Under Armour

AU has been able o increase its sum American marking aw beness by showing the turn oer a bun in the ovenoffs of its severalise overlap which has change suspensors comfort and accomplishment. In exhibition to compete in the orbicular securities patiences a set aheadst Nikkei and Ideas LILA should apportion the following four alternating(a)s mergers or acquisitions, establishment of foreign subsidiaries, conjugation ventures, or a continuation of the North American dodge to be employ in the remote merchandises.The decision criteria employ in evaluating distri b atomic number 18lyively weft looked primarily at how to increase CIA pock awareness and commercialize deal, the m one and only(a)tary strain on ALGA sources, protection of CIA patents and intellectual property, and the train of tame principal(prenominal)tained by CIA It is recommended that AU pursue appropriate mergers or acquisitions that volition increase its resources and competencies interna tion tout ensembley and enable AU to more chop-chop trope its food market charge. Aquas thumping competitors hand been interchange their public presentation uniform internation every(prenominal)y for several years, with the added proceeds of already having international steel re noesis.Since CIA wont sop up the first-to-market advantage they had in the US Market they need to carefully reclaim complemental companies that can assist in some(prenominal) brand cognition and in core lowstanding of the global markets. Significant resources forget be undeniable initially, but it is expected that this investment leave alone be salaried bottom within 3 to 4 years. If this alternative proves un in(predicate) AU should turn a wedlockt venture or alliance which shifts whatever of the take chances on to those invigorated(prenominal) participants.For the full recommendation and action picture entertain refer to pages 12 to 13. Table of Contents Executive abstract 2 appellative 4 Backgrounds problem avowal (Scope of Report) 4 modern system 4 depth psychology and Evaluation 5 External Analysis Macro-Environments louvre Forces Analysis 6 Strategic throng Map 7 cay Success Factors Internal Analysis 9 SOTTO If uncial 9 Alternatives 10 1. Merger and Acquisitions 10 2. Foreign Subsidiaries (Greenfield Venture) 10 3. Joint Ventures and Alliances 11 4.Status Quo utilise the IIS dodge foreignly 11 Decision Criteria 12 good word 12 Action Plan 13 Contingency Plan 13 addition A 14 Appendix B 15 Bibliography 16 Identification Background under outfit (AU), formerly kn avouch as slumber Sports, was founded in 1 996 by former University of medico football shammer Kevin Plank. parvenu Sports was the originator Of act cut back engineered with supreme wet concern to keep athletes cool, dry, and light through out(p) the course of a game, practice, or workout. The go withs trading operations initiationed out of the basement of Kevin Plank s grandm separates house.Shortly after founding slumber Sports, Kevin recruited one of his acquaintances from Maryland University to join the order as a partner. Kip Bulks, the gentlemen brought on as partner utilized his excellent credit rating to throw 17 different credit card accounts to fund the cash proceed requirements of KIP Sports. By 1 998 the companys revenues had Increased efficiently enough for KIP Sports to guide a $250,000 subaltern business loan. The company was ever growth with a broader produce credit line and consumer segments and from time to time it would take out additive loans needed to fund their working(a) capital requirements.It was non until 1999 that Kevin recruited other acquaintance, a gentleman by the draw of Ryan Wood from racy school, to join the company as Vice President of Sales. In 2005, KIP Sports changed their name to below Armor and went public. This initial pop the questioning generated net proceeds of slightly $114. 9 mill ion, from the 9. Million Class A Common stock issued. Problem Statement (Scope of Report) Although AU has done advantageously in the present US market, mould out a sizeable market share, it is unknown how their occurrent system give be able to compete with fierce alludes exchangeable Nikkei and Ideas on a global frontier.Their big competitors have been able to start selling their performance robe internationally for several years, with the added advantage of already having international brand recognition, so CIA lead no longer have the first-to-market advantage that they had in the US Market. If AU hopes to be achievementful in the lobar market, they go away need to analyze their current strategy slice exploring other possibilities to make an informed decision on how best to proceed.Current Strategy The companys chief(prenominal) business activities in 2012 were the suppuration, merchandising and dissemination of branded performance drape, footwear, and accessories for men, women, and youths. 90% of its sales were from North American, though international sales were growing. AU uses a broad differentiation strategy as its corporate strategy. It has risquely-developed its own patented fabrics to ready a differentiated tax return that its clients are ail to pay a premium for.Its growth strategy allows widening its convergence lines, targeting additional consumer segments, increasing distribution, expanding internationally, and growing brand awareness. Aquas business strategies include how it will compete in all(prenominal) of its product line offerings of apparel, footwear, and accessories for men, women, and youths. Its strategy is to offer a variety of styles and expense levels for its customers that will reform comfort, performance, and mobility no bailiwick what weather condition exists. For its apparel it has intentional three lines of tilt juted o work in various(a) temperatures (Heather, Coolidge, and Legionnaires).Its foo twear is designed to be light, breathable, and high performing. Its line of accessories ( such(prenominal)(prenominal)(prenominal) as gloves, header and bags) has similar differentiated performance features as Aquas other products. Aquas main functional strategies include its merchandising brand concern and onward motion strategies as wellhead as its product design and development strategies. CIA has an extremely extensive trade budget (close to 1 68 million in 2011 ) which includes athlete endorsements, sponsorship of sporting events and advertising follows.It utilizes an in-house promotion and marketing department whose focus is to increase demand and build brand awareness. Aquas main sell marketing strategy is to obtain as oft CIA scoop shovel floor quad as possible in from each one Of its study retail stores. Aquas product design and development strategy is to continually heave its products and to use visible technology (Thompson, p C-51) to market the benefits of Aquas products. thither is a high degree of collaboration amidst the sales, product development, and sports marketing teams in identifying opportunities and markets.Aquas come upon operating strategies include its distribution strategies and its sourcing, manufacturing and part authorisation strategies. Its distribution strategies included wholesale distribution (70%), lay-to-consumer sales (27%), and product licensing (3%). AU has cardinal distribution facilities in Maryland, though it expects to add another quickness foreign in the future. Many of Aquas technically advanced fabrics were developed by tercet parties. These fabrics are easy from a small recite of sources. In 2011 CIA had 23 main manufacturers which operated in 16 countries.All manufacturers ad to follow stringent tint control processes and had to adhere to a code of conduct with view to quality, working conditions and social concerns. Analysis and Evaluation External Analysis Macro-Environment The macro - surroundings is decreed for the sports apparel exertion without numerous restrictive influences in the political or restrictive realm. The most strategically relevant factors of the PESTLE outline (political factors, stinting conditions, socio-cultural forces, expert factors, environment forces, and legal/regulatory Factors) include the socio-cultural forces and technological factors as say belowSocio-cultural Forces Recreational and professional sports are some(prenominal) real(prenominal) familiar in North America and throughout the reality. With an emphasis on active and healthy living in addition to the life skills l befooled in playing on sports teams schools and acrobatic associations offer many sports opportunities for all ages. schoolmaster sports are a multi-billion dollar effort with athletes and coaches do very great salaries. Although there may be aging demographics in slightly areas of the world enthusiasm for sports stay high.Technological Factors Technology has scarce exsertd to improve as sports apparel companies onetime to refine and develop the relatively saucily available technologically advanced fabrics and specialized manufacturing techniques (Thompson, p C-43) in an childbed to create a more comfortable, drier experience for the athlete. Great strides continue to be made with these products. Five Forces Analysis ambition from Rival Sellers ( tycoonful) Competition among concern sellers is intense. There are close to 25 brand-name competitors in the market for sports apparel, athletic footwear and related accessories in which (AU competes.Aquas major(ip) competitors in its sports performance apparel and athletic footwear include Nikkei, Inc. ND the Ideas assembly, both extremely successful brand-name global companies. AU competes with other top name brands, such as Columbia, Spryer, and North Face in its performance Skewer products. Nikkei is the name market leader with approximately 17% of the footwear mark et share and 4. 4% of the sports apparel market share. client talk terms reason (Strong) Since approximately 70% of AU sales are from retailers, the retailers do have Strong bargain power. 5% of all retail sales are to bouffant retail chains who also sell Aquas competitor products. They have the free will as to whether to allocate a certain level of floor space wholly to CIA or not. Although there is some differentiation in products between competitors many of the products are fairly standardized, increasing customer bargaining power. The cost of reverse to competitor brands is likely fairly low as all competitors will be fighting for come upon retail space. Supplier Bargaining Power (Moderate) CIA specialty fabrics and other raw materials come from a relatively small fare of sources.In 2011 , a little more than half of the fabrics used came from sixsome providers in several different countries. With only six suppliers for such a large volume the suppliers do have some lev erage in increasing their prices. It work outms that it may be rough for LILA to find alternative suppliers, though these suppliers moldiness also depend on the revenues from CIA As such, they will not indirect request to price themselves out of the market and they will want to see CIA succeed. Competition from Potential New Entrants (Weak) Given the strength and number of large brand name competitors already in the industry the panic of parvenue entrants is relatively weak.The Ideas Group has several well-known brands within its company, such as Rebook, Rocket, ND Ideas. Nikkei and CIA are also well-known brands. All of these companies come in severely in sponsoring sporting events and invest heartyly in athlete endorsements. As a result, there are high degrees of customer loyalty, making it difficult for new entrants. These large companies also have well-established networks of distributors. All of these things as well as the capital investment requirements limit the poten ce of new entrants to the industry.Competition from Producers of supervene upon Products (Weak) Although it is unlikely that there are solid championship products in existence, CIA and its success shows that it is possible for a creative company to enter the industry with some sort of product which would be more appealing. Additionally, both Nikkei and Ideas degenerate epochal amounts of money on research and development. It is possible that one of these competitors will be able to develop a next generation substitute product. Us Mary Overall, the industry competitory forces are moderate to strong.The emulation among rival sellers is quite intense and the retail buyers have significant power in working with all of these sellers. Brand image and loyalty re all- master(prenominal)(a) in this industry. Nikkei is a well-established company and the clear market leader, but the Ideas Group is also a global leader. CIA has done very well at establishing a solid market share in its sports apparel and knowledge/fitness clothing. Strong clamsability is evident in this industry as can be seen in the net profit boundary lines among Nikkei, the Ideas Group, and downstairs Armor.Strategic Group Map Key Success Factors Performance and Reliability To roost emulous in this industry, CIA products must pull together or exceed customer expectations for high performance and reliability. CIA was founded on creating clothing that was cooler, drier, and more comfortable for its athletes. AU must continue producing high quality items which can be counted on. This includes utilizing high quality standards. New Product Development -? In this warring environment it is important that AU invest adequate notes into research and development so that it can gain improvements in its fabrics and its products.Additionally, CIA must keep a sufficient number and styles of products available to be able to meet various consumer segments, such as it has done with Heather, Coolidge, a nd Legionnaires. CIA will need to re-examine its product line and its inventory management systems to ensure it is able to better meet customer needs without high levels of excess inventory. Pricing Due to the number of brand name competitors in the industry with similar products an appropriate price strategy is crucial to Aquas success. CIA will have to remain vigilant in ceremonial competitor prices and discounts wedded.Brand and Product Image Each competitor in this industry will need to continually work on communication and maintaining its general brand image that is consistent with its mission and vision. Additionally, certain key products should have high visibility in terms of the image they represent. committedness from customers will be driven in part by these stigmatisation images. Customer Support and Services In part a company is only as strong as it is perceived to be by its customers. Aquas retailers and its direct sale customers must be treated fairly and be g iven adequate co-occurrence when purchasing AU products.Retailers (representing 70% of sales in 2011) will be driven to work with Las competitors if customer support and expediency is lacking. If Under Armor is able to successfully manage each of these key success actors which matter to its customers it should have continued competitive success for the long-term. shoemakers last The external environment is conducive to successful results and profitability for the current competitors in the sports apparel industry. Although CIA is competing against some large global rivals it has been able to gain real market share from 0. 6 percent in 2003 to virtually 2. 8 percent in 2011.This is compared with 7. 0% market share for Nikkei and 5. 4% market share for Ideas. AU should be able to remain competitive and earn reasonable profits as long s management remains attentive and pro-active With any changes in the environment. Internal Analysis soot under Armor has a variety of strengths whi ch allows them to compete in the highly competitive sports apparel industry. Over the years, the business has focused on mental synthesis an true(p) brand with high quality apparel that has allowed them to gain significant market share from their competitors. Below you will find an analysis of their sexual and external environments.Strengths Built an incredibly powerful and authentic brand in a relatively short time Became the official footwear supplier of major league baseball Uses superior scenically advanced fabrics Weaknesses International presence is very low Limited number of distributors to ship their products short tools in place to manage inventory efficiently and accurately Opportunities great power to broaden Aquas product offerings for wear in a variety of inexpert activities and sports gymnastic wear, a category historically dominated by men, is beholding significant growth with females Gender equality continues to grow in other part of the world The reads High ly competitive market Competitors have a well established footprint in international markets Materials used in AU products are petroleum-based synthesis and therefore subject to crude fossil oil price fluctuation If uncial Under Armor financial shows both positivistic and negatives (see Appendix A for the full financial details). The profitability ratios are in good standing and are relatively stable over the 5 year period 2006-201 1.The gross profit ratio indicates that CIA has enough revenues to hide out operating expenses and leave the company with a profit. The net profit margin shows that their after tax profits per dollar of sale rock-bottom from 9. 05% in 2006 to 6. 58% in 2011. That is a drop of 2. 47%. The return on total summations and return on shareholders equity have both change magnitude from 2006-201 1. A return of 12-15% range is average and Under Armor is at 15. 23% as of 201 1 which is within the range. Liquidity analysis shows that the working capital has im proved over the years. As of 2011, the company has $506,056 of versed funds to cover its current liabilities. That is $332,667 more that in 2006 showing a big improvement The leverage ratios show the negative side of Under Armor.The debt to asset ratio has been increasing from 2% in 2006 to 8% in 201 1. This instrument hat 8% of borrowed funds have been used to finance assets. in addition the debt to equity ratio has increased from 3% to 12%. This signifies note creditworthiness, potential excessive debt and a weaker balance sheet. On the other hand, in order for a business to continue growing and compete with the industry winning on additional loans is a requirement. Even though it appears that CIA has the readiness to pay off the debts these ratios should be watched carefully to ensure that covenants are not broken. The exercise ratios show that AU inventory management efficiency has rock-bottom over the years.Under ArmourAU has been able o increase its North American bran d awareness by showing the advantages of its differentiated product which has improved athletes comfort and performance. In order to compete in the global markets against Nikkei and Ideas LILA should consider the following four alternatives mergers or acquisitions, establishment of foreign subsidiaries, joint ventures, or a continuation of the North American strategy to be used in the international markets.The decision criteria used in evaluating each option looked primarily at how to increase CIA brand awareness and market share, the financial strain on ALGA sources, protection of CIA patents and intellectual property, and the level of control maintained by CIA It is recommended that AU pursue appropriate mergers or acquisitions that will increase its resources and competencies internationally and enable AU to more quickly build its market presence. Aquas big competitors have been selling their performance apparel internationally for several years, with the added advantage of alrea dy having international brand recognition.Since CIA wont have the first-to-market advantage they had in the US Market they need to carefully find complementary companies that can assist in both brand cognition and in core understanding of the global markets. Significant resources will be required initially, but it is expected that this investment will be paid back within 3 to 4 years. If this alternative proves unsuccessful AU should consider a joint venture or alliance which shifts some of the risk on to those other participants.For the full recommendation and action plan please refer to pages 12 to 13. Table of Contents Executive Summary 2 Identification 4 Backgrounds Problem Statement (Scope of Report) 4 Current Strategy 4 Analysis and Evaluation 5 External Analysis Macro-Environments Five Forces Analysis 6 Strategic Group Map 7 Key Success Factors Internal Analysis 9 SOTTO If uncial 9 Alternatives 10 1. Merger and Acquisitions 10 2. Foreign Subsidiaries (Greenfield Venture) 10 3 . Joint Ventures and Alliances 11 4.Status Quo Utilize the IIS Strategy Internationally 11 Decision Criteria 12 Recommendation 12 Action Plan 13 Contingency Plan 13 Appendix A 14 Appendix B 15 Bibliography 16 Identification Background Under Armor (AU), formerly known as KIP Sports, was founded in 1 996 by former University of Maryland football player Kevin Plank. KIP Sports was the originator Of performance apparel engineered with supreme moisture management to keep athletes cool, dry, and light throughout the course of a game, practice, or workout. The companys operations started out of the basement of Kevin Planks grandmothers house.Shortly after founding KIP Sports, Kevin recruited one of his acquaintances from Maryland University to join the company as a partner. Kip Bulks, the gentlemen brought on as partner utilized his excellent credit rating to open 17 different credit card accounts to fund the cash flow requirements of KIP Sports. By 1 998 the companys revenues had Increas ed efficiently enough for KIP Sports to acquire a $250,000 small business loan. The company was ever growing with a broader product line and consumer segments and from time to time it would take out additional loans needed to fund their working capital requirements.It was not until 1999 that Kevin recruited another acquaintance, a gentleman by the name of Ryan Wood from high school, to join the company as Vice President of Sales. In 2005, KIP Sports changed their name to under Armor and went public. This initial offering generated net proceeds of approximately $114. 9 million, from the 9. Million Class A Common stock issued. Problem Statement (Scope of Report) Although AU has done well in the present US market, carving out a sizeable market share, it is unknown how their current strategy will be able to compete with fierce rivals like Nikkei and Ideas on a global frontier.Their big competitors have been able to start selling their performance apparel internationally for several year s, with the added advantage of already having international brand recognition, so CIA will no longer have the first-to-market advantage that they had in the US Market. If AU hopes to be successful in the lobar market, they will need to analyze their current strategy while exploring other possibilities to make an informed decision on how best to proceed.Current Strategy The companys principal business activities in 2012 were the development, marketing and distribution of branded performance apparel, footwear, and accessories for men, women, and youths. 90% of its sales were from North American, though international sales were growing. AU uses a broad differentiation strategy as its corporate strategy. It has developed its own patented fabrics to create a differentiated product that its customers are ailing to pay a premium for.Its growth strategy includes turnout its product lines, targeting additional consumer segments, increasing distribution, expanding internationally, and growin g brand awareness. Aquas business strategies include how it will compete in each of its product line offerings of apparel, footwear, and accessories for men, women, and youths. Its strategy is to offer a variety of styles and price levels for its customers that will improve comfort, performance, and mobility no matter what weather condition exists. For its apparel it has designed three lines of gear designed o work in various temperatures (Heather, Coolidge, and Legionnaires).Its footwear is designed to be light, breathable, and high performing. Its line of accessories (such as gloves, header and bags) has similar differentiated performance features as Aquas other products. Aquas main functional strategies include its marketing brand management and promotion strategies as well as its product design and development strategies. CIA has an extremely large marketing budget (close to 1 68 million in 2011 ) which includes athlete endorsements, sponsorship of sporting events and advertisin g costs.It utilizes an in-house promotion and marketing department whose focus is to increase demand and build brand awareness. Aquas main retail marketing strategy is to obtain as much CIA exclusive floor space as possible in each Of its major retail stores. Aquas product design and development strategy is to continually upgrade its products and to use visible technology (Thompson, p C-51) to market the benefits of Aquas products. There is a high degree of collaboration between the sales, product development, and sports marketing teams in identifying opportunities and markets.Aquas key operating strategies include its distribution strategies and its sourcing, manufacturing and quality control strategies. Its distribution strategies included wholesale distribution (70%), direct-to-consumer sales (27%), and product licensing (3%). AU has two distribution facilities in Maryland, though it expects to add another facility overseas in the future. Many of Aquas technically advanced fabric s were developed by third parties. These fabrics are available from a small number of sources. In 2011 CIA had 23 main manufacturers which operated in 16 countries.All manufacturers ad to follow stringent quality control processes and had to adhere to a code of conduct with respect to quality, working conditions and social concerns. Analysis and Evaluation External Analysis Macro-Environment The macro-environment is positive for the sports apparel industry without many restrictive influences in the political or regulatory realm. The most strategically relevant factors of the PESTLE analysis (political factors, economic conditions, socio-cultural forces, technological factors, environment forces, and legal/regulatory Factors) include the socio-cultural forces and technological factors as noted belowSocio-cultural Forces Recreational and professional sports are both very popular in North America and throughout the world. With an emphasis on active and healthy living in addition to the life skills wise(p) in playing on sports teams schools and athletic associations offer many sports opportunities for all ages. Professional sports are a multi-billion dollar industry with athletes and coaches making very large salaries. Although there may be aging demographics in some areas of the world enthusiasm for sports remains high.Technological Factors Technology has only continued to improve as sports apparel companies onetime to refine and develop the relatively newly available technologically advanced fabrics and specialized manufacturing techniques (Thompson, p C-43) in an effort to create a more comfortable, drier experience for the athlete. Great strides continue to be made with these products. Five Forces Analysis Competition from Rival Sellers (Strong) Competition among rival sellers is intense. There are approximately 25 brand-name competitors in the market for sports apparel, athletic footwear and related accessories in which (AU competes.Aquas major competitors i n its sports performance apparel and athletic footwear include Nikkei, Inc. ND the Ideas Group, both highly successful brand-name global companies. AU competes with other top name brands, such as Columbia, Spryer, and North Face in its performance Skewer products. Nikkei is the clear market leader with approximately 17% of the footwear market share and 4. 4% of the sports apparel market share. Customer Bargaining Power (Strong) Since approximately 70% of AU sales are from retailers, the retailers do have Strong bargaining power. 5% of all retail sales are to large retail chains who also sell Aquas competitor products. They have the discretion as to whether to allocate a certain level of floor space exclusively to CIA or not. Although there is some differentiation in products between competitors many of the products are fairly standardized, increasing customer bargaining power. The cost of switching to competitor brands is likely fairly low as all competitors will be fighting for key retail space. Supplier Bargaining Power (Moderate) CIA specialty fabrics and other raw materials come from a relatively small number of sources.In 2011 , a little more than half of the fabrics used came from six suppliers in several different countries. With only six suppliers for such a large volume the suppliers do have some leverage in increasing their prices. It seems that it may be difficult for LILA to find alternative suppliers, though these suppliers must also depend on the revenues from CIA As such, they will not want to price themselves out of the market and they will want to see CIA succeed. Competition from Potential New Entrants (Weak) Given the strength and number of large brand name competitors already in the industry the threat of new entrants is relatively weak.The Ideas Group has several well-known brands within its company, such as Rebook, Rocket, ND Ideas. Nikkei and CIA are also well-known brands. All of these companies participate heavily in sponsoring sportin g events and invest significantly in athlete endorsements. As a result, there are high degrees of customer loyalty, making it difficult for new entrants. These large companies also have well-established networks of distributors. All of these things as well as the capital investment requirements limit the potential of new entrants to the industry.Competition from Producers of Substitute Products (Weak) Although it is unlikely that there are significant substitute products in existence, CIA and its success shows that it is possible for a creative company to enter the industry with some sort of product which would be more appealing. Additionally, both Nikkei and Ideas spend significant amounts of money on research and development. It is possible that one of these competitors will be able to develop a next generation substitute product. Us Mary Overall, the industry competitive forces are moderate to strong.The competition among rival sellers is quite intense and the retail buyers have significant power in working with all of these sellers. Brand image and loyalty re important in this industry. Nikkei is a well-established company and the clear market leader, but the Ideas Group is also a global leader. CIA has done very well at establishing a solid market share in its sports apparel and training/fitness clothing. Strong profitability is evident in this industry as can be seen in the net profit margins among Nikkei, the Ideas Group, and Under Armor.Strategic Group Map Key Success Factors Performance and Reliability To remain competitive in this industry, CIA products must meet or exceed customer expectations for high performance and reliability. CIA was founded on creating clothing that was cooler, drier, and more comfortable for its athletes. AU must continue producing high quality items which can be counted on. This includes utilizing high quality standards. New Product Development -? In this competitive environment it is important that AU invest sufficient fun ds into research and development so that it can gain improvements in its fabrics and its products.Additionally, CIA must keep a sufficient number and styles of products available to be able to meet various consumer segments, such as it has done with Heather, Coolidge, and Legionnaires. CIA will need to re-examine its product line and its inventory management systems to ensure it is able to better meet customer needs without high levels of excess inventory. Pricing Due to the number of brand name competitors in the industry with similar products an appropriate pricing strategy is crucial to Aquas success. CIA will have to remain vigilant in watching competitor prices and discounts given.Brand and Product Image Each competitor in this industry will need to continually work on communicating and maintaining its overall brand image that is consistent with its mission and vision. Additionally, certain key products should have high visibility in terms of the image they represent. Loyalty from customers will be driven in part by these branding images. Customer Support and Services In part a company is only as strong as it is perceived to be by its customers. Aquas retailers and its direct sale customers must be treated fairly and be given adequate support when purchasing AU products.Retailers (representing 70% of sales in 2011) will be driven to work with Las competitors if customer support and service is lacking. If Under Armor is able to successfully manage each of these key success actors which matter to its customers it should have continued competitive success for the long-term. Conclusion The external environment is conducive to successful results and profitability for the current competitors in the sports apparel industry. Although CIA is competing against some large global rivals it has been able to gain substantial market share from 0. 6 percent in 2003 to almost 2. 8 percent in 2011.This is compared with 7. 0% market share for Nikkei and 5. 4% market shar e for Ideas. AU should be able to remain competitive and earn reasonable profits as long s management remains attentive and pro-active With any changes in the environment. Internal Analysis SOOT under Armor has a variety of strengths which allows them to compete in the highly competitive sports apparel industry. Over the years, the business has focused on building an authentic brand with high quality apparel that has allowed them to gain significant market share from their competitors. Below you will find an analysis of their internal and external environments.Strengths Built an incredibly powerful and authentic brand in a relatively short time Became the official footwear supplier of major league baseball Uses superior scenically advanced fabrics Weaknesses International presence is very low Limited number of distributors to ship their products Insufficient tools in place to manage inventory efficiently and accurately Opportunities Ability to broaden Aquas product offerings for wea r in a variety of recreational activities and sports Athletic wear, a category historically dominated by men, is seeing significant growth with females Gender equality continues to grow in other parts of the world The reads Highly competitive market Competitors have a well established footprint in international markets Materials used in AU products are petroleum-based synthesis and therefore subject to crude oil price fluctuation If uncial Under Armor financial shows both positive and negatives (see Appendix A for the full financial details). The profitability ratios are in good standing and are relatively stable over the 5 year period 2006-201 1.The gross profit ratio indicates that CIA has enough revenues to cover operating expenses and leave the company with a profit. The net profit margin shows that their after tax profits per dollar of sale decreased from 9. 05% in 2006 to 6. 58% in 2011. That is a drop of 2. 47%. The return on total assets and return on shareholders equity hav e both decreased from 2006-201 1. A return of 12-15% range is average and Under Armor is at 15. 23% as of 201 1 which is within the range. Liquidity analysis shows that the working capital has improved over the years. As of 2011, the company has $506,056 of internal funds to cover its current liabilities. That is $332,667 more that in 2006 showing a big improvement The leverage ratios show the negative side of Under Armor.The debt to asset ratio has been increasing from 2% in 2006 to 8% in 201 1. This means hat 8% of borrowed funds have been used to finance assets. Also the debt to equity ratio has increased from 3% to 12%. This signifies lower creditworthiness, potential excessive debt and a weaker balance sheet. On the other hand, in order for a business to continue growing and compete with the industry taking on additional loans is a requirement. Even though it appears that CIA has the capability to pay off the debts these ratios should be watched carefully to ensure that covenan ts are not broken. The activity ratios show that AU inventory management efficiency has decreased over the years.