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College of Commerce And Business Administration
Case: Adidas in 2008: Has Corporate Restructuring Increased Shareholder Value?
Submitted by: Carlos, Amiel Rave Catbagan, Joana Rey Cendana, Kristina Barbara Chua, Charmaine Jhoy Chua, Joanne Chua, Kimberline 4m2
Submitted to: Professor So
Date: December 13, 2010
creating a differentiated image for the products offered by each of its three business segments and expanding controlled retail space through its network of company owned stores SWOT Strengths • Strong management team and good corporate strategy in both North American and overseas markets • • • • • • • • Created differentiated image of each of its three business segments namely Adidas. acquire economy of scales. and variety of products and economies of scope. wide distribution network. OBJECTIVES The company’s corporate strategy since 2008 was focused on extending its leadership in product innovation. Reebok and TaylorMade-Adidas Golf Diversity and variety in products offered on the web (footwear. and acquiring Reebok turn out to be moves that will pave the way for adidas to overtake Nike? Its strategy was acquisition that would build up its capacity and capabilities and position it with greater power of bargaining. Will selling its Salomon ski equipment business and its bicycle parts business.BACKGROUND PROBLEM Adidas’ strategy is to try and take over the number one position from Nike as the leader of the global sporting goods industry. etc. apparel. with suppliers.) Brand recognition and reputation Trademark "Impossible is Nothing" Strong control over its own distribution channel Strong customer base Strong financial position with minimal long term debts Innovative designs in footwear enabling consumers to design their own shoes online . sporting equipment. keeping the TaylorMade Golf division.
• • • • • Brand reputation and recognition Emerging brand name Pricing strategy is competitive to Nike's Merger with Salomon will allow Adidas to gain a strong foothold in the Skiing Industry Expanding controlled retail space through its network of company owned stores Weaknesses • Negative image portrayed by poor working conditions in its overseas factories • • • • • • • • E-commerce is limited to USA Direct sale to consumers is creating conflicts with its own resellers Not known for its research and development leading to innovative designs Currently available supply chain. manufacturing. however. has planned to expand to Canada and international in the near future Online customer service not helpful or easy to find A line of shoes targeted towards athletes should not be so heavy Limited product line Opportunities • Partnerships with major exporting events around the world • • • • • • Increase female participation in athletics Sign-in contracts with famous athletes for endorsement New technology and innovation to stay on top of market needs Expand e-commerce to global markets Partnering up with other retailers to sell basketball footwear and apparel Change in consumer lifestyles . and fulfillment technologies aren't easily integrated with online build-to-order systems The e-commerce is limited to USA.
TaylorMade) and products to improve our competitive position and financial performance: VISION Strives to be the global leader in the sporting goods industry with sports brands built on a passion for sports and a sporting lifestyle. Asics. . In addition to large rivals. and New Balance. The Porter's five forces framework • Threat of New Entrants High due to the large economies of scale needed for manufacturing. Puma. distribution and research and development • Threat of Substitutes Substitutes for Adidas products come from rival manufacturers such as Nike. substitutes come from smaller and more localized companies around the world.Reebok.• • • • • • Available technological innovations Entering new markets Expand customer base geographically or through new products Expand product/service lines Market Diversification Invest in mergers or takeovers Threats • Competition from foreign markets • Competitor's actions • Change in consumer lifestyles • Changing consumer patterns • Growing power of customers to set the price • Growing power of suppliers to set the price • Financial slowdown • New competitors entering the market • Price war between competitors • Negative image created by the sponsored athletes • Continuing challenges in import/export duties THEORETICAL FRAMEWORK MISSION To continuously strengthen our brands (Adidas.
• Rivalry between Competitors Adidas largest rival is sporting apparel giant Nike. LA Lakers.• Bargaining Power of Buyer Customers carry large bargaining power as they can always threaten to buy rival products. since Adidas makes contracts with famous athletes or teams (such as NY Giants. In addition. other much smaller rivals in the United States and Europe includes Puma. • Bargaining Power of Supplier The suppliers’ bargaining power is high as well. Macro Environment : Political • control and monitor hazardous substance to protect human health and environment • 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 Social • products are always in fashion with unique design Technology • maker of world’s first smart shoes . Switching costs are typically very low due switch to a rival’s products if the rival offered trendier or hotter product.microchip and wireless mp3 player along with shoes Adidas Map Position . David Beckham). which controls over most of the worldwide market for athletic shoes. to promote.
AdidasValue Chain ALTERNATIVE COURSES OF ACTION • • • • • • • Strengthen the relationship with customers by reaching them in the internet and ask for feedbacks for the purpose of knowing what the customer prefers. Sponsor different sports events and give souvenirs to participants so that they will relate the brand with their everyday lives. Have a showroom for all their products like shoes and apparels. Relate their products with different trends and technologies like allowing athletes to connect their shoes with their iPod to count how many steps they make while running and the like. Intensify advertisements to retain the brand in the customers mind. Conduct a market survey to know the customer’s perception and to be able to come up with new strategies that will keep the customers loyalty to Adidas. Sponsorships with different athletes in different sports. Organize a fashion show for all their products. to increase brand recognition. RECOMMENDATION .