Under Armour
By: Matt Bertone, Ally Liguori, Ryan Diamond and Cam Knights
Outline
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Company Overview
Company Organization Chart
Business Level Strategies
Goals Multidomestic Strategy Challenges in China
Management Policies
Employee Capacity
Keys to Success Company Overview
• Focuses on sales of performance apparel • Important dates in history . . . – 1996 ‐ founded by Kevin Plank
• College football teams began wearing his “T‐shirt”
– 1998 – signed a deal with uniform provider @ WB
– 2001 – MLB, NHL, NFL (products available in 2500 retail stores)
– 2005 – expanded their product line for women
Company Overview
• Market more then just T‐shirts
• Product Line . . .
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Sweatshirts
Sweatpants
Socks
Shorts
Hats
Spandex
Fleece Jacket
Long Sleeve T shirts
Sunglasses
Cleats
You name it, they probably sell it!
Company Overview
• CEO – Kevin Plank
• CFO – Brad Dickerson
• COO – Wayne Marino • Employee count 3,000
– Expected to see a 36.4% increase
• Net Income for 2009
– $46.8 million which was a growth of 22.4% from previous years
• Sales for ending fiscal period in Dec 2009
– $856.4 million
Company Overview
• Under Armour has initiated business internationally but we feel that moving the company into Beijing China will be extremely successful.
– Huge population
– Booming Economy
– Chinese Love Great Deals
• Must keep in mind competitors (Nike, Reebok,Adidas)
• Our goal is to be the next NIKE
Company Organization Chart
PUMA
New Balance
Reebok
Columbia Sportswear
Basic Business‐Level Strategies
• Differentiating‐ unique and superior product
– “For us, the key driver is to offer products that are better than what is currently in the market, best in class.”
• Core competencies‐ ability to innovate products – our mission: “to make all athletes better. Through passion, science and the relentless pursuit of new innovation.”
• Distinctive competency‐ always manufacture long lasting quality products “best in class”
Locations and competitiveness
• Factor conditions: cheap labor and highly skilled workforce make for competitive production
• Demand conditions: growing economy, desire for brand names, and goal of living healthy lifestyles.
Locations and competitiveness
• Related and supporting industries: There are now about 80 department stores in Beijing. A full range of local and imported brands are sold at specialty counters at Cuiwei Tower, Zhongyou Department Store, Blue Island Mansion, and Constellation Department Store. These stores can help us sell our product
• Firm strategy, structure and rivalry: major competitors like Nike, Rebook and Adidas are sold in Beijing therefore our products need to be more unique and superior for an affordable price to compete with these companies
Key Goals
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High quality products
Low production costs
Successful advertising
Brand recognition
Reasonably priced items
Well trained employees
Known for customer service
Ideal Strategic areas for management
areas of management 15%
35%
functional
18%
diversity
leadership
20%
12%
economic
teams
Multidomestic Strategy
• We want our operations in Beijing managed uniquely in order to ensure our key goals are met
• Table Tennis, Badminton, Basketball, Baseball and Chess are the most popular games in China‐ therefore we must target these sports
Multidomestic Strategy
• We realize Beijing is not the United States. The consumers may be similar to the fact that they desire healthy lifestyles and athletics but the way we advertise is extremely different from the United States. • ex. Advertising during the Super Bowl is a major advantage for US companies but many are asleep in China at 7am when the Super Bowl occurs. Multidomestic Strategy
Marketing strategy: • advertise as a premiere brand name that all athletes want to wear because we are the best
• Sponsor local athletes/ Chinese Olympic team in order to get name out
Product Features:
• Add the Chinese flag to our logo to make our product unique to China. Brand Features:
• Highly trained employees and management who can help customers find exactly what they are looking for
• Superior customer service to ensure customers return
International Management organization Chart CEO and President of Under Amour
CEO Beijing Operations Marketing managers(8)
Human resource managers (5) Financial
Managers (2) Production managers(10)
Sales manager (1)
Compensation
Production managers
Marketing managers
Financial managers
Human Resource managers
Sales manager
$200,000
$150,000
$150,000
$125,000
$ 75,000
International Management Issues
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History of China
Culture
Political Risk
Language Barriers Infrastructure
Athletic Outlook on Life
Chinese Way of Life
• China is an extremely old nation with a lot of history
• Beijing Infrastructure
• Keys to Communication
• Moving Towards Athletic Apparal
Political Risk
• Human Rights and problems associated with it
• Political Risk
• Levi’s and Reebok’s dilemma
• Maintain Ethical Approach Management Policies
Involve lower line managers in our strategic plans
Ignore sunk costs and look towards the future
High quality product and efficient costs
Inbound Logistics, Operations, Outbound Logistics
• Sales and Marketing
• Human Resource Management
• Research and Development
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International Activities and Policies
Company Business Goals
Establish Company Flexibility
Innovate and Learn
International Business Strategy and Plan
Improve Efficiency
Create Positive Cash Flow from Operations
International Management trategy and Plan
Selecting Teams of Employees
Balance Risks
Investment Selection
Acheive Business Goals
International Management Metric Reports
• Cover four main categories
– Overall outcomes/business results
– Costs
– Management retention
– Employee capacity
Overall Outcomes
• Business results will look at our bottom line
• Analyze sales, losses, and total profit
• Will use to decide if our international strategy is working
• Hope to be even through 5 years
– Want to see financial gain after 5 years
Costs
• Lowering cost is crucial to increase profit
• Production costs are cheaper in Beijing
• Labor is also cheaper in China
– Production and manufacturing should be cheaper as well
– Don’t have to pay employees as much compared to the U.S.
– Materials are also cheaper
Management Retention
• Arguably most important factor to take into consideration
• Management is looked at as a valuable asset to us
• Managers know their culture and know the in’s and out’s of every day business
• We seek their knowledge and in return give them the training they need to succeed
• Make sure they are aware of the opportunity for advancement in the company
• Get their opinions on products that are “hot” and “cold”
Employee Capacity
• Employee capacity has given us the ability to move internationally
• By being able to continue to grow, we can expand business even more globally
• Tends to have a positive correlation with financial gains
• Allows us to offer jobs in countries where they are needed
Success
• Success will obviously be measured by our profit
• Hopefully we will have a 36% increase in employee’s by next year
• We expect our profit to gain 8‐10% increase as well
• Hope to compete on a more head to head scale with Nike
STONEHILLCOLLEGE
ExpansionofUnderArmour
By:AllyLiguori,CamKnights,MattBertone,&
RyanDiamond
Prof. Boyd
12/9/2010
Company Overview
When it comes to performance apparel clothing we usually
think of companies such as Nike, Adidas, and Reebok, however;
there is another company name that is emerging within this
clothing line. This company is Under Armour. Under Armour is a
strong competitor when it comes to performance apparel and its
recent emergence has drawn a lot of attention. Not only did we
look at the company history, we overviewed multiple different
aspects such as products, locations, and employees.
There are some very important days to look at when
examining the history of Under Armour. The company was founded
in 1996 by a man named Kevin Plank, who was a football player in
college. He designed a T-shirt that in theory would draw sweat
away from the body and into a microfiber fabric.1 His product was
then used by football players at Maryland, Arizona State, and
other colleges during games. Football teams in both college and
NFL started believing in the Under Armour Company and in 1998,
Under Armour completed a deal with the wardrobe and uniform
provider for Warner Brothers. In 2001 they signed a deal with
MLB, NHL, and the NFL and the Under Armour products became
available in over 2,500 retail stores.
Under Armours’ Product line does not consist of just T
shirts of course it has many different products available for
sale.
The company produces sweatpants, sweatshirts, hats,
jackets, fleeces, spandex, cleats, headbands, sunglasses, and
numerous other things. Pretty much if you name it, they sell
it. Under Armour strives on making a wide variety of clothing
that is comfortable to wear as well as nice and warm. They make
clothing for all weather conditions and have built a strong
reputation for themselves.
This publicly owned company is headquartered in Baltimore,
Maryland but has expanded and now has 28 different factory
houses within the United States. Its employee count is at 3000
but is expected to see a 36.4% percent growth.2 The CEO and
President of the company is Kevin Plank, the COO is Wayne
Marino, and the CFO is Brad Dickerson.
The number of sales for
1
"Under Armour Performance Apparel -- Company History." Find Funding with Banks, Investors, and Other
Funding Sources | FundingUniverse. Web. 07 Dec. 2010. <http://www.fundinguniverse.com/companyhistories/Under-Armour-Performance-Apparel-Company-History.html>.
2
"Under Armour: Information from Answers.com." Answers.com: Wiki Q&A Combined with Free Online
Dictionary, Thesaurus, and Encyclopedias. Web. 07 Dec. 2010. <http://www.answers.com/topic/under-armourinc>.
2
the ending fiscal period in December 2009 was calculated at
$856.4 million.
This was based off an 18.1% growth. Also, the
net income for 2009 was approximately $46.8 million which was an
income growth of 22.4%.3
As those numbers above are related to the United States
Under Armour Companies, we intend to improve the company’s
international business. Under Armour has already made the move
abroad it has locations in Germany, France, Austria, etc. Our
intentions are to implement a factory for Under Armour in China,
more specifically, Beijing. We believe that entering into China
will be a great opportunity to take advantage of due to multiple
factors. China has a huge population and has shown signs of a
increasing economy. Also, we intend to keep the products
relatively cheap and Chinese people love bargains so for these
three reasons and more, we believe the move of Under Armour into
Beijing would be extremely beneficial.
We must also keep in mind where our organization stands in
comparison to our competitors. Obviously Nike is the front
runner in the market but we feel that with certain strategies
and efficient execution we could definitely compete at the
highest level. Our competitors have been successful
internationally and we believe we are fully as capable. The
organization chart for our company in regards to competition is
below.
3
Under Armour: Information from Answers.com." Answers.com: Wiki Q&A Combined with Free Online
Dictionary, Thesaurus, and Encyclopedias. Web. 07 Dec. 2010. <http://www.answers.com/topic/under-armourinc>.
3
Company Organization Chart
PUMA
New Balance
Reebok
Columbia Sportswear
4
International Strategy
The basic business level strategy Under Armour will follow
in Beijing is differentiating their product from competitors4.
They will show that their products are unique and top of the
line. If they can successfully do this, consumers will pay more
for the high quality and brand recognition. Having the highest
quality product is important and is going to be a distinctive
competency which will put Under Armour above the competitors.
China has good factor conditions because of its cheap labor
and highly skilled workforce will make it easy to make the
product cheap and local5. The demand conditions are also high
because of Beijing’s growing economy, desire for brand names,
and goal of living healthy lifestyles. Over the past 5 years
Beijing’s GDP has continued to increase. In 2008, Beijing’s GDP
was Rmb 1,048.8 billion, which was an increase by 9% from the
previous year.
6
Consumers in Beijing have fast growing disposable incomes and
spend approximately 9.9% of their income on clothing7. Consumers
tend to be “extremely brand-conscious, they show strong
preference for international brand names, and often possess one
or more sets of the same product”8. With their goal of a healthy
lifestyle our brand name sporting/work out apparel is exactly
4
McFarlin, Dean B., and Paul D. Sweeney. International Management: Strategic Opportunities and Cultural Challenges. Boston: Houghton Mifflin, 2006. 261. Print. 5
"Cheap Labor in China ‐ Doing Business in China." Entrepreneur Resources. Web. 08 Dec. 2010. <http://www.gaebler.com/Cheap‐Labor‐in‐China.htm>. 6
"BEIJING STATISTICAL YEARBOOK 2009." Web. 08 Dec. 2010. <http://chinadataonline.org/member/yearbook/ybListDetail.asp?YBID=BEJ2009001#>. 7
"Selling in China – Beijing." China Manufacturers & Hong Kong Manufacturers | HKTDC. Web. 08 Dec. 2010. <http://www.hktdc.com/info/mi/a/bgdscn/en/1X068WJT/1/Guide‐To‐Selling‐In‐China/Selling‐In‐China‐
Beijing.htm>. 8
“Selling in China – Beijing."
5
what the consumers want.
increasing as GDP has.
Retail sales in Beijing have also been
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In the past five years the amount of money consumer spent in
retail stores has doubled. This shows the high demand for sales
and future of success for Under Amour.
When considering related and supporting industries, Under
Armour is also in a good position. There are about 80 department
stores in Beijing. A full range of local and imported brands are
sold at specialty counters at Cuiwei Tower, Zhongyou Department
Store, Blue Island Mansion, and Constellation Department Store10.
These stores can help us gain competitive advantage by selling
our product. This will help brand recognition as well.
An area Under Armour must be aware of is the amount of
competition and rivalry in China. This is where firm strategy
and structure are important. Under Armour needs to compete with
well known brands such as Nike, Rebook, and Adidas. In order to
do so, they must put emphasis on their superior quality athletic
wear. They must be the first brand to introduce new products
which outperform other brands.
Under Armour plans to follow a multidomestic strategy
because the actual clothing and concept will be similar to that
sold in the United States, but will vary in order to adapt to
local preferences. The most common sports in China are Table
Tennis, Badminton, Basketball, Baseball and Chess. It is
important to target these sports by advertising during
competitions and inventing products that are custom for athletes
of these games. Under Armour needs to advertise as a premiere
brand name that all athletes want to wear because they are the
9
“Selling in China – Beijing." 10 "Beijing Department Stores and Shopping Malls ‐ Beijing Travel Information ‐ Beijing Tour Service." Beijing Travel. Web. 08 Dec. 2010. <http://www.beijing‐
travel.cn/Beijing_Shopping_Guide/Department_Stores_Shopping_Malls.htm>.
6
ultimate best. Consumers shouldn’t have to question which brand
to buy. Under Amour can do this by sponsoring local athletes and
the Chinese Olympic Team in order to expose the brand name. The
Beijing Under Armour will cater its product to the Chinese
consumers and tourists by adding the Chinese flag to the Under
Armour logo. This makes the consumers feel unique and special.
Another aspect of a multidomestic strategy is that the Under
Armour operations in Beijing will be uniquely managed with
individual goals and prices that do not necessarily follow that
of the United States.
Strategic Areas of Management
Managers are a major part in the success of Under Armour
and the strategy. They must fully understand the strategy and
goals of the company. It is extremely important for managers to
excel in their department. It is also important for managers to
have good leadership skills and change their way of managing if
it doesn’t seem to work with our new location. Since Beijing is
a new territory of Under Amour managers should understand that
diversity is important. Be willing to except new ideas and
beliefs of both employees and customers. They should also be
familiar with the economics of the area and a general idea of
what will be profitable for the company. Lastly, working as a
team is an important aspect of Under Armour and managers should
keep this in mind.
areas of management 15%
35%
18%
functional
diversity
leadership
20%
12%
economic
teams
7
International Management organization Chart
In our Beijing operation, we plan to have 10 production
managers each making $200,000 including benefits. We feel this
is the most important area to have management because there is
most room for error. If errors occur during production then we
no longer have a quality product that we can compete with. Also
the product managers are the ones researching and developing new
products which are essential for our success. The next area we
have 8 managers for is marketing. This is another area that is
important to our international strategy to compete with
competitors. Each manager will make $150,000 with benefits. Our
2 financial managers will also receive $150,000. They have many
people who work under them to help keep track of costs but only
two mangers are necessary. The 5 Human resource managers are in
charge of hiring, training, and employee relations. Since they
have a wide variety of jobs there will be 5 of them. They will
each make $125,000. Finally sales manager will lead the sales
associates and manage store sales by setting daily goals. They
will make $75,000.
8
International Management Issues
One of the greatest challenges to international business
today is how to manage business operations across cultural
boundaries. This is especially true in the case of the People’s
Republic of China. From being a poor country in the 1970’s,
China has developed and is now one of the economic super powers
in the world. The “Open Door” policy was introduced in 1978 to
seek economic interdependence with the rest of the world. Since
1978, China has indeed modernized, has more than doubled its
living standard, and has moved from a rigid command-economy to a
much more flexible socialist market economy. In the last two
decades China has attracted a surge of foreign investments and a
multiple of trade from a massive amount of countries located all
around the world. China has a very unique culture, and Under
Armour will have to face the challenge of successfully carrying
out cross-culture strategy and management in this new foreign
location. There are many forms of risk when establishing a
business in a new territory. Many of the risks companies look
at include; political risk, corruption, religion, labor
regulations, infrastructure, geography, climate, culture,
language, and laws. Each of these issues is extremely important
when looking how Under Armour plans to build new divisions in
china.
To decrease any issues with other cultures norms, companies
need to use cross-culture literacy. "In these days of global
communications, rapid transportation, and worldwide markets,
when the era of the global village seems just around the corner,
it is easy to forget just how different various cultures really
are." Hofstede and Namenwirth, as well as Weber view culture as
"a system of values and norms that are shared among a group of
people and that when taken together constitute a design of
living." This means that a community of people follows similar
abstract ideas about what is good and desirable. For instance,
China has had a 2,000 year old ideology that has a substantial
influence on the way businesses run within the country. Instead
of making an optional decision to potentially gain more profits,
suppliers are being forced to find cheaper labor. From an
ethical standpoint this can be seen as wrong, as many critics
have accused American companies for opening "sweat shops".
Clothing and apparel are ridiculed especially; however to some
degree all companies take advantage of foreign economies and
seeking cheap labor and low maintenance costs. One of the
advantages Under Armour will benefit from is the cheaper cost of
resources in China. However, our company will maintain an
ethical standpoint in the method of how we treat our employees.
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.Today, negotiating new business and trade agreements as
well as establishing business subsidiaries, the number of
foreign business persons is increasingng rapidly. This has
expanded the areas of managerial boundaries between foreign
business representatives and Chinese nationals. Based on this,
an emerging academic literature has begun to investigate crosscultural management issues in China. This helps the flow of
business with China's producers and suppliers, making smother
transaction without the language barrier.
Communication is an extremely important in a country in
China, where the legal system is at the opposite spectrum
compared to the United States. For example, in China there the
legal system is a complex combination of several systems. It is
very hard for most Americans to comprehend the Chinese legal
system. Many firms do not permit their expatriate employees to
drive; rather they provide even their lowest level managers with
cars and drivers. This is due to the fact that in the incident
of a collision with a pedestrian, Chinese law may hold the
vehicle operator partially responsible. In one instance, a
stationary car was run into by a cyclist and the owner of the
car was assessed 10% of the blame. The reason for this
according to Chinese law was that if the owner of the vehicle
had not come to China this collision would never have happened.
In an exhibit taken from the World Competitiveness Yearbook in
2002, the figure portrays ratings of the fairness with which
justice is administered in various countries. The United States
ranked 16th on the list with a rating of 7.73, where as China
ranked number 28, with a rating of 5.5. China’s government is
said to be culpable for the unfairness in justice.
China’s government has also been accused of suppressing
individual freedoms that many countries take as a given and for
other serious abuses. Some groups such as the Amnesty
International and Human Rights Watch have investigated how China
violates human rights. China was accused of operating nearly
1,000 prison labor camps, capricious arrests, the use of child
labor, and unsafe working conditions. As Under Armour
approaches China, our company must have both a strong plan and a
strong identity when entering this uncharted land. Although the
ultimate goal of our corporation is to produce profit and
increase the value of our stock, we will not forfeit important
things such as human rights in the process. We have no
intentions of using child labor in order to cut costs and will
make sure our company is above standards of safe working
conditions. Instead, we aim to provide training that could
10
increase upward mobility within China, and create additional
opportunities and employment. Overtime, the existence of Under
Armour in China may contribute to a more sophisticated and
enlightened workforce in this country.
As our company intends to build in Beijing Infrastructure
is not a major concern. Beijing is a thriving city, one of the
largest in the world, and transportation is considerably
compliant to the needs of the citizens. However, if we step
back and look at China as a whole there are many parts of china
that have extremely poor infrastructure. Large areas of desert
exist south of Mongolia where there are few modes of
transportation. Things like this could affect how we obtain our
resources from our suppliers. This makes it more important to
find suppliers that will be able to accommodate our needs
without our company ever having to worry.
The Chinese culture, language, and way of life will also
impact how our company will run in this part of Asia. Business
meetings, our business hierarchy, employee behavior, and
marketing objectives will all be affected by a culture we are
unfamiliar with. For example, for most Asian business men,
company meetings begin precisely at the time they were scheduled
for. In America, it is not unusual that a big business meeting
will start a few minutes late due to the fact that everyone is
getting coffee. Also, in some cultures lower management doesn’t
even attempt to make their own decisions while in others they
are extremely independent. The Chinese culture will also
influence what products we make, how we design them, and who we
target our product towards. For example, certain colors such as
red and yellow have unique meanings in China and Under Armour
needs to recognize these details. It is our aim to employee
some Chinese citizens at higher levels in the hope that
eventually they will be able to manage our division in China
with a better understanding of the Chinese way of life, and
Under Armour’s objectives and mission.
Overall we are extremely optimistic and excited in our move
to China. Recently China held the summer 2008 Beijing Olympics
which had an astounding influence on the people of China. The
Olympics are by far the highest level of sport and Under Armour
will incorporate this through our marketing campaign. Under
Armour is after all, a sport equipment and apparel company and
what is better that using the Olympics to help make our stand in
China.
11
International Management Policies and how they impact
International Management
Throughout the semester, we have discussed how companies
operating internationally must handle diverse cultures, values
and practices. In addition to this, international corporations
encounter a selection of opportunities such as unexploited
risks, cheaper resources, less taxes, and stronger
infrastructures. With the good comes the bad, and corporations
need to be prepared for threats in various countries including,
political risk, competing companies, and corruption. In today’s
global market, companies must be able to anticipate and react
quickly to changes in the economy and technology or it will lose
its competiveness. With all of these factors, developing a plan
for competing in China could mean the difference between Under
Armour’s victory and failure. Under Armour has very specific
international management policies and processes as it begins to
position itself as one of the leading sport apparel companies in
China.
One important policy that Under Armour will establish
is that we will involve our lower line managers in our strategic
plans for the future. In China Under Armour will be able to be
more flexible, and can react to changes quicker and smoother by
involving key employers in our strategic plans. In today’s
market, it is extremely common for companies to modify, tweak,
or even completely throw away their international strategic
plans and create an entirely new one. In Beijing, we are aware
that we may face difficulties that are unforeseen and may have
to change our strategic plan all together. Some companies
refuse to throw away months of planning, but out international
policy will be to see these things as sunk costs and look to
make the future better.
Under Armour creates capital through the offering of
products or services to customers that are wanted by the
consumer. There are three basic strategies companies we will
use when creating capital through operations. The fist method
Under Armour will use to be competitive is differentiating their
products from those of their opposition. There are many ways of
doing this but usually a company will manufacture a product that
is unique or superior in quality. We believe our apparel and
equipment to be at a superior level to those of Nike and Adidas.
Price is a common advantage companies will use to overcome their
competition. We will not forfeit the quality of our products to
accommodate costs, however currently Under Armour’s pricing is
in the same tear as companies such as Nike, Puma, Reebok and
Adidas. We will not try and beet our competition through
lowering prices. Rather our policy will be to strive to be more
12
efficient and by doing so Under Armour can turn a larger profit
margin. The combination of efficient manufacturing, cheap
labor, and cheaper raw materials allows companies in China to
greatly undercut their competition which is one of the great
motives that brought us to China.
The Under Armour every firm has supply and data storage
which is run by our Info-Tech team. This activity called the
Inbound Logistics plays an important role in the technological
support of the corporation. Some companies outsource their IT
departments to gain an advantage. However, we like to have
complete control over our IT department and therefore will not
be outsourcing our tech program. Operations are another primary
activity, and are responsible for how the product or service is
fabricated, assembled, and how the overhead operates the
facility. After the assembling is complete the next step is to
process the order for the product and complete the delivery.
This activity falls under the Outbound Logistics. In order for
Under Armour to excel in these activities the Sales and
Marketing department must be efficient in creating promotions,
advertising, and in customer relations without spending too much
money. Our policy will be to establish a strong brand name in
China similarly to what Kodak did in Russia after the Cold War.
These combined activities and the value of them determines what
a customer is willing to pay for the product or service offered.
This will help us see if our pricing fits the Chinese Market.
However, is mentioned previously we already have a good idea
considering many of our competitors in the same industry already
trade here. The primary activities of a firm are complimented
by the supporting activities. Firm infrastructure is the cost
and the departments responsible for financing and planning. In
some companies there is long list of names which can result in
delayed decisions and actions. In an efficient firm, the
infrastructure allows decisions to be made quickly and in turn,
results in a company being able to react to market changes. A
key component in any firm is the skills and work of the
employees. The Under Armour Human Resource Management accounts
for the recruiting and training of our employees. Our policy
will be to observe our customers and find employees that are
efficient and easy to mold into our business environment. This
supporting activity is often overlooked when determining the
value of a company. Research and development is also an
essential part of our value chain. Product design and testing
helps a company produce a product of high quality that works.
This is extremely important in the apparel industry because one
competitive advantage is to know what the customer will want in
13
the future. Being one step ahead in fashion and in equipment
will allow Under Armour to stay ahead of our lead competitors.
FLOW CHART
Company Business Goals
Balance Risks
Improve Efficiency
Acheive Business Goals
International Business Strategy and Plan
International Management trategy and Plan
Selecting Teams of Employees
Selecting Smart Investments
Establish Company Flexibility
Innovate and Learn
Create Positive Cash Flow from Operations
14
International Management Metrics Reports
As far as the International Management Metrics Reports are
concerned, we will be looking at four key measures:
outcomes/business results, costs, management retention, and
employee capacity. We at Under Armour feel that success in these
four factors, will lead to success in growth as a company.
Overall Outcomes/Business Results
This category is of course going to be crucial to us as a
company seeing as it will deal with most of our financial data.
We need to know if we are making a profit and/or if we have the
capability to expand our business further than Beijing. We will
look at sales, losses, and total profit as they are the key
contributors to this section. If there are more sales and profit
at one location compared to another, then we will need to
investigate why that is and adjust our production accordingly,
which leads us to our next section.
Costs
Due to China’s cheaper labor and cheaper materials, we feel
that our costs of operating and doing business should be fairly
low. That being said, we need to make sure we are managing our
money effectively and doing our research before we further
invest in new store locations or production factories. If we
start to see higher costs from manufacturing and/or
distributing, we will need to take a look at what we are doing
wrong and adjust it so it doesn’t hurt our bottom line.
Management Retention
We at Under Armour understand that both management and
employee retention is key to running a successful business,
especially internationally. When it comes to our managers in
Beijing, we plan on spending a lot of money on making sure we
hire the right people and train them properly. Being as that is
the case, we definitely want to make sure that they are happy
seeing as they are considered valuable assets to us. They are
able to communicate with the customers in Beijing as well as
inform us of the way everyday business is handled in their
culture. Making sure that we appeal to the consumer culture will
have a positive correlation with sales which makes our managers
that much more important to us. We want to hire young managers,
train them effectively, and keep them around for many years to
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come. We also want to make sure they know that there is great
opportunity for advancement in our company.
Employee Capacity
At Under Armour, employee capacity is absolutely crucial to
our growth abroad. By expanding our employee capacity, we will
allow ourselves to grow further into China and even outside of
China’s borders. Our increase in employee capacity has gotten us
to the point where we can expand to Beijing right now and that
move in itself will create larger employee capacity. As long as
we can maintain a solid increase in our company’s growth, we
will continue to be competitive in the sporting apparel market.
Success
Obviously our success will be measured by our bottom line
but there are other aspects of our company that we need to be
successful in order to achieve a growth in profit. If we
continue to increase our employee capacity, we will continue to
grow as a corporation which creates, hopefully a larger profit,
along with a greater brand image. We hope to compete more head
to head with Nike in the long run and taking our companies
business to Beijing is a step in that direction. We also hope to
continue to find countries in which we can operate while
lowering our costs. By working towards these goals, we can set a
standard for success.
Executive Summary
Under Armour is a company that is new to the international
business world. We have been head quartered in Baltimore,
Maryland but have just begun to expand globally. We hope to
become a diverse company with the ability to compete on the
international stage with Nike and other brand name sports
apparel companies.
Our move to Beijing, China has said a lot about the growth
of our company. We are expanding at a rate of 36% per year as
far as employees are concerned. We believe that China is going
to lower our cost of materials and production as well as give us
a prime location to spread our brand name in a new target
market.
China is just recently becoming introduced to the sports
apparel world thanks to the hosting of the summer Olympics. They
don’t have many star athletes and therefore they don’t see much
advertising for brand name apparel. That is what we hope to
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change with our move to Beijing. We hope to find the stand out
athlete’s in China, even if they play in the U.S., and get them
to wear our brand.
With our expansion into Beijing, we understand that we have
challenges to overcome, one of them being, how to adjust our
management style. We plan to use and teach a multidomestic
strategy to our managers and hope to gain ideas from their
knowledge about the Chinese culture. Our basic business level
strategy is differentiating our product from the competitors.
Our product is unique and superior to others which gives us the
ability to compete. The multidomestic strategy is necessary
because consumers in Beijing are unique and differ from those of
the United States. We plan to focus on popular sports and an
original logo with the Chinese flag in order to cater to those
consumers. We will be investing non-stop in our managers in
hopes for a high management retention rate. We understand that
there are different cultural norms and we plan to train our
manager’s according to what they are used to. We view our
manager’s as our assets and they will be able to promote and
push our product better than anyone.
Two benefits that come with the move to Beijing are cheap
labor and cheaper materials. By lowering our costs through these
two categories, we hope to increase our bottom line. If we are
able to offer the same quality product that we have built our
legendary name on for a cheaper cost, then we will turn a profit
almost instantaneously.
Our main goal once we begin the manufacturing and
distributing process in China is to maintain an even bottom line
for the first five years. We have a strategy to expand right
away but we know that if we can maintain our bottom line for at
least five years, we will be able to do our research and
discover what has been affective and what hasn’t been. Through
this research, we will hopefully be able to work out our
difficulties and turn our international business in China into a
profit. After five years, we hope to gain roughly an eight to
ten percent increase in profit.
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Works Cited
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McFarlin, Dean B., and Paul D. Sweeney. International
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"Under Armour: Information from Answers.com." Answers.com: Wiki
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<http://www.answers.com/topic/under-armour-inc>.
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