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Hanna Cohen, Megan Findakly, Steven Zeigler, and Ayomide
Oluleye
Financial AnalysisRevenue Net Income
Financial performance is STRONGNet revenue has increased 172.43% from 2009 through 2013Net income has increased 246.93% from 2009 through 2013Earnings per share (EPS) has increased 226% from 2009 through 2013
3C’s Business ModelCustomer – Young urban professional affluent consumerCompany- Kevin Plank, 43, is Founder and CEO of performance apparel makerCompetitors – Nike, Adidas, Reebok, and Puma
Why India?Election of Prime Minister Narendra Modi in 2014Recent Changes to Foreign Direct Investment (FDI)Competitors
Method of EntryEntry into India will be accomplished by establishing:
Under Armour IndiaUnder Armour IndiaA wholly-owned subsidiary of Under Armour:
Strategic control and independenceDoes not want to repeat competitors’ mistakesChanging political/regulatory climateBranding
Under Armour India – Supply Chain
• Immediate/Short-term – Exporting– Goal: Enter India as quickly as possible
while keeping initial investment low– Solution: Exporting from Asia and
Mexico• Exporting• Free Trade Warehousing Zones (FTWZ)• FTWZ Stores Customers
– Costs:• Container: $1,800 to $2,500 per TEU from
Mexico to Mumbai, India– Capacity: 15,000 packaged shirts or 8,500
footwear– Cost: $0.12-0.17/shirt or $0.21-.029/footwear
• Import duty – 18%/CIF and Warehousing – Rs. 92/cf
Distribution - Retail Stores• Establish retail stores in shopping malls
– Mumbai – High Street Phoenix– New Delhi – Select CityWalk– Bangalore – Mantri Square
• 5,000-8,000 sq. ft. (North America average is 6,000 sq. ft.)
• Labor sourced locally with training provided by U.S. team
Distribution - Retail Stores• Retailing Costs:
– Retail rent: R150-R180/sq. ft. per month. For 6,000 sq. ft. – 9 Lakh or $13,200 per month, per store.
– Salaries: R110-450/hour, depending on position, 24 FTE person workforce. Total: 2.69 Lakh/week or $4,000 per week, per store.
– Inventory Cost: $21,050 per store (as of Dec. 31, 2014)• Marketing Costs:
– $3,808,000 per year, 52 commercials, 1 team, 6 celebrities and 12 sports players sponsorships
Financial Analysis – India Expansion
Year 1 Year 2 Year 3 Year 4 Year 5Stores & Inventory $1,815,321 $1,815,321 $1,815,321 $1,815,321 $1,815,321Marketing $3,808,000 $3,808,000 $3,808,000 $3,808,000 $3,808,000Build out/Training/Misc.
$618,800 $339,600 $339,600 $339,600 $339,600
Total Costs: $6,242,121 $5,962,921 $5,962,921 $5,962,921 $5,962,921
# of Customers – B/E 64,219 61,347 61,347 61,347 61,347Market Share – B/E 3.61% 3.45% 3.45% 3.45% 3.45%# of Customers – 5.8%
67,950 64,911 64,911 64,911 64,911
Market Share – 5.8% 3.82% 3.65% 3.65% 3.65% 3.65%Avg. Revenue per Customer: $97.20Under Armour Profit Margin (avg.): 5.8%Active Apparel Profit Margin (avg.): 8%Total Market in India: 1,780,000 people
Notes:
• Assuming a modest 3.6% market share in Year 1 and 0.1% gains for Years 2 through 5:
Financial Analysis – India Expansion
Market Share Customers Revenue/
CustomerTotal
RevenueProfit
Margin
Year 1 3.6% 64,219 $97.20 $6,242,086 0.00%Year 2 3.7% 65,860 $97.20 $6,401,592 7.36%Year 3 3.8% 67,640 $97.20 $6,574,608 10.26%Year 4 3.9% 69,420 $97.20 $6,747,624 13.16%Year 5 4.0% 71,200 $97.20 $6,920,640 16.06%
Breakeven
SWOT AnalysisCEO Kevin PlankR&D and product innovationExcellent marketing abilities
SLimited wholesale distributorsUnfamiliar to the Indian sportswear marketWHeighted competitionNike and cricket strong relationshipT
Global market expansionExpansion into other sports accessoriesGrowing urbanizationSponsorship opportunitiesLack of Brand Loyalty
O
Risk AnalysisHigh Risk:
DemandGovernment Regulation
Medium RiskSupplyIntellectual Property
Low RiskPolitical InstabilityTheftCounterfeiting
Pot
entia
l Im
pact
Probability
Severe
HighMinimal
DemandSupply
Political Instability
Theft/ Shrinkage
Intellectual Property
Counter-feiting
Government Regulation
Strategic Plan: Differentiation
4 Ps of Marketing
Promo
Product Price
Place
Mumbai, Maharashtra
New Delhi, Delhi
Bangalore, Karnataka
Place
4 Ps of Marketing
Place
4 Ps of MarketingTECHNOLOGY
HeatGearColdGearStorm
Product
4 Ps of Marketing
Price
Mercurial Superfly FG CR7
$300
$400
4 Ps of Marketing
4 Ps of Marketing
Promo
GovernmentCricket Players/ Clubs
Bollywood ActorsFootball Player/ ClubsHockey India League
Sohail Khan
Shah Rukh Khan Juhi Chawla
Thank you
Appendices
Company BackgroundFounded in 1996 by Kevin PlankHeadquarters – Baltimore, MarylandPublic offering – November 18, 2005, now: NYSE as UAWorldwide, $2.32 billion revenue, 7,800 employeesCompetitors – Nike, Adidas, Columbia Sportswear
Company Background
To empower athletes everywhere
To make all athletes better through passion, design, and relentless pursuit of innovation
To compete with the best
InnovationInternational expansionDirect-to-consumer sales
Vision
Mission
Aim
Strategy
Tactics
Expand women’s footwear, international and direct-to-consumer businessDiversify brand (golf, fishing, & hunting)
1999 2005 1996
Timeline and ManagementFounded by
Kevin Plank,
incorporated in
Maryland
Global expansion into Asia market
Global expansion
into Europe market
Went public on NASDAQ
Under Armour played a
supporting role in Any
Given Sunday
2007 20092006
Traded on NYSE as UA
Opened European
HQ in Amsterdam
2009 – Formed alliance
with Ripken Baseball
Opened first direct
to consumer store in
Annapolis, MD
2012 20142010
Under Armour
surpassed $1 bn in annual
revenue
Deal with Univ. of Notre
Dame to provide
uniforms and
athletic equipment
Michael Phelps won 7 medals
at the Olympics, cementing the Under Armour name
Comprehensive SWOT Analysis
CEO Kevin Plank/Management TeamR&D and product innovationProduct performanceBrand cacheContinues growth Excellent marketing abilities
SLimited wholesale distributorsLimited Global brand recognitionLimited patents – easily replicable apparel technologyLate player in the Indian sportswear market
WConsumer price sensitivityIncreased cost of raw materialsHeighted competitionGlobal expansionStrong relationship of competitors with local retailers
TIncreased desire for productExpansion of direct-to-consumeGlobal market expansionExpansion/creation into other sports accessoriesMiddle class emergeSponsorship opportunities in different sports teams)
O
State Income per capita (2013) (Rs.)
% change in Per Capita Income over previous year
Delhi 219,979 14.22%Karnataka 84,709 10.62%Maharashtra 114,392 10.00%
Population in the 15-24 (for Urban Areas) State Total Male FemaleDelhi 3,3 M 1,8 M 1,5 MKarnataka
4,6 M 2,3 M 2,3 MMaharashtra 9,9 M 5,32 M 4,6 M
Place
4 Ps of Marketing
Appendix - FinancialsYear 1 Year 2 Year 3 Year 4 Year 5
Cost Analysis:
Rentals $ 475,200.00 $ 475,200.00 $ 475,200.00 $ 475,200.00 $ 475,200.00
Labor Costs $ 624,000.00 $ 624,000.00 $ 624,000.00 $ 624,000.00 $ 624,000.00
Inventory $ 511,515.00 $ 511,515.00 $ 511,515.00 $ 511,515.00 $ 511,515.00
Shipping Fees (19%) $ 97,187.85 $ 97,187.85 $ 97,187.85 $ 97,187.85 $ 97,187.85
Import Fees (18%) $ 92,072.70 $ 92,072.70 $ 92,072.70 $ 92,072.70 $ 92,072.70
Warehousing Fees (3%) $ 15,345.45 $ 15,345.45 $ 15,345.45 $ 15,345.45 $ 15,345.45
Marketing $ 3,808,000.00 $ 3,808,000.00 $ 3,808,000.00 $ 3,808,000.00 $ 3,808,000.00
Total Variable Costs: $ 5,623,321.00 $ 5,623,321.00 $ 5,623,321.00 $ 5,623,321.00 $ 5,623,321.00
Store Buildout/Upkeep (3 stores) $ 118,800.00 $ 39,600.00 $ 39,600.00 $ 39,600.00 $ 39,600.00
Training $ 300,000.00 $ 100,000.00 $ 100,000.00 $ 100,000.00 $ 100,000.00
Miscellaneous $ 200,000.00 $ 200,000.00 $ 200,000.00 $ 200,000.00 $ 200,000.00
Total Fixed Costs $ 618,800.00 $ 339,600.00 $ 339,600.00 $ 339,600.00 $ 339,600.00
Total Costs: $ 6,242,121.00 $ 5,962,921.00 $ 5,962,921.00 $ 5,962,921.00 $ 5,962,921.00
Appendix - FinancialsRevenue Generation:
Average Revenue per Customer $
97.20 $
97.20 $
97.20 $
97.20 $
97.20
# Customers at: 0% profit
64,219
61,347
61,347
61,347
61,347
4% profit
66,788
63,801
63,801
63,801
63,801
Under Armour Avg. - 5.81% profit
67,950
64,911
64,911
64,911
64,911
8% profit
69,357
66,255
66,255
66,255
66,255
52 commercials @ $15,000 $
780,000.00
1 teams @ $1,000,000 $
1,000,000.00
6 celebrities @ $55,000 $
330,000.00
12 sports players @ $141,500 $
1,698,000.00
Base Inventory (3 stores) $
63,150.00 Inventory Turnover Ratio 2.7Average Profit 8.0%Under Armour Avg. Profit 5.81%
Current Indian Target Market 1,780,000 1,780,000 1,780,000 1,780,000 1,780,000Market Share at: 0% profit 3.61% 3.45% 3.45% 3.45% 3.45%
4% profit 3.75% 3.58% 3.58% 3.58% 3.58%Under Armour Avg. - 5.81% profit 3.82% 3.65% 3.65% 3.65% 3.65%
8% profit 3.90% 3.72% 3.72% 3.72% 3.72%
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