Strenghts

Opportunity

The company has worldwide

presence and is internationally
recognized.
The company sponsors major
sporting events including
Olympics and major sportsmen
and teams.
The company has a very
diversified product portfolio
ranging from sports shoes,
equipments to clothing and
accessories.
Strong brand
Strong distribution chain
Market Leadership
Weaknesses

Threats

Stiff competition and similar big

brands means customers have
high brand switching
The products can sometimes be
costly due to innovative
technology or production method
High cost structure
Overpricing

SO

Expand customer base

Market Diversification
Change in consumer lifestyle
Technological innovation
Market development

Competition for foreign

markets
Growing power of customers
to set prices
Financial slowdown
Price war between
competitors
New competitors entering the
market

ST

Bring in innovative products

Expand distribution line
Diversify the market by
diversifying the products

Aggressive advertisement to
combat prospective companies to
enter the market
The utilization of the companys
brand to entice customers
Optimum use of the distribution
chain to maximize profits

WO

WT
Look for alternative innovative
technology that costs less.
Develop products with different
price levels
The integration of customer
lifestyle in product development
to retain customers

Make prices competitive

Reduce competition by developing
flexible produt line
Combat competitors products by
making better ones

Space Matrix for Adidas

Financial Position ( FP )

Adidas
return
on
equity
increased
from
9.9014.61percent
5.0
Return on invested capital increased from 9.90 to 13.03 percent
6.0
Revenue
increased
compared
to
the
previous
year
3.0
Total= 14.0

Industry Position

Deregulation
provides
geographic
and
product
freedom
4.0
Deregulation increases competition in sports and apparel industry
5.0
Deregulation by certain countries makes it easier for adidas to expand
3.0
Total= 13.0

Stability Position

Less developed countries are experiencing high inflation and political

instability
-4.0
Deregulation in the business sector has created instability through the
industry
-5.0
New competitors in the same industry create instability in terms of long term
-6.0
operation
Total= -15.0

Competitive Position

Adidas
has
the
largest
market
world-wide
-2.0
Competitors such as Nike are becoming a threat to the company
-4.0
Adidas has a large market share which means that it has large customer base
-3.0
Total = -9.0
Conclusion
SP Average is -15.0/3 = -4
CP Average is -9.0/3 = -3
IP Average is 13.0/3 =4.33
FP Averageis 14.0/3 =4.67
Directional Vector Coordinate x axis = -3 + (4.33) = +1.33
Directional Vector Coordinate y axis = -5 + (4.67) = -.66
Adidas should pursue Competitive Strategies
Since Adidas is competing in an unstable environment it must be wary of
what its competitors is up to. By unstable, we pertain to the competitors that
also have a big market share and directly affect the operation of Adidas. As
they continuously compete with Adidas, Adidas is forced to adjust its
strategies to effectively combat its competitors strategies as Adidas wants to
retain or even increase its market share.

Assurance of Learning Exercise 6c

Developing a BCG (Boston Consulting Group for Adidas AG

To understand the Boston matrix, you need to understand how market share and
market growth interrelated.
Market share is the percentage of the total market that is being serviced by your
company measured either in the revenue terms or unit volume terms.
This strategy is totally based on the market share of the product and the growth of
the market. It is a typical strategy where the companies should have products with
high growth in large markets and also products that have low growth but can
generate more cash for the company. Based on such combinations of this matrix,
there are four dimensions for this model based on which the companies can
understand how much cash is being generated and consumed. There are four
categories that a company can divide its products based on the BCG Growth matrix.
They are cash cows, stars, problem child and dog.

BCG Growth-Share Matrix

Question marks or Problem child (upper-left or conservative quadrant) Quadrant I
Such products are made available in high markets and the market share is very less.
They require lot of funds to improve their market share and it is uncertain whether
they will grow or not. As the markets are growing phenomenally, Adidas has few
problem Childs and these can be ignored by the company
Low Market Share and High Market Growth
Dont know what to do with the opportunities, decide whether to increase
investment.
Question marks should be resolved by executives by deciding whether to foster or
sell these units.
Stars (upper-right or aggressive quadrant) Quadrant II
Stars are such kind of products that generate enough amount of revenue for the
company, but at the same time these products need more cash to maintain its
position in the market. With adidas, the reebok brand can be considered as a star
according to my assessment as it is known for its fashion and it is a popular product
among young people. Sales occurred from reebok generate revenue, but not
enough to self-sustain the product by itself. In countries like India, reebok is a
popular brand, but the sale done and revenue obtained is not enough to keep the
brand alive in such huge market. To keep it vibrant, adidas should divert its funds
from the profits obtained from other products
High Market Share and High Market Growth
Doing well, great opportunities.

Stars should be funded and ready to grow.

Dogs (lower-left or defensive quadrant) Quadrant III
These are products that have fewer shares in the market and also have a very slow
growth rate. The products dont consume lot of investment and they dont generate
huge revenue for the companies.
Low Market Share and Low Market Growth
Weak in market, difficult to make profit.
It sound mean, but dogs should be sold if passible and abandon if necessary.
Cash cows (lower-right or competitive quadrant) Quadrant III
In adidas, the different kinds of products that are sold on the brand name of adidas
are the cash cows for the company. The reason behind this is that these are widely
used by people and reasonable profit is generated from these products. By selling
such products, adidas is able to generate more cash for the company and this can
be used either for the development of new products or investment can be done in
some other business area. The main financial pillars for the company are adidas
products which are the cash cows and so the revenue generated from these cash
cows is very crucial for the company to sustain.
High Market Share and Low Market Growth
Doing well in no growth market with limited opportunities.
Cash cows should be milked to supply funds to more promising businesses.
Assurance of Learning 6D
Key factors
Alternative 1
attractiven
weight
ess
Strengths
Strong
distribution
20%
3.0
chain
diversified
product
20%
4.0
portfolio
Market
10%
4.0
leadership
Weaknesses
High cost
20%
2.0
structure
Limited
20%
4.0
segmentation
Over pricing
10%
4.0
SUM WEIGHT
100%
Opportunities
Market
10%
2.0
Diversificatio

Alternative 2
attractiven
ess

Total AS

weight

Total AS

0.6

20%

4.0 up

0.8

0.8

20%

4.0

0.8

0.4

10%

4.0

0.4

0.4

20%

2.0

0.4

0.8

20%

1.0 down

0.2

0.4

10%
100%

4.0

0.4

0.2

10%

2.0

0.2

n
Change in
consumer
lifestyle
Technological
innovation
Threats
Growing
power of
customers to
set prices
Financial
slowdown
New
competitors
entering the
market
SUM WEIGHT
SUM
ATTRACTIVEN
ESS SCORE:

20%

2.0

0.4

20%

2.0

0.4

20%

4.0

0.8

20%

2.0 down

0.4

10%

2.0

0.2

10%

2.0

0.2

20%

3.0

0.6

20%

3.0

0.6

20%

3.0

0.6

20%

3.0

0.6

100%

100%
6.2

>

5.4

(Attractiveness Score: 1 = not acceptable; 2 = possibly acceptable; 3 =

probably acceptable; 4 = most acceptable; 0 = not relevant)
Alternative 1 is obviously greater than alternative 2. the 3 major differences that
apparently affects the sum attractiveness sscore, are the distribution chain, limited
segmentation, and the technological innovation.

Source:
http://www.ukessays.com/essays/marketing/adidas-focuses-onsports-and-the-brand-specialises-marketing-essay.php
http://knowledgeforall79.blogspot.com/2012/05/space-matrixexample.html
http://financials.morningstar.com/ratios/r.html?t=ADDYY
http://ycharts.com/companies/ADDYY/debt_equity_ratio