External Environment Analysis

Running head: EXTERNAL ENVIRONMENT ANALYSIS 1

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EXTERNAL ENVIRONMENT ANALYSIS 2

External Environment Analysis

Athletics and sporting activities continue to attract the attention across the world. Many

people have developed a positive attitude towards football and athletics among other events. In

fact, the presence of internet explains the rising inclination to these activities. Consequently, the

industry has attracted many players since it offers a significant market for different products. The

firms that operate in the sports apparel and athletics industry, like Under Armour, experience an

increasing demand for their product. Moreover, the use of technology has boosted a series of

innovation that suits the taste and preference of consumers in this market niche. Some of the

products here include athletics footwear, sports apparel, and related accessories. The main

players in this industry include Nike, Adidas, and Under Armour. These firms compete regarding

innovative products, affordable prices, and the support they offer to their consumers. Also,

quality is another facet that they use to attract and retain customers. Therefore, the sports and

athletics industry remains one of the market segments that continue to attract more clients.

Porter's Five Forces

The analysis of Porter's five forces remains vital to the understanding of the behavior of

the sports and athletics industry. These forces include the threat of new substitutes, the

bargaining power of the suppliers, and the competitor's rivalry. Others factors include customer

bargaining power and the threat of new entrants.

The industry displays an intense level of competitive rivalry. It experiences high demand

of the sports apparel and athletics footwears including other accessories. Consequently, the quest

to satisfy the market demand has attracted many players in this industry. These firms have set the

quality of their products high while at the same time using advanced technology in developing

them. They both aim at ensuring that consumers obtain what suits their taste and preference. For

EXTERNAL ENVIRONMENT ANALYSIS 3

instance, Under Armour has developed innovative products that see it take over the control of

this market from Nike.

Moreover, bargaining power of the consumers is another force in this industry which is

strong. Most customers display changes in their taste and preference. As a result, these

companies work with the aim of meeting such demands. They have developed products that help

in solving most of their problems. Also, their purchasing behavior plays a critical role in this

industry. Therefore, the firms remain with no option but to factor in customer's willingness and

ability in their pricing mechanism. Notably, some companies like Under Armour have decided to

concentrate in particular market locations, for example, North America where consumers can

buy their products. On the other hand, strong suppliers' bargaining power also dictates the

operation of this industry. Some firms in this industry like Nike that have operated for longer

periods than the rivals cope well with suppliers. Also, others like Under Armour rely on bank

loans to facilitate its operations. Therefore, it is apparent that burden that suppliers pose on them

hinder their efficiency to some level.

The quality and integration of technology in the manufacturing of products in this

industry have far reduced the threat of substitutes which makes it weak. Most of their

commodities appeal to the clients, and they have peculiar differentiation strategies. Such aspects

notwithstanding, the prices they charge have caused some consumers to opt for substitutes.

However, it only appeals to the low-class customers which makes it weak. Finally, the high

quality and use of technology in manufacturing these products have restricted new entry to the

industry. Despite such barriers, there is the moderate move by other firms to enter it following

the increasing demand by customers.

EXTERNAL ENVIRONMENT ANALYSIS 4

Key Success Factors

Some of the key factors for succeeding in the sports apparel and athletics footwear

industry including innovation, quality products, and the use of internet in interacting with

customs. Since consumer taste and preference changes with time, being innovative remains the

only way to respond to such pace. It helps in developing new products that match their demands

thereby guaranteeing the going concern of any company. Also, it is true that most clients prefer

buying high-quality commodities. Most of the firms operating in this industry like Nike and

Under Armour understand the significance of selling quality products to their clients.

Apparently, one can attract or retain customers by ensuring maintain product quality which in

effect increases their level of revenue. Therefore, these firms use it as a key success factor in

ensuring that they remain relevant to most clients. Finally, technology, particularly internet

proves a vital factor in this industry. Some firms like Nike have resorted to online marketing and

selling of their products which is healthy to their success. The use of internet especially the

social media platforms helps in making consumers aware of the available commodities. Also, it

ensures that companies identify with these consumers and, as a result, identify their needs.

Industry Profile and Attractiveness

The sports apparel and athletics footwear industry external environment reveals it as

competitive. Some of the rival firms include Nike, Adidas, and Under Armour. The companies

compete by technology and quality. The industry is also gaining attraction from different

consumers across the world. This phenomenon is due to the increasing love for sports and

athletics. As a resultant, its incumbents find its attraction strong following the presence of high

demand. Its prospects entail expanding its operations to the global level with the view to reach or

attract more clients. Also, it has the opportunity to intensify the use of the internet for both

EXTERNAL ENVIRONMENT ANALYSIS 5

marketing and communication. Some of the current challenges include meeting the changing

consumer taste and preferences. The industry is attractive for the current players concerning

profit and sales. Also, its strong competitive intensity makes it appealing to the incumbents.

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