CS for Under Armour
Question 1
I’m going to identify why so difficult for new firm to enter the sportswear industry based on evaluating the following barriers. Those barriers are capital requirements, economies of scale, product differentiation, access to channels of supply & distribution, legal and regulatory barriers, expected retaliation.
First of all, I’m going to analyze legal and regulatory barrier. Sportswear industry is a free market, investor are free to enter the market. The international community is not particularly regulatory to enter the market, therefore the legal and regulatory barriers is low.
Secondly, the industries are freely access, this makes the industries have many new competitors, and therefore existed companies are difficulty to do any expected retaliation to hinder all developing competitors. But they may have competition of advertisement, such as scramble spokesperson. The barrier of expected retaliation is medium.
And the barrier of capital requirement is high, since it depends on investor ambitions. Since entry the sportswear industries is difficult. Plank, the founder of Under Armour, he used $60000 to launch Under Armour. It seems like very low cost. But a company want to be success, which may occur many expenses, such as research expenses, Under Armour has his own laboratory to develop the new technique and promotion or sponsor to get popularity, founder of Under Armour believe that word-of-mouth, therefore Under Armour sponsor many recreational team and youth tournaments, therefore the substantial costs make this barriers become high.
Then, the Economies of Scale barrier is medium. Many company such as Nike, Adidas, Columbia sportswear, they gain much market share and have many loyalty customers, and therefore they can order a large number of products to enjoy the Economies of Scale. But this barrier is remaining at the medium level, since the Economies of Scale effect is not very significant now, as the cost of manufacturing
I’m going to identify why so difficult for new firm to enter the sportswear industry based on evaluating the following barriers. Those barriers are capital requirements, economies of scale, product differentiation, access to channels of supply & distribution, legal and regulatory barriers, expected retaliation.
First of all, I’m going to analyze legal and regulatory barrier. Sportswear industry is a free market, investor are free to enter the market. The international community is not particularly regulatory to enter the market, therefore the legal and regulatory barriers is low.
Secondly, the industries are freely access, this makes the industries have many new competitors, and therefore existed companies are difficulty to do any expected retaliation to hinder all developing competitors. But they may have competition of advertisement, such as scramble spokesperson. The barrier of expected retaliation is medium.
And the barrier of capital requirement is high, since it depends on investor ambitions. Since entry the sportswear industries is difficult. Plank, the founder of Under Armour, he used $60000 to launch Under Armour. It seems like very low cost. But a company want to be success, which may occur many expenses, such as research expenses, Under Armour has his own laboratory to develop the new technique and promotion or sponsor to get popularity, founder of Under Armour believe that word-of-mouth, therefore Under Armour sponsor many recreational team and youth tournaments, therefore the substantial costs make this barriers become high.
Then, the Economies of Scale barrier is medium. Many company such as Nike, Adidas, Columbia sportswear, they gain much market share and have many loyalty customers, and therefore they can order a large number of products to enjoy the Economies of Scale. But this barrier is remaining at the medium level, since the Economies of Scale effect is not very significant now, as the cost of manufacturing