Running head: 2020 STRATEGY ANALYSIS OF BODY ARMOR 1

2020 Strategy Analysis of Body Armor

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Table of Contents

Introduction............................................................................................................................3

Discussion................................................................................................................................4

Key issues affecting the company..........................................................................................4

Key strategies executed/proposed.........................................................................................7

Conclusion.............................................................................................................................11

References..............................................................................................................................12
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Introduction

Under Armour has been having difficulties with its financials and sales for a long time.

Entering 2020, the company was entering its 5th year of difficulties in the North American

market. The North American market accounts for more than two-thirds of the annual sales

revenues of the firm. The company's issues started in 2016, which impacted the company a great

deal. At the time, the company was a reputable up-and-coming company in the sports apparel

industry. Still, its reputation was shunned as a result of the sales and financial troubles. Since the

company was incepted, it had never experienced a slow in its sales and revenue growth until

2016. Since then, the company has been experiencing fewer profit margins due to reduced sales

of the organization's products. Any organization needs to carry out strategy analysis to determine

the areas that are negatively impacting the firm and that need improvement and how the

improvement will be achieved. It is also critical to carry out strategy analysis to identify the

organization's areas performing the best. This paper analyzes the 2020 strategy of Under

Armour, highlighting the key issues affecting the organization. These key strategies have been

executed or proposed to improve the organization's situation and identify if the company has

improved or failed based on the strategy implementations. This will be significant as it will

provide insight into the company entering another quarter. However, the question is whether the

company has certainty in the future.

Discussion

Key issues affecting the company

Under Armour has been in trouble since 2016. The trouble has been brought by several

issues that the organization is facing. Since the organization's inception, it has been experiencing

tremendous growth, even taking on huge sports apparel companies like Nike that had dominated
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the sports apparel industry. However, in the past five or so years, the company has experienced a

lot of trouble to the extent that it has been regarded as an organization that has a very uncertain

future. Share investors and entrepreneurs are uncertain about the organization's future, which has

made them avoid trading with the nation or engaging in serious business with it. The most hit

market of the organization by the troubles facing the firm is the North American market. This is

the most important market segment of the organization, as it accounts for more than two-thirds of

the company's annual sales revenues (Thompson, 2021). Therefore, the company having troubles

in this market segment meant that it was in big trouble. It was beginning to lose its grip and

strength on its most important market segment. Losing the grip on its most important segment

means that the organization's future became uncertain in 2020; it was experiencing its 5th year

consecutive of difficulties in sales. Therefore, one of the key issues affecting the firm is reducing

sales and earnings. Since 2016, the company has had reduced sales and earnings from the main

market segment. Prior to the third quarter of 2016, the company had experienced a 26 quarter

straight revenue growth of 20% and above. The sales of the fourth quarter of 2016 were a

slowdown of the company's sales revenues (Thompson, 2021). From 2016 to 2020, the company

has been experiencing low sales revenue and sales growth rate, the slowest the company has ever

experienced, according to the CEO and Chairman of the company Kevin Plank.

Another key issue that the company is experiencing is an uncertain future. This has been

brought about by the company's reduced growth rate and sales and revenue. When the company

first encountered the reduced growth and sales revenues in the fourth quarter of 2016, the CEO

and chairman of the company were optimistic but uncertain about the company's future. This has

negatively impacted the organization since most investors in almost all aspects have been pulling

out and avoiding the company. The first impact was on the stocks market, where the company's
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shares reduced below the share price of $105 that it had earlier hit in July of 2015. At the end of

2016, the share price had reduced to $27, the most share price decrease the company has ever

experienced since it was made a C corporation in 2002. At the end of 2020, the share price of the

company's shares had attained a low of $13 per share (Thompson, 2021). These results were

achieved due to the weak outlook of the organization. A summation of the reduced share price of

the company shares from $105 in 2015 to $13 in 2020 proved that the company had an uncertain

future. The company's investors were having doubts and concerns on whether they will be able

to recoup their investments in the North American market. Being experienced in the business

environment, most investors saw this as the sign of a troubled brand. They compared these signs

with previously troubled brands. The investors understood that it was almost impossible to

rebuild the image of a brand once the brand had fallen from the favor of the market and the

public in general. This, coupled with the rating of the CEO and chairman of the company as the

fourth-worst CEO of 2017 by Wall Street, made the organization's investors more uncertain

about the company's future (Thompson, 2021). Therefore, the majority of the investors pulled

out from the company as they could not continue investing in an organization that was

performing poorly, and they were not having profits from their investments. Another reason why

the company's future was becoming uncertain was due to a poor leadership structure that had

been implemented by the CEO and chairman of the company starting in 2016. At the start of

2016, the CEO and chairman of the company made changes to the leadership structure that led to

the making of poor leadership choices on the organization and operational decisions. This

impacted the company's performance negatively as most of the employees began struggling with

their tasks due to the leadership structure.

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The one poor leadership decision that was executed on the organization was the

controversial split of the company's stocks that was orchestrated by the CEO and Chairman of

the company in April 2016. This decision landed the CEO and chairman of the company on the

list by the wall street of the worst CEOs. The decision made by the CEO was to split the stocks

of the company into three classes, Class A, Class B and Class C. Class A involved vote entitled

stocks, while class B and C were made up of investors who did not have any voting power. This

insinuates that only shares in class A had voting power. The impact of this was that the voting

power of every shareholder was reduced by 65%(Thompson, 2021). This further means that the

investors who had full share voting power did not have as much power as before, and therefore

they could not make major decisions on the company. The question would be, who was this

power transferred to? This power was transferred to the CEO and chairman of the company,

making him have more voting power than the company's investors. With such power, he changed

the leadership structure and tactics of the company; thus, he ended up making a string of

unrealistic and poor decisions.

The third key issue affecting the organization is stiff competition from the main

competitors. The main competitors of the organization have been Nike and the Adidas brand.

These two competitors have mastered the art of incorporating innovation in their products and

operations. This has provided them with a competitive advantage over the Under Armour

company. On the other hand, the company has been making poor leadership decisions that have

made it fall out of the favor of the investors and the public. This has therefore reduced their

competitive advantage in the market. It can be identified that as the company's competitive

advantage is reducing, the competitive advantage of the competitors is increasing. This created a

big competitive rift between the company and the competitors, making the competition stiffer.
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Prior to the company's issues, the competition was being handled positively. The company's

competitive advantage would rise with the rise of the competitive advantage of the competitors

(Thompson, 2021). Therefore, the stiff competition by the competitors through the incorporation

of innovation in their products made the clients of the company ditch under Armour since they

were more attracted to the competitors' products. This added to the woos of the company.

Key strategies executed/proposed

Due to the company's challenges, it had to come up with strategies that would help it

overcome these challenges. The pressure of the investors leaving and the company losing on its

most important market segment could not allow it to continue operating on the same strategies.

As a matter of fact, these are issues that the company has been facing for close to five years.

Therefore, it insinuates that the strategies that were previously used in the organization could not

help the organization overcome the challenges it was facing. The 2020 strategy has been divided

into different parts to cover the different factors of the company. Each factor of the organization

requires a different strategy from the other since even though they contribute to the same overall

problem, they have different underlying issues. The different strategies have been divided into

growth, product line, marketing and promotions, and distribution strategies, among others.

The first key strategy that has been executed or proposed by the organization is the

growth strategy. This is the most important strategy to the organization since growth is the major

problem the company has been experiencing since 2016. The organization's growth rate has

stagnated and, in some areas, stopped completely (Thompson, 2021). Instead of having positive

growth, the company has been experiencing negative growth. Therefore, there was a need to

eliminate the negative growth rate and the stagnation and experience a positive growth rate. The
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2020 growth strategy of the organization has been based on five pillars. The first pillar that the

2020 growth strategy of Under Armour is built on is the rejuvenation of the sales growth and

profitability in the company's largest market segment through an improved e-commerce platform

enhanced shelf space availability in the physical retail shops reduced-price discounts (Thompson,

2021). The second pillar of the growth strategy is improving authenticity to the brand by

introducing more innovative products, helping the clients with new solutions to their problems,

and enhancing their experiences. The third pillar is exerting the necessary efforts to help

continue the growth of the company revenues in other regions of the company, such as Latin

America and the Asia Pacific areas. The fourth important pillar for the growth strategy is

enhancing their emphasis on endorsing sports personals and other brand influencers to improve

brand awareness globally, thus strengthening the brand. The fifth pillar on which the growth

strategy has been built is growing the fitness business by obtaining more digital subscriptions

and selling digital advertisements on its three apps related to the fitness industry.

The second key 2020 strategy that has been executed or has been proposed for

implementation on Under Amour is the product line strategy. Since the company has a wide

product portfolio, every product has been provided with its strategy. This is because the different

products of the company have different target markets. The previous product line strategy that

the company has been using the company's product offerings and them marketing the individual

products at different price points. This strategy has been enhanced to make it more relatable to

the company's issues. This means that some elements of this product line strategy have been

eliminated, others have been added, and others have been improved. This has helped incoming

with a more customer- and growth-oriented (Thompson, 2021). The main aim of the new

strategy is to have the new additions to the product line to provide the client with an experience
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that is superior to a similar product in the market that could be used as an alternative. It does not

matter whether this product is from the main competitors or not. The sports apparel industry has

changed over the years, and therefore, clients go for the product that helps handle their needs

regardless of the company or brand name. The customer is more oriented towards their needs

being solved.

The third key 2020 strategy that the company has already implemented to solve its issues

is the implementation of an in-house marketing and promotions department. This department is

responsible for advertising, marketing and promoting all the organization's products. This has

helped the organization reduce its expenditure on marketing and promotions. Previously, the

company contracted a third-party advertising company to handle its promotions and marketing.

The department has introduced the sports marketing strategy whereby the company uses high-

performing sports personalities to promote its products and thus improve its sales. The sports

personalities are from different levels, from high schools to professional teams (Thompson,

2021). This strategy was attained by the organization signing agreements with different teams

and colleges. The company would also sponsor and host sports events on different levels. It also

narrowed down to individual sports personnel. In such cases, the company entered into

endorsements with the individual sports personnel to promote and advertise the company's

products. Since the company has different products for different sports, it had to use different

sports personalities on the sports they have apparel for. Another marketing strategy that the

company executed was increasing storage space in the physical stores selling the company's

products. This has been referred to as the shop in shop experience. In this approach, the company

designs and funds the point of sale displays under the company to improve the engagement

between the products and the clients. The company has also invested heavily in media
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promotions. It utilizes both mainstream media and social media platforms to promote its products

(Thompson, 2021). It also advertises and promotes in print media. This has been done to reach as

many people and as many target markets as possible. It also contracts social media influencers to

promote some of its products.

The company's distribution strategy had to change with the closure of the Dicks Sporting

Goods, which accounted for 10% of the company's net revenues. The company, therefore,

implemented the strategy of opening and entering into agreements with more retail accounts to

sell more of the products by the company. This was also to eliminate the dependency of one

retail account. With different retail accounts, the company is able to distribute more products.

The company also relies on the direct to consumer sales. To improve this, the company has

opened more retail stores and invested more in e-commerce platforms. This will ensure that the

sales and growth of the company grow in the coming years. The company has also engaged in

agreements with other distributors for its clients outside the North American market segment

(Thompson, 2021). The company has also heavily invested in product design and development.

This has been achieved through innovation. The company realized that its major competitors had

incorporated innovation in their product design and development, which is why their competitive

advantage is increasing. With this strategy, the company hopes to regain its lost competitive

edge.

Conclusion

The implementation of the strategy has not been of great help to the organization since, in

the first quarter of 2020, the company faced a 23% decline from the first quarter of the previous

year, 2019. even though there was the COVID19 pandemic, the bigger percentage of the decline
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can be pointed to the failure of the implemented strategies. This means that the company has not

improved from the strategy, and the company's problems are still being a menace. The company

continued to lose in its primary market segment, the North American market. The 2020 strategy

has not been of help to the organization, and therefore the company needs to go back to the

drawing board and come up with a better strategy that will help it achieve growth and restore its

former glory and brand image. From the failure of this strategy, the company does not have a

certain future, and it is bound to lose more investors and clients to its competitors. The

company's future will only be certain with the design and introduction of a strategy that handles

all the key problems the company is facing effectively. The company also does not have a

compelling product assortment that will accelerate the sales and growth of the company. This

calls for the introduction of new products to the company's product portfolio. The company's

share prices will continue to fall, and it is predicted that if a better strategy is not implemented,

the share price will come to $4 per share.

References

Thompson, A. A. (2021). Crafting & Executing Strategy: The Quest for Competitive Advantage:
Concepts and Cases (23rd Edition). McGraw-Hill Higher Education (US).