Under Armour And The Sports Apparel And Footwear Industry In 2008 Case Study Solution & Analysis
Introduction
Under Armour And The Sports Apparel And Footwear Industry In 2008 Case Study Help is a widely known international brand name in innovation market, founded in 1938 by Lee Byung Chul, in South Korea. Under Armour And The Sports Apparel And Footwear Industry In 2008 handle large number of product classifications consisting of Semiconductors, Telecommunications, Digital Media, Digital Appliances and many more other electronic items. Historically, the company's core consumers consist of the Original Devices Manufacturers (OEMs), which utilized to sell Organization products withtheir own trademark name. Till early 1990s, the core competency of Org lie in its low rate offerings than its competitors by making existing items at economies of scale. Its consumer circle consists of Original Devices Manufacturers (OEMs), who used to sell Under Armour And The Sports Apparel And Footwear Industry In 2008 Case Study Analysis products with their own trademark name. Corp was not simply known outside Korea. There were also no or little interest in constructing the trademark name globally. Marketing budget plan was managed by production department with a prime focus on offering low-cost products.During the 1997 Asian Financial Crisis the business nearly got bankrupt, however with the Vision of Chairman Lee it totally turn its fortune around and in 2002 was listed the leading 25 most important business worldwide. When Kim was employed as a Chief Marketing Officer in 2000 the business was not even listed. He rearranged Corporation as an international brand and informed his divisional supervisors to understand marketing and its value. Now their goal is to arrive 10 by 2005.
Problem Statement
Corporation's shift from an item based to a marketing business is not going as efficiently as planned.Overcoming the reluctance of divisional supervisors to include marketing efficiently is still a major obstacle. Creating a constant brand name identity across the whole world and employing marketing techniques that best fits the regional culture is no easy task.
Situational Analysis
Yun had a rather clear picture in his mind about how Under Armour And The Sports Apparel And Footwear Industry In 2008 Case Study Analysis can change from a low end to a high end product supplier. He understood that change can only be done through positioning Organization as a business providing high-end products and this could only be done through high level of marketing.
In spite of having a clear vision about how to build Corp brand name, with a prospective support of its executives, Yun faced a number of marketing challenges in early years of its efforts.
One of the marketing challenges for Yun was the perceptions of executives about the value of marketing. They considered marketing and selling as very same tools and thought that quality items do not required marketing for increasing sales. As their focus towards marketing was quite low in their previous organisation practices, and the present marketing requirement was too much high, the gap was too broader and to fill this space with wrong understandings about marketing was quite tough for Yun.
As specified above, marketing focus was really low in previous practices, for that reason there were no proper marketing budget plans for each of the product on the portfolio. There was no marketing planning done for the existing items. Together with it the item variety of the business was increasing with the ripening of brand-new item ideas by the R&D sector of Business. Yun had an obstacle to carry out marketing planning and to produce marketing spending plans for existing in addition to for brand-new products from the very start, and this would take a substantial time.
A substantial shift would be needed in existing marketing expenditures to develop the Under Armour And The Sports Apparel And Footwear Industry In 2008 Case Study Analysis brand. This would lead to increased marketing expenses for Corporation and might disturb the administration regarding increased expenses, as they hesitated to marketing expenses formerly and an unexpected huge shiftwould make them disrupt. This could lead to declining executive assistance for international marketing. In this scenario, Yun deals with a difficulty for justifying increased marketing costs by showing the long term value of big marketing expenditures.
Internal Analysis
SWOT Analysis
Strengths
Company strengths lie in its big item portfolio. Business has biggest number of patents in the industry with total number of 15499 patents approved in United States( USP). Big quantity of R&D costs has actually made it possible for the business to grow its product portfolio at a higher rate than its competitors. Under Armour And The Sports Apparel And Footwear Industry In 2008 Case Study Analysis spent about $13.079 billion on its R&D sector in 2016, which is 7.3% of its total revenues.
Another strength of Under Armour And The Sports Apparel And Footwear Industry In 2008 Case Study Analysis is its capability to develop innovative items at a constant rate. It significant shows for the innovation and product designing of Corp is that the business has received many awards for its development and item design.
Unlike Apple and other rivals, Venture is concentrated on producing gadgets which can be easily incorporated with any type of open source Os (OS) and software application. This offers Corporation an edge over Apple devices.
Company's capability to produce luxury items at low cost of production is also among the major strength of Business as it allows the company to catch more market by providing quality products with cost control.
Weaknesses
Under Armour And The Sports Apparel And Footwear Industry In 2008 Case Study Analysis weak points are hidden in the company's reliance on outsourcing software for its gadgets due to company's inability in establishing software application, unlike Sony. Business also has low earnings margins as compare to Apple due to huge distinction in the rates of Apple and Corporation with a much lesser difference in quality. The varied focus of the company due to large number of items in its portfolio, lead to the less effective production and make the business unable to charge greater costs like Apple. The business is likewise ineffective in handling its patents and often faces the issue of patent violation.
Opportunities
Opportunities for Under Armour And The Sports Apparel And Footwear Industry In 2008 Case Study Help lie in the growing Smartphone market and the company's efficiency in the market. Organization currently runs in about 80 nations and the company has a chance to increase its geographical expansion by moving towards more emerging markets outside Asia.
Hazards
The dynamic market environment of technology market posture a severe threat on Corp's survival and require the business to spend much of its earnings share on R&D in order to make it through in the long run. The marketplace saturation in industrialized countries i.e. saturation of mobile company is likewise a huge risk for the business's growth in the presence of strong competitors like Apple.
4 P's of Marketing
Product
Company offers quality items and has a rather rich portfolio which caters to different segments. LCD and mobile phones are the biggest items of Corp, whereas DRAM is also not far behind in contrast of them.
• LCD/ TV
• Laptops.
• Mobile phones.
• A/c.
• Personal computers.
• Hard disk drives.
• Washer.
• Fridges.
• Video cameras.
• Microwaves.
• Flash memory.
• DRAM.
Price.
Under Armour And The Sports Apparel And Footwear Industry In 2008 Case Study Solution uses both market competitive and market skimming rates strategies for its wide variety of products. In competitive rates it adjusts the price according to the competition in order to gain advantage, whereas, it uses market skimming method where the item has actually an added value and by selling a few items it can reach break-even.
Location.
It has among the best supply chain networks, with retail suppliers, their own sole suppliers, E commerce channels like Amazon and so on. All its items are prompt supplied to the selling place/ delivered to the clients straight in case of online order.
Promotion.
It uses both offline & online channels of promo to market their items. Paid item advertisements, social promo and digital ads are utilizes to produce awareness about Organization items.
Value Chain Analysis.
It's an analytical framework for recognizing company activities that include value or competitive advantage for the company.
Incoming Logistics.
For its incoming logistics it owns different logistics firms as it subsidiaries. It looks after its providers and produces a harmonious relationship with them and even decreased their payment cycles to improve this relationship further which includes worth to their chain network.
Operations.
Corp's core competency is its mass making it produces 90% of its products internal. Divided into three different divisions its operations are particularly IT & Mobile Communications, Gadget Solutions and Customer Electronic Devices. It is preserving operation hubs worldwide to further add worth to its worth chain network.
Outbound Logistics.
Its outgoing logistics system efficiency is one of the main reasons Under Armour And The Sports Apparel And Footwear Industry In 2008 Case Study Help has the ability to compete with Apple. Venture's own Electronic Logitec system plays a significant role in the outbound logistics operations. It even performs the jobs of collection of payment, settling insurance coverage claims, etc. on behalf of Org.
Marketing and Sales.
Drawing in target consumer attention towards the product is done through marketing and sales to communicate with them the worth and competitive benefit the item provides. Under Armour And The Sports Apparel And Footwear Industry In 2008 Case Study Analysis marketing spending plan is continuously rising considering that they began their rearranging globally and will continue to do so as they are continually looking to expand and invest in high potential development markets. The spending plan is invested in events, print and media ads, public relations and so on.
Company put their customers at the leading and continually aim to deliver unmatchable customer service requirements. By including a direct assistance line to contact them 24 hours they have even more increased the included worth of Corporation service.
Segmentation.
Under Armour And The Sports Apparel And Footwear Industry In 2008 Case Study Help has actually diversified market segmentation, based upon its arrangement of large range of items to large number of customers. Venture target customer sections can be divided into 3 categories i.e. Under Armour And The Sports Apparel And Footwear Industry In 2008 Case Study Solution IT and Mobile Communications, Organization Customer Electronic Devices and Enterprise Device solutions.
Geographical.
Under Armour And The Sports Apparel And Footwear Industry In 2008 Case Study Help geographical division is based upon two criteria i.e. region and density. Org serves about 80 nations worldwide with its items supplied to Urban as well as Backwoods of the nation. The Business is also growing its worldwide existence and the company's versatility in finding its plants motivates international growth of Corp.
Market.
Enterprise produces items that can be used by both women and males. The target clients for Enterprise IT and mobile communication products have an age variety of 18-65 with majority at a young or freshly wed life cycle stage. Apart from it, Organization Customer Electronics are targeted to a client sector with an age range of 25-65.
Psychographic.
The psychographic segmentation of Under Armour And The Sports Apparel And Footwear Industry In 2008 Case Study Analysis s based upon the social class and the lifestyle of the customer. Venture target clients on the basis of social class are generally upper middle, middle and working class clients, as Company sell items like cellular phone very little more affordable i.e. Motorola along with very little costly i.e. Apple. It offers quality items to middle level customers at a somewhat high price than others targeting the same section.
Behavioural.
Under Armour And The Sports Apparel And Footwear Industry In 2008 Case Study Solution bulk target clients have special behavioural attributes. They are brought in towards Corporation due to the fact that of its moderate prices with an extent of quality.
Quantitative analysis.
Sales of Business has increased remarkably from 16 billion $ in 1997 to 44.6 billion $ in 2002, and the net earnings of.48 billion $ to 5.9 billion $. It has also reduced its debt from 15 billion $ to 4.6 billion $. Digital media is the biggest selling category of Venture with sales of 13.9 billion $, whereas, Telecommunication and Semiconductors sectors both reached 11 billion $ in sales. Because of the high overhead expense, incomes/ sales are increasing but net profit is not increasing accordingly. New expansions and working with's were the main reason of the increase in the overhead costs, with china currently not providing any profit to Company, but there is a lot capacity in the existing market with 75 % yet to be explored.
Qualitative analysis.
Whereas, the core strength of the company is presently manufacturing but long gone are those days when great products were selling themselves. Kim has currently begun to enhance the marketing activities of Business and very quickly it will end up being one of its core strength like manufacturing if not much better.
VRIO.
Worth.
Corporation operates designs, makes and offer a vast portfolio of customer electronic devices. It runs in an exceptionally competitive environment and has actually successfully placed itself as the maker of quality products. The response is yes.
Rarity.
As, said earlier that Under Armour And The Sports Apparel And Footwear Industry In 2008 Case Study Solution operates in a highly competitive environment, which means all the business have similar items. So, the answer for rarity is no.
Imitability.
Due to the nature of the market, it is really simple for competitors to understand the performance of the products and quickly make their own designs. Yes, Org is just behind IBM in signing up brand-new patents yearly, however the advantage is extremely short-term in this industry.
Organization.
Chairman Lee has completely turn-around Business, from going practically insolvent throughout the Asian financial crisis of 1997 to the leading 25 company worldwide. Certainly yes there appertains company in the company and the outcomes promote themselves.
External Ecological Analysis
PESTLE Analysis
Political
Being an international brand name spread almost in every nation worldwide, bulk of the environments like USA, Europe, China etc., are very conductive for its operations. Nevertheless, it deals with some political pressures in less developed nations where law and order situation is not good. Latin American, African and some Asian nations fall in this category, where political instability do have an impact on Under Armour And The Sports Apparel And Footwear Industry In 2008 Case Study Analysis operations.
Economic
Purchasing power of customers is important for business like Enterprise to succeed and grow. Emerging markets like India, middle-eastern countries and so on offer development chances, whereas, due to recession even the customers of developed nations suffer badly. Thus it is extremely essential for the business to keep an eye on the ongoing financial scenario of the nation prior to going into the market.
Socio-Cultural
Multinational business need to face various social and cultural concerns throughout its operations in a foreign nation. Corp has actually also faced numerous issues however have embraced to the regional environments of the majority of the nations extremely well. It has actually customized its products, practices, policies and so on accordingly in order to achieve success.
Technological
With a yearly expense of 2.4 billion dollars in Research study & Advancement, and with continuous innovative item launches, Under Armour And The Sports Apparel And Footwear Industry In 2008 Case Study Solution is one of the leading innovative companies of the world. With a clear objective to be ahead of the rest when it pertains to technological improvements, Company has actually risen to the no 25 of the leading effective business of the world.
Legal
Each country has their own laws and policies, being a multinational company Corp need to strictly follow those laws in their jurisdictions. Failure to do so, will result in serious legal consequences. So, it needs to study or employ a regional law specialist prior to beginning its operations in a specific country.
Environmental
With the rising awareness amongst consumers about the ecological & ethical infractions of companies, Corporation has to guarantee that it follows all the security guidelines. Ecological damages, ethical misconducts are not acceptable and in some countries the effects can be very severe. On the other hand it has to do some Business Social Duty practices to reveal the locals that it appreciates their environment and people.
Porter's 5 Forces
Risk of Replacement
Danger of substitution for Corp's each product category is quite significant. Running in an incredibly dynamic industry lead the business to deal with a high threat of substitution. Elements for high threat of alternative for Under Armour And The Sports Apparel And Footwear Industry In 2008 Case Study Solution Mobile phone consist of the existence of high number of providers and Market saturation in industrialized countries, that make the cost of changing for consumers practically zero. Substitution risks for Venture visual display lie in the altering lifestyle of clients. Clients can switch to seeing visuals in your home towards outdoor activities. Together with it, Org printing solutions products are threatened by the increasing destination of clients towards cloud storage.
Competition Among Existing Companies:
The rivaly among Corporation and its close rivals is intense. The significant reason behind this is the approach of market saturation in different variety of product categories, requiring Enterprise to present more innovative functions in existing items and brand-new ingenious products to maintain its growth. Other aspect for the extreme competition amongst the rivals is the little product differentiation among the items. The prominent gamers in the innovation industry are rather aware of the value of R&D spending for their survival and are facing a race of marketing and R&D costs, to capture the market. The major competitors for Under Armour And The Sports Apparel And Footwear Industry In 2008 Case Study Help samrtphones consist of Apple, Motorola, LG, Nokia, Huawei, OPPO and so on. High competition rivalry leads to the fluctuating market shares which can be seen in Exhibition F.
Bargaining Power of Suppliers:
( Organization Sustainability Report, 2016) Provider's bargaining power for Enterprise is low as Org runs economies of scale and its orders are of potential size and worth. Due to incapability of Under Armour And The Sports Apparel And Footwear Industry In 2008 Case Study Help to build its own software, it has to outsource its software application development to Google, which becomes a possible provider of software for Business, resulting in high bargaining power of Google.
Bargaining Power of Purchasers:
Negotiating power of purchasers for different number of product classifications of Business is extreme. Among the element leading to the intense bargaining power is the availability of a great deal of competitors in practically each product classification i.e. competitors of Corp Smart device, with a very little distinction. The high accessibility of suppliers of Smart devices with minimum differentiation, make the switching expense for buyers practically zero, thus increasing the bargaining power of purchasers. Market saturation in the majority of the product classifications also make the bargaining power of buyers more intense in for Under Armour And The Sports Apparel And Footwear Industry In 2008 Case Study Help. In spite of igh bargaining power Business is quite capable of selling its items at a greater price than much of its competitors, due to luxury quality product and a reasonable brand image.
Hazard of New Entrants:
Threat of brand-new entrants for Under Armour And The Sports Apparel And Footwear Industry In 2008 Case Study Analysis is rather low. Along with it, requirement of substantial know-how and research study and development expenditures for survival in the market likewise make brand-new entrants reluctant to enter in the market. Market saturation is also one of the barrier of entry in technology industry.
Competitive Analysis
Company's high item diversification offers it distinction from its rivals. Unlikely to its close rivals including Sony, Intel and Nokia, who focus majority on a single item category with Sony focusing on customer electronics, Nokia on cell phones and Intel on chips, Under Armour And The Sports Apparel And Footwear Industry In 2008 Case Study Help had a substantial R&D costs on all of its product classifications which allow the company to earn potential revenue from sales of almost all of its products.
The company ranks first in 4 item categories i.e. DRAM Chips, LCD Displays, Big Screen Televisions and Microwave, in regards to worldwide market share, amongst 8 different product classifications. Venture was the worldwide leader in producing DRAM, SRAM and NAND flash chips. Although, Org revenues from chips was less than Intel however its incomes from chips was growing faster than Intel and has actually grown near to the profits levels of Intel, as given up the case Exhibit 2.
In addition to the chips Company mobile market was also flourishing at a high rate than its competitors i.e. Motorola and Nokia. Corporation's mobile phone's sales growth was 51% as compare to Motorola with just 4% and Nokia with absolutely no sales growth. The major reson behind Corporation's high growth despite of higher prices than Nokia and Motorola was the business's high-end quality cellular phone.
Enterprise was also reaping the benefits from increasing market share of luxury LCDs as given in case Exhibition 3. The significant reason, making the business allow to get the chance is its mass production at low expense. Sony was the most significant rival for Under Armour And The Sports Apparel And Footwear Industry In 2008 Case Study Help in LCD market, however, it had actually likewise begun joint venture with Corp in 2003 for LCD producing, decreasing the competition for Org.
Porter's Competitive Strategy
Low Expense Leadership method of porter is fully carried out by Org the method they attain economies of scale by strengthening their core competencies of production. They constantly bring something brand-new and ingenious whether it's a service or a product.
Alternatives
Alternative Option 1
The Chief Marketing Officer (CMO) of Under Armour And The Sports Apparel And Footwear Industry In 2008 Case Study Help would produce a brand-new brand image by targeting the more youthful generation of the particular country. As, specifically mobile phones of Corp are very popular among the more youthful group.
Pros
1. It is the very best method to build Consumer Lifetime Worth (CLV) by producing a long-lasting relationship with clients. Construct loyalty through providing value and reap the benefits for long-term, as research study has revealed it is much cheaper to retain current customers than to draw in brand-new ones.
2. Another pro of this alternative is that word of mouth spread faster amongst more youthful people and which in turn will generate new customers for my items.
Cons
1. Old consumers who were connected with Corp prior to might not like this new image the business is attempting to portray.
2 It will sustain more expenditures to rearrange some items and it may not even bring success as the trends change very rapidly among the younger group.
Alternative service 2.
Business has made manufacturing its core proficiency for the most part of their service and due to which its managers are not scared to completely step out of their convenience zone. It would be done by arranging training workshops during which significance of marketing will be taught and numbers will be provided. Failure to get the passing ratings will get demoted. Marketing environment need to be developed internally first as real marketing begins inside the corporation.
Pros
1. Its pro will be that all the marketing method fans will come out and also the opposite ones.
Cons
2. Its con can create an extremely unhealthy environment in the workplace, as individuals frequently resist modification since they fear it.
Determine the best option
Alternative is the best as it plainly has more pros since as soon as a Customer Life time Value is constructed the company will profit from it till that client is alive and has buying power. Plus, our target customers are the younger generation which are bound to live longer than the existing aging individuals. Org's main objective is to create loyalty amongst its customers and make them bought it from them and even buy their different items.
Execution Plan
• Targeting younger generation through social marketing, developing a link with them like Pepsi do with music. And set the expectations possible and reasonable.
• A group consisting of best marketing and sales professionals ought to be assemble, and both views must be taken into account before securing the resources required to implement the strategy.
• Thorough communication of the plan need to be done as it is extremely essential for everyone to be on the very same page to make it work.
• Tasks and timelines must be construct and interacted appropriately to each individual accountable.
• The supervisor must utilize a dashboard which shows the development of all the tasks which have been done or about to be done and by whom.
• The supervisor should keep an eye on and keep a continuous look at the individual and general efficiency.
Due to the fact that any brand-new pattern or policy may come in due to which all the things currently prepared have actually to be adjusted, • Everybody should be ready to adapt midway. It's much better to have contingency strategies already prepared.
• At the end of the campaign the supervisor must interact the outcomes and if effective need to commemorate with the team.
Budget plan
The M-net program exposed engaging analysis about the low and high growth possible areas and just how much marketing budget ought to be assigned accordingly. This modification the budget allocation of many managers and various nations were dissatisfied and argued but the analysis done by the program was precise and revealed figures like The United States and Canada and Russia development possible warranted a 35% allotment while they were getting 45%. Whereas, China and Europe must be getting 42% however were instead offered 31%. It really assisted to relatively disperse the resources and record more clients by spending more on ads on the high development potential regions of the world.
Conclusion
Its constant investment in R&D and innovative practices have moved them to brand-new heights however for them its' only the start and they desire to be amongst the leading 3 brand names in the world. Their marketing efforts should be directed towards younger demographic amid the internal arguments about marketing and ought to create Customer Lifetime Value as it will not just give them benefits now however will continue to gain it till the client lifetime. As the expense of keeping the customer is much less expensive than drawing in a new one.
