The Problem That Under Armour Group Is Facing (Case Study Sample)

Name
Institution
Subject
Date
Under Armour Case Analysis
Introduction
The sports industry is a very lucrative market for new businesses all over the world. People can invest in various sectors of this industry. For this cases study, sportswear is the major area of investment and the paper analyses the ability of Under Armour Sportswear Company to establish itself in a very competitive environment. A Porters five forces analysis and a SWOT analysis for this company will be done to help see how the company can compete and make recommendations to improve its success.
Under Armour sportswear company began in 1996 created by Kevin Plank, who is a former University of Maryland football player. He wanted to come up with sports gear that would help solve the problems players experience during training such as sweating on the cotton T-shirts as well as the pants. The sweat makes the T-shirts dark, uncomfortable for the trainer, and thus unable to exploit their full potential. The company’s growth rate is very phenomenon over the last fifteen years becoming a major competitor to well-established brands such as Nike, Adidas and other major sportswear brands all over the world. It’s not easy for a company to improve market share in a very competitive environment from 0.6 percent to 2.8 percent within a period of about eight years. The statistics take into consideration the fact that the highest percent of market share is by Nike that is about 7 percent.
Problem
Despite the success in the market, there are various challenges that this company faces as it takes steps to conquer the sportswear market. The reliable enterprises that do the same business and have a wider market share around the globe affect the penetration ability of the global market. It limits its ability to provide their products to the customers who are loyal to a different brand. Another challenge the company faces is the operational cost of production of these high-tech where they specialise. AU depends on materials produced from overseas countries such as Taiwan, Peru, Mexico and U.S. the products are synthetic products of petroleum and the manufacturing cost is affected by the crude oil prices. Therefore, the prices of their products are dependent on crude oil prices and hence, able to fluctuate anytime. Fluctuating products do not impress customers, as they tend to make it impossible to trust their supplies.
Porter's five forces for Under Armour
Supplier Power: 
There are many suppliers of sportswear garments all over the world. This aspect causes the prices of the products to be lower that their current set. However, the uniqueness of the product UA offers it control most of its prices with ease. Very few companies produce and sell high-tech sportswear in North America. Therefore, this company has the better bargaining power when it comes to supplying high-tech sportswear all over the world.
Buyer Power: 
The purchasers of sportswear have a significant impact on the prices of the product. They can have the authority to dictate the prices especially if a company depend on few customers that determine its productivity. In this case, however, UA has a wide variety of clients in the North America and they cannot manipulate the prices of the garments.
Competitive Rivalry: 
Competitors are very influential in the development of any business. The ability of any company to thrive in a competitive environment is a sign of productivity and success in taming the market. Very few businesses can thrive in such a competitive environment and it takes right strategies to achieve it. UA is such a company and it has managed to improve its market share over the past 15 years and compete with companies that are about a century old. UA is very competitive and it offers unique products that most of its competitor’s lack, an approach is making it grow the customer base every year since its inception. It’s important to say that it has a competitive power over the existing companies in the market.
Threat of Substitution:
If customers can assess substitute products that can be used instead of the ones a particular company is offering, it’s a threat to the development of the enterprise. UA faces such a threat since some customers prefer to wear the cotton garments to the high-tech garments that are very expensive. The company needs to review their prices to avoid such a situation if they want to have a larger market share. This issue weakens the power of UA to sell its unique products to customers all over the world.
Threat of New Entry:
Entry into this market by new companies is not easy. It’s not a business that one can start will low capital as it requires relatively high investments to initiate the business. Moreover, people are afraid to compete with the already established brands therefore at risk getting into the firm. The UA Company is not a threat because its investment is likely to scare away many investors from starting their businesses.
SWOT analysis
Strength
The company offers unique high-tech sportswear garments for training and produ...