Porter's Five Forces Analysis Of Under Armor

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Under Armor is a leading developer and distributor of athletic gear. The product line consists of a wide variety of apparel, footwear, and accessories. Over the past few years, the company has grown at an impressive rate due to their increased product line, expansions to the international market and direct- to- consumer business. Analyzing Porter’s Five Forces will aid in understanding what the company will face and potentially overcome moving forward.
Threat of New Entrants
The success and popularity of Under Armor products has attracted many competitors to develop similar products and, inevitably, will result in new entrants to the industry. This will eventually cause a decrease in profitability for all competitors. Under Armor must continue to better their product and adapt to the needs of their market in order to stay ahead of the competition. Differentiating their products will help the company as a strong competitor in a rapidly growing industry. Developing and patenting one of a kind products would help to ensure their continuing and prevailing success, while deterring new companies from the market.
Threat of Substitute Products
Under Armor is viewed as a designer company for athletic wear. The company makes higher quality merchandise, which comes with a higher price tag. Under Armor’s line appeals to a wide variety of people, from upper class to lower class consumers. While it is easier for consumers in upper class society to purchase this high-end workout gear, it may not be reasonable to consumers in the lower class or even middle class markets. Companies such as Wal-Mart and Target can make a very similar product for almost half the price. To prevent losing these customers, Under Armor should consider a mor...

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...ers is a very large demographic that is not currently being targeted by specific companies. If Under Armor was to develop and distribute a line that appealed to this market they would be able to have the competitive advantage of that segment.
Threats

Revenues come from the sale of Under Armor products. From 2009 to 2012 the company has seen a steady increase in revenue, which can be credited to factors such as, expansions, increased marketing, and product innovation. Under Armor had a 24.6% increase in revenue from 2011 to 2012. This was down from the previous 38.4% increase from 2010 to 2011. Under Armor showed a favorable increase in their operating profit margin, total return on assets and return on stockholder's equity. This helps us to recognize the company as using their resources efficiently and showing an overall profitability for the company.

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