Under Armour's Strategy in 2013: Good Enough to Win Market Share from Nike & Adidas

4594 Words Jun 16th, 2014 19 Pages
Module 3 Case Assignment 2– Under Armour’s Strategy in 2013 – Good Enough to Win Market Share from Nike & adidas?
1. How strong are the competitive forces confronting Under Armour, Nike, and The adidas Group? Provide a five-forces analysis to support your answer.
The competitive forces confronting Under Armour, Nike and The adidas Group are:
Supplier Bargaining Power
Under Armour
Under Armour has established multiple suppliers of raw materials and fabrics, most of which are dispersed among south-east Asia and Latin America. Five suppliers provide between 50 to 55% of Under Armour’s fabrics. Almost all of their products were manufactured by 27 primary manufacturers dispersed throughout 14 countries. Ten manufacturers
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Profit margins range on an average from 5.3% for Under Armour and The adidas Group to an average of 23.4% for Nike.

All three companies are vulnerable to the threat of new entrants. Due to good profits, this is an attractive market for new entrants. Due to the wide availability of low-cost labor in emerging markets, labor costs are low for new entrants. Recent free-market oriented trade treaties, such as NAFTA, SAFTA, and the European Union have reduced tariffs and also reduced international trade restrictions, therefore reducing barriers for new entrants. Because demand is growing, new entrants could expect to earn satisfactory profits.

The threat from new entrants is slightly diminished because the three current companies are well established with a worldwide brand identity. Nike’s swoosh is considered the 24th most valuable brand, the highest ranking apparel brand, and Adidas is considered the 68th most valuable brand. Under Armour does not make the top 100. but it still enjoys a broad amount of recognition and support from high-profile sports teams and players. The World's Most Valuable Brands. (2013, December 1). . Retrieved June 6, 2014, from http://www.forbes.com/powerful-brands/list/#page:1_sort:0_direction:asc_search:

Under Armour, Nike and The adidas Group all have well established retail and distribution

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