A company needs to assess the target market and state of the industry for it to be successful. Under Armour Corporation designs and sells shoes, sportswear, fitness outfits, and casual clothes. The headquarters of the Under Armour Company is in Baltimore, Maryland. Under Armor Company is among the leading companies in the sportswear industry. The corporation has incorporated technology in their operations to increase their sales and counter competition in the industry. The mission of the company is to enhance the image of the sportspeople by designing outfits that meet their needs (Under Armour, 2017).
The purpose of carrying out the competitive analysis is to illustrate the success of the product line in the market. The paper outlines the nature of the competitive industry. The second section of the article focuses on the comparative benefits and the global opportunities of the company. The third section of the article focuses on the factors that influence the demand for the product. The fourth part of the article focuses on the factors that affect the net revenue.
Delegate your assignment to our experts and they will do the rest.
Competitive Analysis
Under Armour Corporation is in the category of the sportswear market niche. The target market of the company is large, and many stores sell their products. The primary consumers of Under Armour Company products are athletes and individuals who take part in fitness activities. Some consumers purchase the company's products to gain popularity. Under Armour Company sells their items through their retails shops, wholesale stalls, and websites. The leading wholesale consumers of the company products are Finish Line, Hibbet Sport, and Dick Sports Group. The company markets the fitness outfits to the recognized athletes and teams in high schools, universities and national teams (Under Armour, 2017). The marketing strategy assists Under Armour Company to sell their products in other markets.
Under Armour Corporation operates in a competitive industry. The firm was started in 1996 and has developed over the past 22 years. The main competitors of the corporation include Nike and Adidas. The company produces similar products as the competitors. The company uses the conventional methods to make their products and have limited rights to their manufacturing process (Under Armour, 2017). Under Armour Company is a price taker in the fitness outfit market because the company can easily enter and leave the industry. The company has o accept the prices set in the market.
The competition in the sportswear industry is high. The company is experiencing slow growth, and their stock is losing value in the industry. The sales of the company are declining as a result of an increase in the competition, and one of the wholesalers has ceased their operations. The company has attempted to reduce their prices to counter competition in the industry, but it has led to the reduction of the total revenue. The competition in the industry reduces the opportunities for the company to increase their profits.
Comparative Advantages and International Trade Opportunities
The international trade facilitates the growth and expansion of businesses in foreign markets. Under Armour Company is expanding its operations in global markets by exporting their goods to foreign countries. The exports are 11% of the company’s total earnings. The company exports their products to Korea, China, Japan, South America, Australia, and Europe. The corporation imports their raw materials from Mexico, Malaysia, and Taiwan. Under Armour Corporation have industries located in China, Indonesia, Vietnam, and Jordan (Under Armour, 2015). The operation of the organization can be affected by the government regulations of the United States and the countries that process the products. The government restrictions can increase the production costs resulting in a rise in the product prices which decreases the market demand.
The international markets allow every country to manufacture products that they a high comparative advantage in processing. The country’s comparative advantage positively influences their cost of production. The company benefits from global trade because it processes their products in states that have a high comparative advantage in manufacturing sportswear. The cost of manufacturing the goods in the United States is higher than the cost of purchasing them. The values of the items influence their market demand. The government regulations have an impact on the need for goods.
Factors affecting Demand, Supply, and Prices
The supply and demand laws rule the business model of Under Armour Company. For instance, a reduction in the price of goods will increase their demand. The act of supply indicates that an increase in the price of goods will increase the supply.
A shift in the demand curve is influenced by various factors which include the rates of income, needs, preferences, and consumers. An increase in the taxes will result in increasing the prices of goods that lowers their market demand. The demand curve shifts downwards when the consumer bears the tax burden. The market equilibrium will reduce due to the downward shift of the demand curve.
A shift in the supply curve is influenced by several factors which include changes in the product prices, technology, preferences and an increase in competition. The supply curve will shift as a result of the producer bearing the tax burden. The products are prone to tariffs and foreign exchange risks because they are processed outside the country. The market can correct itself from the imbalance in the equilibrium. The increase in the competitors in the market will cause a shift in the supply curve. The shift in the supply curve will increase the rate of supply in the market resulting in the reduction of the prices. There are no barriers to entry in the sportswear industry. The supply and demand factors will affects the prices of Under Armour products. The company has to carry out an extensive analysis of their markets for them to avoid the effects of demand and supply on their operations. The company adopts the “price-taker” approach in the industry. The corporation can lose their market share in case the prices increase beyond the normal levels. The company can encounter losses when the prices are reduced below the standard costs.
Factors that will affect total revenue
The company maintains a different net economic revenue from the one indicated in the financial reports. The net income of the company is net earnings less the net expenses. There are two kinds of costs which include explicit and implicit costs. The exact costs are illustrated in the financial statements, but the inherent costs are not indicated in the financial reports (Mankiw, 2015). The intrinsic costs cannot be measured because they illustrate opportunities that were handed out during the commencement of the company.
The net revenue of Under Armor Company is prone to risks. The possible risks include the elements that influence the prices of the products and barriers to international trade. The company cannot increase the prices of their products in the industry because they are price-makers. The corporation can increase their production levels to increase their profits. The corporation can optimize their profits when the marginal revenue is below the average revenue, and an increase in the production levels will raise the margins.
In conclusion, Under Armour Company needs to assess their economic market before increasing their profits. The product prices should march the market prices. The corporation should continue carrying out the global trade for them to increase their operations in foreign countries. The company needs to take into account the risks of global trade and factors that influence demand as well as supply. The firm requires to establish the marginal expenses before raising the levels of production.
References
Mankiw, N. Gregory (2015). Principles of Microeconomics (7th ed.). Stamford, CT: Cengage Learning.
Under Armour, Inc. (2016). 2016 Annual Report of Under Armour, Inc. Retrieved from http://files.shareholder.com/downloads/
