Under Armour SWOT/TOWS
SWOT:
“The intention of SWOT, or strength, weaknesses, opportunity, and threat, analysis, is to identify those internal strengths and external opportunities that an organization can leverage to accomplish its objectives, while also seeking to mitigate internal weaknesses and external threats (Lewis and Littler, 1997).”
Strengths and weaknesses are internal factors. So, they are within the company’s control. Whereas opportunities and threats are external factors, meaning the company has no control but must react to them in order to get the best outcome.
Strengths
1. Big brand recognition 2. Multiple distribution networks 3. Athlete relationships 4. Use of digital apps | Weaknesses
1. Dependent on US Market 2. High investment costs 3. Limited geographic presence 4. High Price |
Opportunities
1. Growing markers in Africa and Asia 2. Collaborative efforts 3. Increase inactive people 4. Influencer market trend
| Threats
1. Competitors 2. Controversy and Political 3. Fake UA clothing & footwear 4. Rise of wages in Asia |
Strengths
- Big brand recognition – UA is a well-known fitness brand that closely competes with other big brands like Nike and Adidas.
- Multiple distribution networks – In 2020, UA’s distribution of net sales was as follows, 53% wholesale, 41% direct to customer, 3% connected fitness, 2% Licensing and other.
- Athlete relationships – With the current influencer market trend, UA has been smart in sponsoring some of the world’s best athletes and movie stars in hopes of increasing sales due to an increased demand when the normal person tries to dress the same way as their role models. Some athletes and movie stars that have been sponsored by UA are Steph Curry, Tom Brady, Michael Phelps and Dwayne Johnson.
- Brand portfolio – The company strives on broadening its type of products. This wide selection has boosted the company’s growth.
- Use of digital apps - “The Under Armour app store includes MapMyFitness, MyFitnessPal (for tracking calories and nutrition), and Endomondo (a health and fitness tracking app).”
Weaknesses
- Dependent on US Market – North American countries are responsible for 83% of UA’s revenue. So it is clear how dependent they are on the American Market.
- High Investment costs – UA’s management decided to take a big risk and increase its investment spending significantly. “The investment is beneficial if it returns in increased revenue. It does, however, limit its ability to make fresh purchases, and its ability to generate further revenue remains in doubt. “
- Limited geographic presence – UA is clearly outnumbered in the number of stores in many continents compared to Nike. They are lacking presence in Africa, South America and Asia compared to Nike and Adidas.
- Pricing makes it unaffordable for some – The technological advancements in UA clothing makes their prices rise and makes it less accessible to low-income households.
Opportunities
- Growing markets in Africa and Asia – With Asia having such a high population, it would be a no brainer to target large sales here and invest more money. Africa as a whole is developing a lot and more people are escaping poverty. This means that more and more people have more disposable income and can afford UA.
- Collaborative efforts – Several well-known department stores sell UA clothing and footwear so this is increasing exposure and marketing and more of this could only do good for UA.
- Increase active people – With the growing variety of sports in this world, more and more people are finding new hobbies and interests and many of these sports are targeted at people who wouldn’t normally participate in sports. This means that the demand for sports and fitness shoes and apparel will increase somewhat consistently for many years to come.
- Influencer market trend – UA must keep on track when it comes to endorsement deals with celebrities and sports stars. Currently, whatever these people wear will be what everyone else sees as “cool” and in fashion.
- Product Diversification – UA could grow into new production lines and sell new products like specific sports gear.
Threats
- Competitors – Nike and Adidas are known as the 2 leaders in this industry and the likes of Gymshark has come up very well in the past few years.
- Controversy and political – With the new outbreak of body positivity, UA must be careful on how it markets itself without stepping on the toes of some people. Many people nowadays believe that it is toxic to have a societal view of “good bodies = healthy bodies” and they believe that the perfect body views are making people very insecure.
- Fake UA clothing and footwear – It is not a surprise that some people make their own homemade UA apparel and footwear and sell it to make an income. These products are normally of very low quality so people may be led to believe that UA sells bad quality clothing and footwear.
- Rise of wages in Asia – UA and many other big companies tend to open their main factories in Asia as it is cheaper and there is a higher demand for employability so getting many workers is easy and cheap. So, if there happens to be a significant increase in minimum wages, UA may be affected a lot.
TOWS:
“ A distillation of the findings of the internal and external audits which draws attention to the critical organisational strengths and weaknesses and the opportunities and threats facing the company” (Kotler et al 2005)
TOWS Matrix is more useful than a standalone SWOT analysis because it shows the relationship between internal and external factors. Its main purpose is to:
- Take advantage of opportunities
- Reduce threats
- Exploit strengths
- Remove weaknesses
| Factors creating threats
Rise of minimum wage in Asia because of labour exploitation & Sales of Fake UA Clothing & footwear
| Factors creating Opportunities
The power of the influencer market & Increasing number of new sports and hobbies
|
Weaknesses
Dependent on US market & High Investment Costs | Critical Success Factor 1
UA should look into decreasing investment costs so that they are able to keep employees if minimum wages rise in Asia. | Critical Success Factor 2
UA should increase the number of influencers on endorsements deals in other countries and decrease the number of them in the US .
|
Strengths
Athlete Relationships & Multiple distribution networks | Critical Success Factor 3
UA should find smarter ways of marketing their many distribution networks and emphasize the fact that any other way may be fake,
| Critical Success Factor 4
UA should identify the most influential and best players in these new sports and look into using them as marketing bait. The more people can relate to the brand within new sports, the more customers you will have.
|
References
Pershing, J. and Leigh, D., 2006. [online] p.1089. Available at: <https://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.457.6925&rep=rep1&type=pdf#page=1135> [Accessed 18 March 2022].
Parker, B., 2019. Under Armour SWOT Analysis 2022 | SWOT Analysis of Under Armour. [online] Business Strategy Hub. Available at: <https://bstrategyhub.com/swot-analysis-of-under-armour-2019-under-armour-swot-analysis/> [Accessed 18 March 2022].
SEOAves. 2022. Under Armour SWOT Analysis 2022 | SEOAves. [online] Available at: <https://seoaves.com/under-armour-swot-analysis/> [Accessed 22 March 2022].
IDS Media. 2021. The Changing Demographics of Gym Members | IDS Media. [online] Available at: <https://www.idsmedia.co.uk/news/demographics-of-gym-members> [Accessed 18 March 2022].
BStrategy Insights. 2022. Under Armour SWOT Analysis - BStrategy Insights. [online] Available at: <https://www.bstrategyinsights.com/under-armour-swot-analysis/> [Accessed 18 March 2022].
Tighe,D., 2021. Under Armour: sales share by distribution channel worldwide 2020 | Statista. [online] Statista. Available at: <https://www.statista.com/statistics/259180/net-sales-share-of-under-armour-worldwide-by-channel/> [Accessed 18 March 2022].
Getlucidity.com. n.d. [online] Available at: <https://getlucidity.com/strategy-resources/an-introduction-to-tows-analysis/> [Accessed 18 March 2022].
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