Under Armour – Can David Challenge The Goliaths?
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Case Study: Under Armour – Can David Challenge The Goliaths?
Outline the level of diversification and the international strategy that Under Armour pursues.
Diversification:
Under Armour adopted a low level of diversification strategy, specifically with the dominant business strategy, where 70% to 95% of the business is from one business – athletic clothing business. UA was founded in 1996 and is still very young and at the growing phase. 84% of its business come from the apparel business unit, and the domestic sales within the U.S. form 93% of its total sales.
Besides apparel products, Under Armour started to diversify their products to enter into footwear market. It is beneficial for Under Armour because they are selling new products to…show more content… Additionally, UA operates with manufacturers that can complete multiple functions under one entity, thus to attain a maximum efficiency and control cost. On the other hand, given that American sports such as football and basketball in other regions of the world are considerably less popular than in the U.S., and in Europe the predominant sport is soccer. Currently, UA doesn’t sponsor any soccer player and has only recently started sponsoring soccer teams. So far UA has sealed partnership agreements with teams Tottenham Hotspur, which is only the 19th most popular soccer team all over the world and is not as popular as other soccer teams that are sponsored by other athletic apparel…show more content… However, UA has limited expertise and capability to accomplish all above immediately, especially when giant sports brands such as Nike and Adidas are already positioned firmly. UA should employ a related constrained diversification strategy in which the business units are sorted by type of sports to better target different regions of the world. The product, technological and distribution resources can be shared within the company. In this way, UA will not be vulnerably dependent on only one business which is their performance apparel products, and can diversify the risks. Additionally, UA needs to detect new opportunities such as extreme sports through which they can widen their product portfolio and increase their