Professional Documents
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NOORSEHA , FARAH
DAHLIA FARAHIYAH,
ZEPHANIA THAISAYI OPATI
SUMMARY
• Adidas AG’s corporate strategy is to try and take over the number one
position from Nike as the leader of the global sporting goods industry.
Its strategy was acquisition that would build up its capacity and
capabilities and position it with greater power of bargaining, with
suppliers, acquire economy of scales, wide distribution network, and
variety of products and economies of scope.
TaylorMade-adidas -Golf Equipment:
metalwoods, irons putters,
ADIDAS GROUP BRANDS
ADIDAS’ CORPORATE
STRATEGY
• diversified it beyond
•footwear and apparel and into ski equipment,
golf clubs,bicycle components, and winter sports
apparel.
Acquisition • focused on extending its leadership in product
Salomon SA innovation, creating a differentiated image for the
(1998) products offered by each of its three business
segments, expanding controlled retail space through
its network of company owned stores, and achieving
efficiencies in its global supply chain process
and activities.
• to Amer Sports Corporation for €485 million.
Divestiture
Salomon’s winter sports • The divestiture of Salomon’s winter sports
and bicycle and bicycle components business would make
components business TaylorMade Golf the lone business retained
(October 2005) from the company’s 1998 acquisition
of Salomon SA
•
position to serve
The sportswear market can be split into two separate markets:
– Sports Performance Group and
– Sport Style Street wear/life style fashion group
• The mass-market for sportswear initially developed in the 1980's with the
growth of the training shoe market.
• The worldwide sales of athletic apparel and footwear for athletes and
those drawn to sport-inspired products totaled nearly $125 billion in 2007.
• The annual growth rate for the global athletic footwear and apparel
industry had slowed from 6.8 percent in 2005 to 3.3 percent in 2007.
• At about $42.5 billion, North America was the largest market for athletic
apparel and footwear but its 3 percent annual growth rate was greater
than only Europe’s 2 percent annual growth rate among all developed and
emerging markets for athletic apparel and footwear.
• Markets in Eastern Europe, south and Central Asia, and China grew at
rates of 20 percent, 13 percent, and 15 percent, respectively, between
2006 and 2007.
Emerging market
opportunities the company
ought to pursue
• Eastern Europe
– Sales had grown by as much as 50 percent annually in Rusia and other
former Soviet states such as the Ukraine, Armenia, and Belarus to give
it a 2-to-1 margin over runner-up Nike
– Adidas management expected Rusia to become its largest and most
profitable market in Europe by 2010.
• Asia
– was projected to become Adidas’s largest market overall within the
near term because of the strong demand for athletic footwear and
apparel in Asia country markets.
– Asia up more than two-thirds of the world’s population in 2008 and was
projected to grow from 3.2 billion people in 2008 to 3.6 billion people
by 2028.
• Women
– There is also a new trend in consumer behavior and women are getting
a bigger influence in all buying decisions and more and more
companies realize this and redirect their advertising towards women.
This, as well as their increased interest for sports, should make women
an obvious target for Adidas-Reebok and their advertising.
ADIDAS AG’S INTERNAL
CONSIDERATION
• Company ambitions
– The company’s corporate strategy since 2008
was focused on extending its leadership in
product innovation, creating a differentiated
image for the products offered by each of its
three business segments, expanding controlled
retail space through its network of company
owned stores, and achieving efficiencies in its
global supply chain process and activities.
• TaylorMade-adidas Golf
– In 2008, TaylorMade was the largest seller of drivers, fairway woods, and
hybrid clubs. TaylorMade also produced and market a line golf balls but had
not achieved any significant market success in the product category.
Successful new product
innovations
For Adidas AG, each business unit was expected to develop at least one
major product innovation per year in each product category.
• Reebok’s major product launches in 2007 included its Trinity KFS III
running shoes and Reebok Edge uniform systems for hockey. The
company also improved the comfort of its Rockport footwear
collection in 2007 by incorporating its Torsion system developed for
Adidas running shoes.
Financial Objectives
• According to the financial summary for Adidas AG from 1998
until 2007, the company financial performance was reported a
good signs, which increased from €5,065 (1998) to €10,299
(2007).
• Beside that, the dividends per shared was also keep increasing
year by year from €0.21(1998) until €0.50 (2007).
• The integration of Adidas and Reebok supply chain activities was expected
to result in cost saving of €105 million by year-and 2008 and contribute to
improvements in both the company’s gross margins and bottom lines.
• Adidas kept its production costs low by outsourcing more than 95 percent
of its production requirements to contract manufacturers located
throughout Asia. In 2005, the company launched an initiative called World
Class Supply Chain to improve coordination with its contract
manufacturers, get new products to market more quickly, and lower costs.
S.W.O.T ANALYSIS
Strength
• In many invents is the biggest sponsor
• Strong management team
• Brand recognition and reputation
• Diversity and variety in products offered on
the web
(footwear, apparel, sporting equipment,
etc.)
• Strong control over its own distribution
channel
• No bad reputation like child labor or
environment
pollution
• In the Soccer industry, Adidas has a
Contd…
Weaknesses
• High prices in some products
• E-commerce is limited to USA
• The direct sale to consumers is creating
conflicts with its own resellers
• Online customer service not "helpful" or
easy to find
Contd…
Opportunities
• Increase female participation in athletics Adidas by Stella
McCartney
• Collaborate with other online retailers to offer Adidas products
• Possibility of outsourcing the web development and e-commerce to
a third party developer
Threats
• Nike's strong reputation in the footwear and apparel industry
• Negative image created by the sponsored athletes (i.e. Kobe
Bryant and his sexual assault case)
• Increase in the Price of Raw materials
• Continuing challenges in import/export duties
PEST ANALYSIS
Political
• control and monitor hazardous substance to
protect human health and environment
• manage and monitor SARS in Asia factory
• protects and supports the rights of its
employees by following all the current
employment laws
Economic
• decrease unemployment by increasing the
number of employees every year
Contd…
Social
• products are always in fashion with unique design
• focus on sports and athletics enthusiast
Technology
• maker of world’s first smart shoes - microchip and
wireless mp3 player inside shoes
• efficient production
FIVE FORCES ANALYSIS
• Threat of New Entrants
High due to the large economies of scale needed for
manufacturing, distribution, research and development,
and other operations.
• Threat of Substitutes
Substitutes for Adidas products come from rival manufacturers
such as Nike, Puma, Asics, and New Balance. In addition to
large rivals, substitutes come from smaller and more localized
companies around the world.
• Bargaining Power of Buyer
Customers carry large bargaining power as they can always
threaten to buy rival products. Switching costs are typically
very low due switch to a rival’s products if the rival offered
trendier or hotter product.
Contd…
• Bargaining Power of Supplier
The suppliers’ bargaining power is high as well, since
Adidas makes contracts with famous athletes or teams
(such as Chelsea FC, Liverpool FC, NY Giants, LA Lakers,
David Beckham), to promote and advertise its products.