Under Armour Inc 2013 Case Solution

1. Internal analysis

a. Value chain analysis

The distribution and operations network of Under Armour has been developed through collaboration with license partners which delivered its wide range of products to customers across the globe. The majority of the sales are routed through wholesale channels which include independent retailers, regional and domestic sporting goods chains, department store outlets, leagues, institutional authentic institutions, and teams (Baixardoc, 2019). 

Support activities

There are various support activities which work in close coordination with the core functions and responsible for generating value. Technology is important support function. The company adds value to their products and service globally through allowing technology to transfer through association. The leadership of the company is committed to continuously improve the efficiency of their processes and establish optimal ways to produce apparel & footwear products and sports accessories for men, women, and youth while ensuring professional standards of security in each segment they operate (Sustainability Report, 2017).

Other than technology, there are other support function which include human resource which is responsible for identifying, hiring and training competent resources for the group. The human resource is responsible for effective talent management. Other support functions include finance, audit, risk and administration. These support activities complements the main function and enable to company to develop expertise and competencies in the industry allowing it to introduce products that are always received well by its customers after their release. Since the company has a huge commitment to understanding the customer's requirements in athletics, fitness, and training activities and as part of an active lifestyle. The company highlights the advantages of its products in deriving better athletic performance thereby allowing Under Armour to build the consumer demand (Bartleby, 2015). 

b. Resources audit

The company puts its focus on sustainability, safety, and security of its people and environment in which the company operates to create value for its various stakeholders including employees, suppliers, shareholders, and customers. Since the company considers the human capital the most valuable resource special in the retail segment in which the company operates (Dbmaltby, 2013). Therefore, all the resources either tangible or intangible are managed in an efficient manner thereby allowing Under Armour to improve the financial conditions and operational results of their business. 

The company manages costs across all functions and divisions through employing best global practices. Using business operation modeling techniques to make the processes more efficient will cut the wasteful overheads resulting in the rationalization of the cost. The optimization of the operations will provide efficiency in maintaining and controlling of the processes at Under Armour and will bring functional changes across all strategic business units (Ciment & Hanbury, 2020). 

The company has access to multiple resources which differ in nature. These resources include physical (building, land, retail stores, inventory & equipment), financial (financial health, cash flows, borrowing/credit), human (staff, skills, expertise), intangible resources (brand equity, reputation, copyrights, goodwill, trademarks, patents, knowledge). All these resources are collectively contributing to derive the profitability of the company. Resource management is complement by the performance management and quality insurance which are the key aspects to derive profitability with scarce resources (Sustainability Report, 2017). In this regard, the company has to place sufficient controls of the processes which allow the optimum utilization of its resources without any bottlenecks and result in the highest performance of the employees. However, there must be a relentless focus on the quality and standards which will ensure the products to meet all the requirements of the respective customers. 

Under Armour has adopted a strategy of resilience and stewardship whereby it takes responsibility for its actions and provides solutions to the setbacks and challenges which may be triggered by the environment, the climate, the market, and the industry. Moreover, at Under Armour resource evaluation is a continuous process whereby various functions at the company undertake periodic reviews of the resources they have and the required resources to meet the company’s milestones and objectives (Allega, 2018). 

c. Barney's VRIO model 

In order to perform the VRIO analysis, it is important to understand the health of the internal resources and competitive advantages first. As mentioned above, Under Armour has resources ranging from physical to intangible. Firstly, the financial resources of the company include consistent growth in revenues for the last many years, healthy operating earnings which contribute to the healthy bottom line (i.e., $92 Million). Other than that, the company has a healthy balance sheet footing of $4.8 Billion with a stable cash position (Annual Report, 2019). 

Secondly, the product design and development are another key resources which leads to a competitive advantage for the firm. Under Armour creates technically advance product which is superior in quality whereby the product development teams collaborate with third-party vendors while focusing on style, fit and performance. This competency allows Under Armour to deliver a superior performance which meets the evolving requirements of the consumers (Appel, 2018). 

Inventory management is another key area which affects their ability to increase efficiency in their supply chain management. The company maintains sufficient inventory levels for existing orders, the fast delivery requirement of the consumers, and projected inventory sales. The company uses information technology to design inventory management system which is integrated within the firm and linked with different functions of the company thereby helping the company to reduce their cost to a large extent through cutting reordering cost, production lead time control and selling excess inventory through factory stores (Cosgrove, 2019). 

The company also owns the material trademarks which are used in coordination with sales, distribution, marketing both globally and locally. The distinct trademarks of Under Armour help the company to build its brand image and create a unique impression of its products as compared to the competitors. These trademarks are considered to be significantly valuable within the firm since they help to distinguish their products from those of others. 

The VRIO analysis of these four resources may be summarized as below.