4.

0 Industry analysis-5 forces analysis

Power Of
Suppliers

Competition
Power Of
in the
Buyers
industry
Porter 5
Forces

Potential of
Threat Of
new entrants
Substitute
into the
Products
industry

4.1 Bargaining Power of Suppliers

Supplier concentration and availability of alternative suppliers are important factors in

determining supplier strength. This power analyzes how much power and control a company's
suppliers have to raise the price of their products or reduce the quality of the goods or services
they buy, which in turn reduces the profit potential of the industry (Alex 2020). The bargaining
power of Under Armour suppliers is between medium and low. Suppliers influence Under
Armour because it requires a lot of resources and materials to maintain customer satisfaction,
they use multiple suppliers, allowing Under Armour to bargain with suppliers and sign contracts
to get the best deal at the lowest possible price. Under Armour has built an efficient multi-
supplier supply chain (Henricks 2018). For example, Under Armour can have different vendors
for its different geographic locations. This ensures the efficiency of its supply chain. As the case
shows, Under Armour products are made by 27 manufacturers in 14 countries. Any supplier that
meets the company's quality standards can supply these goods. Large companies can quickly
switch suppliers without worrying about a significant drop in quality. Suppliers also experiment
with product designs using different materials, so that if the price of one raw material rises, the
company can switch to another. However, the weaknesses of UA are the price of UA sometimes
higher than Nike. Big buyers get cheaper prices from these suppliers by ordering larger
quantities than smaller companies. For example, Nike might buy more T-shirt cotton at an
exponential price and negotiate a lower price than UA. This has clearly demonstrated that the
strength of UA suppliers is only mid-to-low-end, and Nike can still catch up with UA prices.
Additionally, UA use the innovative in its use of materials, sourcing a variety of proprietary
blended fabrics from third parties to create products that are different from competitors. It also
helped the company avoid the disadvantage of buying the same materials in lower quantities and
at a higher cost (Palmer 2020).

4.2 Bargaining power of buyer

The bargaining power of buyers is also described as the output market. This force analyzes the
degree of customer pressure on the company and also affects the customer's sensitivity to price
changes (Alex 2020). Under Armour has built a strong reputation through marketing campaigns
and sponsorship. It spends heavily to sign up the world's best athletes to represent its brand. The
company successfully acquired NBA champion and Most Valuable Player (MVP) Stephen Curry
in 2013 and quarterback Tom Brady in 2010 (Press release 2010). While this kind of sponsorship
attracts many buyers to UA products, which are usually high priced, innovative and of good
product quality, buyers are willing pay for this premium price due to the appeal of this kind of
NBA championship sponsorship and its premium quality products help it retain customers.
However, in addition to excellent brand recognition, the focus is on innovation and product
quality. The brand has done a lot of research to produce innovative products. Its high-quality
products help attract and retain buyers. This is the main competitive advantage of the brand and
contributes to its outstanding sales. Overall, the brand has been able to build customer loyalty
through its marketing efforts and focus on quality. This benefits the brand and limits the buyer's
bargaining power. However, consumers may also be attracted to other brands such as Nike and
Adidas due to the price, advertising, product sponsorship and changes in style. In general, buyers
have moderate bargaining power (Abhijeet 2017).

4.3 Threat of the new entrants

New entrants intend to gain a foothold in the market divided by existing companies, and at the
same time they can bring new capacity and resources to the industry. Therefore, the level of
company profit is reduced, even endanger the survival (Visual paradigm 2021). New entrants
require face some barriers when they want to enter to the market due to the strong existing
players who are well entrenched in the market. Some of the barriers are government created
barriers, intellectual property, patent and economies of scale will affect the new entrants and they
need take into the consideration. Generally, the barriers to entry in the sports industry are
relatively high, especially in the sportswear field, where competition is fierce, and several
leading companies are vying for space. Under Armour have spent a lot of human capital and
financial resources to develop products, manufacture products with affordable quality, and even
promote products to appropriate distribution channels. Overall, these factors make it difficult for
new entrants to enter the industry. However, the threat still exists because some fashion brands
also produce sportswear. UA has developed innovative and unique products as a new sportswear
design that can be used in any climate and any sport. These new products have attracted athletes
and university teams to a certain extent. They can easily and quickly open up a niche market for
themselves and begin to expand into other fields faster. New entrants can also target innovative
technologies similar to UA in the sports industry, which may pose a threat to the existing sports
industry. However, despite the presence of strong competitors in the industry, UA's continued
innovation will be welcomed by customers and make it attractive. Therefore, it is also difficult
for new entrants to enter the sports industry.

4.4 Threat of Substitutes Product

The threat of substitutes is the availability of products that consumers can buy rather than
industrial products. An alternative product is a product from another industry that offers
consumers similar benefits to products produced by companies in that industry. According to
Porter's five forces, the threat of alternatives determines the competitive structure of an industry
(Strategic CFO 2021). Sport industry is a major commodity in high demand. As interest in sports
continues to rise worldwide, demand for sportswear and accessories is expected to grow
(Abhijeet 2017). There is continuous the threat of a more innovative version entry as a substitute
for each product. For every product, there is always the threat of a more innovative alternative.
However, Under Armour's alternative products are very threatening, and it is difficult for UA to
successfully create many such alternative products in various sports industries. For example, UA
successfully replaced the standard cotton T-shirt worn by athletes with stretchy base-layer shirt
(Barclay 2020). It also uses its brand awareness and early success to develop other products, but
it requires spend time and investment to expand. Although UA has more innovative product to
replace the product, but most other brands are also influential brands, such as Nike and Adidas. It
also produces similar products, which can well replace Under Armour's sports equipment and
clothing. Therefore, the threat of Under Armour alternatives is higher, because smaller brands
may also be a minor threat (Abhijeet). The only factor that mitigates this threat to a certain extent
is that Under Armour needs to continue to conduct research and innovation to allow UA to
continue to appear new products to replace other brands of products. Style and fashion trends
also play an important role in this industry. Although pure function may be the only factor
considered by professional athletes, everyday consumers are more concerned about appearance
and styling. This is a more subjective area and may be more susceptible to the influence of other
brands' popularity (Barclay 2020).

4.5 Competition in the industry

The last force is to analyze the intensity of market competition. It takes into account the number
of existing competitors and the competitiveness of each individual. When only a few companies
sell products or services, the competition is fierce, the industry is constantly evolving, and
consumers can easily switch to competitors' products at a lower cost (Marci 2019). Under
Armour operates in a competitive textile and apparel industry. Most of UA's competitors come
from major large organizations such as Adidas, Nike and Puma, they hold a large portion of the
market share. Under Armour is by far the youngest of the three stocks and went public in 2005.
Although the company’s growth over the past 10 years has been impressive, it is the smallest of
three companies. The competitors have been improving their marketing strategies to maintain
their position in the market but Under Armour difficult to catch them up. For example, there are
the cooperate with sports clubs or events that use product launches, celebrity endorsements, and
other growth strategies. This competition does have an impact on the overall long-term
profitability of the organization. Nike and Adidas, which have a lot of resources, are playing a
role in the high-performance apparel market to gain market share in this emerging product
category. Under Armour does not hold any fabric or process patents, so its product portfolio may
be replaced in the future. When rivalry competition is high, advertising and price wars ensue,
which can hurt a business's bottom line (Marci 2019).

5.0 Competitor Analysis

Under Armour has 3 main competitors, it is an assessment of the strengths and weaknesses of
current and potential competitors. Nike is the first and stronger competitor to Under Armour
because Nike has the largest market share in the sports footwear and apparel industries in the
lists of competitors (Umar 2019). For example, brand image of Nike is a recognized endorsement
and deep pockets around the world. The endorsement list has played a pivotal role in influencing
Nike's brand image. Nike partnership with the famous athletes to endorsement such as Kobe
Bryant, Michael Jordan, Cristiano Ronaldo, Leborn James Roger Federer and Maria Sharapova.
Although this partnership requires to spend time and a lot of money, but it can influence Nike
brand image and lead Nike become one of the most influential brands in the world (Umar 2019).
This cooperation forces Under Armour to spend precious money on market research and
endorsements. Although UA intends to increase brand influence and maintain competitiveness,
but Nike is the first to lead its brand reputation worldwide. Then, Nike’s strength is that the Nike
brand itself is very strong and the company also has a diversified brand portfolio. It includes
Converse and dozens of other Nike-centric sub-brands, such as Nike Tiempo, Nike Blazers and
Nike Shox, most of which are eye-catching. Therefore, this also shows that Nike has a good
foundation in the footwear industry and can easily respond to changes in preferences. As a result,
Nike is one of Under Armour's biggest competitors. Due to its global influence in China, Asia,
Latin America and the EMEA market, Nike has a strong competitive advantage over Under
Armour. Nike's operating profit margin is better than Under Armour (Figure 1), and even its
brand reputation is strong globally.

Next, Adidas is the second strong competitor of Under Armour, its product has always been
more diversified than Under Armour because it is one of the companies that launched before it.
Although Adidas and Under Armour are the giants of athletic industry but Adidas is the second
largest athletic footwear and apparel brand in the world. In European, there is a huge market
share on Adidas. However, Taylor Made and Reebok are two well-known brands under the
Adidas Group. Adidas was originally producing a football brand, but after owning these two
brands, its market diversified into sportswear and equipment. Therefore, While Nike and Adidas
have done well in North America over the past few years, Under Amour is losing market share
(Umar 2019). One of Adidas' strengths is its strong financial performance over the past 10 years.
For example, Adidas recently leaked non-core brands TaylorMade and Rockport, which
expanded by 55% in 2018. Since the company can achieve sales growth without increasing
similar sales costs, the possibility has also increased. However, Adidas is second only to Nike in
terms of revenue and profit, and the two competitors have a big impact on UA. Although the
Adidas brand is limited to sportswear, but its product portfolio is diversified. The company has a
variety of product portfolios, including various footwear and accessories under the Adidas brand,
which is a high-end market segment, and another Reebok is a mid-range brand. It also provides
various item designs to attract a wide range of sports, such as boots, clothing and hardware
accessories. Adidas has limitations, but its diversified use of products makes it superior to other
products (Biz news 2020).

Lastly, Nike and Adidas are often seen as competitors to Under Armour but Puma is also one of
the strong competitors of UA. The reason is it involve celebrities as Puma brand ambassadors
and creative directors has perform very well in past few years. For example, as brand
spokespersons, these celebrities designed and promoted different footwear brands. As a result,
Puma showed faster growth and achieved higher valuation and profitability. Puma's profit
margin is also higher than that of the Under Armour brand (Umar 2019). Additionally, Puma has
a strong marketing which has use of the advanced marketing techniques to promote its products.
It is such as social media platforms, TV and targeted marketing. Marketing techniques are
compelling and attract the attention of customers, it also can increase sales of the company's
products worldwide (Ahsan 2021). Therefore, Puma sponsored many top athletes, which had a
great influence and provided a lot of funds, because it meant that their brand was shown to the
world, so if top athletes use their products, it become a good brand and brand reputation become
famous. This can increase customer attractiveness because it acts as a real-time advertisement.
Puma uses sponsorship and marketing to attract customers, which makes Puma do better than its
Under Armour.

6.0 Key Success Factor

In this part, it aims to study the key success factors for success in the sportswear and sportswear
industries. The key factors are the main completion factors that enable the company to prosper
and surpass its competitors (Ciro 2014). The first key success factors for Under Armour are its
innovative performance-based equipment and apparel. UA's strength lies in producing clothing
and apparel that enhance athletic performance (The Sisleader 2021). UA intend to own a brand
that lives up to its promise of having an authentic brand. So, the company main strategy for
success has been that of innovation from the beginning. Under Armour design innovative T-shirt
such as wear ColdGear® design Tshirt to stay dry. UA Cool Switch uses a unique coating inside
the fabric that takes heat away from the athlete’s skin, leaving them truly cool and able to work
longer. Then, HeatGear® innovation design uses of the super-breathable fabric, it can absorb
sweat and adjust the temperature, so the aesthetes feel drier, cooler, and lighter than ever. The
last is AllSeasonGear® innovation is to stay comfortable. The technology behind Under
Armour's diverse product assortment for men, women and youth is complex and innovative in
the apparel industry (Under Armour 2021). It provides high-quality products, brings multiple
benefits to athletes, and keeps the movement dry, cool and light during the game (Under Armour
2021). This has allowed the company to experience significant growth in the sportswear
industry.

The second key success factor of Under Armour establish a strategic partnership with Equinox to
seek new opportunities to sell its products in new locations. Equinox is a diversified brand
portfolio, occupying the market for high-end fitness enthusiasts. Equinox not only has financial
capabilities and a dedicated consumer group, but also has an active brand association to promote
Under Armour. Therefore, this collaboration allows UA to use its prior expertise in fitness
technology and a combination of well-known celebrity athletes to enhance Equinox's fitness club
products and provide consumers with a high-end, premium impression of the Under Armour
brand. Under Armour can investment in fitness technology to Equinox's clubs to further enhance
the premium sports experience that the brand is known for (Justin and Shivani 2020). Under
Armour can enhance the social aspect of exercise through applications that combine wearable
technology and gym hardware to emphasize Equinox's current experience-based value
proposition. For example, Under Armour brand wristbands like Orange Theory will further
supplement the exercise experience with physiological data such as calories burned or heart rate.
The human interaction brought about by the Equinox partnership is critical to the success of
Under Armour wearables. For example, wearable technologies such as Zwift and Mirror use
fitness equipment to enable users to gain a deeper understanding of their exercise status and
record their performance improvements over time. While Under Armour's wearable technology
products had been lackluster, the cross-branding opportunity introduced a new consumer base of
Equinox members, encouraging adoption and adding rationality to the company's offerings
(Justin and Shivani 2020).

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