquarters or stores to conduct operations. The staff will be prepped, the supplies will be available, and as discussed earlier, the marketing will already be underway. The final component is taking the product to the consumer and building a relationship to earn their loyalty.

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The global market can be an unforgiving environment, but Under Armour has already taken the steps to succeed in the market. Under Armour has supplied and been the official sponsor for many collegiate teams as well as teams at the professional level. This form of advertising is extremely effective and universal: serving as a stepping stone for earning a larger portion of the global market and simultaneously gaining ground against the athletic apparel king, Nike. With Under Armours international revenue only accounting for approximately 6% of UAs total revenue from this year, there is a lot of ground to be gained on the global level ("Investor day 2013," 2013). If UA is able to remain on track, the international revenue is slotted to account for nearly 12% of their total revenue by the end of 2016. The finally key task to carry Under Armour to the next level is the further diversification of their products to earn the business of consumers. It is apparent Under Armour is primarily focused on the male athlete but, to the credit of the company, has taken steps to expand their target audience to women and children. Also, UA has introduced some products outside what some could consider as athletic apparel. This trend needs to continue and additional focus should be put on a target market outside that of male athletes. This will help draw in additional revenue for the company. Measurement and Control Measurement and control within UA should carry on as it has in the past. Leadership in the company provides defined goals and direction to their employees and investors who in turn hold the company accountable for meeting those milestones. Take for example, UAs goal to break $4 billion in revenue by 2016. The company,

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undoubtedly, has a clearly mapped path to reaching this goal. The responsibility falls on all involved with the company to ensure the company reaches those goals on time. Under Armour has had great success in the past accomplishing this task and there is little doubt they will have trouble keeping in suit as they progress into the future. Conclusion Under Armour began as a single person, Kevin Plank, working in his grandmothers basement selling a moisture wicking shirt to athletes to help keep them cool during games and practice. Since Under Armour went public in 2005, the company has seen steady growth. Sales have increased from $17,000 in the first year to over $2.2 billion expected at the end of this year and have published a set of goals to earn over $4 billion in revenues by 2016. It is within the realm of reality for Under Armour to achieve their $4 billion milestone but the overarching business goal of Under Armour is to dethrone Nike as the largest athletic apparel company in the market. This will require UA take the appropriate strategic actions. First, UA needs to ensure their suppliers are able to guarantee the raw materials will be available to facilitate the companys growth. Secondly, Under Armours executive teams must properly prepare their management staff and posture them for rapid and global expansion. Finally, Kevin Plank should strive to further diversify the companys product lines with a strong emphasis on women and children. The targeting of new marketing audiences will help bring additional revenue into the company, thus bringing Under Armour closer to the level of Nike and Adidas.

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If Under Armour is able to follow this guidance and meet the milestones and goals already in place, the company will be well on its way to stealing a large percentage of the market from companies like Nike. Kevin Plank need only apply his new marketing campaign I Will to his business strategy and investors can sit back and watch as UA grows into the number one position within the athletic apparel industry.

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References Abhijeet, S. (2010, November 10). Swot analysis of under armour. Retrieved from http://www.managementparadise.com/article/849/swot-analysis-of-under-armour Burke, M. (2013, March 04). Under armour's kevin plank is the billionaire underdog. Retrieved from http://www.forbes.com/sites/monteburke/2013/03/04/under-armourskevin-plank-is-the-billionaire-underdog/ Investor day 2013. (2013). Under armour investor day 2013. Retrieved from http://files.shareholder.com/downloads/UARM/2604259539x0x670156/5C4A6AF752AE-452B-BC3B-D173423CD32E/ID2013_-_Financial_Deck-_EXTERNAL.PDF Korman, C. (2013, July 19). Under armour expands deal with dc comics, re-launches alter ego line. The Baltimore Sun. Retrieved from http://www.baltimoresun.com/business/baltimore-sports-blog/bal-under-armour-alterego-dc-comics,0,4393356.story Reuters. (2013, July). Under Armour Inc (ua). Retrieved from http://www.reuters.com/finance/stocks/companyProfile?symbol=UA Strange, A. (2013, February 13). Under armour shows off interactive running suit of the future. Retrieved from http://www.dvice.com/2013-2-13/under-armour-showsinteractive-running-suit-future Teufel, B. (2011, March 17). Under armour: Internal and swot analysis. Retrieved from http://www.slideshare.net/BrianTeufel/assignment203-under-armour-internal-andswot-analysis-7700298

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Under armour, inc - financial history. (2012, Dec). Retrieved from http://www.uabiz.com/income.cfm Under armour, inc - history. (2013, July). Retrieved from http://www.uabiz.com/company/history.cfm Under armour, inc - our mission. (2013, July). Retrieved from http://www.uabiz.com/company/mission.cfm Under armour (ua) swot analysis. (n.d.). Retrieved from http://www.wikiwealth.com/swot-analysis:ua United States Securities and Exchange Commission, (2012).Under armour, inc. (Form 10-K). Retrieved from website: http://investor.underarmour.com/annuals.cfm Yahoo finance: Under armour, inc. company profile. (2013, July). Retrieved from http://biz.yahoo.com/ic/106/106607.html

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