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Under Armour’s Strategy in 2014
Overview
Founded in 1996 by former University of Maryland football player Kevin Plank, Under Armour was the
originator of performance apparel—gear engineered to keep athletes cool, dry and light throughout the
course of a game, practice, or workout. It started with a simple plan to make a T-shirt that provided
compression and wicked perspiration off the wearer’s skin, thereby regulating body temperature and avoiding
the discomfort of sweat-absorbed apparel. Under Armour’s innovative synthetic performance-fabric T-shirts
were an instant hit.
Seventeen years later, with 2013 revenues of $2.3 billion, Under Armour had a growing brand presence in the
roughly $63 billion multi-segment retail market for sports apparel, active wear, and athletic footwear in the
United States. Its interlocking “U” and “A” logo had become almost as familiar and well-known as industry-
leader Nike’s swoosh. In 2013, Under Armour had a 14.7 percent share of the U.S. market for sports apparel (up
from 12.7 percent in 2012 and 11.1 percent in 2011), which compared quite favorably with Nike’s 27 percent
market share and adidas’s 7.4 percent market share. In the synthetic performance-apparel segment—a market
niche with estimated sales of $3 to $4 billion in 2013—Under Armour had an approximate 60 percent market
share. Under Armour’s principal business activities in 2014 were the development, marketing, and distribution
of branded performance apparel, footwear, and accessories for men, women, and youth. The brand’s moisture-
wicking fabrications were engineered in many designs and styles for wear in nearly every climate to provide a
performance alternative to traditional products. Its products were worn by athletes at all levels, from youth to
professional, and by consumers with active lifestyles.
Across all segments (sports apparel, active wear, and athletic footwear), however, Under Armour still had a
long way to go to overtake the two long-time industry leaders—Nike and The adidas Group. In fiscal 2013,
Nike had U.S. sales of $11.3 billion and global sales of $25.3 billion, and it dominated both the U.S. and global
markets for athletic footwear. In the United States, Nike’s share of athletic footwear sales approached 60 percent
(counting its Nike-branded footwear and sales of its Jordan and Converse brands) versus Under Armour’s 2.25
percent share. Nike’s 2013 global sales of athletic footwear totaled almost $16 billion (over 1 million pairs per
day), dwarfing Under Armour’s 2013 footwear sales of $299 million. The adidas Group—the industry’s second-
ranking company—had 2013 global sales of €14.5 billion (including €6.9 billion in athletic footwear and €5.8
billion in sports apparel) and 2013 North American sales of €3.4 billion. But Under Armour was gaining ground.
From 2008 through 2013, Under Armour’s sales revenues grew at a compound annual rate of 26.3 percent.
Nike’s revenues during its most recent five fiscal years (July 1, 2008, to June 30, 2013) grew at only a 6.3 percent
compound rate; the revenues of The adidas Group—the second-largest company in the global sporting goods
industry—grew at a compound rate of 6.3 percent during 2008–2013.
Founder and CEO Kevin Plank believed Under Armour’s potential for long-term growth was exceptional for
three reasons: (1) The company had built an incredibly powerful and authentic brand in a relatively short time,
(2) there were significant opportunities to expand the company’s narrow product lineup and brand-name appeal
into product categories where it currently had little or no market presence, and (3) the company was only in the
early stages of establishing its brand and penetrating markets outside North America.
– 308 –
TEACHING NOTE
CASE 5
Potent Enough to Win Market Share
away from Nike and Adidas?
:
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309
In 2013-2014, the multi-segment global market for sports apparel, athletic footwear, and related accessories was
fragmented among some 25 brand-name competitors with diverse product lines and varying geographic coverage
and numerous small competitors with specialized-use apparel lines that usually operated within a single country
or geographic region. Industry participants included athletic and leisure shoe companies, athletic and leisure
apparel companies, sports equipment companies, and large companies having diversified lines of athletic and
leisure shoes, apparel, and equipment. In 2012, the global market for athletic footwear was about $75 billion
and was forecast to reach about $85 billion in 2018; growth was expected to be driven by rising population,
increasing disposable incomes, rising health awareness, and the launch of innovative footwear designs and
technology. The global market for athletic and fitness apparel, estimated to be $135 billion in 2012, was forecast
to grow about 4 percent annually and reach about $178 billion by 2019. Nike was the clear market leader in the
sporting goods industry, with a global market share in athletic footwear of about 21 percent and a sports apparel
share of about 4.8 percent.
The Under Armour case contains a wealth of detail about the character and strategic direction of the company,
the chief elements of its strategy, Under Armour’s financial and operating performance, and Under Armour’s
two biggest competitors—Nike and The adidas Group. There’s ample detail in the case to provide a basis for
students to assess:
■ Under Armour’s strategy.
■ Its present competitive standing in the multi-segment global market for sports apparel, athletic footwear,
and related accessories.
■ Whether Under Armour has the resource strengths and competitive capabilities to challenge Nike for industry
leadership over the long term.
Suggestions for Using the Case
This freshly-updated case should generate considerable student interest and provoke a lively, interesting class
discussion. Under Armour is rapidly expanding its market presence in performance sports apparel, growing a
base of loyal customers for its product offerings, and becoming a much stronger market contender vis-à-vis both
Nike and The adidas Group.
The Under Armour case is probably best assigned after you have covered Chapters 1-7, but it can be successfully
used after students have read just Chapters 3, 4, and 5. It is definitely a good case for drilling students in the tools
of analysis covered in Chapters 3 and 4. The material in Chapters 5 and 6 is pertinent to student identification
and assessment of Under Armour’s strategy and competitive approaches. And, with Under Armour beginning to
enter numerous foreign markets, the material in Chapter 7 regarding competing in foreign markets comes into
play as well.
The Under Armour case provides an opportunity for class members to evaluate industry and competitive
conditions, think strategically about Under Armour’s resources and capabilities versus those of its main rivals,
do a weighted competitive strength assessment of Under Armour versus Nike and The adidas Group, crunch
some numbers in the financial exhibits, and make action recommendations regarding Under Armour’s future
course of action.
There is enough material in this case and enough opportunities to drill students in applying the concepts and
analytical tools in Chapters 3 and 4 to fill two class periods should you opt to devote this much class time to
covering the case thoroughly.
Videos for Use with the Under Armour Case There are three videos you can show (or let students view
on their own) when having class discussion of the Under Armour case:
nA 3:58-minute February 14, 2014 YouTube video entitled “Under Armour to Blame for U.S. Speed Skaters’
Struggles?” It can be accessed at https://www.youtube.com/watch?v=uN4JFPS9ofo.
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nA 7:59-minute February 14, 2014 YouTube video entitled “Under Armour CEO: Olympic Gear Questions
Fair.” It can be accessed at https://www.youtube.com/watch?v=YZ7BKqO73rc.
nA 2:28-minute February 21, 2014 YouTube video entitled “Under Armour CEO Defends Skating Suits.” It
can be accessed at https://www.youtube.com/watch?v=rziPtY2sCXE.
If class time is too constrained to show all three videos, then our suggestion is to show the first and third videos
in class. Our recommendation would be to show these two videos just prior to asking class members for what
3-4 top priority issues do Kevin Plank and Under Armour management need to address—question 9 on the list
of recommended assignment questions below.
The Connect-based Exercise for the Under Armour Case. We developed an exercise for Under Armour
for inclusion in the publisher’s Connect™ Management web-based assignment and assessment platform
because:
nThe case ties tightly to many of the topics covered in Chapters 3 through 7.
nOne of the purposes of the case exercises is to drill students in applying the concepts and analytical tools
discussed in the chapters to the circumstances posed in the cases.
This particular Connect-based exercise concerns the following ten questions:
1. What is your assessment of the strength of competitive pressures stemming from rivalry among Under
Armour, Nike, and Adidas-Reebok (The adidas Group)?
2. What is your assessment of the strength of competitive pressures stemming from the threat of entry of new
competitors into the North American market for performance sports apparel?
3. What is your assessment of the strength of competitive pressures stemming from substitutes for performance
sports apparel?
4. What is your assessment of the strength of competitive pressures stemming from suppliers to the marketers
of performance sports apparel?
5. What is your assessment of the strength of competitive pressures stemming from the buyers of performance
sports apparel in North America?
6. What is the collective strength of the five competitive forces facing Under Armour, Nike, and Adidas-
Reebok?
7. Does Under Armour have any core competencies and, if so, what are they?
8. Does Under Armour have any resource strengths or competitive capabilities that qualify as a distinctive
competence?
9. Which one of the five generic competitive strategies discussed in Chapter 5 most closely approximates the
competitive approach that Under Armour is employing?
10. What is impressive about Under Armour’s financial performance during the 2008-2013 period (as shown in
case Exhibit 1)?
It should take class members roughly 60 minutes to complete the exercise, assuming they have done a conscientious
job of reading the case and absorbing the information it contains. All of the questions are automatically graded,
and the grades are automatically recorded in your Connect grade book, which makes it easy for you to evaluate
each class member’s ability to apply many of the concepts and analytical methods in Chapters 3-7.
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311
What to Tell Students in Preparing the Under Armour Case for Class. To give students guidance in
what to do and think about in preparing the Under Armour case for class discussion, we strongly recommend
two things:
1. Have class members complete the Connect-based exercise for the Under Armour case in the
event you have adopted the Connect software for your course.
OR
2. Provide class members with assignment questions and insist that they prepare good notes/
answers to these questions before coming to class. Our recommended assignment questions for
the Under Armour case are presented in the next section of this TN. You may wish to have the class
concentrate their attention on a subset of these questions, depending on how you want to handle the
class discussion. Covering all of the assignment questions will likely require two class periods.
To facilitate your use of assignment questions and making them available to students, we have posted
a file of the Assignment Questions contained in this teaching note on the instructor resources section
of the Connect Library. In all instances, these assignment questions correspond to the assignment
questions in the teaching note for the case.
In our experience, it is quite difficult to have an insightful and constructive class discussion of an assigned case
unless students have conscientiously have made use of pertinent core concepts and analytical tools in preparing
substantive answers to a set of well-conceived study questions before they come to class. In our classes, we
expect students to bring their notes to the study questions to use/refer to in responding to the questions that
Utilizing the Guide to Case Analysis. If this is your first assigned case, you may find it beneficial to have
class members read the Guide to Case Analysis that immediately follows Case 31 in the text. The content of this
Suggested Assignment Questions for an Oral Team Presentation or Written Case Analysis. We
definitely recommend use of the Under Armour case for written assignments and oral team presentations. Our
suggested assignment questions are as follows:
■ Under Armour CEO Kevin Plank has employed you as a consultant to assess the company’s overall situation
and recommend a set of actions to improve the company’s future prospects. Please prepare a report to Mr.
Plank that includes (1) an evaluation of competitive forces in the global market for performance sports
apparel and accessories, (2) an assessment of Under Armour’s strengths, weaknesses, opportunities and
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312
■ Prepare a brief report to Under Armour CEO Kevin Plank outlining the 3-4 top priority issues that Under
Armour management needs to address and the actions you think Kevin Plank should initiate to address these
issues and steer Under Armour into an even stronger position to challenge Nike’s leadership position. Your
report should contain detailed and convincing reasons in support of each one of your recommendations. It
Assignment Questions
1. How strong are the competitive forces confronting Under Armour, Nike, and The adidas Group? Do a five-
forces analysis to support your answer.
2. Does Under Armour have any core competencies and, if so, what are they?
3. Does Under Armour have any resource strengths or competitive capabilities that qualify as a distinctive
competence?
4. What does a SWOT analysis reveal about the overall attractiveness of Under Armour’s situation?
5. What are the key elements of Under Armour’s strategy?
6. Which one of the five generic competitive strategies discussed in Chapter 5 most closely approximates the
competitive approach that Under Armour is employing?
7. What is impressive about Under Armour’s financial performance during the 2008-2013 period (as shown in
case Exhibit 1)?
8. How does Under Armour’s competitive strength compare against that of Nike and The adidas Group? Do
a weighted competitive strength assessment using the methodology presented in Table 4.4 in Chapter 4 to
support your answer. Based on your assessment and calculations, does Under Armour have a net competitive
advantage or disadvantage in competing against Nike and The adidas Group?
9. What 3-4 top priority issues do Kevin Plank and Under Armour management need to address?
10. What recommendations would you make to Under Armour CEO Kevin Plank? At a minimum, your
recommendations should cover what to do about each of the top priority issues identified in question 9.
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Teaching Outline and Analysis
1. How strong are the competitive forces confronting Under Armour, Nike, and The adidas
Group? Do a five-forces analysis to support your answer.
Below is a representative five-forces model of competition for the performance sports apparel industry:
■Rivalry among the designers and marketers of performance sports apparel—a strong, perhaps even
fierce, competitive force
In assessing this competitive force, students should draw upon the information in Figure 3.4 in Chapter
3 (and the related text discussion).
The rivalry among Under Armour, Nike, and The Adidas Group is vigorous and likely to remain so. All
3 competitors are striving to grow their sales and market shares. Rivalry is centered on two main factors:
Competitive pressures coming from
the market attempts of sellers in
Competitive pressures coming
Competitive
pressures
stemming
Competitive
pressures
stemming
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314
• Rivalry-related competitive pressures are being intensified by the active and aggressive efforts on
the part of Under Armour, Nike, and Adidas-Reebok to build and strengthen the appeal of their
• Rivalry is weakened by the differentiation that exists from one brand of performance sports
apparel to another (as concerns product selection, brand image, quality, design, and styling)—such
• Fast-growing demand for performance sports apparel acts to weaken the rivalry among rival
designers/marketers because there is enough new demand to enable each rival to grow sales/market
share without having to steal customers away from rival brands.
However, in our view, the latter two factors are not powerful enough to overcome the competitive
impact of the first two factors acting to strengthen rivalry. On the whole, we think it is fair to say that
the competitive pressures associated with rivalry among Under Armour, Nike, and Adidas-Reebok are
nCompetitive pressures associated with the threat of new entry into the performance athletic apparel
marketplace—a weak to moderate competitive force
In assessing this competitive force, students should draw upon the information in Figure 3.5 in Chapter
3 (and the related text discussion).
Factors that are acting to intensify the threat of entry:
• The fast rate of growth in buyer demand for performance athletic apparel
• Existing industry members are actively striving to expand their market reach by entering product
Factors that are acting to weaken the threat of the entry:
• The small pool of entry candidates
• Somewhat formidable entry barriers—new entrants face high barriers in building a retail distribution
• The degree of product differentiation and brand name awareness enjoyed by Under Armour, Nike,
and Adidas-Reebok—trying to go head-to-head against these rivals would be quite expensive from
All things considered, we think it is fair to say that the competitive pressures associated with the threat
of additional entry into the performance athletic apparel marketplace are:
• Relatively weak in the case of brand new competitors entering the marketplace on a grand scale
with intentions to take on the market leaders. However, we would not disagree with students who
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• Relatively strong in terms of the existing competitors (particularly Nike, Under Armour, and
adidas-Reebok) entering new product segments and new geographic areas where they currently
do not have a market presence.
nCompetitive pressures associated with substitutes for performance athletic apparel—a moderate
competitive force
In assessing this competitive force, students should draw upon the information in Figure 3.6 in Chapter
3 (and the related text discussion).
Factors that are acting to intensify competitive pressures from substitute products:
Factors that are acting to weaken competitive pressures from substitute products:
• Substitute types of athletic apparel deliver less comfort and are viewed by many users as being of
inferior quality (despite the attraction of their often lower prices)
All things considered, it is fair to say that the competitive pressures from substitutes for performance
sports apparel are moderate. Some students might argue for strong or moderately strong because of the
nCompetitive pressures associated with the bargaining power of suppliers—a moderate competitive
force
In assessing this competitive force, students should draw upon the information in Figure 3.7 in Chapter
3 (and the related text discussion).
Factors that are acting to intensify the bargaining power of suppliers:
• Fabric suppliers having proprietary fabrics with superior performance features and/or superior
quality have significant bargaining power to influence the prices and other terms and conditions
• The designers and marketers of performance athletic apparel are not a strong threat to integrate
• The designers and marketers of performance athletic apparel are not a strong threat to integrate
• The presence of numerous contract manufacturers who are eager to win the business of producing
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316
• The costs to Nike, Under Armour, and adidas-Reebok of switching their orders over to alternative
• Fabric suppliers having non-differentiated or commodity-like performance fabrics lack any
All things considered, it is fair to say that competitive pressures from the bargaining power and leverage
of suppliers are weak in the case of contract manufacturers and moderate when certain fabric
rival fabric suppliers.
nCompetitive pressures associated with the bargaining power of buyers—a weak to moderate
competitive force depending on the type of buyer
In assessing this competitive force, students should draw upon the information in Figure 3.8 in Chapter
3 (and the related text discussion).
The two types of buyers that really matter here are (1) the big chain retailers of performance athletic
It is very important here that class members understand that individual buyers of
performance athletic apparel do not buy directly from Under Armour, Nike, or adidas-
Reebok except when they are shopping in the retail stores/factory showrooms owned and
operated by these companies. Individual shoppers are really in no position to bargain with
Factors that act to enhance the bargaining power of retailers and/ prestige sports teams:
• The retailers of performance athletic apparel have some freedom to decide which brands they want
to stock in their stores and also which specific apparel items within a branded product line to
stock—retailers are unlikely to stock all brands and all models/styles of each brand of performance
• It is easy and relatively inexpensive for the retailers of performance sports apparel to switch a
portion (and in some instances, perhaps, even a big fraction) of their purchases from one brand to
• Retailers have the freedom to determine which brands to display in which space on their floors
(all floor or shelf locations or types of merchandise displays may not be equally attractive in terms
• Some retailers of performance sports apparel have bargaining power and leverage because they
buy in large quantities and thus qualify as very important and competitively valuable customers of
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317
• Prestige sports teams may well possess bargaining power in negotiating the terms and conditions
under which they will use the performance athletic apparel of such designers and marketers as Under
Armour, Nike, and adidas-Reebok. The marketing value and brand-building value that having the
viewers of sporting events see company logos on a particular team’s apparel has to Under Armour,
Factors that act to weaken the bargaining power of retailers and/ prestige sports teams:
• The vast majority of retailers of performance athletic apparel do not pose a credible threat to
integrate backward into the design, manufacture, and marketing of performance sports apparel and
• Retailers are aware that growing numbers of individuals who buy performance athletic apparel are
• Because there are vast numbers of retailers of performance athletic apparel, no one single retailer
tends to be so critical to Nike or Under Armour or The adidas Group that they have to agree to
All things considered, it is fair to say that the competitive pressures from the bargaining power and
leverage of those who buy performance sports apparel from Under Armour, Nike, Adidas-Reebok,
and other performance sport apparel marketers are not of equal strength or intensity for the three
Buyer bargaining power tends to be:
• Strong for large chain retailers who buy performance sports apparel directly from Under Armour,
• Moderate to moderately strong for prominent sports teams who obtain performance sports apparel
• Weak to nonexistent for individuals who shop at the retail stores/outlets operated by Under Armour,
Conclusions concerning the Overall Strength of All Five Competitive Forces: The
collective strength of the five competitive forces facing Under Armour, Nike, Adidas-Reebok, and other
