A PEST analysis measures market potential as well as the industry’s situation. By measuring these factors it becomes easier to determine market attractiveness as well as the potential of the business and ability to access the industry.
Political Opportunities Threats ‐ Foreign Direct Investment Policies. A few foreign countries now have policies in place that prohibit full ownership of retail stores. These policies hold a threat to internationalization ‐ Currency exposure risk ‐ Competitive tax system internationally
Economic Opportunities ‐ Growth of the performance shoe industry ‐ Economic recovery ‐ Strong brand equity Threats ‐ Increase in interest rates ‐ Increase in labor costs and inflation in China ‐ Under Armour shoe sales relies on a consumers discretionary income ‐ Increase in the shipping costs of raw materials and company resources ‐ High reliance on overseas manufacturing and outsourcing
Socio‐Cultural Opportunities ‐ Quality over price is valued in the footwear industry ‐ Average lifespan in the United States is 78 and due to the economic crisis, people over 68, are worth 47 times more than people under the age of 35. ‐ Increase in physically active seniors ‐ Obesity rates have risen in the U.S. making some consumers more health conscious ‐ Participation in sports is a major part of U.S. culture ‐ Rise in the number of women athletes Threats ‐ Obesity rates in the U.S. have raised showing that some people are not interested in physical activity
Technological Opportunities ‐ Increase in the use of commerce conducted electronically ‐ Increase in the use of mobile commerce ‐ Social media systems becoming increasingly popular for marketing to consumers ‐ New technologies emerging that allow corporations to become more energy efficient as well as reduce manufacturing costs Threats
Conclusion: The opportunities for the athletic shoe industry outweigh the threats. Although labor, gas and interest rates are increasing, there is greater opportunity for global growth as well as growth in athletic participation. Due to the high rivalry and brand loyalty between Under Armour and Nike Inc. high barriers of entry are created. This is why these two companies share an attractive industry.
January 9, 2018
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