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Company’s Strategy to Expand Internationally
Under Armour is one of the emerging sportswear firms in the global market. It has a comprehensive strategy to help it expand to the global market. According to Cavusgil, Knight, and Riesenberger (310), a firm may choose different strategies when making an entry into international markets. In this report, the researcher will look at how Under Armour can use franchising as an internationalization strategy to enter the Indian market.
This clothing company cannot afford to ignore the Indian market that has a population of over 1.2 billion people. However, this market is very different from the American and European markets, where this firm has experienced massive success. The majority of Indians are poor, and their purchasing pattern is also very unique. Making a direct entry through export strategy may not register the expected success. This means that this firm will require a unique strategy that will enable it to achieve the expected success. Franchising will offer this firm an opportunity to enter the Indian market at the least cost possible.
As this firm seeks to enter the global market, it will have to manage the pressures of global integration and local responsiveness. Some of the pressures from the global integration that this firm will face include the diversified needs of multinational customers, competition in the new market in India, technology intensity, and cost reduction. Managing these pressures will define the ability of the firm to achieve success in this new market.
The firm will also need to deal with the pressures of local responsiveness when making an entry into the market. Issues such as variation in tastes and preferences of the customers will have to be given serious consideration. The management will have to appreciate the fact that there is a difference in traditional practices and infrastructure in this country. The United States and Europe have more advanced infrastructure as compared to India. However, this firm will have to find a way of working with what is available locally. The distribution channels used locally may also be slightly different from what is common in the home country.
Pressures Paramount in this Case
In the case of having a franchise of Under Armour in India, the paramount pressures that will have to be dealt with majorly come from the global integration category. This is so because the local responsiveness pressures can be dealt with by the franchisee who understands the local Indian market. These pressures include competition, cost reduction, and technology intensity. These pressures are chosen because the franchisee may not have knowledge of how to manage them adequately.
Differences in the tastes and preferences of the customers will be given priority over the other three pressures presented in this exhibit. Government demand will not be an issue as long as the franchise is operating within the law. Infrastructural differences and uniqueness of traditional practices can easily be managed because the franchisee understands the cultural practices of the country. The franchisee will also be in a better position to find a way of moving the products into the market despite the challenges that might be present (Cavusgil 76). The pressure of distribution channels may pose a challenge, but the franchisee can easily modify that of the parent firm to fit in the local context.
Cavusgil, S. International Business: Strategy, Management, and the New Realities. New Delhi: Pearson Education, 2009. Print.
Cavusgil, Tamer, Gary Knight, and John Riesenberger. International Business: The New Realities. New York: Cengage, 2015. Print.