Share Since its development inthe Porter's Five Forces Model has been a helpful tool used by prospective investors to help analyze the industry in which a certain company operates. UA manufactures and markets cutting-edge clothing, sporting goods and accessories. UA is a relatively young company, having only gone public in It faces the challenge of competing against long-standing industry giants such as Nike and Adidas.
UA manufactures and markets cutting-edge clothing, sporting goods and accessories. UA is a relatively young company, having only gone public in It faces the challenge of competing against long-standing industry giants such as Nike and Adidas.
As such, Under Armour must rely on superior product innovation and unique marketing techniques. Its product development and marketing techniques prove UA has been on the front line of changing competitive dynamics in its industry.
For example, the company has spent substantial money acquiring mobile technology companies such as MyFitnessPal to more effectively engage with athletes and create deeper brand affiliations.
Its ability to innovate and provide increased perceived value to its customers is absolutely necessary for future success due to the intense competition it faces. Competition in the Industry While there are countless numbers of athletic apparel companies that compete with UA in certain market niches, only a few companies have the sheer size and established distribution channels to compete across all the product lines UA offers.
The largest of these competitors are Nike and Adidas. Both of these competitors are older companies with higher total annual sales than UA. While this disparity is enormous, it must also be noted that UA has achieved a significantly higher growth rate in recent years than either of its giant competitors.
Although it does not possess the same diversification of products or the international market penetrationUA has been successful in nearly every industry subsection it has entered.
Potential of New Entrants Into the Industry In general, the barriers to entry for a diversified athletic apparel company are very high. It takes a significant amount of financial and human capital to develop products, manufacture them with quality and affordability, and push products into the appropriate distribution channels.
As of JanuaryUA is the most recent case study of a significant new entrant into the industry, and it has proven it can be successful.
However, achieving the size and market share of a company such as Nike takes years or even decades. It is highly possible for new companies to enter smaller niches of the industry.
For example, a new entrant may find success in marketing an innovative product to one particular sport, such as golf or tennis. UA started by marketing primarily to American football, creating a better base-layer shirt than was available at the time.
It is more likely for certain segments of the industry to be susceptible to new competitors than the entire industry, at least in the near term. Power of Suppliers Suppliers in the athletic apparel industry often sell materials to competing companies.
Larger buyers obtain cheaper prices from these suppliers by ordering larger quantities than smaller companies.
According to our analysis a competitive rivalry within the industry, bargaining power of customers and threat of new entrants are the three key forces which have potential to disrupt Under Armour’s growth story. SWOT Analysis The SWOT analysis provides a clear summary of the strength, weaknesses, threats, and opportunities facing Under Armour. This analysis provides an in-depth combination of the internal and 18 external environment surrounding Under Armour on a company level, and the entire industry. (see Appendix 5 for SWOT . Learn about Under Armour and how it differentiates itself in the competitive athletic apparel industry in light of Porter's Five Forces model.
For example, Nike may be able to buy exponentially more cotton for T-shirts than UA and negotiate a substantially lower price. This may partially explain why UA, in general, tends to have higher-priced products than Nike. But UA has been extremely innovative in the materials it uses by creating various proprietary fabric blends it sources from third parties.
This not only creates product differentiation from the competition, but it also avoids the disadvantage of buying the same materials at lower volume and higher cost than competitors. Power of Customers Customers certainly have a wide range of choices when it comes to buying clothing and accessories for their favorite sports.
In the world of online shopping, customers also have the ability to quickly and easily shop for the lowest price for a similar product. With that in mind, it becomes critical for a company such as UA to create products for which customers are willing to pay a premium over mainstream, price-competitive goods.
Research shows customers also buy based on brand recognition and association. This is why companies such as Nike have famously paid huge amounts of money to sponsor athletes; customers perceive value based on associations.
With this in mind, UA started spending huge dollars to sign some of the best athletes in the world to represent its brand. Threat of Substitute Products Clothing is a staple item that is always in demand. As worldwide interest in sports continues to rise, the demand for athletic clothing and accessories is expected to continue to grow.
For each product, there is always the threat of a more innovative product entering as a substitute.Industry and Competitive Analysis: Under Armour. Courtney Ellis, Travis Tempel, Casey Harvey, Roberto Padilla, Mason Stone, Miguel Medrano, Julio Garcia, Glen Lesley •-UA is a much smaller company compared to competitors, and therefore not as strong knows where it stands with respect to its environment.
Summary of External Analysis After analyzing the threats and opportunities facing Under Armour and the industry, it becomes clear that Under Armour faces a high threat of substitute product, high competitive rivalry, and a pressing need for differentiation.
According to our analysis a competitive rivalry within the industry, bargaining power of customers and threat of new entrants are the three key forces which have potential to disrupt Under Armour’s growth story.
Learn about Under Armour and how it differentiates itself in the competitive athletic apparel industry in light of Porter's Five Forces model. Breaking into an industry with well-established players is never an easy thing, and for Under Armour (NYSE: UA), the challenge of building up its athletic apparel business was especially fierce, given the competitive pressures of facing off with a .
Under Armour’s Case Analysis Introduction Kevin Plank, a then year old former teams captain of the University of Maryland football team, founded Under Armour, Inc. in Under Armour is an American company that offers a variety of sportswear clothing, accessories, and footwear.