Download - Under Armour Final.pptx
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UNDER ARMOURStrategies for International Expansion andSocial Media
Clientlogo
April 12, 2013
Mitchell Shelby, Woody Sokolowski, Darron Su, Kathleen Yang, Sam Zhang
Deloitte Consulting LLP
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Agenda
Vision Darron Su
Why China?
Financials
Additional Cultural Points
Sam Zhang
Darron Su
Market EntryOverview
Strategy
Kathleen YangWoody Sokolowski
Operations Overview Mitchell Shelby
Conclusion Darron Su
Q & A
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Why Are We Here?
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China
Russia BrazilRevenue
$486
Costs
$315
Revenue
$1,017
Costs
$648
Revenue
$602
Costs
$299
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China Russia Brazil
$369 $171 $303
2013-2017: Cumulative Profit Projection (in millions)
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WHY CHINA?Financials
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Market Comparison
Comparison relatively to ChinaChina Brazil Russia
GDP per cap 100% 172% 209%% GDP spent on apparel 100% 169% 151%
Macroeconomic Risk 100% 96% 117%Market Risk 100% 48% 44%
Targeted Population 100% 13% 7%Profit 100% 42% N/A
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Target Market Population
0
100000000
200000000
300000000
400000000
500000000
600000000
700000000
2014 2015 2016 2017
Brazil
China
Russia
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Market Comparison
Comparison relative to ChinaChina Brazil Russia
GDP per cap 100% 172% 209%% GDP spent on apparel 100% 169% 151%
Macroeconomic Risk 100% 96% 117%Market Risk 100% 48% 44%
Targeted Population 100% 13% 7%Profit 100% 42% N/A
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Growth of Middle Class PopulationChina's new middle class is hungry forWestern gear and individualism
----Times
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Growth of Middle Class PopulationChina's new middle class is hungry forWestern gear and individualism
----Times
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Growth of Middle Class Income
1
1.2
1.4
1.6
1.8
2
2.2
2.4
2.6
2.8
2011 2012 2013 2014 2015 2016 2017
Brazil
China
Russia
Growth in Disposable Income
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Growth of Middle Class Income
Projected Profit from 2014-2017 inmillion $
$-
$20
$40
$60
$80
$100
$120
$140
$160
2014 2015 2016 2017
Brazil
China
Russia
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Growth of Middle Class Income
Projected Profit from 2014-2017 inmillion $
$-
$20
$40
$60
$80
$100
$120
$140
$160
2014 2015 2016 2017
Brazil
China
Russia
Return of Investment%
0%
10%
20%
30%
40%
50%
60%
2014 2015 2016 2017
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*Target Market Age 15-37
Country Risk Profile
Brazil China RussiaCountries Grade Score GradeScoreGrade Score
Security risk B 34.5B 32.1C 53.6Political stability risk B 25.0B 47.1C 55.9Government effectiveness risk C 65.4D 77.9D 81.7Legal & regulatory risk B 41.5C 60.1C 69.7Macroeconomic risk B 43.5A 22.8B 33.7Tax policy risk C 50.0B 38.3C 55.0Labor market risk B 44.0C 59.0B 47.0Infrastructure risk C 63.2B 44.7C 51.3Average risk B 45.9B 47.8C 56.0
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WHY CHINA?Additional Cultural Points for Consideration
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Rising Obesity Rates
Average Chinese Male Waistline Size
IncreasedObesity Rates(20% ->40%)
HeightenedAwareness ofHealth Issues
IncreasedPhysicalExercise2012
76.2 cm198563.5cm
Source: China.org.cn
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Obesity in America
Light Blue -
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US Physical Activity Participation Rates
Source: Center for Disease Control and Prevention
0
5
10
15
20
25
1998 2000 2009 2010
Percent
Year
% of 18+ Adults that Met Physical Activity Guidelines forAerobic Activity and Muscle Strengthening Physical
Activity
Percent
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Sports Universities
3,000 Elite Athletic Institutions
Sports > Academics
Performance Driven Mindset
Huge Market Potential
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MARKET ENTRY
STRATEGY
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Social Media Overview
I S S U E S
Change in management style
The tower
Censorship problem
New staff
S O L U T I O N S
UnderArmoursculture
Blogging
Chinas popular websites
Tracking changes
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Under Armour Culture
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Under Armour Culture
EMBRACECHANGE
We cant use culture as an
excuse to not changeproduct, process, or people
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Online Presence
513
millionpeople
= +
Worlds largest Internet user base
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Online Presence
MicroblogsOnline
Communities
SocialNetworking
Sites
Worlds largest Internet user base
300 million social media users
Blogs
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Online Presence
40%
Worlds largest Internet user base
300 million social media users
40% of time spent online
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Online Presence
Worlds largest Internet user base
300 million social media users
40% of time spent online
Hire blogging specialists
DE DAYU2 98HSU
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Sino Weibo
DE DAYU2 98HSU
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Sino Weibo
DE DAYU2 98HSU
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Sino Weibo
DE DAYU2 98HSU
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Costs
$250
Ghost-writing
BlogPosts
BlogPosts
$100 $50
$500
$75 - 200
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QQ = Yahoo
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Youku = Youtube
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RenRen = Facebook
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Baidu = Google
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Advertising
PPC
Pay per click
Keyword phrases
Banner ads
SEO
Visibility
Trustworthiness
Traffic
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Social Media
SetupCost Range
$500-$5,000
MaintenanceCost Range
$500-$7,500 amonth
ImprovementsCost Range
$10,000-$30,000
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OPERATIONSOVERVIEWDistribution Strategies
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Wholesale Distribution Target top tier retailers
Valuable locations
Price products at premium
Have sponsored athletes make presence
Distribution
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Additional Distribution 8
Target Elite Sports Universities in China Enhance image of Under Armour
Distribute in bulk sales Promotion
Discount
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CONCLUSIONBrief Recap
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Summary
Why China Largest Projected Profitability (Largest Target Market Here)
Low Average Risk (Grade B)
Culture Encourages Performance Athletics and Physical Activity
SocialMedia
China has Worlds Largest Online Presence
Break into Market with PPC Advertisement and SEO
Hire Bloggers (Reasonable Costs)
Operations Target Top Tier Wholesale Retailers
Strategically Position Retailers Near Sports Universities
Sponsor Elite Sports Universities to Enhance Brand Image
Offer Promotions and Discounts for Bulk Sales