630 STraTeGIc MaNaGeMeNT caSeS

Under Armour, Inc., 2013

www.ua.com, UA
Headquartered in Baltimore, Maryland, Under Armour (UA) was founded in 1996 by a former
University of Maryland football player who desired a t-shirt that would whisk away perspiration
rather than get soggy wet. The company has grown to be one of the most sought after brands
among athletes around the world, being worn by some of the largest U.S. college football and
European soccer teams. Colleges such as the Maryland Terrapins, Auburn Tigers, South Carolina
Gamecocks, and many more have contracts with UA to outfit their teams. English soccer team
Tottenham Hotspur, Greek team Aris F.C., and Mexican club Deportivo Toluca F.C. all are out-
fitted by UA. Mega stars such as Tom Brady, Cam Newton, Bryce Harper, Michael Phelps, and
many more, all sponsor and market UA products.
UA designs, develops, markets, and distributes apparel, footwear, and accessories for men,
women, and children worldwide. The company offers apparel in three styles: compression, fitted,
and loose and designed to be worn in hot, cold, or normal weather. Footwear products include
cleats for most all sports, running and basketball shoes, and even hunting boots. Accessories
include gloves for football, baseball, golf, socks, and team uniforms. UA’s moisture-wicking
fabrications are engineered in many different designs and styles for wear in nearly every climate
to provide a performance alternative to traditional products. Its products are sold worldwide and
worn by athletes at all levels, from youth to professional, on playing fields around the globe.
UA’s European headquarters are in Amsterdam’s Olympic Stadium, with additional offices in
Denver, Hong Kong, Toronto, and Guangzhou, China. With about 1,800 employees, UA distrib-
utes its products through specialty retailers, department stores, outlet stores, and institutional
athletic departments.
For the second quarter of 2013 that ended June 30, 2013, UA reported that revenues
increased  23 percent to $455 million while the company’s net income increased 163 percent
to $18 million compared to the prior year’s period. The company’s apparel revenues increased
23 percent to $310 million, primarily driven by a new baselayer product and the expansion of the
Storm and Charged Cotton products. The company’s second quarter footwear revenues increased
21 percent to $82 million, spurred by the Highlight football cleat and the UA Spine platform.
UA’s Q2 2013 accessories revenues increased 30 percent to $51 million, primarily driven by
headwear. For the quarter, UA’s Direct-to-Consumer revenues represented 30 percent of total net
revenues and grew 29 percent year-over-year. The company’s Women’s category is doing well
with its new Studio and ArmourBra products, and the Spine running footwear is doing well.
Copyright by Fred David Books LLC. (Written by Forest R. David)

history
At age 23, Kevin Plank developed a new t-shirt in his grandmother’s basement in Washington
D.C. after noticing that his compression shorts always stayed dry, but t-shirts had to be changed
frequently because they became sweat soaked. This observation led Plank to create a new
compression t-shirt that whisked away sweat. After graduating, Plank provided this t-shirt to
his former teammates who were playing in the National Football League (NFL). After positive
reviews, UA had t-shirt orders totaling $100,000 in 1997. UA’s first big break came when USA
Today pictured Oakland Raiders quarterback Jeff George wearing UA apparel. In late 1997,
Georgia Tech asked for 10 shirts, ultimately leading to deals with Georgia Tech, Arizona State,
and North Carolina State universities.
In the 2000s, UA expanded rapidly after outfitting Warner Brothers with apparel for two
films, and an advertisement placed in ESPN Magazine generated $750,000 in sales. In 2003, UA
became the outfitter of the now defunct XFL football league and launched its first TV advertise-
ment with the motto “Protect this House.”
UA recently opened specialty stores, including a 6,000-square foot store in Illinois and
has opened factory outlet stores in 34 states. In 2011, the company purchased 400,000 square
 case27 • UnderarmoUr,Inc.,2013 631

feet of office space for $60.5 million. UA has new contracts with the NFL, National Basketball
Association (NBA), and Major League Baseball (MLB) to produce footwear, apparel, and ac-
cessories. Many European football teams such as Trottenham Hotspur and other rugby teams are
outfitted with UA products. None of UA’s 5,900 employees are members of a union, and 1,900
are full-time.

Internal Issues
UA owns no fabric or process patents. Thus, UA competitors can manufacture and sell products
very similar to UA products. UA’s success thus hinges a lot on their brand image, trademarks,
and copyrights.

Vision and Mission

Regarding UA’s vision, CEO Plank recently said:

Our investments illustrate our commitment to realizing our long-term vision of one day
having our Women’s business larger than Men’s, Footwear larger than Apparel, and our
International business larger than our U.S. business.

Organizational Structure
UA reportedly operates under four geographic segments: (1) North America, (2) Europe, the
Middle East, and Africa (EMEA), (3) Asia, and (4) Latin America. However, from its organiza-
tion structure revealed in Exhibit 1, it appears the company is structured divisionally by product.

Marketing
UA’s marketing expenses were $205.4 million in 2012, up from $167.9 million the prior year.
But these marketing expenses were 11.2 percent of revenues, down from 11.4 percent the prior
year. UA’s advertising expenditures in 2012 and 2011 were $205.4 million and $167.9 mil-
lion respectively. UA develops and markets products primarily for use in athletics, fitness, and
any outdoor activities. UA attempts to drive demand through brand equity and increasing con-
sumer awareness of its superior product. UA’s growth is largely dependent on sales from Dick’s
Sporting Goods, The Sports Authority, and Foot Locker, which have store-within-a-store sales

Exhibit 1 Under Armour’s Organizational Structure

Kevin Plank, CEO and

Chairman of the Board

Matthew
Mirchin,
Byron John Rogers,
Brad Kip Fulks, Karl-Heinz Senior
Adams Jr., Vice-president
Dickerson, Chief Maurath, Vice-president
Chief and General
Chief Financial Operations President Global
Performance Manager of
Officer Officer International Brand and
Officer E-commerce
Sports
Marketing

Gene McCarthy, Adam Peake, Henry Stafford,

Senior Senior Senior
Vice-president Vice-president Vice-president
Footwear U.S. Sales of Apparel

Source: Based on company documents.

632 Strategic ManageMent caSeS

channels. However, UA has been making great strides selling its products directly to consum-
ers, with 29 percent of revenue in 2012 coming from direct sales. UA has the brand strength to
attract many consumers to more profitable channels. However, 69 percent of 2012 revenue was
from wholesale, and 2 percent from licenses.
A key strategy for UA is securing endorsement of its products from high-performing ath-
letes who have significant influence in the NFL, NBA, MLB, and even high school teams. Many
sports stars such as Cam Newton and Tom Brady endorse and wear UA products. It is UA’s belief
that this strategy is the best possible way to advertise its products because many fans become
familiar with UA products seeing them worn by high-performing athletes on a year round basis.
In addition to focusing on the large-market leagues, UA also focuses on brand authenticity from
a more grassroots level. By hosting camps, clinics, and other activities for young athletes, it is
able to gain a firsthand appreciation for UA’s product quality and brand equity.
UA uses broadcast, print, and social media outlets to promote the firm’s product. UA also
engages in acquiring prime real estate in the 25,000 major retail stores worldwide in which their
products are sold, as well as operating outlet stores in 34 different states. UA products are sold
throughout the world. New UA products in 2012 included UA Studio line, the Armour Bra, cold-
back technology, UA Spine footwear, and UA scent control technology.
“The biggest, baddest brand on the planet, bar none.” That’s how founder and CEO Plank
likes to describe his vision for what UA can ultimately become. Plank and his team are excellent
marketers; the company’s blood-pumping ads resonate with athletes and those who aspire to be-
come athletes. UA’s bold logo and brash and edgy marketing campaigns inspire movement and
physical fitness, positioning the company well within the healthier lifestyle megatrend. Plank
and his team relish their underdog image versus big rival firms; they love to operate within and
promote an “us-versus-them” philosophy. This competitive fire has served UA well and has en-
capsulated many athletes and fans.
UA has 102 factory house stores in North America, mostly located in the eastern USA.
UA opened its first factory house store in Canada in 2012.

Finance
In late 2012, UA has an impressive annual growth rate of 34 percent since 2005, has a
market cap of $4.32 billion, and a price-to-earnings (P/E) ratio of 49.4, above the S&P 500
P/E ratio of 17.7. UA shares were up 44.6 percent year-to-date as of December 20, 2012.
Strong financially, UA has used zero of its $300 million revolving credit facility at the end of
September 2012. UA’s debt-to-equity ratio is low at 0.10. UA has a quick ratio of 1.84 and
has improved its earnings per share by 22.7 percent in the most recent quarter compared to
the same quarter a year ago. UA does not pay dividends, preferring to reinvest all earnings
back into the firm.
UA expects 2012 net revenues of approximately $1.82 billion, representing growth of
24 percent over 2011, and 2012 operating income of approximately $207 million, representing
growth of 27 percent over 2011. Plank says: “I am proud of what our team has accomplished so
far this year and we are well positioned for growth in 2013 and beyond. I emphasize ‘team’, as
we continue to make great strides with the additions of seasoned leadership in Supply Chain,
Women’s, and International.”
UA revenues increased 24 percent in the third quarter of 2012 to $575 million compared
with net revenues of $466 million in the previous year’s period. Net income increased 25 per-
cent. UA’s recent income statements and balance sheets are provided in Exhibits 2 and 3, respec-
tively. Note that the company pays no dividends and is performing in an excellent manner.

Segment Data By-Product

Exhibit 4 provides a breakdown of UA’s revenues by product. Note that apparel continues to be
the strongest product offered based on net revenues, but footwear and accessories such as bags,
hats, and gloves experienced higher percent increases over the most recent fiscal year. License
revenues decreased as a result partly of less orders of hats and bags. Seventy-six percent of
company revenues are derived from apparel in 2012. Followed by footwear at 13 percent and
accessories at 9 percent.
 case27 • UnderarmoUr,Inc.,2013 633

Exhibit 2
UnderarmourstatementsofIncome
(In thousands, except per share amounts)
Yearendeddecember31,
2012 2011 2010

Net revenues $1,834,921 $1,472,684 $1,063,927

Cost of goods sold 955,624 759,848 533,420
Gross profit 879,297 712,836 530,507
Selling, general and administrative expenses 670,602 550,069 418,152
Income from operations 208,695 162,767 112,355
Interest expense, net (5,183) (3,841) (2,258)
Other expense, net (73) (2,064) (1,178)
Income before income taxes 203,439 156,862 108,919
Provision for income taxes 74,661 59,943 40,442
Net income $128,778 $96,919 $68,477
Net income available per common share
Basic $1.23 $0.94 $0.67
Diluted $1.21 $0.92 $0.67
Weighted average common shares outstanding
Basic 104,343 103,140 101,595
Diluted 106,380 105,052 102,563

Source: 2012 Form 10K, p. 49.

Exhibit 3 Under Armour Balance Sheets

Underarmour,Balancesheets
(In thousands, except share data)
december31, december31,
2012 2011

Assets
Current assets
Cash and cash equivalents $341,841 $175,384
Accounts receivable, net 175,524 134,043
Inventories 319,286 324,409
Prepaid expenses and other current assets 43,896 39,643
Deferred income taxes 23,051 16,184
Total current assets 903,598 689,663
Property and equipment, net 180,850 159,135
Intangible assets, net 4,483 5,535
Deferred income taxes 22,606 15,885
Other long-term assets 45,546 48,992
Total assets $1,157,083 $919,210
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable $143,689 $100,527
Accrued expenses 85,077 69,285
Current maturities of long-term debt 9,132 6,882
Other current liabilities 14,330 6,913
Total current liabilities 252,228 183,607
Long-term debt, net of current maturities 52,757 70,842
Other long-term liabilities 35,176 28,329
Total liabilities 340,161 282,778
(continued)
634 Strategic ManageMent caSeS

Exhibit 3 Continued

december31, december31,
2012 2011

Commitments and contingencies

Stockholders’ equity
Class A Common Stock, $0.0003 1/3 par value; 200,000,000 28 27
shares authorized as of December 31, 2012 and 2011;
83,461,106 shares issued and outstanding as of December
31, 2012 and 80,992,252 shares issued and outstanding as of
December 31, 2011.
Class B Convertible Common Stock, $0.0003 1/3 par value; 7 7
21,300,000 shares authorized, issued and outstanding as of
December 31,2012 and 22,500,000 shares authorized, issued
and outstanding as of December 31, 2011.
Additional paid-in capital 321,338 268,206
Retained earnings 493,181 366,164
Accumulated other comprehensive income 2,368 2,028
Total stockholders’ equity 816,922 636,432
Total liabilities and stockholders’ equity $1,157,083 $919,210

Source: 2012 Form 10K, p. 48

Apparel is offered in many styles and fits to cover most any environment condition. Apparel
is specifically engineered to replace traditional nonperformance fabrics and replace them with the
most cutting edge products available. UA currently has three gear lines that achieve the designed
purpose of having a sophisticated apparel option for all weather conditions. The three products
are marketed under HEATGEAR, designed for hot weather, COLDGEAR, designed for cold tem-
peratures, and ALLSEASONGEAR, designed for between the extremes. In addition to the three
temperature ratings, all products also come in three fit types: compression (tight fit), fitted (athletic
fit), and loose (relaxed). All UA appeal products are designed to whisk water away from the wearer
to keep them as dry and comfortable as possible in any temperature or type of activity.
UA expanded into offering footwear in 2006 and today makes footwear for virtually all sports
including running and even hunting boots. Like the traditional shirts, footwear offerings are designed
to cushion and manage moisture. In 2011, UA began to sell hats and bags in house; these products
were previously provided by a licensee. Other accessories developed and now marketed by UA in-
clude gloves for football, baseball, golf, and running as well as mouth guards, socks, and eye wear.

Segment Data By Region

Exhibit 5 reveals UA’s recent revenues and operating profits for the North American and inter-
national markets. UA reports revenues in four distinct geographic regions: (1) North America,
(2) EMEA, (3) Asia, and (4) Latin America. Each geographic segment operates in the same

Exhibit 4 UA Segment Data by Product

Yearendeddecember31(inThousands),
Percentchange
2012 2011 2010 2012 2011

Apparel $1,385,350 $1,122,031 $853,493 23.5% 31.5%

Footwear 238,955 181,684 127,175 31.5 42.9
Accessories 165,835 132,400 43,882 25.3 201
Total net sales 1,790,140 1,436,115 1,024,550 24.7 40.2
License revenues 44,781 36,569 39,377 22.5 (7.1)
Total revenues 1,834,921 $1,472,684 $1,063,927 24.6% 38.4%

Source: 2012 Form 10K, p. 29.

 case27 • UnderarmoUr,Inc.,2013 635

manner, to design, develop, market, and distribute UA products. Note that only 6 percent of UA
revenues were derived from international markets so the company combines all these countries
into one segment for reporting reasons. UA acknowledges that the trend in performance prod-
ucts is becoming increasingly global with a bright future, but 6 percent so far leaves tremendous
upside for the company.
UA’s North American segment includes about 18,000 retail stores; UA also owns 80 outlet
stores located in 34 different states. The company’s two largest customers are Dick’s Sporting
Goods and The Sports Authority. In addition to selling to the public, UA earns income from the
sale of uniforms and practice gear to high school, college, and professional teams.
In EMEA, UA products are sold in approximately 4,000 retail outlet stores. European foot-
ball teams that wear UA gear reside in many European nations including the United Kingdom,
France, Germany, Greece, Italy, and Spain among others. First division rugby clubs in France,
Ireland Italy, and the United Kingdom also wear UA products. Products in Europe are currently
distributed out of The Netherlands.
Since 2002, UA has enjoyed a licensing agreement with Dome Corp., which produces
and sells UA products in Japan, which are all tailored for Japanese consumers’ specific taste.
Products are sold in more than 2,500 specialty stores in Japan, as well as to several profes-
sional soccer and baseball games in Japan. Also in Asia, products are sold in both Australia
and New Zealand, and in 2011, UA’s first specialty store opened in Shanghai, China. Latin
American customers are provided UA products through independent distributors but more
commonly are served through distribution facilities in the USA. Only 6 percent of UA’s 2012
revenues were generated from outside North America. The company does have two specialty
stores in Shanghai, China. About 55 percent of the fabric used in UA products comes from
suppliers in China, Malaysia, Mexico, Taiwan, and Vietnam. UA has 27 manufacturers in
14 countries.

Competition
UA has unique branding of a fabric to whisk away water from the body, but competitors such as
Nike and Adidas have copied UA’s designs and technology. The fabrics UA uses are not unique
to them, and it does not control any patents on fabrics or processes. It is all about branding for
UA. Because firms such as Nike and Adidas have much larger resources to draw on, competing
long term may be difficult for UA, but so far the firm is doing well. In addition, competing for
floor space at large retailers is difficult because many stores have their own store brands, in addi-
tion to private label brands, all competing for floor space.
Exhibit 6 provides some comparative information for UA and rival firms. Note that in terms
of revenue UA is about the size of Columbia Sportswear, but Nike and Adidas are both more

Exhibit 5 UA Segment Data by Geographic Region

Yearendeddecember31(inThousands),
2012 2011 2010 Percentchange

Net Revenues
North America $1,726,733 $1,383,346 $997,816 38.6%
Other Foreign Countries 108,188 89,338 66,111 35.1%
Total Net Revenues 1,834,921 1,472,684 1,063,927 38.4%
Operating Profits 2012 2011
North America $197,194 $150,559 $102,806 31.0% 46.4%
Other Foreign Countries 11,501 12,208 9,549 (5.8) 27.8
Total Operating Profit 208,695 162,767 112,355 28.2 44.9

Source: 2012 Form 10K, p. 33.

636 Strategic ManageMent caSeS

Exhibit 6 Comparative Information for Sports Apparel Firms

Underarmour adidas columbiasportswear nike

Number of Employees 1.9K 39.9K 4.1K 40K

Net Income ($) 98.9M 922M 94.6M 2.2B
Revenue ($) 1.54B 17.1B 1.7B 24B
Revenue ($)/Employee 855K 429K 414K 600K
EPS Ratio ($) 0.95 2.20 2.78 4.73
Market Cap. 5.2B 15.3B 1.8B 42.6B

EPS, earnings per share.

Source: Based on company documents.

than 10 times the size of UA. Note also that UA is exceptionally efficient as indicated by its high
revenue per employee ratio.

Nike
Headquartered in Beaverton, Oregon, Nike is the largest apparel and footwear provider for men,
women, and children worldwide. Nike outfits athletes globally in virtually every sport, including
running, basketball, football, soccer, golf, and many more. In addition to apparel and footwear,
Nike also produces golf clubs, athletic bags, gloves, footballs, bats, and much more. Nike owns
brands such as Converse, Chuck Taylor, and All Star to name a few.
Nike reported in 2011 that 42 percent of revenues derived from U.S. operations, where the
company sells its products in a wide range of mediums from retail stores, its Internet site, 156
Nike factory stores, and tens of thousands of other stores, such as Foot Locker. Nike’s interna-
tional sales accounted for 58 percent of revenues in 2011 and products are sold in similar ways
as in the USA. Nike currently operates 308 factory stores outside the USA. Approximately 67
percent of all Nike North American revenues are derived from footwear, 28 percent from appeal,
and only 5 percent from equipment. Nike’s operations in international markets have a similar
revenue breakdown by product, making Nike’s primary revenue generator footwear, as opposed
to UA being primarily an apparel producer.
Like UA, Nike outfits many professional and major U.S. college teams with their gear.
Notable teams wearing Nike gear include the University of Oregon, Penn State University, and
The University of Alabama. Nike has stars such as Michael Jordan, LeBron James, and Tiger
Woods serving as spokespersons to help in promoting the brand. Late in 2012, Nike sold its Cole
Haan handbag and shoe brand to private equity firm Apax Partners for $570 million and also sold
its Umbro football brand to Iconix Brand Group for $225 million.

Adidas AG
Headquartered in Herzogenaurach, Germany, Adidas AG develops and produces a wide range of
athletic appear, footwear, and accessories and operates in six business segments: wholesale, re-
tail, TaylorMade-Adidas Golf, Rockport, Reebok-CCM Hockey, as well as other brands. Adidas
sells its products through retail stores, the Internet, and through 2,401 company-owned stores
worldwide. The company most closely competes with UA with its sport performance line of ap-
parel that is modeled after UA fabrics to help keep athletes dry and comfortable for the duration
of their activity.
Adidas currently has a contract with the NBA to outfit all teams with apparel, and in addi-
tion, Adidas outfits some or the largest European football clubs with apparel. Adidas employs
many of soccer’s biggest starts to market their products, such as Frank Lampard, Steven Gerrard,
and Micheal Ballack. Tennis stars endorsing Adidas include Andy Murray, Justine Henin, Marcos
Baghdatis, and many more. Andy Murray is Adidas’s highest paid spokesman with a five-year
contract worth $24.5 million.
Adidas had sales of more than 13 billion euros in 2011, an 11-percent increase from the pre-
vious year, with every reporting segment enjoying larger revenues than the previous fiscal year.
 case27 • UnderarmoUr,Inc.,2013 637

The retail and TaylorMade-Adidas Golf segments enjoyed the largest percent increases at 20 and
16 percent, respectively.

Columbia Sportswear Company

Headquartered in Portland, Oregon, Columbia’s trademark Bugaboo parka with weatherproof
shell competes with some UA products, as does Columbia’s performance apparel for a variety of
activities and Columbia’s sportswear accessories, boots, and rugged footwear, sold under brands
Columbia, Mountain Hardwear, Sorel, and Montrail. Columbia brands are used globally during
outdoor activities, such as skiing, snowboarding, hiking, climbing, camping, hunting, fishing,
running, and the like. Columbia operates about 50 outlet retail stores and 10 branded retail stores
in the USA, as well as 10 in Europe, 2 outlet stores in Canada, and about 300 stores in Japan
and Korea. Thousands of other stores sell Columbia products globally, including even Dick’s
Sporting Goods and The Sports Authority that UA counts on most.

External Issues
Economic Factors
The apparel industry has a mediocre outlook given weak economies in which consumers are
faced with less discretionary income. Items expected to maintain strong sales are those that
are well differentiated from competing products, where consumers value the extra features
and are less price sensitive to products they deem necessary. More luxury items in both sport-
ing activities are expected to have modest growth. In 2011, the apparel industry reported sales
up 5.9 percent over 2010, however much of this gain was the result of inflation and the rising
prices of commodities such as cotton, increased labor wages overseas, and increased freight
fees. Nevertheless, the S&P Apparel Retail Index rose 22 percent versus a 12-percent increase
for the S&P 1500 Index from March 2011 to March 2012. The S&P Footwear Index rose only
11.5 percent during this same time frame.
Apparel sales totaling $77.7 billion was imported into the USA in 2011, up nearly 9 percent
from 2010. Approximately 38 percent of all apparel imported came from China. The apparel
industry is extremely fragmented with many firms competing for the same customers. For
example, the top 10 national brands only account for 16 percent of wholesale apparel sales in the
USA with 84 percent of apparel distributed coming from smaller brands and store brand goods.
Women’s segment has traditionally accounted for significantly more sales at 55 percent. Men
only accounted for 28 percent and children 17 percent of apparel sales in 2011.
The footwear industry grew at a slower rate than apparel in 2011. Fashion footwear
accounted for 48 percent of total footwear sales, with performance footwear accounting for
27 percent, sports footwear 13 percent, outdoor footwear 8 percent, and work and safety foot-
wear 4 percent. Fashion and sports footwear are expected to be the most significant areas of
growth moving forward as people look to improve their fashion looks and the growing health-
minded concerns of the public.

Technological Changes
Nike was one of the first companies to understand the importance of producing better sport-
ing apparel and footwear for athletes, when Phillip Knight and his track coach Bill Bowerman
developed a better shoe for members of the University of Oregon track team. Since the 1960s,
there have been many developments and improvements in shoe and apparel design away from
the traditional cotton sweat suit and basic tennis shoe. Today, apparel hugs the body and insu-
lates the wearer from cold and keeps them cool from hot. Shoes can be synced to computers to
determine performance and impact points for the runner and t-shirt fabrics can even help man-
age odors. These types of technological offerings keep customers purchasing new items and can
create intense competition and brand loyalty.

Where to Produce
China has historically been the low-cost alternative for apparel firms when selection a nation for
the production of their products. In 2011 alone, 38 percent of all apparel imports and 74 percent
of all footwear imports into the USA came from China. However, with rising production costs,
638 Strategic ManageMent caSeS

higher wages in China, increased transportation costs and less control over quality, Chinese
imports may be waning in the eyes of large U.S. apparel corporations in favor of facilities in
Mexico and the Caribbean. UA currently produces many of their items in Mexico and enjoys
quicker turnaround and more quality control than some rival firms who import a large percentage
of their inventory from China.

The Future
UA needs considerably more global presence to gain economies of scale versus its large rival
firms. Increasing downward pressure on prices could necessitate that UA effectively expand
globally. The primary strategic issue facing UA therefore is how and when and where to expand
globally. Other secondary strategic issues facing UA include whether to diversify into other ac-
cessory items to reduce the firm’s reliance on apparel and whether to increase its expenditures
on R&D to keep pace with changing technological advancements in the apparel industry. UA
is strong financially, which does enable the firm to make strategic acquisitions as needed, so
the firm should identify potential acquisition candidates around the world. Effective global ex-
pansion is an important key to UA’s growth and prosperity in the future. Even South America,
Central America, Mexico, and Australia are all sports-minded areas in which UA products should
be well received. Perhaps what UA needs most is to fulfill CEO Plank’s vision: “Our long-term
vision is to one day have our Women’s business larger than Men’s, our Footwear business larger
than Apparel, and our International business larger than our USA business.” Prepare a five-year
strategic plan for CEO Plank to fulfill his vision for UA.