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The purpose of this assignment is to learn about strategy and strategic management by comparing the
strategies of two companies from the same industry. The strategies of Nike and Adidas have been
compared from the textile industry. Nike and Adidas both specialize in footwear, apparel and accessories
and their competition is intense as Nike is the market leader and Adidas is the market challenger. The
topics in this assignment cover critical incidents of both Nike and Adidas that occurred in the past and the
comparison between both their strategies as well their future plans. This assignment shows us the
influence the strategy has on the success or failure of companies and how companies craft sustainable
strategies that help them to retain their position in the market.
Table of Contents
Page
1.0 Introduction
11
13
7.0 Conclusion
14
14
9.0 Bibliography
17
List of figures:
Page
Nike logo
Adidas logo
Air Jordan
Adidas Samba
German National Team wearing Adidas in the 1954 football world cup
Copa Mundial
10
F.g.5) Kaka
10
10
11
12
13
13
1.0 Introduction:
Johnson, Scholes and Whittington (2005, p.9) defines strategy as the way in which an organisation plans
to use its resources effectively in order to gain a competitive advantage over the long term. In other words
the carefully planned guidelines that organisations follow, which differentiates them from other
organisations. Mirow (2005,p.10) suggests that strategy of Amazon.com,Inc., a multinational electronic
commerce company headquartered in Seattle, focused on providing customers with low price,
convenience and a wide selection of merchandise. They focused on this strategy and started their website
in 1995 as an online book retailer. They slowly expanded their products and are currently an online
shopping website with the largest product supplies online earning revenues in billions. Hence we can see
how important strategy is for the success of an organisation. There are three levels of strategy, which are
corporate level, business level and functional level strategy. Strickland and Thompson (2003, pp.50, 55
and 56) suggests that the corporate level strategy is the strategy which is determines the overall purpose
and prospect of an organisation and reflects on how to add value to different parts of the organisation. The
business level strategy provides guidelines on how to excel competitors or survive in a particular market
and the functional strategy is the contribution made by the resources, people and processes to the business
and corporate level strategies. Companies strive with their strategies in order to become the leader in their
specific industry or market. Nike and Adidas are the top two competitors in the footwear, apparel and
accessories segment of the textile industry. The focus of the latter part of this report is on how these
competitors compete with each other using their strategies.
2.0 Literature review:
In order to fully understand about strategy, it is mandatory to know about the five generic competitive
strategies. The five generic strategies according to Strickland and Thompson (2003, p.150) are low-cost
provider strategy, in which the organisation provides goods or service at a low cost, broad differentiation
strategy, in which the organisation differentiates its products or services making it appeal to a vast range
of customers, best-cost provider strategy, in which the organisation provides goods or services of high
quality making it worth the amount they are charging which is lower than their competitors, a focused
strategy based on lower cost, in which the organisations focus on a narrower buyer segment and provides
them their goods or services at a lower cost than its competitors and focused strategy based on
differentiation, in which the organisation focuses on a narrower buyer segment and produces product
customized according to their needs.
According to (www.adidas-group.com) Adidas registered as a company in 1949 with the three stripes logo
as their trademark. (www.footballshirtculture.com) explains that in the year 1950 they produced the
Samba all-round soccer shoes which are even now considered to be the best classic training shoe today.
One of the biggest successes of Adidas was in 1952 when it was the most common shoe brand worn at the
Olympic Games held in Helsinki. They made the first track shoes with removable spikes. Emil Zatopek,
in Adidas shoes, won three gold medals in one week creating a huge impact on the image of the brand.
German National Team wearing Adidas in the 1954 football world cup [IMAGE URL:
http://soccernet.espn.go.com/world-cup/feature?id=696762&cc=4716&ver=global]
In 1954 Adidas became famous all over the world as the German national team was victorious in the
football world cup for the first time, wearing Adidas shoes with screw-in spikes. In 1955 Adidas came up
a shoe with exchangeable spikes which became very popular among the high jumpers. In 1964 Billy Mills
won the mens 10,000 meters wearing the new Adidas shoe which was considered the lightest shoe
weighing 135 grams. In 1969 Adidas produced the worlds first injection molded multi stud soles of
polyurethane, which gave a one year guarantee on the soles. Adidas began production of balls in 1961 and
in 1970 their football was the official ball of the football world cup. In 1971 the famous Fight of the
century where Muhammad Ali and Joe Frazier fought with each other, both of them wore special boxing
shoes designed by Adidas.
Fig.1
Fig.2
Fig.3
integrated brand structure into a functional multi-rand structure for the Reebok and Adidas brands. This
created a global sales function which were responsible for commercial activities and a global brands
function which were responsible for the marketing of both brands. The global sales function was also split
into two departments, wholesale and retail, which catered to the various needs of both these business
models. This was done in order to sustain their corporate level strategy for the long run so that these
divisions could emphasize and work hard in their respective departments in order to make the most of
their efforts. This led to the elimination of regional headquarters and moved towards more direct
communication between the local markets and the global functions.
They implemented a multi-brand strategy by having a diverse brand portfolio which allowed them to cater
all segments of the market from players to almost everyone. This helped them to keep a unique identity
and concentrate on their core competencies.
Adidas focused their investments in the best marketing and distribution channels in different countries by
critically evaluating the consumer buying behaviors and their constant struggle to secure prime shelf
space. They have also embraced e-commerce in order to become more efficient and appeal to more
customers and make purchasing much more easily accessible for them. Their supply chain is closely
communicated and hence it helps them to customize their products which appeal to a wide range of
customers. The organizational culture of Adidas group obligates employees to be innovative. This culture
forces them to produce goods which are highly innovative and with the use of the latest technology their
products have a very good quality. According to (ar2001.adidas-salomon.com) using latest technologies
they produce products which enhances performances of players and they focus on sports such as football,
tennis, basketball and even training shoes which are used by anyone with the ability to run. Their new
technologies have lead to the production of Climacool, a shoe with a ventilation system and a 3 a shoe with
an energy management system that guides and drives an athletes foot through each stride.
Fig.4
Fig.5
Fig.6
Even though Adidas was the official sponsor of the World cup 2010, Nike attached an LED display to a
30 story skyscraper in Johannesburg where soccer fans could write short messages using popular social
networking websites such as Twitter and Facebook and Nike put up 100 messages on the side of the walls
every night.
Adidas on the other hand, launched a new collection called Adidas Adipure for the world cup 2010 which
also had customized shoes worn by famous players such as Kaka and Lionel Messi. In soccer Adidas
shoes are worn by famous players such as Zinedine Zidane, Kaka and Lionel Messi, whereas Nike shoes
are worn by Christiano Ronaldo, Wayne Rooney and the original Ronaldo. In basketball Nike shoes have
been used by Michael Jordan and Adidas shoes have been worn by Kobe Bryant.
6.0 Future Plans of Nike and Adidas:
It is easy to become the market leader or the market challenger for organisations but sustainability is the
primary concern and hence organisations focus of the sustainability by coming up with strategies that will
make their position sustainable in the long run. According to (www.environmentalleader.com) Nikes
future plans are to focus on the environment and production of eco friendly products. They mentioned in
their 2005 and 2006 Corporate Responsibility Report that they will become carbon neutral by 2011 by
reducing their Caron Dioxide emissions. They have decided to design all Nike brand footwear in ways
through which they can reduce waste production during product design and packaging. They will
eliminate the use of volatile organic compounds and use more environmental friendly material in their
products and be carbon neutral by 2011. Adidas on the other hand became the official sportswear partner
of the London 2012 Olympic Games. The London Organising committee for the Olympic Games and
Paralympic Games (LOGOC) has few regulations which all of its partners are obligated to follow. These
obligations are focused towards the environment. Adidas, being a partner of LOGOC has to follow all
these regulations as their future plans are to be the official sponsor of almost all major events in the world,
and in order to achieve this goal their strategy is to produce environment friendly goods as well. They
have to ensure that all their products are produced with environment friendly materials, which would
protect the human health and the environment and their packaging should also be produced with materials
that can be recycled. Hence we can see that both the future plans of Nike and Adidas are quite similar.
7.0 Conclusion:
The main element that determines an organisations success or failure is the strategy it follows. Any
industry is vast and the competition is also fierce and in order to survive in the competition organisations
must devise innovative strategies. Nike and Adidas have started their journey decades ago and they have
struggled but sustained their positions; Nike as the market leader and Adidas as the market challenger.
Various incidents have occurred in the past to both the companies which were both good and bad, but it
was the strategies that helped them survive and sustain their positions. The strategies of both these
companies are quite similar and Adidas is not far behind from Nike, but any small mistake by Nike, might
make them the market challenger and Adidas the market leader. Nike has to be very careful while
implementing their strategies because Adidas is very close to becoming the market leader. Nikes initial
strategy of being just the product designer, distributor and marketer gave them the competitive edge
against Adidas, because their investments were low compared to Adidas as they have production plants,
but Nike should be very careful to sustain their market position.
Johnson,G., Scholes,K. and Whittington,R.(2005) Exploring Corporate Strategy: Text and Cases.
Seventh Edition. Prentice Hall.
Websites:
Articles:
Anderson,A.(2010) Nike vs Adidas: The battle for buzz in the World cup,
[URL:http://www.bizmology.com/2010/06/25/nike-vs-adidas-the-battle-for-buzz-in-the-worldcup] (accessed: 29 August 2010)
Images :
German National Team wearing Adidas in the 1954 football world cup [IMAGE URL:
http://soccernet.espn.go.com/world-cup/feature?id=696762&cc=4716&ver=global]
Adidas adiPURE III and Nike Tiempo Elite [IMAGE URL: http://soccerlens.com/shirts/nike-vsadidas-buying-football-shoes-in-2010/6410/]
9.0 Bibliography:
Books:
Johnson,G., Scholes,K. and Whittington,R.(2005) Exploring Corporate Strategy: Text and Cases.
Seventh Edition. Prentice Hall.
Websites:
Articles:
Anderson,A.(2010) Nike vs Adidas: The battle for buzz in the World cup,
[URL:http://www.bizmology.com/2010/06/25/nike-vs-adidas-the-battle-for-buzz-in-the-worldcup] (accessed: 29 August 2010)
Images:
German National Team wearing Adidas in the 1954 football world cup [IMAGE URL:
http://soccernet.espn.go.com/world-cup/feature?id=696762&cc=4716&ver=global]
Adidas adiPURE III and Nike Tiempo Elite [IMAGE URL: http://soccerlens.com/shirts/nike-vsadidas-buying-football-shoes-in-2010/6410/]