TABLE OF CONTENTS

Sl. No. CHAPTERS PAGE NO.

1 AN OVERVIEW OF THE INDUSTRY

1.1 Brief History of the Industry

1.2 Business Process of the Industry

1.3 Market Demand and Supply – Contribution to GDP –
Revenue Generation
1.4 Level and Type of Competition – Firms Operating in
the Industry
1.5 Pricing Strategies in the Industry
1.6 Industrial performance Global, National and Regional
basis
1.7 Prospects and Challenges in the Industry

2 COMPANY PROFILE
2.1 Brief History of the Organization and current Board of
Directors / Organizational chart
2.2 Mission/Vision Statement and Quality policy
followed/Quality certification attained
2.3 Business Process of the Organization – Product profile
2.4 Customers of the Organization – Level of Operations
(Global/National/Regional)
2.5 Competitors of the Company

2.6 Strategies – Business, Pricing, Management

2.7 CSR Activities

2.8 Export / Import

2.9 Collaborations & Expansion Plans

2.10 SWOT Analysis of the Company

 2.11 Organization Chart

3 DISCUSSION
3.1 Literature Review –on any topic in HR /Marketing
/Finance
3.2 Objective assessment of the Company & Industry
3.3 Objective assessment of lliteratures gathered under
respective topics in HR/Marketing/Finance, etc.
3.4 Contributions by the student.
(If possible, primary data could be ensured using
telephonic/online interviews/questionnaire through
Google forms. )
4 CONCLUSION

BIBLIOGRAPHY
 CHAPTER 1
AN OVERVIEW OF THE
INDUSTRY
1. AN OVERVIEW OF THE CLOTHING AND FOOTWEAR INDUSTRY

1.1 BRIEF HISTORY OF CLOTHING AND FOOTWEAR INDUSTRY

Clothing and footwear industry, also called apparel and allied industries, garment
industries, or soft-goods industries, factories and mills producing outerwear,
underwear, headwear, footwear, belts, purses, luggage, gloves, scarfs, ties, and
household soft goods such as drapes, linens, and slipcovers. The same raw materials
and equipment are used to fashion these different end products
In the late Stone Age northern Europeans made garments of animal skins sewn
together with leather thongs. Holes were made in the skin and a thong drawn
through with an instrument like a crochet hook. In southern Europe fine bone
needles from the same period indicate that woven garments were already being
sewn. Weaving and embroidery were developed in the ancient civilizations of the
Middle East. The equipment used in the fabrication of clothes remained simple and
always lagged behind the development of techniques for spinning and weaving. An
important advance took place in the Middle Ages, when iron needles were
introduced in Europe.

All operations continued to be performed by hand until factory production of cloth

was made possible by the invention in the 18th century of foot- and water-powered
machinery for spinning and weaving. This development in turn stimulated the
invention of the sewing machine. After several attempts, a practical machine was
patented in 1830 by Barthélemy Thimonnier of Paris, who produced 80 machines to
manufacture army uniforms. Thimonnier’s machines, however, were destroyed by a
mob of tailors who feared unemployment. Thimonnier’s design used one thread; an
American, Elias Howe, improved on it significantly with a lock-stitch machine that
used two threads, a needle, and a shuttle. Though patented there, it was not
accepted in the United States; Howe took it to England, where he sold part of his
patent rights. The objections of the American tailors and seamstresses were
overcome by a machine designed in 1851 by Isaac M. Singer of Pittstown, N.Y. When
the sewing machine was first introduced, it was used only for simple seams; the
more complex sewing operations were still done with a hand needle. The machines
before Singer’s were hand-powered, but Singer quickly popularized foot-powered
machines. Before the second half of the 19th century, the fabric or leather sections of
clothing and footwear were cut by shears or by a short knife with a handle about 5
inches (13.5 cm) long and a 3-inch tapered blade. All pressing, whether the finished
press or underpressing (between sewing operations), continued to be done with the
stove-heated hand flatiron. The flatiron and the iron (later steel) needle were for a
long time the only major advances in making clothing and footwear since ancient
times. Tailors and dressmakers used hand needles, shears, short knives, and
flatirons. Footwear was made by using hand needles, curved awls, curved needles,
pincers, lap stone, and hammers.
For many years the sewing machine was the only machine used by the clothing
industry. The next major development was the introduction in England in 1860 of
the band-knife machine, which cut several thicknesses of cloth at one time. It was
invented by John Barran of Leeds, the founder of the Leeds clothing industry, who
substituted a knife edge for the saw edge of a woodworking machine. The resulting
increased cutting productivity motivated the development of spreading machines to
spread fabric from long bolts in lays composed of hundreds of plies of fabrics. The
height and count of the lay depended on the thickness and density of the fabric as
well as the blade-cutting height and power of the cutting machine. The first
spreading machines in the late 1890s, often built of wood, carried fabrics in either
bolt or book-fold form as the workers propelled the spreading machines manually
and aligned the superposed plies vertically on the cutting table, thus making the
cutting lay. Although most of the early machines operated with their supporting
wheels rotating on the cutting table, on some machines the wheels rode on the floor.
1.2 MANUFACTURING PROCESS OF THE CLOTHING AND FOOTWEAR INDUSTRY
Many different sequences of the three major processes—cutting, sewing, and
pressing—are used. The exact sequence depends on the raw materials for the
garment, the processing equipment, the garment’s design, and quality specifications.
Five other processes are used to assemble, decorate, and finish the components into
the finished garment: baking or curing, cementing, fusing, molding, and riveting,
including grommetting and nailing.
Cutting process:
Cutting involves three basic operations: making the marker, spreading the fabric,
and chopping the spread fabric into the marked sections. The marker, or cutting lay,
is the arrangement of patterns on the spread fabrics. When hides are cut, the lay
length is the hide size; many hides are cut in single plies. Short lengths are spread by
hand, but large lays, made from large bolts of material, range in length to over 100
feet (30 metres) and heights containing hundreds of plies and must be spread with
traveling spreading machines. Stationary spreaders are used for small sample lots.
Manual and semiautomatic spreading machines are propelled manually over the lay
length as the machine feeds the fabric ply onto the cutting table. Some machines
book-fold the successive plies as the fabric is spread; others have turntable devices
permitting one-way spreads. Lays may be spread either with all plies of fabric facing
one way or with successive plies facing each other in face-to-face spreads. Turntable
spreaders were introduced in 1920, face-to-face spreaders in 1938, and electric-
powered spreading machines that spread a full bolt automatically without manual
attention in 1946. In 1950, cutting blades were invented to cut the ply at each end of
the lay as it is spread. These cut-off spreaders are automatic. Electric-eye edge
controls for precise superposing of plies became available on automatic machines in
1962. In 1969 piggyback automatic spreaders were introduced, which carry a
second bolt that is spread as soon as the first bolt is on the lay.

The marker is superposed on the completed lay. Markers are made of one of three
materials: the fabric being cut, an inexpensive felt of muslin-type cloth, or one of a
variety of papers. When paper with a low coefficient of friction is used, the marker is
fastened to the lay by stapling or two-sided adhesive stripping. Papers with an
adhesive on one side can be heat-sealed to a fabric and are commonly used with
woollens or soft fabrics. Photomarking machines are used for duplicating often-used
paper markers. Many markers are first made in miniature, with precise scaled-down
patterns to determine the optimum layout for minimal yardage; the optimal
miniature marker is then used as the guide for making the full-scale cutting marker.
Some automated equipment is capable of both making the graded pattern and laying
it out on the fabric to minimize waste. A sprayer machine, which sprays the entire
length of the lay around the pattern, eliminates the need for manual marking-in Six
types of machines are available to chop or cut a lay into the component parts of the
marker: rotary blade machines; vertical reciprocal-blade machines; band knives,
similar to band saws; die clickers, or beam presses; automatic computerized cutting
systems with straight blades; and automated computerized laser-beam cutting
machines.
Sewing production:
Clothing, footwear, and allied industries have been known as the needle trades
because sewing is the major assembly and decorative process used. Some items such
as plastic raincoats and footwear are assembled and decorated by fusing, but only a
tiny fraction of garments were produced completely by fusing, cementing, or mold
casting.Over 10,000 different models of industrial sewing machines have been made.
Most are produced in Great Britain, Germany, Italy, Japan, and the United States.
Sewing machines are classified according to stitch type and bed type (the shape of
the machine’s frame). The seven basic beds, or frames, are flatbed, raised-bed, post,
cylinder, off-the-arm, closed-vertical, and open-vertical. The bed type is determined
by the manner in which fabric passes through the machine as it sews. There are four
categories with regard to operational control, all electrically powered: manual-
paced, automatic cycle with manual loading and extraction, fully automatic, and
automated.
Pleating:
Pleating is the process of putting a design of creases into fabric. Accordion, side, box,
inverted, sunburst, air-tuck, Van Dyke, and crystal are trade terms for some pleat
designs. Pleating is accomplished by machine or by the use of interlocking paper
pleat patterns. Pleating machines have blades or rotary gearlike surfaces that crease
the fabric as it passes between two heated rotary mangles, setting the creases.
Machines may be used for pleating either specific cut garment sections or lengths of
fabric that are then cut after pleating into garment sections. In pattern pleating, the
garment section or fabric length is sandwiched between two complementarily
creased plies of paper that shape the fabric into the desired pleat design. This
creased trio is inserted in a steam chamber, or autoclave, for a given length of time,
depending on fabric characteristics and pleat durability desired.
Creasing:
Creasing machines differ from pleating machines in that they fold the edges of
garment sections and set the fold crease as an aid for such operations as sewing the
edges of collars, cuffs, and patch pockets. Creasing diminishes the time for
positioning the creased section during sewing.
Mangling:
Mangling is the process of pressing a garment or section between two heated
cylindrical surfaces.
Blocking:
Blocking consists of encompassing a form, block, or die with the garment with
skintight precision. The item is blocked or pressed by superposing a complementary
pressing form that sandwiches the shaped garment or section between the
interlocked blocks. This process is used for such items as hats, collars, cuffs, and
sleeves.
Curing:
Curing consists of baking a garment or garment section in a heated chamber to
either set creases in the fabric permanently or to decompose auxiliary media used as
a sewing aid. For example, curing permanently sets previously pressed creases in
certain permanent press, durable press, and wash and wear garments. Curing
decomposes the backing material used for facilitating the embroidering in certain
embroidered garments.
Casting:
Casting consists of making a garment or garment section by pouring a fluid or
powder into a mold that forms the garment or section when the fluid or powder
evaporates or solidifies.
Special footwear processes:
Footwear may be classified according to the section of the foot it covers and how it is
held on: sandals, slip-ons, oxfords, ankle-support shoes, and boots. The term shoe
refers to footwear exclusive of sandals and boots. Sandals cover only the sole and
are held onto the foot by strapping. Slip-ons cover the sole, instep, and may or may
not cover the entire heel; styles include pumps and moccasins. Oxfords cover the
sole, instep, and heel and have closures such as laces, straps, buckles, buttons, or
elastic to secure the shoe to the foot. Ankle-support shoes cover sole, instep, heel,
and ankle and secure the shoe to the foot with a closure device; the chukka is an
ankle-support style. Boots cover the foot from the sole to various heights above the
ankle: shin height, calf length, knee length, and hip length. Closures may or may not
be used, depending on the degree of snugness desired.Most footwear factories that
produce dress, play, and work footwear in slip-on, oxford, ankle-support, and boot
categories from leather or synthetics simulating leather have eight processing
departments: (1) cutting; (2) stitching, which sews the upper section above the sole;
(3) stock fitting, which prepares the sole section; (4) lasting, which attaches the
upper and its lining to a wooden foot shape, the last, in order to assemble the sole
section to the upper; (5) bottoming, which attaches the sole to the upper; (6)
heeling, which attaches and shapes the heel bottom into its final form; (7) finishing,
which includes polishing, extracting the lasts, stamping the shoe brand and name on
the sole, inserting heel and sole pads, and inspecting the inner shoe; and (8) treeing,
which includes attaching laces, bows, and buckles and final cleaning and inspection.
1.3 MARKET DEMAND AND SUPPLY – CONTRIBUTION TO GDP – REVENUE
GENERATION

Marketing Demand and Supply

The global apparel market is projected to grow in value from 1.5 trillion U.S. dollars
in 2020 to about 2.25 trillion dollars by 2025, showing that the demand for clothing
and shoes is on the rise across the world. The regional distribution of the demand
share of apparel is expected to stay mostly consistent between 2015 to 2020,
although the Asia Pacific region had the highest level of growth at four percent. The
three world largest apparel markets are the United States, China, and Japan in
descending order.
There are four main product categories for the apparel and footwear market:
womenswear, menswear, sportswear, and childrenswear. Womenswear was the
bestselling apparel category in the world. The United States alone generated 187
billion U.S. dollars in womenswear sales, and about 86 billion dollars in menswear
sales. Another important category with a high level of growth is the sports apparel
market, which was valued at about 185.2 billion as of 2020. Denim, a classic staple of
a casual wardrobe, is only getting more popular across every type of clothing item.
Although there are countless apparel retailers across the world, both big and small,
the biggest companies control the majority of the market. The three top selling
apparel and footwear retailers were TJX Companies, Inditex, and H&M. In terms of
casual apparel, The Gap, Inc. was the top selling retailer, based on sales value.
Luxury clothing, on the other hand, was led in sales by LVMH Moet Hennessy Louis
Vuitton S.E., an enormous French luxury goods conglomerate. In terms of individual
brands, some of the most valuable brands in the world include Nike, GUCCI, and
Adidas. The apparel and shoes industry is vast, comprising many product categories,
ranging from basic to luxury options. The market can be unpredictable and subject
to changes in design, consumer demand, and shifting retail strategies. In recent
years, there have also been changes in the dynamics of the clothing manufacturing
industry, with many companies choosing to outsource production to cheaper
locations across the world. As a result, countries such as China, Bangladesh, Turkey,
India, and Cambodia, now rank as the leading exporters of clothing.
Contribution to GDP
Footwear industry contributes about 2% to India’s GDP. The sector employees over
2.5 million people and has potential to create 2 million jobs in the next 5 years. The
Government of India has allowed 100 per cent foreign direct investment (FDI) in the
sector. The tanning industry has adopted Zero Liquid Discharge (ZLD) systems to
meet environmental regulations. As a measure to boost manufacturing in the leather
footwear segment, excise duty has been reduced from 12% to 6% for footwear
costing between INR 500 and INR 1000. CII has a National Committee on Leather
,Footwear and Leather Products having representation of major leather, footwear
and leather products companies and key stakeholders associated with the sector.
The global footwear market size is valued at $ 365.5 Bn in 2020 and is estimated to
reach $ 530.3 Bn by 2027 with a Compound Annual Growth Rate (CAGR) of 5.5 per
cent from 2020 to 2027. The global footwear market is segmented into type,
material, end users, distribution channel, and region. By type, the market is
categorized into athletic and non-athletic. Depending on material, it is bifurcated
into leather and non-leather. On the basis of distribution channel, it is classified into
hypermarket/supermarket, specialty stores, brand outlets, online sales channels and
others. Representing the developed world, the United States will maintain a 1.8%
growth momentum. Within Europe, which continues to remain an important
element in the world economy, Germany will add over US$2.4 Billion to the region’s
size and clout in the next 5 to 6 years. Over US$1.8 Billion worth of projected
demand in the region will come from Rest of Europe markets. In Japan, Casual will
reach a market size of US$11.1 Billion by the close of the analysis period. As the
world’s second largest economy and the new game changer in global markets, China
exhibits the potential to grow at 3.5% over the next couple of years and add
approximately US$17.2 Billion in terms of addressable opportunity for the picking
by aspiring businesses and their astute leaders. Presented in visually rich graphics
are these and many more need-to-know quantitative data important in ensuring
quality of strategy decisions, be it entry into new markets or allocation of resources
within a portfolio. Several macroeconomic factors and internal market forces will
shape growth and development of demand patterns in emerging countries in Asia-
Pacific, Latin America and the Middle East.
All research viewpoints presented are based on validated engagements from
influencers in the market, whose opinions supersede all other research
methodologies. The textiles and apparel industry in India has strengths across the
entire value chain from fiber, yarn, fabric to apparel. It is highly diversified with a
wide range of segments ranging from products of traditional handloom, handicrafts,
wool and silk products to the organized textile industry. The organized textile
industry is characterized by the use of capital-intensive technology for mass
production of textile products and includes spinning, weaving, processing, and
apparel manufacturing.
The domestic textiles and apparel industry stood at $140 bn in 2018 (including
handicrafts) of which $100 bn was domestically consumed while the remaining
portion worth $40 bn was exported to the world market.
Further, the domestic consumption of $100 bn was divided into apparel at $74 bn,
technical textiles at $19 bn and home furnishings at $7 bn. While exports comprised
of textile exports at $20.5 bn apparel exports at $16.1 bn and handlooms at $3.8 bn.
1.4 Level and Type of Competition – Firms Operating in the Industry
Competition in global apparel and footwear, while already tough, is intensifying as
the industry, despite its fragmentation, is increasingly being driven by large
companies and retailers benefiting from economies of scale, streamlined business
operations, lean supply chains and big data analytics. This briefing aims to shed light
on how these driving forces are influencing consumer behaviour and demand, and
what strategies apparel and footwear companies are pursuing to remain
competitive. The Footwear Industry is a mature industry; it consists of giant players
like Nike, Reebok, & Puma on one hand and millions of small retailers in the
unorganised sector on the other. This industry presents a myriad of interesting
observations – there are highly specialised segments where performance is the
driving force – like running shoes, basketball shoes, and soccer shoes. But to some, a
highly ‘fashionized’ shoe is the priority. Therefore the industry is in a creative phase
where performance and fashion have now been merged to create a new hybrid,
called lifestyle segment. The competition in this industry is mostly non-price atleast
for the established legendary players like Nike and Adidas. They compete for mind
share of the customer and aspects like marketing campaigns, brand ambassadors,
product proliferation and branding, spell success. Brand Stickiness is high once a
customer has experienced a brand and has been satisfied, indicating that price
stickiness is less which is also due to affluent lifestyles, prosperity and rising
purchasing power of the customer today.
Nike and Adidas are the two mammoths of the industry today. Nike is the world
leader with a close follower as Adidas & Reebok combined (post Reebok’s
acquisition by Adidas in 2006).
Firms Operating in the Clothing and Footwear Industry
 Nike.
 PUMA.
 Under Armour.
 New Balance.
 ASICS.
 FILA
1.5 PRICING STRATEGIES IN THE CLOTHING AND FOOTWEAR INDUSTRY
Companies set the prices of their products in order to achieve specific
objectives. Consider the following examples:
In 2014 Nike initiated a new pricing strategy. The company determined from a
market analysis that its customers appreciated the value that the brand provided,
which meant that it could charge a higher price for its products. Nike began to raise
its prices 4–5 percent a year. Nike’s understanding of customer value enabled it to
raise prices and achieve company growth objectives, increasing U.S. athletic
footwear sales by $168 million in one year. Not surprising, product pricing has a big
effect on company objectives.  (You’ll recall that objectives are essentially a
company’s business goals.) Pricing can be used strategically to adjust performance
to meet revenue or profit objectives, as in the Nike example above. Or, as the airline-
industry example shows, pricing can also have unintended or adverse effects on a
company’s objectives. Product pricing will impact each of the objectives below:
 Profit objective: For example, “Increase net profit in 2016 by 5 percent”
 Competitive objective: For example, “Capture 30 percent market share in the
product category”
 Customer objective: For example, “Increase customer retention”
Of course, over the long run, no company can really say, “We don’t care about profits.
We are pricing to beat competitors.” Nor can the company focus only on profits and
ignore how it delivers customer value. For this reason, marketers talk about a
company’s “orientation” in pricing. Orientation describes the relative importance of
one factor compared to the others. All companies must consider customer value in
pricing, but some have an orientation toward profit. We would call this profit-
oriented pricing.
Profit-Oriented Pricing
Profit-oriented pricing places an emphasis on the finances of the product and
business. A business’s profit is the money left after all costs are covered. In other
words, profit = revenue – costs. In profit-oriented pricing, the price per product is
set higher than the total cost of producing and selling each product to ensure that
the company makes a profit on each sale.
The benefit of profit-oriented pricing is obvious: the company is guaranteed a profit
on every sale.
There are real risks to this strategy, though. If a competitor has lower costs, then it
can easily undercut the pricing and steal market share. Even if a competitor does not
have lower costs, it might choose a more aggressive pricing strategy to gain
momentum in the market.
Also, customers don’t really care about the company’s costs. Price is a component of
the value equation, but if the product fails to deliver value, it will be difficult to
generate sales.
Finally, profit-oriented pricing is often a difficult strategy for marketers to succeed
with, because it limits flexibility. If the price is too high, then the marketer has to
adjust other aspects of the marketing mix to create more value. If the marketer
invests in the other three Ps—by, say, making improvements to the product,
increasing promotion, or adding distribution channels—that investment will
probably require additional budget, which will further raise the price.
It’s fairly standard for retailers to use some profit-oriented pricing—applying a
standard mark-up over wholesale prices for products, for instance—but that’s rarely
their only strategy. Successful retailers will also adjust pricing for some or all
products in order to increase the value they provide to customers.
Competitor-Oriented Pricing
Sometimes prices are set almost completely according to competitor prices. A
company simply copies the competitor’s pricing strategy or seeks to use price as one
of the features that differentiates the product. That could mean either pricing the
product higher than competitive products, to indicate that the firm believes it to
provide greater value, or lower than competitive products in order to be a low-price
solution.
This is a fairly simple way to price, especially with products whose pricing
information is easily collected and compared. Like profit-oriented pricing, it carries
some risks, though. Competitor-oriented pricing doesn’t fully take into account the
value of the product to the customer vis-à -vis the value of competitive products. As a
result, the product might be priced too low for the value it provides, or too high.
As the airline example illustrates, competitor-oriented pricing can contribute to a
difficult market dynamic. If players in a market compete exclusively on price, they
will erode their profits and, over time, limit their ability to add value to products.
Customer-Oriented Pricing
Customer-oriented pricing is also referred to as value-oriented pricing. Given the
centrality of the customer in a marketing orientation (and this marketing course!), it
will come as no surprise that customer-oriented pricing is the recommended pricing
approach because its focus is on providing value to the customer. Customer-oriented
pricing looks at the full price-value equation and establishes the price that balances
the value. The company seeks to charge the highest price that supports the value
received by the customer.
Customer-oriented pricing requires an analysis of the customer and the market. The
company must understand the buyer persona, the value that the buyer is seeking,
and the degree to which the product meets the customer need. The market analysis
shows competitive pricing but also pricing for substitutes. In an attempt to bring the
customer voice into pricing decisions, many companies conduct primary market
research with target customers. Crafting questions to get at the value perceptions of
the customer is difficult, though, so marketers often turn to something called the Van
Westerndorp price-sensitivity meter. This method uses the following four questions
to understand customer perceptions of pricing:
1. At what price would you consider the product to be so expensive that you would
Not consider buying it? (Too expensive)
1. At what price would you consider the product to be priced so low that you would
feel the quality couldn’t be very good? (Too cheap)
2. At what price would you consider the product starting to get expensive, such that
it’s not out of the question, but you would have to give some thought to buying
it? (Expensive/High Side)
3. At what price would you consider the product to be a bargain—a great buy for
the money? (Cheap/Good Value)
Each of these questions asks about the customer’s perspective on the product value,
with price as one component of the value equation.
1.6 Industrial performance Global, National and Regional basis
1.7 PROSPECTS AND CHALLENGES IN THE CLOTHING AND FOOTWEAR
INDUSTRY
PROSPECTS OF CLOTHING AND FOOTWEAR INDUSTRY
 The industry’s prospects are closely tied to the purchasing power of consumers,
who look pretty confident now. A sturdy labor market and rising income levels
are paving the way for higher spending. While apparel is the core segment of the
industry, increasing popularity of fitness activities is driving the need for suitable
footwear. Quick product innovation plays a crucial role in bolstering sales.
Companies’ constant endeavors toward bringing new styles enable them to
resort to full price, instead of markdowns, which in turn help drive revenues.
Notably, sales at both clothing & clothing accessories stores have increased 1.6%
on a sequential basis during the month of December 2019.
 Industry participants are playing dual in-store and online roles with evolving
consumer shopping pattern. Apart from upgrading digitally, companies are
coming up with unique products and better deals. Some of the companies are
even trying their hand at subscription or rental services for its offerings. Again,
the growing popularity of second-hand clothes and accessories are persuading
fashion retailers to change business model. Initiatives such as building omni-
channel, coming up with loyalty and marketing programs, enhancing supply
chain and providing faster delivery options are also worth mentioning.
Simultaneously, companies are investing in renovation and improved checkouts
and mobile point-of-sale capabilities to keep stores relevant. These should boost
revenues of the industry players as well.
 The industry is quite fragmented with companies vying for a bigger slice of
the pie on attributes such as price, products and speed-to-market. Players in
this space are battling competition from online retailers, particularly Amazon
(AMZN) and private-label brands and fashion-fast names like H&M and Zara.
Addressing these, a significant number of players in the industry have been
making investments to strengthen their digital ecosystem and accelerating
shipping and delivery capabilities. While these endeavors might boost sales,
they entail high cost.
CHALLENGES IN CLOTHING AND FOOTWEAR INDUSTRY
 Due to consumer’s ever-increasing environmental awareness and the
detrimental effects the fashion industry has on the environment, consumers are
now choosing to invest in brands that are actively seeking sustainable
alternatives to conventional textile manufacturing. From Fairtrade cotton to eco-
friendly fibers that are produced using seaweed, shoppers are always on the
lookout to support the next innovative, sustainable fashion trend. Additionally,
brands that are ethical and adhere to garment factory social compliance
regulations are being ranked as brands with more authority and influence.
Shoppers are continuously trying to make a difference by reducing their impact
on the environment. Thus, they’re looking for ways to express their ethical ways
in their everyday lifestyle through the brands they choose to support
 Nowadays, consumers are used to accessing products not only from brick and
mortar stores but online retailers instantly. If the shop or online retailer is out of
stock, they expect to be notified when they’ll be able to place their order. They're
used to personalization and customization. Customers want to be able to weigh
in on the design of the product they want to purchase, making sure that it is
unique to them. This creates a challenge as brands constantly have to cater to
their customer’s needs and wants. Additionally, with fast fashion on the rise,
consumers have become accustomed to seeing the same outfit their favorite
celebrity wore on the red carpet in stores the following week at a much lower
price. This places tremendous pressure on apparel supply chains concerning
product development and designing, sourcing, and manufacturing.
 The demand for improved efficiency, quality and speed is on the rise. But, as the
cost of production is increasing globally, apparel brands are finding it harder to
find cheap sources for production to meet their production demands while
keeping costs low.Brands are pressed to increase production speeds while
maintaining an acceptable level of quality, which is particularly tough for smaller
brands who rely on in-house quality management systems to achieve. As a result,
brands and retailers opt for outsourced apparel quality management solutions to
meet quality expectations. Additionally, brands are challenged with keeping up
with an increased demand for transparency.
 They are being pressured to make their supply chain available to the public, in
terms of disclosing information about auditors and suppliers, etc.
 The apparel industry is overflowing with different brands and styles that cater to
various markets around the world. You’ll be lucky to find a market that is
untouched. This makes it the industry highly competitive, and it is incredibly
difficult to stand out from competitors. When shopping for clothes, whether it is
online or at a physical store, buyers experience an abundance of options to
choose from which makes product differentiation unbelievably complicated.
Therefore, apparel companies are forced to rely on brand equity to stand out
from the crowd.Brands focus on pricing, quality, trendiness and customer
experience to create brand loyalty. Even though a brand may build up a strong
brand name, brands experience brand sensitivity, which impacts their
customer’s loyalty.If they happen to be out of stock, or unfortunately produced
low-quality goods, loyal customers will easily shop elsewhere until their needs
are met. They also have no problem expressing their feelings about the brand’s
‘poor quality’ on social media, which may cause a chain reaction.
 CHAPTER 2
COMPANY PROFILE
 2. COMPANY PROFILE
2.6 BRIEF HISTORY OF ADIDAS AG AND CURRENT BOARD OF DIRECTORS /
ORGANISATIONAL CHART
HISTORY OF ADIDAS AG
Adidas AG (German: [ˈʔadiˌdas]; stylized as adidas since 1949[3]) is a German
multinational corporation, founded and headquartered in Herzogenaurach,
Germany, that designs and manufactures shoes, clothing and accessories. It is the
largest sportswear manufacturer in Europe, and the second largest in the world,
after Nike.[4][5] It is the holding company for the Adidas Group, which consists of
the Reebok sportswear company, 8.33% of the German football club Bayern
Mü nchen, and Runtastic, an Austrian fitness technology company. Adidas' revenue
for 2018 was listed at €21.915 billion.
The company was started by Adolf Dassler in his mother's house; he was joined by
his elder brother Rudolf in 1924 under the name Gebrü der Dassler Schuhfabrik
("Dassler Brothers Shoe Factory"). Dassler assisted in the development of spiked
running shoes (spikes) for multiple athletic events. To enhance the quality of spiked
athletic footwear, he transitioned from a previous model of heavy metal spikes to
utilising canvas and rubber. Dassler persuaded U.S. sprinter Jesse Owens to use his
handmade spikes at the 1936 Summer Olympics. In 1949, following a breakdown in
the relationship between the brothers, Adolf created Adidas, and Rudolf established
Puma, which became Adidas' business rival.
The three stripes are Adidas' identity mark, having being used on the company's
clothing and shoe designs as a marketing aid. The branding, which Adidas bought in
1952 from Finnish sports company Karhu Sports for the equivalent of 1,600 euros
and two bottles of whiskey, became so successful that Dassler described Adidas as
"The three stripes company. The company was founded by Adolf "Adi" Dassler who
made sports shoes in his mother's scullery or laundry room in Herzogenaurach,
Germany after his return from World War I. In July 1924, his older brother Rudolf
joined the business, which became "Dassler Brothers Shoe Factory" (Gebrü der
Dassler Schuhfabrik).
The electricity supply in Herzogenaurach was unreliable, so the brothers sometimes
had to use pedal power from a stationary bicycle to run their equipment.
Dassler assisted in the development of spiked running shoes (spikes) for multiple
athletic events. To enhance the quality of spiked athletic footwear, he transitioned
from a previous model of heavy metal spikes to utilising canvas and rubber. In 1936,
Dassler persuaded U.S. sprinter Jesse Owens to use his hand made spikes at the 1936
Summer Olympics. Following Owens' four gold medals, the name and reputation of
Dassler shoes became known to the world's sportsmen and their trainers. Business
was successful and the Dasslers were selling 200,000 pairs of shoes every year
before World War II.
Current Board of Directors
KASPER RORSTED - CHIEF EXECUTIVE OFFICER
ROLAND AUSCHEL - GLOBAL SALES
BRIAN GREVY - GLOBAL BRANDS
HARM OHLMEYER – FINANCE
AMANDA RAJKUMAR - HUMAN RESOURCES
MARTIN SHANKLAND - GLOBAL OPERATIONS
2.7 MISSIONS OF ADIDAS AG
Mission Statement:
The Adidas group thrives to be the global leader in the sporting goods industry with
brands built on a passion for sports and a sporting lifestyle.
Vision:
To enhance social and environmental performance in the company and the supply
chain, thereby improving the lives of the people making our products.
Goals:
To establish it self as a brand that is totally committed and dedicated towards its
customers.
The company wants to establish its leadership in the industry and its name as an
organization for innovation and design.
The establish itself as a top brand in terms of customer satisfaction.
To establish itself as a global organization.
2.8 BUSINESS PROCESS OF THE ADIDAS AG – PRODUCT PROFILE
2.9 CUSTOMERS OF THE ADIDAS AG – LEVEL OF OPERATIONS
(GLOBAL/NATIONAL/REGION)

Adidas has become one of the most popular brands amongst men and women when
it comes to sportswear worldwide. Adidas is also a very popular brand in the United
States. As of 2017, 42 percent of U.S. consumers stated that they usually bought
adidas clothing, shoes and accessories. Adidas is also a popular brand for high
income earners in the United States. In 2018, 42.01 percent of respondents who
stated their income was high said they owned Adidas brand apparel, accessories,
and footwear. Adidas customers consist of upper & Upper-middle class social
groups. To be successful across consumer segments, Adidas acknowledged that a
strategy of mass production or mass marketing is no longer sufficient.
Only by identifying and understanding consumer’s individual motivations and goals
for doing sport, their lifestyle, their fitness level, where they are doing sport and
their buying habits will help them in creating meaningful products, services and
experiences that build a lasting impression and brand loyalty. According to Adidas
Group, Adidas is primarily targeting sports participants, including those at the
highest level of their sport, as well as non-athletes who are inspired by or really love
sports. Adidas has a long history of providing athletic footwear and apparel for
athletes at all levels of sport. As detailed in its strategic positioning statement,
Adidas' strongest consumer market is with the 20- to 29-year-old age group who are
athletes or are passionate about sports. The company is focused on targeting and
strengthening its brand with the next generation of athletes in the 14- to 19-year-old
age group. Adidas believes this target group is the most influential consumer group
in the world.
2.10 COMPETITORS OF THE ADIDAS AG

Adidas Competitors Umar Farooq January 22, 2019

Adidas is a German multinational brand that designs and manufactures sports
footwear, apparels and related accessories for athletes, sports enthusiasts and
fitness lovers. Adidas was founded in 1920 with the name of Dassler Brother Shoe
Factory and named as Adidas since 1949. After Nike, which is the world leading
brand of footwear, Adidas stand the second largest brand in the world. Adidas most
valuable acquisition was Reebok Sportswear Company which took place in 2005 for
$3.8 billion. This acquisition allowed Adidas to compete Swoosh Nike.

Let us discuss for key facts and figures of Adidas. The mission of Adidas is to be the
best sports company in the world. The company’s worldwide employees are 56,888
that comprising 50% male and 50% female. Adidas has produced 900 million units
worldwide in 2017. The net sale made by Adidas was €21.218 billion in 2017 and
investing €187 million in R&D. Adidas brand is a huge success but still having strong
competition in the market.
List of Top Competitors of Adidas
Nike
PUMA
Under Armour
New Balance
ASICS
FILA
Hanesbrands
Foot Locker
Li Ning
Anta

2.11 STRATEGIES – BUSINESS, PRICING, MANAGEMENT

Business Strategy of Adidas
Adidas Business Strategy
Adidas.
Business strategy has a very important role in the making of any market leading
brand. The 21st century marketplace is highly competitive and to stay ahead of
others you need a strong business strategy. Changes happen fast in the business
world. However, strategy is at the foundation of everything you need to excel in a
highly competitive and fast changing business environment. In this article, you will
read about the business strategy adopted by Adidas for market growth. During the
recent years, Adidas has made several changes to its business strategy for achieving
faster growth worldwide.

Nike is currently dominating the market, but the sales of Adidas have grown fast.
The brand is gearing up for a high jump in the near future. Its new business strategy
encompasses several things from changing the company’s strategic focus, to creating
more sustainable products and technological innovation. Adidas is aiming to become
the first true fast sports company of the world. Speed is a very important element
and at the core of its new business strategy. It also aims to leverage its scalable
operating model to grow its income faster and derive better financial and
operational results. The financial results of 2017 prove that these changes have
started bearing results better than expectations and if Adidas can sustain the
momentum, it could reduce the gap between itself and Nike faster.
Key Elements in Adidas Business Strategy:
– Corporate Strategy – Creating the new.
– Focus on Sustainability
– Investment in Digital
– Marketing for higher impact
– Effectively managing the supply chain
– Focus on key urban market
Corporate Strategy – Creating the New

2.12 CSR ACTIVITIES

As one of the biggest sports company in the world, Adidas’ business success started
from 2006 when it merged Reebok. Furthermore, According to Markus Baumann,
vice president Adidas Global Football, “the World Cup is the ideal stage to present
such innovations and our brand to a broad audience.” 1 2010 FIFA World Cup that
Adidas AG hold had brought not only huge company’s financial profits, at least 1.5
billion Euro in football category, but also brand recognition.2 However, except for
focusing on its business success, the brand also put efforts on its sustainability
behaviors. Adidas Group is the parent company of Adidas, Reebok and TaylorMade
Golf, and it is the group works on social works, sustainability work, relationship with
stakeholders and concern of workers. Furthermore, to maintain its credibility, the
group has the brand’s annual report that reveals process of its sustainability targets.
How does Adidas practice it’s CSR plan? According to Adidas Group, by collaborating
with material suppliers, universities and scientific instituted, the company is able to
embed its CSR practice in day-to-day activities. With the help of these professional
teams, Adidas Group first of all plan and set proper and attainable 10-year-goals,
and then they design strategies to reach the goals. For example, if wants to reduce
the traffic CO2 producing, how employees should change the way they travel? Or the
business travel could be replaced by internet conferences? How much reduction
should one employee’s flying trip be per year so that the company will get to its goal
of 30% less CO2 emission in 10 years. Lastly, the most important work for these
professional team, is the post-work evaluation, which could test out the efficiency of
the whole plans. With the steps of planning, designing, and evaluating, Adidas works
their CSR work systematically. The following is Adidas’ CO2 emission reduction
results from 2007 to 2009, which indicates that there is exact record every year
since 2007 so that the group can put them into track. 3 CSR of Adidas includes
environmental issues concerns, sustainable materials usage and labors’ rights. They
do recycle in both companies and factories, and they produce products by recycle
materials like inlay soles, textiles, metals, plastics, packaging and rubbles. Moreover,
Adidas works with organic cotton farmers and use their products and they join
Better Connon Initiative (CBI) two years ago4 , which aims at reducing water
consumption and pesticide use in cotton framing. With those movements, Adidas
claims itself cares about the society and sustainability. The report, Adidas Group’s
Sustainability Performance Review 2009, includes its supply chain, audit systems,
training sessions, environment plans, community involvement, and green company
targets.5 It has its 10 year plans for sustainable issues. Starts from 2005, the whole
plan broadly includes goals of environmental friendly plans, social compliance plans,
and employee’s wage and working conditions. Adida Group from their hardware
facilities, factories to every pair of shoes; from management strategies, wage
fairness to employee’s mental conditions, according to the annual reports of Adidas
Group are being considered and audited.
How does Adidas prove its CSR credibility? According to Adidas, it has its own
internal team for assessing how well the suppliers are complying with our supply
chain code of conduct, the worldplace Standards.7 In order to be impartial, those
teams values transparency and stakeholder feedback, and it has regular reports on
their compliance work. What’s more is that it submits programs to evaluation and
public reporting by the Fair Labor Association (FLA), and it practices full disclosure
to researchers, trade unions and other concerned NGOs.8 Following are
partnerships and engagements with different NGOs for different CSR categories.

1. Corporate responsibility:
World Federation of the Sporting Goods Industry(WFGSI)
World Business Council for Sustainable Development (WCSBD)
2. Supply Chain Conditions
Fair Lavor Association (FLA)
Fair Factories Clearinghouse (FFC)
3. Environment
AFIRM Working Group
Better Cotton Initiative (BCI)

2.13 EXPORT / IMPORT

2.10 SWOT ANALYSIS OF THE COMPANY
Adidas Strengths
Brand Value: Adidas is one of the most valuable brands in sports. According to Forbes, it
is ranked at #3 position (Nike at # 1 and ESPN at # 2) with a brand value of $6.8 Billion.
An Iconic Brand with a Prestigious Legacy: Adidas has nurtured a strong and prestigious
legacy and heritage over its long, illustrious history by influencing and shaping
numerous aspects of society across the world.
For example, the company influenced sports in the 70s and shaped the hip-hop culture
in the 80s. Its iconic three-striped tracksuit and three-leafed motif logo transformed the
brand into a cult, particularly among urban youth.

New Products Innovation: Since its founding, Adidas has prioritized the quality of its
products over everything else. In 2018, EUR 153 million was invested in R&D (0.7% of
its annual net sales). High-quality, innovative products are one of the driving forces
behind its ever-growing customer base.
Diversified Portfolio: Even though the Adidas brand is restricted within the sportswear
industry, the company’s products are diversified. It offers multiple products that are
designed to cater to a wide range of sports, including footwear, apparel, and hardware
accessories.

Young Customers prefer Adidas: The consistent focus on product quality and customer
experience has enabled Adidas to nurture a global and loyal customer base, particularly
teens and young adults between 16 and 24 years in urban areas.
Effective Supply Chain Management: Supply chain management is vital in the success of
global companies, particularly for Adidas, since it outsources most of its manufacturing.
According to its annual report, Adidas works with key strategic partners to ensure
control of the entire supply chain.
Footwear – In 2018, 97% of total footwear volume was produced in Asia and Europe
(1%) and the Americas (2%). Vietnam is the largest sourcing country representing 42%
of total volume.

Apparel – In 2018, 91% of total apparel volume from Asia. Europe (3%), Americas (4%),
Africa (1%). Cambodia is the largest sourcing country representing 24% of produced
volume
Hardware – In 2018, about 79% of hardware products (bags and balls) were produced
in Asia, Europe (19%) and Americas (1%). China represents the largest sourcing
country (38%), followed by Turkey (18%) and Pakistan (18%).

Strong Financial Position: Financial capability is critical in protecting market share and
long-term profitability and sustainability. Adidas is among the most financially stable
companies globally and utilizes its financial superiority to fend-off competition from
other global companies such as Nike and Puma.
In 2018, Adidas’s currency-neutral revenue grew by 8% to EUR 21.9 Billion, and net
income increased by 20% to EUR 1.7 Billion.

Strong & Diversified Distribution Network: Adidas has several distribution networks,
including over 2300 company-owned retail stores, over 14,000 mono- branded
franchise stores, and over 150,000 co-branded, retail partners and wholesale stores.
In addition, eCommerce platforms increase sales by providing different channels to
reach target markets and sell directly to the consumers within these markets.

Effective Marketing Strategy: The strength of the marketing strategy used by Adidas
stems from its perfectly balanced mix of promotion, advertisements, and the use of
digital technology.
Branding through international sponsorships: Sponsoring global organizations provides
an opportunity to advertise directly to sports lovers and fanatics globally. For example,
the marketing campaign for the FIFA World Cup in Russia, NBA, Olympics.
Sponsorship of high-profile athletes such as David Beckham, Lionel Messi, Sachin
Tendulkar, Andy Murray, etc. strengthens brand desire.
Celebrity Endorsements: Adidas has strived to maintain and enhance its recognition as
a youthful and urban brand through endorsements from celebrities. Adidas has been
endorsed by a long list of movie stars and music hit-makers such as Beyoncé and Kanye
West.

Adidas Weaknesses
Supply Chain Shortage: Adidas outsources the production of most of its products to 3rd
party or independent manufacturing suppliers, mainly in China, Cambodia, and
Vietnam. It has exposed Adidas to the risk of overdependence on foreign suppliers.
According to Reuters, these suppliers are unable to keep up with the growing demand
for mid-priced apparel in the North American market, resulting in a reduction in sales
growth by 1-2% in 2019.
Expensive Products: Adidas charges a premium or high prices for its products, which
has alienated low-income consumers. Only upper- and middle-income group customers
can afford over a $100 shoe.
Limited Product Line: Adidas Group has only Adidas brand and Reebok brand under its
portfolio, which has restricted the company within sports footwear, sports apparel, and
accessories. Therefore, a decline in demand for sports-related products can be
disastrous to Adidas.

Adidas Opportunities
E-commerce: In recent years, the number of consumers who shop online or use e-
commerce sites has increased significantly. Adidas incorporated Instagram’s checkout
feature into its distribution network, leading to a 40% increase in online sales in the 1st
Quarter of 2019, which implies that it can replicate this success in other social media
platforms such as Facebook and Snapchat.
Growing Sportswear Industry: Sports and fitness have grown in popularity with no sign
of slowing down soon, which means there will be a consistent increase in demand for
sportswear products and assortments.
Investing in Smart Materials: Technological advancements have enabled the
development of new synthetic materials that are better and more beneficial than
traditional materials.
Continual and increased investment in technological development and the manufacture
of new materials can provide Adidas with an edge over its competitors.

Culture of Yoga Pants: Increased health consciousness, change in preference, and tastes
among consumers have increased demand for sports-related products. “Culture of yoga
pants” is redefining our sports apparel industry.
Increasing Demand for Premium Sports Products: Improved economic situation in
developing countries has increased purchasing power and demand for premium
products. Adidas can capitalize on this by expanding into countries such as India, where
discretionary income is expected to increase by 45% by 2025.
Diversification into sporting equipments: Even though Adidas has a diversified
portfolio, there is still room for expansion of its product line.
For example, Adidas can differentiate itself from Puma and Nike by expanding its
product line to include sporting goods such as tennis rackets, golf clubs, hockey sticks,
and so on.

Global Expansion: The rapid growth of emerging markets in Africa, Asia, and South
America provides Adidas with lucrative opportunities for expansion. For example,
Adidas has about 12,000 stores in China, and in 2019, they plan to open additional 1000
new stores.
Product Development in Space: In 2019, Adidas has partnered with International Space
Station National Lab to explore new product development “Boost midsole creation”
process without gravity.
Shoe Subscription – In the UK, it is estimated that over 300 million pairs of running
shoes are thrown away every year. Adidas engineers are trying to make the entire
running shoe (midsole foam, outer sole, knitted upper, an insole, laces, torsion bar)
from the same material (usually, Adidas’s running shoes include over 12 different
materials).
Once the shoe is worn out, it can be completely melted and recycled to new shoes. This
concept is known as FutureCraft.Loop. Who knows – this can very well turn into a shoe
subscription model in the future?
Adidas Threats
Competition: The main threat facing Adidas is increased competition due to
globalization and technological advancements, which has enabled entry and penetration
of small and medium companies. This implies that Adidas has to compete against main
rivals such as Nike, Under Armour, Puma while fending-off new entrants and
penetrators.
Rapid Expansion and Adoption of Ecommerce: Companies are adopting the rapidly
expanding e-commerce at an alarming rate, which can pose a threat to Adidas if its main
competitors such as Nike and Puma adopt e-commerce before them.
Supplier Dominancy: The fact that Adidas outsources most of the manufacturing of its
products implies that the suppliers have more bargaining power than the company. The
skewed balance of power exposes Adidas to the possibility of being held hostage by its
biggest suppliers.
Loss of Trademark: In 2019, Adidas lost the three-strip logo trademark case in the
General Court of the European Union, which exposes the brand to the threat of
imitation.
Technological Advancements: The threat posed by competitors increases as they
become more technologically advanced. This implies that a competitor such as Nike will
pose a greater threat if they become technologically advanced than Adidas.
US-China Trade Tensions: Adidas operates globally, which implies that the company is
susceptible to the reckless tit-for-tat imposition of tariffs between countries. A trade
war is particularly threatening to Adidas because the US is the company’s second-
largest market, yet vast majority of its products are made in China and other Asian
countries. According to CEO Rorsted, currency war and tariffs pose a major threat to
Adidas.
Exchange Rates: Fluctuations of major currencies such as the Euro and the US Dollar can
negatively affect Adidas’s profits since it operates in the global marketplace.
Global Economic Slowdown: The effects of economic slowdowns, such as lower sales,
negatively affect Adidas, just like any other company.
Fake Products: According to CEO Rorsted, 10% of Adidas products in Asia could be fake.
The number and quality of fake products for premium shoe brands have increased
significantly in the recent past, which poses a threat to shoe-manufacturing companies.