Adidas Case Study

Impossible is nothing. –Adidas Commercial Slogan.

Figures
Revenue- 2018-19- $25.9 Billion = 185.8 Billion Rupees. –Forbes.
Valuation- 16.6 billion U.S. dollars in 2019, an increase from around seven billion U.S. dollars in 2016.
An overview of the Sports shoe industry

In 2015, the global footwear industry was valued at 75.2 Billion dollars. However, it is expected that by
2023, this value would have crossed the $115.6 Billion mark. One central factor supporting fast growth of
sports shoe industry worldwide is the rising health consciousness. Globally, the population of millennial
is highly health conscious. Apart from fitness trends, growth in gym and sports infrastructure across the
urban areas, has supported the growth of this industry. The two markets that are leading in terms of
overall sales are Europe and North America. However, a large proportion of sales are also coming from
the fast growing Asian economies. Nike has steadily continued to dominate the sports shoe and apparel
market. However, Adidas has also made a strong return, by growing financial investment in innovation
and digital technology. 2017 financial performance of Adidas tells an exciting story of fast growth and
exceptional financial performance. Its higher focus on innovation, digital technology and sustainability
has started paying off and one can expect Adidas to perform better in future.
About Adidas
Adidas is a 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.
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 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 which made Adidas famous globally. In 1949, following a breakdown in the relationship
between the brothers, Adolf created Adidas, and Rudolf established Puma, which became Adidas'
business rival.
In August 2005, Adidas acquired Reebok as a subsidiary, uniting two of the largest sport outfitting
companies, but maintaining operations under their separate brand names. Adidas acquired all of the
outstanding Reebok shares and completed the deal valued at $3.8 billion.
Adidas Success Business Strategies:
1. Focusing on your strengths
In the 80s, the successful company finally got into trouble. After the passing of Adi Dassler and his son
Rudolf, they tried constantly changing strategies, which did not however bring the desired success. Only
during the late 90s and 00s did the brand find its way out of the crisis and back to its old strength and new
markets.
Adi Dassler was famous for tailoring his shoes to athletes’ needs and supporting their performance by
taking notes on pages, and then producing the highest quality product possible. With his death, focus on
this special way of working was lost. Adidas began to look at their competitors for inspiration rather than
setting the tone themselves. The result: uncertainty among employees and ultimately the customers. But
former Nike managers rediscovered the company’s traditional strengths in the 1990s, putting them back at
the center of the brand where they could once again serve as a beacon for employees and customers.
2. Corporate Strategy – Creating the New
Adidas’ mission is to be the best sports company in the world. Being the best means making best in class
products and serving the customers in the best manner possible. Its new strategic business plan is termed
“Creating the new”. At the core of this plan is Adidas’ ambition to drive top and bottom growth further by
increasing the brand desirability significantly. The focus therefore is how the brands connect and engage
with the customers. However, to achieve its new business plan, the brand has also focused on the creation
of a performance culture. The new strategic plan of Adidas is built around three strategic choices – speed,
cities and open source.

 Speed – How we deliver: Putting our consumers at the heart of everything we do and serving
them in the best possible way means that we need to ensure that they always find fresh and
desirable products where and when they want them. We will become the first true fast sports
company. Brand desirability at Adidas begins with customers. The customers are at the center of
everything it does and focuses on saving them in the best possible manner.   There are three
Pillars of the Speed program which are never out of stock, planned responsiveness and in season
creation.
 Cities – Where we deliver: Urbanization continues to be a global megatrend. Most of the global
population lives in cities. Cities are shaping global trends and consumers’ perception,
perspectives and buying decisions.
World’s biggest cities contribute to the largest part of the world’s GDP. It is why Adidas has
focused specifically on major cities. It started from London, Los Angeles, New York, Paris,
Shanghai and Tokyo. These key cities also provide platforms for the activation of ADIDAS
brands. Some of the major successes in this area include ‘Green Light Run’ in Tokyo, receiving
six Cannes awards, as well as the Parley ‘Run for the Oceans’ in New York City and the launch
of our new football footwear franchise Nemeziz in London. Apart from generating excitement in
the respective cities, these events also got excellent social media coverage all throughout the
globe. Focusing on consumer experience in these cites has helped brands find growth faster. In
2017, these cities made an above average contribution to the overall growth of the company and
its market share. 
 Open Source – How we create: The focus of ‘Open Source’ is to let consumers enjoy higher
participation in the products Adidas makes. This part is about learning and sharing and inciting
conversations between the brand, external experts and consumers. Three strategic initiatives
started for Open Source are creative collaboration, athletic collaboration and partner
collaboration. Creative collaboration focuses on increased partnership between the brand and
outside creative thinkers. Athlete collaboration focuses on partnering with athletes so that the two
can shape the future of sports together. Partner collaboration on the other hand focuses on sharing
resources and expertise with the best in other fields. Another important strategic initiative was
focused upon North America and making it a strategic priority since this is the largest market for
Adidas that represents around 40% of total share in the sporting goods industry. 
3. Focus on sustainability:

Sustainability has become a key focus for all the big brands of the world including Adidas. The brand is
smartly investing in this area and has formed some important partnerships that will enable it to achieve
higher efficiency while having lower environmental impact. It formed a strategic partnership with Parley
for The Oceans. It is now producing shoes using the Parley ocean plastic. In 2017, it continued to reduce
its use of virgin plastic and made more than a million pair of shoes using Parley Oceans plastic.
Moreover, 99% of the cotton that the brand sourced from around the world was better Cotton. It has
integrated sustainability in most aspects of its business from supply chain to product creation and store
concept development. The brand has also decided to keep its offices plastic free and for that it
implemented a plan that will avoid the use of at least 40 tons of single use plastic every year.  However,
that is not all because the brand is focusing on more eco innovative technologies and processes that
reduce its dependence on harmful products and minimize its environmental impact. Not just Adidas but
Reebok is also focusing on production using sustainable raw materials. It has announced Cotton & Corn
sustainable products initiative. This initiative intends to bring plant based products to the market by 2018.
These shoes will have an upper part made up of organic cotton and a base made from industrial grown
corn. For this initiative Reebok has partnered with DuPont Tate & Lyle Bio Products, a leading
manufacturer of high-performance bio-based solutions. In this way Adidas & Reebok have continued to
raise their investment in sustainable products and processes.
4. Investment in Digital:
In 2017, Adidas founded the digital leadership team whose responsibility was to start digital initiatives
across the entire company and support the various functions with decision making in this area. This team
has set its digital priorities and also set a clear digital roadmap for the future. Adidas is crafting a new
digital experience for its customers which starts from Adidas and Reebok websites.
2017 also saw the launch of Adidas app. Its e-commerce channels are also the fastest growing of its all
sales channels which achieved 57% growth in 2017.  Digital experiences shape the perception of
consumers towards a brand and as such digital is now an essential part of brand’s business strategy.
However, digital extends deeper in Adidas’ system than shopping and marketing. The brand is forming
fresh partnerships to extend the impact of digital in its entire system. It has adopted the digital light
synthesis which eliminates the need for traditional prototyping or holding in the making of athletic
footwear. Apart from that Adidas and Siemens announced a collaboration that is aimed at minimizing the
time it takes to bring a product to the market. The two are going to undertake research and development
programs together which will enable the Adidas speed factory to grow capabilities that will aid fast,
transparent and individualized production. Siemens is a leader in digital factory automation and
simulation solutions, and the expertise it brings will offer greater flexibility and higher manufacturing
efficiency to Adidas.
5. Marketing for higher impact:
Both Adidas and Reebok are trying to achieve more from their marketing efforts. Adidas focuses on
creating inspirational and innovative marketing concepts driving consumer advocacy as well as brand
equity.  Adidas uses its marketing activities to build trust among its customers. Apart from that, it uses its
marketing efforts to maintain the iconic status of its key franchises, making it more reasonable for buyers
to buy from these brands. A large part of its marketing investment is spent on partnership assets.
However, Adidas plans to decrease this investment from around half of its total marketing investment to
only 45%. In this regard it has partnered with high profile events, teams and individuals. Through key
events like FIFA, UEFA, French open and Boston Marathon it has continued to build its products to the
biggest stages throughout the world. Similarly, it has been using high profile teams and individual
football stars like Leonel Messi and Paul Pogba for the marketing and promotions of its brands.   Apart
from these the brand has also struck a large number of partnerships like that with singer Kanye West and
Pharrell Williams as well as several top designers and design studios.
Similarly, Reebok has focused on creating an emotional connection with its customers. It has created a
‘Be More Human’ platform especially for consumer connection. To give its marketing strategy a more
authentic feel, the brand has created a series of partnerships. It is building partnerships with fitness
instructors and currently more than 100,000 fitness instructors globally are a part of its network. Its digital
channels are the main channels for communication and marketing initiatives as well as from a commercial
perspective.
6. Effective management of the supply chain:
The effectiveness of the entire brand depends upon the effectiveness of its production system. Adidas has
managed its supply chain excellently. Its global operations channel takes care of the supplier relationships
and works in tandem with strategic supply chain partners for improving the process of manufacturing.
The Global operations function is delivering against their strategic focuses that are:
 To make Adidas the first true fast sports company which involves speeding things up.
 Creation of a seamless consumer experience that has the customer at the center.
 Transforming the manufacturing process.
While the number of total Adidas suppliers is around 800, the Global Operations function worked with
296 of them and 109 of them are strategic supply partners that have worked with the brand for more than
10 years. A very large part of its suppliers are located in Asia which is to minimize the costs of
manufacturing since the raw material and labor are cheaper there. 97% of Adidas’ footwear production
took place in Asia in 2017. China is its largest supplier of apparel followed by Cambodia and Vietnam.
The Global Operations function plays the central role in managing the supply chain. The brand is
especially focusing on speed in its supply chain and therefore created Speed-factories. These speed
factories combine technology with art to better cater to customer demand. The first of these speed
factories was opened in Germany.
In this way, Adidas has used a multi-pronged strategy for getting faster growth. Apart from focusing on
increased technological efficiency through investment in digital technology, the brand has also focused on
operational efficiency. Increased focus on supply chain has led to smarter management of the
manufacturing processes. Marketing is also a critical focus which is being reshaped though the use of
digital technology and by designing new and improved consumer experiences.