In using Porter’s five-force analysis
In using Porter’s five-force analysis, we can discover how strong the competitive forces are within thesports apparel and footwear industry. The five-force analysis involves; rival sellers, threat of new entrants, substitute products, supplier bargaining power and buyer bargaining power, which we will explore to determine the attractiveness and intensity of competition within this market. Competitors in the industry can wreak havoc on the bottom line for a company. With rivals, a price competition usually ensues, which benefits the customers but hurts the competing businesses that share a common strategy. In reviewing rival sellers, many competitors exist within the sports apparel and footwear industry, but most of them are unable to compete with the industry giants, Nike and Adidas. They are well seated in the industry and their sales reveal this ultimate strength, however, Under Armour is putting pressure on these mammoths. In 2015, global sales of sports clothing and footwear equated to $250 billion, of which Nike grabbed $30.6 billion, Adidas held in itsgrasp $18.8 billion and Under Armour had a much smaller piece of the pie, at $3.9 billion globally. Inreviewing these numbers, it looks like Under Armour is really subpar to the industry giants, but this is not exactly the case. Under Armour in the past couple of years have shown a much stronger rate of growth than its main competitors, Nike and Adidas. We cannot forget of course the new entrants into the competition, which are vying for their piece of the puzzle. The brand image that Nike and Adidas hold, allows customers to feel confident that the items offered will follow the same quality as the other products manufactured by Nike and Adidas. This customer loyalty holds great value in the eyes of the consumer, but do not minimize the potential that is evident with Under Armour. Under Armour has a growth advantage in terms of brand image and growing its market strengths outside of the United States. With Under Armour being in the infant stage compared to the Nike and Adidas, they have the definite potential for enormous growth in the future. With this, rival of sellers is great but their potential for significant movement by UnderArmour.Threat of new entrantsinto this industry is moderate to high. Within the population, citizens are striving for a healthier lifestyle, which offers for more demand within the footwear and sports apparel industry. With the athletic production industry, there is much consideration that a business must take before entering, such as; the financial cost or large capital cost that is needed for marketing and advertising to create a brand, production costs that include labor costs, emphasis on quality and low cost achievement and the importance of the distribution channels.