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Organizational Structure: Audit & Proposal

Audit of Existing Structure

The organizational chart in Exhibit 1 (p. 2) reveals a centralized **Functional Structure**. This structure is ineffective for a company of Under Armour's global scale and directly contributes to its strategic challenges.

Key Inefficiencies Identified:

  • Excessive Span of Control: The chart shows ten executives reporting directly to the CEO, Kevin Plank. This is an unmanageable number that creates an information bottleneck and prevents effective oversight of diverse functional areas like Sourcing, Revenue, and Digital Operations.
  • Declining Corporate Performance: The structure is failing to produce results. This is evidenced by a catastrophic 50% drop in stock price in 2017 (p. 1, para. 3) and a net income loss of $48 million for the same year (p. 4, Exhibit 2), indicating a disconnect between strategy and execution.
  • Lack of Diversity & Strategic Blind Spots: The case explicitly states, "all eleven top executives are male" (p. 3, para. 1). This homogeneity at the highest level of leadership likely contributes to a failure to understand key consumer segments, most notably the women's apparel market where UA "lags niche competitors such as Lululemon" (p. 10, para. 4).
  • Executive Instability: The company is described as being in "some disarray" following the departure of the footwear chief, head of women's and kids' apparel, and the chief marketing officer (p. 3, para. 1). Such high turnover is a classic symptom of internal structural conflict and poor leadership alignment.

Proposed Organizational Structure

A **Divisional-by-Geographic-Region Structure** is proposed to decentralize authority, improve regional accountability, and align the company's leadership with its most significant growth opportunities in international markets.

  • CEO (Kevin Plank)
    • COO (Patrik Frisk)
      • President, North America
      • President, EMEA
      • President, Asia-Pacific
      • President, Latin America
    • CFO
    • CMO
    • Chief Diversity Officer

Justification for Proposed Changes:

  • Solves Span of Control: The COO now oversees regional operations, reducing the CEO's direct reports to a manageable number and allowing him to focus on long-term strategy and innovation, a critical need given the company's "disarray" (p. 3, para. 1).
  • Drives Accountability: Each regional President is now fully accountable for their region's P&L, such as reversing the North American sales decline (p. 1, para. 4) or capitalizing on the 35% sales growth in Asia-Pacific (p. 7, para. 1).
  • Addresses Diversity Weakness: The creation of a C-suite Chief Diversity Officer directly addresses the critical weakness of the "all eleven top executives are male" (p. 3, para. 1), signaling a commitment to better understanding diverse customer bases.