UNDER ARMOUR
AN INNOVATION ORIENTED ENTERPRISE
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AN INNOVATION ORIENTED ENTERPRISE
UNDER ARMOUR
Founded twenty years ago in 1996, Under Armour is an American based company that deals in sports apparel and other accessories. The company is involved in producing and supplying sportswear and other related items all over the world. The company, just like many other start-ups around the world, was formed from the basement of a house. Kevin Plank was 23 and a former captain of the special team at the University of Maryland football team (Slideshare.net, 2016). Initially, Plank started the company in Washington DC in his grandmother’s basement and spent his time all over the East Coast trying to sell apparel from the trunk of his car. After he had made the first big sale of $17,000, he moved to Baltimore where the company is headquartered till date (Slideshare.net, 2016).
The idea of the business came to Plank as a result of getting frustrated with the current ways of doing things (Under Armour, 2016). Plank was a fool back on the varsity team, and he had grown increasingly frustrated with having to remove the sweat-soaked T-shirt that he wore beneath the jersey during playtime. He also noticed that the compressed shorts he wore in the field were never sweaty. It was the moment when inspiration kicked in and the idea to create T-shirts out of synthetic fiber to contain the sweat (En.wikipedia.org, 2016).
After he had graduated, he came up with the initial prototype of the shirt and handed them out to his friends who had moved on to the NFL. The sweat-wicking technology enabled Plank to form the basis of a good product that ensured the athlete stayed cool, dry and light always (En.wikipedia.org, 2016). Big brands like Nike, Reebok and Adidas, took notice of the sweat-wicking T-shirts and followed suits by manufacturing their versions. The brand gained a strong level of recognition when it appeared on the cover of USA today donned by Jeff George, a quarterback from the Oakland Raiders (En.wikipedia.org, 2016). An equipment manager from Georgia Tech was impressed by the cover photo and as a result requested several shirts from Plank. This deal led to much more as other Division 1 teams like Arizona State University made orders for the shirts. Orders continued to increase since the reviews from players and other stakeholders were always positive. In the same year, Under Armour capitalized on this recognition to create a couple of new apparel lines such as ColdGear, Street Gear, AllseasonGear, HeatGear and TurfGear (Under Armour, 2016). Growth increased steadily and in the next year, Plank had $100,000 in orders to fulfill.
The company was entering into a period of unprecedented growth, and the biggest break came in 1999 in the movie Any Given Sunday (En.wikipedia.org, 2016). Warner Brothers requested Under Armour to outfit their film. The film showed the leading actor, Jamie Foxx, wearing a Jockstrap from Under Armour. The company had now achieved some level of global recognition. Under Armour saw this opportunity and placed an advertisement in ESPN The Magazine which went on to generate roughly $750,000 in sales. The XFL league was the next big breakthrough as Under Armour were the official outfitters. Rosewood Capital, a private equity firm, injected $12 million into the company and with the growing popularity, the company ran their first televised advertisement. The shares of the company went public on NASDAQ in November 2005 where they raised $153 million.Over the years, Under Armour have opened numerous specialty stores all over the world and in many states across America (Business Insider, 2016). The year 2013 saw them open their first Brand House in Baltimore.
Publicity
Over the years, Under Armour has been known for forming strategic alliances with individuals or other companies to improve their global portfolio. They partnered with Carl Ripken Jr. (Baseball Hall of Fame) to provide uniforms for a world series named after the Athlete (En.wikipedia.org, 2016). They also provided the suits that were worn by the speed skating team during the Winter Olympics of 2014. The poor performance by the athletes caused repercussions to the company. Studies did not display any distinct flaw with the suits, but nevertheless, the company stock took a plunge due to the issue. Under Armour offered a contract of $250,000,000 over ten years to sign NBA superstar Kevin Durant but they were beaten to the deal by Nike who offered $50,000,000 more (En.wikipedia.org, 2016). The company made history in 2014 when they signed a contract with the University of Notre Dame for providing athletic equipment and apparel. The deal was structured to run for ten years and was the biggest one that had ever been signed in the entire history of college athletics.
The company has been making some strategic acquisitions improve their portfolio. They acquired MapMyFitness (a digital app maker) in 2013 and later on in 2015 they also bought an app maker called MyFitnessPal for nutrition and calorie counting. Under Armour also owns a fitness app maker called Endomondo which was purchased at $85,000,000 (En.wikipedia.org, 2016). January 2016 saw the company make a strategic deal with IBM to use their cognitive computing technology so as to make data collected from their apps more accurate and meaningful. Under Armour made a deal with the North American Soccer League to be the Official Matchball Partner. A deal worth $280 million was also reached between Under Armour and UCLA and it is the biggest one ever signed in the history of NCAA (En.wikipedia.org, 2016).
Successful Entrepreneurs
A company cannot be successful if it is run by people who are not adequately capable of the job (Hill and Jones, 2009). A successful entrepreneur has to have certain skills and abilities to help propel the company to new levels. The determination and dedication of a group often say a lot about the nature of the people who run it. Kevin Plank has displayed several characteristics that set him apart to be a successful entrepreneur.
Creativity– any successful entrepreneur must have the ability to recognize an opportunity when they see it (Ducre, 2005). Many people miss these opportunities because they are not very obvious but a keen businessperson will always see them. Plank realized his opportunity when he noted that his compressed shorts did not get drenched in sweat.
Risk taker– a successful business person is not scared of taking risks if they may benefit from doing so. Taking a risk means that an idea is put into motion. Kevin Plank took numerous risks as he was building Under Armour. He risked to trust his dream and got straight to pursuing it after college instead of trying to find a job like most of his colleagues.
Superb business skills– a successful entrepreneur should have excellent qualifications and capabilities to seize an opportunity and optimize for it (Ducre, 2005). Plank knew that the sweat wicking shirt was going to become a big hit in the sports industry. He even gave out samples to his friends who went on ahead to the NFL thus boosting the visibility of his brand.
Drive– it is a skill that cannot be taught anywhere and must come from within the person (Hillairet, Richard, and Bouchet, 2009). A successful entrepreneur should be someone who is strongly driven and committed to their idea. Plank sold apparel from the trunk of a car up and down the East Coast, and this showed the drive and belief that he had within.
Vision– an entrepreneur must know which direction and how they want the company to go (Down, 2010). When Plank perfected the art of making the sweat-wicking shirts, he saw a lane that the company could capitalize on to grow to greater heights.
Versatility– a successful entrepreneur must incorporate versatility into their activities to ensure that risk is spread around and not just depending on one lane (Hillairet, Richard, and Bouchet, 2009). The company saw that HeatGear had become very successful and they launched a wider range of apparel including StreetGear and ColdGear among others.
Community
Under Armour have been keen on giving back to the community in some creative ways. They have an effort called UA Give Back, and it contains three key facets that help the community on various levels:
UA Power in Pink– this program contributes to fight breast cancer by partnering with women to promote exercise and fitness.
UA Freedom– they contribute to raise awareness for wounded war veterans and other military personnel while honoring them too.
UA Win Global– it is a program for children that focuses on the underprivileged communities to offer playing areas and supporting coaches and other important special programs that benefit the youth.
Entrepreneurial Spirit
An entrepreneurial spirit is essentially a mindset. It is a way of reasoning that seeks to bring about immediate change instead of waiting for change to occur (Inc.com., 2016). This mindset incorporates innovation, critical questioning, continuous improvement, and service. Entrepreneurial spirit sees the diamond in the rough, the unexploited opportunity, and have the tenacity to work towards that goal (Mohanty, 2010). It drives determined people to build something from a situation where they started with nothing or significantly less. The entrepreneurial spirit cannot be taught; it must come from within the person (Inc.com., 2016). Several features will set someone with an entrepreneurial spirit apart from the rest:
Passion
A real entrepreneur will be deeply passionate about his activities, and it is evident even when he speaks about it (Inc.com., 2016). When such people talk about or conduct their business, it is done with conviction and a high level of belief. Kevin Plank was deeply passionate about his company since it started out as a problem for him to deal with the sweat. He understood the importance of creating a suitable way to combat the sweat and improve the performance of athletes.
Progress
Entrepreneurs are always looking for a better way to do things and always believe that it can be found. Average people rarely question how things could be improved, but on the other hand, entrepreneurs are always evaluating to come up with new products, ideas and ways of doing things. When Kevin made the HeatGear apparel, he did not rest on his laurels. He figured that other sectors could do with specialized clothing and so he came up with ColdGear, AllseasonGear, StreetGear, and TurfGear.
Calculated Risks
An entrepreneur understands that no case presents a foolproof chance of success (Nirjar, 2011). The real entrepreneurs can gauge situations and calculate the risk involved versus the reward. There are no laid down rules to success in business and hence contractors must use their acumen to navigate the industry. This year alone in January, the company signed an apparel and sponsorship deal worth $280 million, making it the biggest in the history of NCAA, with UCLA. It is an enormous amount of money hence a significant risk, but it is also a well calculated one since it will result in more sales and publicity.
Optimistic
It is a fundamental trait for anyone who seeks to be a successful entrepreneur (Ducre, 2005). Starting and running a business is very challenging, and hence it is good to have a positive outlook as well as hope for a better future (Nirjar, 2011). Optimistic entrepreneurs question themselves, “Why can’t it be done?” instead of just saying that it cannot be done. They always seek to come up with solutions to problems and always maintain a positive attitude. Plank started out in his grandmother’s basement and had an idea for a product. He did not mind that there were giants such as Nike that were already well established in the industry. He took his idea and ran with it.
Execution
Most entrepreneurs fail at this most vital stage. Many brilliant ideas have died off because the individual was not keen enough on going out into the market to test out their idea. An idea in itself is not sufficient unless it is backed by good action. Success or failure are determined at this stage since the feedback from the public will tell everything. Kevin Plank decided to test out his product by giving it to a couple of friends who went to the NFL. In doing this, he was putting his brand into the public eye and eventually it was well received.
Strategic Advantage
Every industry has companies that will benefit from individual occurrences to gain the upper hand (Hill and Jones, 2009). Sporting goods companies will spend millions every year trying to come up with products to benefit professional athletes as well as other ordinary people with interest in the products. It is a highly competitive field and hence companies are always on the lookout for a way in which they may gain strategic advantage in the industry (Smallbusiness.chron.com, 2016). The company is involved and dedicated to performance apparel and not just any sportswear apparent. The aim is to maximize the performance of an athlete as much as possible.
Under Armour have established themselves as underdogs in the industry and their rise has been meteoric. Currently, it is the second largest provider of sportswear apparel in the United States after Nike (Business Insider, 2016). They have created a sense of being approachable and focusing on solving performance related problems in the industry as opposed to merely selling apparel. They have come up with a strategy that seems to be the opposite of what Nike is doing, and yet it is proving to be wildly successful (Business Insider, 2016). Under Armour bets on athletes who are not yet well known but have the capability to be global stars. This method allows them to seem humble to the common man as opposed to Nike which is a behemoth that has all the greatest and famous athletes on its roster.
Under Armour partnered with basketball superstar Steph Curry way before he attained his current level of fame and exposure. The idea is to show that the company gives a chance to the best talent out there and one does not have to be famous but just hard work and dedication like Curry. It is a strategy that has enabled them to come from behind and usurp companies like Adidas in the sportswear sector.
Competitive Advantage
Companies involved in the manufacture of sportswear and performance apparel have to be on a constant lookout for new ways to increase their chances of success in the market. Competitive advantage may come from many situations such as access to natural resources, labor, location or even new technology (Nirjar, 2011). Global giants like Adidas and Nike control the market for sportswear, but Under Armour is a market leader in the area of performance apparel.
Under Armour came up with a shirt design that had not been seen in the industry before. When sweat drenches the clothing of an athlete, it may hinder optimal performance since the excess moisture may act as a disturbance. The shirts designed by Under Armour seek to alleviate this problem. The fabric of the shirt is blended with polyester and other and other chemical components that enable it to remove perspiration from the skin by absorbing it onto the surface of the shirt where it evaporates. The athlete remains dry, and hence his performance is enhanced. Companies like Nike saw the success that these shirts were bringing to Under Armour and decided to copy the design, but the latter is well known for good performance.
Technology innovation has been evident in the sportswear industry especially now that competition is at an all-time high. Under Armour started a Brand House (their first) in 2013 in Baltimore. The advantage of a Brand House is that all designing of products is done in-house and hence there are minimal leakages of information or disturbances (Down, 2010). Research and development teams in all the major companies are working tirelessly to come up with more advanced equipment and apparel. Adidas came up with the adizero range of performance shoes that are highly advanced technologically. The shoe features a carbon plate that minimizes loss of energy, permanent Nano-ceramic compression pins that optimize propulsion thus increasing speed. The fabrics used in making the shoes are breathable too to improve circulation of air.
Athlete involvement has become a very critical sector in the sports goods industry. A company like Nike is best known for the famous faces of athletes associated with it. Companies are trying to attach themselves to the most successful sports people to boost their image and increase sales of items in those games and also to the millions of fans that the athletes have. The theory is that highly successful athletes will have a bigger following and commercial pull and hence it is wise to back them. Under Armour can owe its global appeal to athletes like Steph Curry, Jordan Speith and model Giselle Bundchen amongst others while Nike has the likes of Lebron James. Star power is an area that these companies have maximized on to create a global following since these figures are idolized all over the world. The athletes are also involved in the development of equipment to ensure that it performs according to expectation. The adizero shoes from Adidas were designed with Tyson Gay (American Olympic sprinter) and Jessica Ennis (heptathlete).
Sporting goods companies have diverted into many areas, and most have followed the idea of Under Armour of coming up with specialize apparel. We see companies forming departments to come up with the specific product for women, kids, young athletes as well as established professionals. Under Armour have an athleisure branch that specializes in coming up with designs for women. Nike has partnered with famous personalities such as Michael Jordan to come up with the world famous ‘Jordan’ line of sneakers and trainers.
Smart wear is a new trend that is gaining traction fast in the sporting goods industry (Sherwood and Drane, 2015). Smart wear is when technology and sportswear converge. High-tech sports are showing a high possibility of growth such that other non-sports companies are willing to dip into the market to earn a share of it too. The leading giants in the electronics sector such as Samsung, Nokia, and Apple have been working with top brands in the sport to create new revenue streams in sport-related technologies. Apple has partnered with Nike to come up with a sports kit that incorporates sensors into the shoes enabling users to obtain real-time feedback from their workout sessions and track their performances. Smart garments, such as the one patented by Apple, contain in-built sensors that provide physio metric data of the wearer, location, and garment performance. Studies show that this industry is likely to grow by a massive proportion in future and hence more sports apparel companies are trying to link with advanced technology.
Product design is an area that businesses have started to pay more attention to detail. The 21st century due to aesthetic values. People wear items as a form of expression of their lifestyle as well as for fashion among other reasons. Pivotal to the success of any organization is the research and development of new and catchy designs (both forward-looking and retro) to ensure that they rein in more customers (Sherwood and Drane, 2015). It comes with several problems since companies that come up with these new designs fall prey to counterfeiters who take away a huge chunk of their market. Today we see more sporting goods companies using design patents to protect their designs from criminals and fellow competitors. Having a particular model associated with an individual group alone is likely to increase revenue and boost the image.
Conclusion
It is evident that the next frontier
in the sporting goods will be achieved through innovation (Sherwood and Drane,
2015). Today, companies are spending increasingly more money in research and
development trying to come up with products to increase their market share.
Technology is a vital part of most, if not all, of the innovation that is
happening in this industry from advanced materials to data collection and
beyond (Clearinghouseforsport.gov.au, 2016). We can see that technology is
vital to the future of any sport around the world. Sporting goods and apparel
have come together with technology to help in improving the performance of
athletes as well as other fitness enthusiasts (Royal Fashionist, 2016). The
nature of the industry is that it is extremely competitive and hence companies
have to ensure they stay innovating so as to survive and command a significant
market share.
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