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Case Code: LDEN123
Case Length: 12 Pages 
Period: 2014    
Pub Date: 2017
Teaching Note: Available
Price: Rs.400
Organization : Under Armour
Industry : Sports Apparel and footwear
Countries : USA
Themes: -
Case Studies  
Business Strategy
Human Resource Management
IT and Systems
Leadership & Entrepreneurship

Managing Communication Crisis the 'Under Armour' Way

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UA was a company powered by innovation and driven by Research and Development. To Plank, selling was not entirely the marketing and advertising department’s job. It began with the R&D and innovation departments, and was subsequently supported by marketing and advertising. Mach 39 was one of UA’s innovations which received much hype for its promised performance. To help the US speedskating team deliver a great performance at the 2014 Sochi Olympic Games, UA teamed up with US-based defense and advanced technologies company Lockheed Martin to develop the Mach39.. ...

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The initial list of probable destinations for the Winter Olympics 2014 included Sochi (Russian Federation), Salzburg (Austria), Jaca (Spain), Almaty (Kazakhstan), PyeongChang (Republic of Korea), Sofia (Bulgaria), and Borjomi (Georgia). After a rigorous process of evaluation and voting, Sochi was elected as the venue. The Olympics were to be held from February 7 to 23, 2014. More than 2800 players from 88 countries were to take part in the event and participate in 98 events spanning 15 disciplines in 7 sports. The United States had as many as 230 athletes representing it in various sports, behind only the host Russia that had 232 athletes.....


The US Speedskater team entered the games as one of the favorite teams with 28 medals in the World Cup races held a few months before the Sochi Olympics. US speedskater Shani Davis (Davis), who was the gold favorite, was clad in the UA’s Mach 39. Branding the suit as ‘the fastest suit in America’ had led to expectations soaring among the athletes and the viewers. The audience, UA, and the country had enormous hopes of the speedskaters bringing laurels to the country. However, the hype and the hope didn’t last long. To the utter disappointment of everyone, Davis ended up nowhere near the podium. He finished eighth in the event in which he had been a winner in the two previous Olympic Games....


UA was so confident about the Mach 39 that it didn’t have a contingency plan when the suit failed . It was Pelkey’s toughest challenge when the brand UA came under fire and UA’s apparel was blamed for the gap between its promise and reality. UA had gained recognition as a technology driven sports apparel company in the last decade. With a mistake like this, the reputation of its R&D and technology were at immense risk. UA’s representatives had a herculean task ahead in managing the crisis and preventing any further damage to the company’s image. It was accountable to the stakeholders like its endorsers, shareholders, consumers, sports lovers, and above all, the nation. The team at UA was in a dilemma on whether to face the press or evade it. UA’s contract with the US speedskating team was to terminate at the end of 2014....


Pelkey didn’t want to shy away from the press, as she felt that could have caused a negative brand perception among the UA consumers. She decided that the company should face the press and own up to the issue. Pelkey’s strong dictum to everyone across UA was not to negate or disown the accusations. While defending the suit was allowed, the blame-game was a ‘strict no’. According to Plank, “In no way, shape or form will we ever point fingers at the athletes. These guys have a ton of things going through their heads. There was no push back from us. We said, whatever will make the athletes more comfortable, we’ll do.”...


Various departments in UA, viz., the innovation, R&D, marketing, PR, etc. became more closely knit than ever, toward understanding how products were tested before they were announced to the public. Since the Sochi crisis, UA had beefed up its PR team — from 9 to 14 employees globally. UA had also engaged a third party agency – Edelman – to manage crisis communications...


The night the suit crisis broke, Plank woke up at 4 a.m., and couldn’t go back to sleep as he realized the reputation of the company he had founded was under fire. After the initial report, according to Plank, UA became a soft and easy target for media and social platforms and the speedskaters. ..


Plank felt that factors like the immense stress to perform, and the suit being experimental, the notion that something was wrong with the new suit were virtually impossible to ignore. He was confident of the Mach 39 as a performance suit. He said, “In no way, shape or form will we ever point fingers at the athletes. These guys have a ton of things going through their heads. There was no push back from us. ..


UA responded to the 2014 speedskating incident like an emergency situation. The experience was a lesson to the communications team at UA. After the Sochi episode, it applied the lessons learnt in its PR strategy to ensure a more effective and swifter response. UA had always inculcated and encouraged the culture of transparency, which extended beyond crisis communications into investor relations. ..


UA was careful and aware of the importance of being transparent. The crisis made UA determined to make its homework on every new product release even more thorough. UA’s main focus during the crisis was on the USA teams, rather than on the suits. In Plank’s words in his interview to CNBC, “This wasn’t a PR play as much as a cultural play”. Pelkey supplemented Plank’s opinion when she said, “We wanted to stand up and show our support and tell the world that we believe and are committed to U.S. Speedskating.” UA was smart not to go under a rock and hide. Its refusal to give up on Team USA and its commitment to help it fuel a US comeback during the 2018 Winter Olympics shifted the focus away from the suit impact. ..


Exhibit I: Under Armour’s Market Value During the 2014 Olympics
Exhibit II: Under Armour – Mission and Vision
Exhibit III: Under Armour Stock during Olympics 2014