Three stakeholders of significance at Under Armour are those of the 15,000+ Employees, the Shareholders, and the Company Directors as these are the people who are affected by the businesses poor performance when there are faults in any of the subsystems (Statista, 2017). If the company continues to lose profits, it will need to cut back on its operating expenses, which will result in employees being let go. The recent decrease in share value has come as a great loss to shareholders of Under Armour stock (UA), greatly impacting the financial positions of those highly invested. CEO, Kevin Plank relies heavily on his self-developed organization to satisfy his financial needs and will surely suffer if the companies subsystems are to continue operating inefficiently.
The major subsystem in need of change is that of the E-commerce sector as it is there that Under Armour’s major competitors are increasing their sales, with Nike’s online sales increasing 30% over the past year due to the increase in sales generated by the mobile apps it offers (Zaroban, 2015). Expanding in the online retail area of the business will enable the company to globalize at a faster rate, increase the accessibility of its products, and lower the operational costs as it is far cheaper to sell online than to sell through external retailers. In Nike’s case, selling online generates nearly twice the revenue and significantly higher margins on each transaction (Zaroban, 2015).
Omnipresence - the state of being widespread or constantly encountered.
A company that effectively executes the concept of an “omnichannel”, attempts to master the ability to interact effectively with customers through any virtual or physical channel. The final goal of an omnichannel is to create total visibility of everything a customer does with the retailer, regardless of the channel interaction, so that both ends of the transaction is aware.
Stores need to be able to sell their stuff online and in their stores.
All of the peer competition battling against UA have multiple mediums of getting their product out there.
UA has applications for smart phones where you can connect with friends and share your progress, however, does not include product releases, reviews, advertisements or any mean of increasing product awareness.
If UA were to increase its e-Commerce subsystem within the company, it will demand more from Public Relations due to the fact that it will increase sales and revenue. It will also give the marketing department more money to be able to attract more elite athletes to represent their products.
Rather than trying to find the best management in all circumstances, the more modern approach adopts contingency thinking.
Contingency thinking tries to match management practices with situational demands.
Contingency thinking recognizes there is often more than one pathway to solve a problem - personal or organizational. Meaning that, instead of looking for the universal, or “cookie cutter” advice, managers should be trying to identify practices that best fit with the demands of the different situations within UA’s organization.
From a contingency thinking approach, the solution to aligning the total system of UA is set a goal for each subsystem and execute it to the results the company needs.
It will be difficult to see results right away due to the complexity of analyzing the results from quarterly data but over time and consistent nurturement to these goals will entail increase sales in these new markets.
The global sales results from peer companies such as Nike and Adidas surpass that of Under Armour due to the fact that they are simply not involved in the global market.
Under Armour Chairman and CEO (chief executive officer) Kevin Plank stated: “Bankruptcies, channel dislocation and destocking combined to disrupt the overall North American retail landscape. We’re still a very young company internationally, and 85% of our global revenue comes from North America.”
Under Armour can increase its product awareness buy partnering with Amazon and transition into the online market due to the sport retailer bankruptcies that are negatively impacting total sales.
Under Armour has the highest exposure to domestic markets than any other apparel competition they are compared too.
Increasing exposure in international markets will diversify and increase their reach within other untouched markets by UA on a global scale.
IDENTIFY and EXPLAIN how you would ensure that the proposed change above will satisfy any three or all three stakeholders of Under Armour?