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TEACHING NOTE
CASE 8
Under Armour’s Strategy in 2016
Overview
Founded in 1996 by former University of Maryland football player Kevin Plank, Under Armour was the
originator of sports apparel made with performance-enhancing fabrics—gear engineered to wick moisture
from the body, regulate body temperature, and enhance comfort regardless of weather conditions and
activity levels. It started with a simple plan to make a T-shirt that provided compression and wicked perspiration
o the wearer’s skin, thereby avoiding the discomfort of sweat-absorbed apparel. Under Armour’s innovative
synthetic performance fabric T-shirts were an instant hit.
However, across all segments (sports apparel, active wear, and athletic footwear) of the $250 billion global
market in which the company competed, Under Armour still had a long way to go to overtake the two long-
time industry leaders—Nike and The adidas Group. In scal 2015, Nike had U.S. sales of $11.3 billion and
global sales of $30.6 billion, and it dominated both the U.S. and global markets for athletic footwear. In the
Despite having global sales much smaller than its two global rivals, Under Armour was gaining ground and
making its market presence felt. In North America, Under Armour had recently overtaken adidas to become the
second largest seller of sports apparel, active wear, and athletic footwear. Under Armour’s 2015 North American
sales of $3.56 billion were over 15 percent greater than The Adidas Group’s 2015 North American sales of €2.75
billion (equivalent to about $3.03 billion). Moreover, Under Armour was growing at a faster percentage rate than
both its bigger rivals. From 2010 through 2015, Under Armour’s sales revenues grew at a compound annual rate
How Big a Factor Can the Company Become in the $250
Billion Global Market for Sports Apparel and Footwear?
Case 8 Teaching Note Under Armour’s Strategy in 2016
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Nonetheless, 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 signicant opportunities to expand the company’s narrow product line-up 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. Plank’s revenue
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 oerings, 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 denitely 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 identication and
assessment of Under Armour’s strategy and competitive approaches. And, with Under Armour’s accelerating
eorts to enter a growing number of 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 nancial 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 ll 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 two videos you can show (or let students view on
their own) when having class discussion of the Under Armour case:
Links to the two videos are also posted in the instructor resources section of the Connect Library.
Our recommendation would be to show the Kevin Plank video interview at the beginning of the class period and
to show the rst video 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 in the Assignment Questions section below.
Case 8 Teaching Note Under Armour’s Strategy in 2016
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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:
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 ve competitive forces facing Under Armour, Nike, and Adidas-
Reebok in the North American market for performance sports apparel?
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 ve 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 nancial performance during the 2011-2015 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.
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.
Case 8 Teaching Note Under Armour’s Strategy in 2016
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In our experience, it is quite dicult 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 rst assigned case, you may nd it benecial to have
class members read the Guide to Case Analysis that follows Case 31. The content of this Guide is particularly
helpful to students if your course is their rst experience with cases and they are unsure about the mechanics of
how to prepare a case for class discussion, oral presentation, or written analysis.
Suggested Assignment Questions for an Oral Team Presentation or Written Case Analysis. We
denitely 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
■ 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
Assignment Questions
1. How strong are the competitive forces confronting Under Armour, Nike, and The adidas Group? Do a ve-
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?
Case 8 Teaching Note Under Armour’s Strategy in 2016
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5. What are the key elements of Under Armour’s strategy?
6. Which one of the ve 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 nancial performance during the 2011-2015 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 identied in question 9.
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 ve-forces model of competition for the performance sports apparel industry:
Substitutes for
Performance
Athletic Apparel
Competitive pressures coming from
the market attempts of sellers in
other industries to win buyer patronage
away performance athletic apparel
Threat of New Entry
into Performance
Athletic Apparel
Case 8 Teaching Note Under Armour’s Strategy in 2016
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Rivalry among the designers and marketers of performance sports apparel—a strong, perhaps even
erce, 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:
Students should be pressed to identify the following rivalry-related competitive pressures at work:
• Rivalry-related competitive pressures are being intensied by the ongoing and vigorous eorts on
the part of Under Armour, Nike, and Adidas-Reebok to expand their product lines and oer wider
selection to those people who wear performance sports apparel.
• 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 rst two factors acting to strengthen rivalry. On the whole, we think it is fair to say that
Competitive 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:
Case 8 Teaching Note Under Armour’s Strategy in 2016
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Factors that are acting to weaken the threat of the entry:
• The small pool of entry candidates
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
Competitive 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:
All things considered, it is fair to say that the competitive pressures from substitutes for performance
consumers are becoming aware of and attached to the performance and quality of the products made of
“high-tech” performance fabrics and are increasingly inclined to pay the higher price.
Competitive 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).
Case 8 Teaching Note Under Armour’s Strategy in 2016
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The two types of suppliers that really matter here are (1) the suppliers/makers of performance-based
fabrics and (2) the contract manufacturers that actually produce the apparel items.
Factors that are acting to intensify the bargaining power of suppliers:
Factors that are acting to weaken the bargaining power of suppliers:
• The presence of numerous contract manufacturers who are eager to win the business of producing
apparel items for Nike, Under Armour, and adidas-Reebok and who also have the capabilities (1) to
make these items to the designer/marketer’s specications and (2) to meet their delivery schedules.
All things considered, it is fair to say that competitive pressures from the bargaining power and leverage
Competitive 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
apparel and (2) prominent and highly visible sports teams.
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
Case 8 Teaching Note Under Armour’s Strategy in 2016
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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 specic 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
athletic apparel. Such choices—most especially if they have many store locations and buy in very
sizable quantities—are likely to convey some bargaining power in wresting concessions regarding
prices or other important terms and conditions from the designers/marketers of performance athletic
apparel.
• 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
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
compete head-to-head against Under Armour, Nike, and Adidas-Reebok with their own private-
label brands.
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
Case 8 Teaching Note Under Armour’s Strategy in 2016
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Buyer bargaining power tends to be:
Conclusions concerning the Overall Strength of All Five Competitive Forces: The collec-
tive strength of the ve competitive forces facing Under Armour, Nike, Adidas-Reebok, and other mak-
ers of performance sports apparel is “moderately strong” to “strong”—but denitely not so strong as
to prevent them from earning attractive prots.
We also think that class members should conclude that competitive pressures associated with rivalry and
with buyer bargaining power are probably the two strongest of the ve competitive forces.
2. Does Under Armour have any core competencies and, if so, what are they?
We think students ought to single out the following as qualifying as Under Armour core competencies:
Designing innovative performance sports apparel
Management believed that having audiences see Under Armour products (with the interlocking
UA logo prominently displayed) being worn by athletes on the playing eld helped the company
establish on-eld authenticity of the Under Armour brand with consumers.
• It is fair to say that UA has built a potent and authentic brand image and reputation in a relatively
short time
