Presentation is loading. Please wait.

Presentation is loading. Please wait.

Primary Question for Adidas

Similar presentations


Presentation on theme: "Primary Question for Adidas"— Presentation transcript:

1 Primary Question for Adidas
Does Adidas's corporate strategy, including recent acquisitions and restructuring, stay true to its brand while positioning itself to improve shareholder value and challenge Nike as the leader of the global sporting goods industry?

2 Secondary Questions What enabled Adidas to be the market leader in the past? How did Adidas lose the lead to Nike? What has the Adidas brand represented in the past and what does it represent today? How has Adidas' corporate strategy changed over time, specifically before and after the restructuring? Have Adidas' acquisitions helped improve their position against the competition? What role do developing countries have in Adidas's future success and how is Adidas positioned in those countries? Should Adidas be concerned about losing North American market share to Nike? Is there another corporate strategy Adidas should be pursuing?

3 What enabled Adidas to be the Market Leader in the past?

4 Product Innovation 1925:studs and spikes Arch support
Track and Field 1925:studs and spikes Arch support 1949 – molded rubber cleats screw in spikes Soccer 1954 – screw in spikes 1963- Began producing soccer balls 1967 – athletic apparel Results Over 700 patents Strong reputation among top athletes 1970 – leading brand in consumer jogging shoes Analysis – Adidas was an early entrant into athletic shoe industry. They developed many of the features still present in shoes today. Strong presence in Olympics and soccer. Created a strong brand based on high quality, innovative products that top athletes choose to use in training and competition.

5 Marketing Innovation Gave shoes to German athletes in 1928 Olympics 2 stripe (and later 3 stripe) brand 75% of track and field athletes wearing adidas in 1960 Olympics 78% of athletes wearing adidas at 1972 Olympics Developed strong following with top track and field athletes. Applied this same model years later with soccer shoes and apparel. Successful because adidas was creating innovative, high quality products. Product innovation enabled marketing innovation. Different than Nike – marketing is what set them apart from the start.

6 How did Adidas lose the lead to Nike?

7 How Did adidas Lose US Market Share to Nike?
Nike emerging in the 70’s Aggressive launch new styles – going after youth and fitness craze Large endorsement contracts – sign Michael Jordan Focused, aggressive, dedicated leadership Outsourcing of manufacturing to Asia adidas Innovative leader dies in1978 – quality declines, innovation drags Dedicated to competitive athletes Passed on Michael Jordan 8 years of management and ownership changes Costly German manufacturing facilities

8 What has the Adidas brand represented in the past and what does it represent today?

9 How has Adidas's corporate strategy changed over time, specifically before and after the restructuring?

10 Adidas Evolving Strategy
Return to form via restructuring… Adi’s leadership… Loss of focus… Design and Innovation, differentiated image for brands, improved retail and supply chain Focused on Puma, while Nike underestimated. Tries to catch up via acquisitions which yields product breadth instead of specialization. Focused on athletic footwear/apparel. Success factors are marketing and product innovation.

11 Adidas’ Current Strategy

12 Have Adidas’s acquisitions helped improve their position against the competition?

13 Salomon Acquisition: Was it Successful?
Product Line Before Product Line After Athletic Shoes Athletic Apparel Ski Equipment Golf Clubs Bicycle equipment Winter Sports Apparel Analysis:Paid 1.5bn to diversify product line. Surpassed Reebok world’s 2nd largest sporting goods company, however…

14 Adidas’s Stock Price Stock price fell soon after acquisition in 1998, Salomon divested except for Taylor-Made Golf line. Adidas overpaid for acquisition.

15 Adidas after Salomon was divested
Product Line Before Product Line After Product Line After Divestiture Athletic Shoes Athletic Apparel Ski Equipment Golf Clubs* Golf Clubs Bicycle equipment Winter Sports Apparel Net addition was TaylorMade golf

16 TaylorMade-Adidas Golf Sales by Product Line
Conclusion: TaylorMade/Adidas has been able to keep sales up through athlete endorsements even though USGA rules have limited tech advances & an industry decline in the number of golfers.

17 2007 TaylorMade/Adidas Golf Sales Breakdown
Conclusion: Use Adidas’s marketing model of track & field/soccer shoes to gain more sales in footwear & apparel.

18 SWOT Analysis for Reebok
Strengths Strong in hockey, football and baseball Loyal female customer base Past success in marketing Strong stable of professional athlete endorsements Weaknesses Poor reputation for quality and innovation Greg Norman golf apparel brand Limited distribution channels Opportunities Encouraging sales growth in Latin America and Asia Economies of scale with Adidas supply chain and distribution Threats Possibility of cannibalization if sold in same place as Adidas products Still third in market share in its strongest market, North America

19 Adidas Reebok Football Baseball Hockey Soccer Running Basketball
Reebok Acquisition Adidas Reebok Football Baseball Hockey Soccer Running Basketball On paper it looks like Reebok’s product portfolio, endorsements and relationships round out Adidas and together they can join forces to overtake Nike. Issue is can management overcome Reebok’s reputation for poor quality and lack of innovation? Can two companies come together with such different cultures and focus? Adidas – product innovation and commitment to quality Reebok – marketing focus

20 What role do developing countries have in Adidas's future success and how is Adidas positioned in those countries?

21 Adidas is a global player
43% of sales from Europe, which is slowest growth market Encouraging that #1 in developing eastern European market, Russia expected to be most profitable market in Europe by 2010 2006 acquisition of Reebok not enough to overcome Nike in North America Growing number of sales in Asia market, fueled by adidas success in China. Strong demand and large population

22 Net Sales in Emerging Markets
Analysis – strong growth trend in sales in two very attractive emerging markets. Growth may be result of Adidas brand strength in soccer, world’s most popular sport.

23 Regional Footwear/Apparel Markets
Size Market Growth Rate Adidas Sales Adidas Sales Growth Adidas Position North America $42.5 billion 3% $2.9 billion 5% #2 behind Nike Europe N/A 2% (20% Eastern Europe) $4.3 billion 8%, mainly in Russia #1 Asia 3.2 billion people 13% (South and Central) 15% (China) $2.2 billion 17% Latin America $657 million 39% Analysis – Adidas is strong in several developing markets (Eastern Europe, China) but its focus and acquisitions have been geared towards overtaking Nike in the large, but slow growth North America market.

24 Should Adidas be concerned about losing North American market share to Nike?

25 Retail Store Strategy 2006 2007 Adidas Retail Locations 875 1003 Reebok Retail Locations 283 430

26 Adidas AG Geographic Revenue Performance
Key Growth Potential: Europe – continue focus on soccer (including endorsements) and build brand loyalty Asia/Latin America – increase distribution network and brand awareness - All three regions averaging double-digit growth rates

27 TaylorMade Advantages
Shift to International Markets Strength in Metalwoods Strong Apparel Presence Revenues from Asia: 1999 – 13% of total 2007 – 35% of total Decreasing reliance on U.S. Market: 1999 – 69% of total 2007 – 52% of total Metalwoods currently hold number one ranking. Irons hold less than half market share of industry leader Golf balls have seen limited success Over 70 touring pros lift apparel presence. Conclusion – TaylorMade should hold U.S. market share in U.S. given the brand’s strengths, however, TM is only 8% of Adidas AG global revenues. TM cannot help Adidas overtake Nike in U.S. market

28 Adidas Global Revenue Sources (2007)
Conclusion – The majority of Adidas’s revenue streams are outside U.S. market and are growing significantly – let Nike lead U.S. market but dominate Europe and emerging markets.

29 Reebok Global Revenue Sources (2004)
Conclusion – Use Adidas’s control and production efficiencies to enhance Reebok’s distribution network in U.S. to increase U.S. revenues.

30 Is there another corporate strategy Adidas should be pursuing?

31 Alt Strategy Options Use Adidas as revenue driver outside of U.S. market – restructure Reebok strategy to capitalize on historic revenue performance in U.S. Decrease number of Adidas retail outlets in U.S. - convert to Reebok retail Increase Reebok U.S. endorsements Use Adidas global distribution to further increase TaylorMade international revenues

32 Slides that follow still need to be placed or cut.

33 External Environment: PEST
Category Issue Threats/Opportunities Ranking (1-5) Political Operating multi-nationally – awareness of cultures, laws, image, environment, regulations Threat- mistakes can be costly 2 Economic Current state of economy – customers may be less willing to pay for higher priced items Threat – high quality means higher prices Extreme forces in competitor pricing. Opportunity – supply chain efficiencies and multiple distribution channels 4 Social Keeping up with the wants of the younger generation Opportunity – Reebok’s strength in this area Technological Product innovation is a key driver in the industry Opportunity – core competency for adidas “Significance” represents value-neutral impact, and may be either positive or negative for Whole Foods.

34 Porter’s 5 Forces Intensity of Competition High Threat of Substitutes
Low Bargaining Power of Suppliers Bargaining Power of Buyers High Threat of New Entrants

35 Porter’s Five Forces Factor Description Impact
Threat of Substitute Products adidas’s strength is product innovation and meeting customer expectations Low Threat of New Entrants Strong presence of established brands and distribution channels Customers already loyal to their brand Huge resources required of new entrants Bargaining Power of Buyers Huge number of buyers means adidas must market products effectively Must be able to differentiate from the competition Buyers more conscious of their spending Buyers have access to more information High Bargaining Power of Suppliers Multiple sources of materials for shoes and apparel – commodity status Suppliers are very dependent on adidas and others Ease in switching suppliers if necessary and can do so globally Competitive Rivalry Recent acquisitions in industry All competition has global reach – internet and e-commerce Remaining a leader is expensive – aggressive sales and marketing Always struggling to get a competitive edge


Download ppt "Primary Question for Adidas"

Similar presentations


Ads by Google