Khaoula
Zhenghe Chai
Craig Cataldo
Joshua
Maricruz
Casey
Jennifer
Chapter 4 Worksheet
The purpose of the internal analysis is to assess the competitive capabilities and resources of the company under analysis. For each strategic factor throughout the worksheet, you should conclusively state if the factor is a strength or a weakness. This will strengthen your analysis and help you with your subsequent SWOT analysis.
1. How well is the current strategy working (page 95)?
In this section you must address the criteria and the ‘how well’ question simultaneously. For example, if the company uses a broad differentiation strategy as their present strategy, how well is the differentiation strategy working for the company? For a broad differentiation strategy, I would expect you to cite examples of adding value for the customer and other stakeholders. Then I expect you to determine how well they are implementing the strategy.
Criteria Facts What does this mean?
What are the present strategies? (Note: Refer to chapter 5 the five generic strategies, choose one, and tell me why.) Under Armour focuses on a generic differentiation business strategy. Before UA has or introduces a new product they make sure to have intense research done on it. They do this by investigating the products’ viability and competitive advantage.
– Assess the company’s performance.
For the performance test, look at their financial ratios and their relative performance. When you have the facts, it is much easier to conduct your analysis.
Under armour’s first made profit was in 1998. They have shown substantial year on year growth when it comes to revenue. They have also shown various times in exceeding growth in the apparel market. The financial ratios show that UA is not financed through debt. They are able to pay their short term liabilities because they have positive capital. Since the return of assets is high it shows that management efficiently uses their assets to generate earnings. Under Armour’s financial ratios show that the company is in good financial standing. This could be an opportunity for them to grow and expand internationally as they wanted to.
What is the company’s competitive scope
● stages of the industry’s production-distribution chain it operates,
● geographic market coverage, and
● size and composition of the customer base?
● Please add other facets of competitive scope as necessary.
Under Armour targets customers that are men, women, or youth that are athletes, military personnel, or college teams. These customer are located in various regions. The company offers its products in 15,000 locations throughout North America, Europe, the Middle East, Africa, the Asia-Pacific, and Latin America. 84% of their source of revenue comes from wholesale distribution to retail stores, 11% comes from direct sales to athlete or teams, and 4% comes from product licensing. They have a niche market in which and try to appeal to those that play sports or tend to sweat and need protection from that and odor. However, their products are not just limited to those folks, they’re available to the public as well.
What are the functional strategies
● Production,
● Marketing.
● Finance,
● Human resources,
● R&D,
● Etc.?
Start by listing the functional areas; then provide the facts associated with each of the areas. Finally, conduct your analysis and determine how well the functional areas are working and the associated strengths and weaknesses.
You are supposed to examine the company’s functional strategies from the perspective of how the strategies serve the overall strategy. Most of Under Armour’s primary expenses comes from their cost of goods sold (50%). This includes the cost of the product, and other criteria’s such as import costs. Another large expense is of their SG&A. In which it incorporates, 36% of the overall expense. They believe that a huge aspect of being successful and having an advantage in comparison to their competition, is to spend on SG&A. This could include various categories such as: marketing, selling, product innovation, etc. There are various strategies that UA uses whether it is aiming at marketing, or R&D. These strategies have weaknesses and strengths as well that UA has to keep into consideration. They do this by examining their financial reports and taking a look at their ratios. Here they are capable of telling whether their strategies are working or if they’re not.
Has the company achieved its financial objectives? Determine if they achieved their short and long-term objectives and provide the supporting analysis why they did or did not achieve the objective. The company has achieved its financial objectives. They continue to achieve their goals by having a niche strategy. They continue to design products that serve unmet needs. In order to secure future financial objectives, they are laying their focus on 8 to 12 year old consumers in order to build loyalty very early. Their financial future has to do with their product and how they serve their customers. The better the product the more profit the company will see. Under Armour’s products serve to meet needs such as wicking perspiration away from the skin, having mobility and comfort and weather performance technology.
Has the company achieved its strategic objectives? Determine if they achieved their short and long-term objectives and provide the supporting analysis why they did or did not achieve the objective. Refer to Chapter 2 page 43 for a list of strategic objectives. Long term they want to become a leader in the industry with their strategic planning. They are able to triumph competitors such as Lulu lemon. However, in order to do so it is a lot tougher when it comes to competitors such as Nike, and Adidas. Although Under Armour has taken many of their market shares. Short-term they want to expand internationally. The reality of it is that Under Armour is top notch when it comes to guarding odor and sweat, but Nike and Adidas have been leaders of both shoes, and sportswear. Their main concern is in the future, and that is why some of their strategies attract younger aged kids from 8 to 12. They want to create a new customer loyalty base so that it last for a while.
What is the company’s position relative to EACH of its competitors?
● Market share
● Profit margin
● Net profits
● ROI
● EVA (page 9)
● MVA (page 10)
● Financial strength
● Sales growth
● Image
● Reputation
● Industry position
● Please add other facets of relative position as necessary. Under Armour strategy to growth is to build on existing relationships that they have already developed with certain retailers such as Dicks Sport. They believe in innovation to the point that they extend much of their expenses to research and development so that they can develop new and better products. This will enhance their image and reputation as well. They’d like to see an extension in their retail locations This also includes increasing their retailers overseas, giving them a larger market share. UA has taken many of the market share away from its competitors. Although they are not an industry leader they are amongst the top. With competitors such as Lulu lemon they need to be able to keep up with their products and customer loyalty. However, Lulu lemon lacks brand recognition while Under Armour is well known amongst most athletes, sports personnel.
