Strategic Development of the sports company, Under Armour.
Strategic Development of the sports company, Under Armour.
In the assessment brief below you will find:
1. Details of the coursework assessment, background to the case study and case study 4 questions that need to be answered utilizing the information presented to complete this case study assignment.
2. Guidelines to assist you in answering the case study questions.
3. The assessment marking criteria and feedback sheet .
4. Information on presentation.
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Case Study Analysis You are required to conduct an analysis of the following case study and article: Under Armour by Mark Brewer et al. in: Ireland R.D, Hoskisson R. E. Hitt, M.A, (2011) Management of Strategy: Concepts and Cases, 9th Edition, South-Western Cengage Learning. Case 23 pg. 349 – 358. (Used for Questions 1 to 3)
Hempel J, With Acquisition, Under Armour Muscles into Wearable Tech Apps, Fortune, 14th November, 2013. Open link below: http://fortune.com/2013/11/14/with-acquisition-under-armour-muscles-intowearable-tech-apps/ (Used for Question 4)
This case study describes how entrepreneur Kevin Plank broke into the competitive sportswear market. Competing with long established leading brands such as Nike and Adidas, Plank is building Under Armour into an innovative global brand with billion dollar plus sales. The case study presents extensive information about Under Armour’s strategy and key business functions and processes. It is a fascinating account of how Plank at start-up invested $60,000 in 1996 and by 2008 he had gained the largest market share in the US performance apparel segment with a 43% share compared to Nike (32%) and Adidas (5.1%). The objective of your case analysis will be to assess your understanding of the competitive environment in the sportswear industry; Under Armour’s capabilities and core competencies; and its strategic choices at business level (generic competitive strategy) and corporate level (product diversification and international choices) using organic and acquisition as methods of growth. You may be familiar with its products but, if not, visit a sports retailer who is likely to stock some of its product range. Alternatively, you can visit its website, however, when answering the case questions below, only use information on Under Armour contained in the case study and article. Questions 1 – 3 are answered using the case study provided. Question 4 is answered using the article. Your marks will be heavily penalized if you use information on the company from alternative sources as it is the analysis of the case study information provided which is being assessed.
Questions 1. Using Porter’s Five Forces Model, analyse the competitive environment in the sportswear industry. Support your arguments with evidence from the case study. (25% weighting of total grade)
Question 2. Conduct a value chain analysis to assess Under Armour’s capabilities, identify and evaluate its core competencies, and argue how these core competencies underpin its choice of generic competitive strategy. (30% weighting of total grade)
Question 3. Critically assess Under Armour’s product diversification decisions and international strategy choices. (20% weighting of total grade)
Question 4. With reference to the Fortune article, advise the Board on the potential benefits and pitfalls of this acquisition. (15% weighting of total grade)
Mark allocated for the presentation of analysis, selection of appropriate tools and use of case evidence. (10% weighting of total grade)
Assessment Guidelines
In answering Question 1 mentioned above you need to review Porter’s Five Forces model and apply it to analyse the sportswear industry. This is an industry level analysis of the competitive environment – part of external environment analysis. At this stage do not focus too much on how Under Armour managed to overcome the forces and successfully compete in the industry as this is the basis for the analysis of its internal capabilities in question. The purpose of the Five Forces Model is to gain a deeper understanding of the intensity of competition in the industry and which forces are the key influencers. The more intense the competition — the less attractive the industry– the lower the average level of industry profitability. The reverse applies to less intense levels of competition. You must analyse each force individually through an examination of the structural factors which determines the impact of this force. The discussion of how these factors influence each force means that your answer will go beyond the description of each force. For each force arguments should be presented as to whether the force’s influence is high, medium or low. Your arguments should reach and encapsulate following conclusions:
(i) is this an attractive/unattractive industry (high/low/average profit margins) as result of the intensity of the competitive forces
(ii) what are the most significant forces facing the sportswear industry in the future that all competitors should take into account in their strategy formulation.
In answering Question 2 – it requires you to carry out an internal analysis of Under Armour’s capabilities, then identify and evaluate its core competencies.
Use the value chain framework to analyse Under Armour’s capabilities. You must go further than describing what it does in each activity through a discussion of what it does well (strengths) and what areas it needs to improve (weaknesses to address).
To identify Under Armour’s core competencies, analyse critical linkages/processes in the value chain, some of which should be the basis for your choice of core competencies (CCs). The explanation of value chain linkages is an intermediary stage to identifying CCs. Assess which linkages are “core” by applying Barney or Grant’s criteria.
The final part of the question requires you to identify its choice of generic competitive strategy – differentiation, cost leadership or integrated/stuck in-the –middle .Your choice should be supported by the capabilities and CCs you have derived from your preceding value chain analysis.
For Question 3 the focus switches to how Under Armour has used its capabilities and competitive advantage to grow via product diversification and international strategy It has taken strategic decisions to diversify beyond apparel into new products and market segments. Identify the types of diversification decisions taken and assess the potential benefits, risks and capabilities required to achieve success in these new products and segments. Progress on international expansion has been limited as at the end date of the case. To assess its international strategy select which strategy it should pursue (multi-domestic, global or transnational). To develop an argument to support your international choice work through the elements of the Integration Responsiveness Grid which apply to the sporting goods industry and also its own capabilities.
In answering the final question 4 of the assignment , you are asked to discuss the potential benefits and drawbacks of a recent acquisition.
Coursework Assessment Feedback
Presentation of analysis, use of appropriate tools & case evidence. (10%)
Five Forces analysis of the competitive environment in the sportswear industry. (25%)
Analysis of Under Armour’s value chain capabilities, core competencies and assessment of its generic competitive strategy. (30%)
Assessment of Under Armour’s growth strategies: product diversification and international strategy choice. (20%)
Analysis of the benefits and drawbacks of its acquisition in wearable technology. (15%)
General Comments for the Completion of this Assignment
Assessment Presentation Information As you prepare the case analysis there are a few other points you must take into account.
1) A case analysis is not a conceptual explanation or discussion so do not spend too much time on conceptual explanation, instead your focus should be on how the concepts are used to analyze the case events and reach evaluative judgments.
2) Always draw on evidence from the case to support your analysis and conclusions. Using evidence without analysis will amount to describing what has happened in the case and will not gain many marks.
3) Do not present your answer in a rigid report format but write in sections which reflect the major elements of your analysis.
4) It is critically important that if you use quotes from the case or academic texts, you do so selectively and they must be placed in quotation marks and referenced appropriately.
The case ends in 2010 and you should answer the questions in terms of the information presented in the case up to this time. You are not required to go beyond the case end date since the analysis and judgement are being assessed at this point, not in the light of subsequent events. As a result you should not include references on Under Armour from the internet or other sources other than those contained in the case.
Target Length of the Assignment/Case Analysis is 4000 words or Maximum Length:4600
The word limit excludes appendices and bibliography. Where a submission exceeds the stated word limit the Assignment will be strictly penalized.
Appendices can be a useful to provide additional information from the analysis you provide in the assignment and the key points are incorporated into the main body of the answer.
