Daily thoughts, observations, and speculations
Under Armour is not the best example of corporate diversification. With 84% of their
sales coming from apparel, and 93% of their overall sales coming from the U.S.,
there is a high level of dependence on their apparel division. UA managers are relied
upon to give highly customized and high-quality services to the divisional customers.
But to develop this department within their company, UA must properly diversify.
Because UA is young and small, they do not have separate business units based
on sport. While the company is still in its infancy stage, they should
eventually adopt a related constrained diversification strategy in which each
sport is its own unit. Once each individual unit is created, resources can be
shared amongst all units to optimize company efforts.