The Cohesion Case1. HISTORY Adi Dasler is the founder of Adidas. In 1920, Adi Dasler created his first shoe made of canvas 1949: Adi Dasler formally registered his company ADIDAS (“Three Stripes Company”) Adi Dasler courted many famous athletes to endorse his products and received biggest marketing opportunities when German football team won the 1954 world cup using Adidas products Adi Dasler died in 1978. In 1980’s, Adidas struggled to keep its reputation and market share due to its new rival Nike Robert Dreyfus as CEO in 1992 In 1995, he had 3-stripes back on the sportswear map and listed as a new IPO o the German Stock Exchange In 2001 – Acquired Salomon Group (“TaylorMade” as brand) In 2006 - Acquired Reebok International Ltd 2. VISION AND MISSION The company doesn’t have a Vision It’s current Mission reads as follows: “Adidas AG is committed to being a global leader in the sporting goods industry by producing brands that are novel, fun and have a passion for athletics and active people worldwide. We are committed to delivering industry leading financial results, innovating the most advance products, focusing on our consumers, and maintaining all of this while being a good corporate citizen” 3. ADIDAS GROUP DIVISION Adidas AG three primary divisions: i) ii) iii) 3.1 Adidas Reebok TaylorMade Adidas Adidas produces a wide range of sports apparel for both amateur and professional athletes and their respective organizations. In 2006, Adidas signed an 11 year partnership with the NBA, making Adidas the official uniform provider until the year 2017 In 2009, Adidas introduced their TECHFIT line of under-jersey compression garments to aid performance of basketball players Two primary divisions of Adidas Brand: i) Sport Performance: focuses mostly on athletes in 4 areas; football, running, training, and basketball. ii) Sport Style: targeted at youth and fashion-minded people, linking the sport theme to fashion. 1 45% from footwear. 4. Massachusetts. USA) TaylorMade In 1979. the inventor of metal woods.3 Revenue by Product Consolidated Financial Statement In 2009. FINANCIAL INFORMATION 4. and 10% from hardware. 4.1 Apparel 2 .2 American inspired global brand keeping its roots in women’s sports and fitness but also expanded to men’s fitness.2 Revenue by Region In 2008.The Cohesion Case 3. In 2008. 5. net income and revenues of Adidas decreased than 2008 The firm has an extensive long ter debt and high goodwill that could spelltrouble to the company in the future. In 2006. 4.3 Reebok (Canton. revenues for Adidas from Asia and Latin America increased while North America decreased. EXTERNAL ISSUES 5. Adidas derived more revenue in Asia then North America. TaylorMade became only the second brand in golf industry to have over $1 billion USD revenue in a single year. it started by Gary Adams.1 45% revenues generated were from apparel. Apparel revenues increased in 2007-2009 while hardware and footwear decreased. TaylorMade sold their Maxfli brand to Dick’s Sporting Goods. Has an exclusive contract with National Football League (NFL) and NHL Its vision is “Fulfilling and Leading Through Creativity” Its purpose is “being committed to corporate responsibility and enabling youth around the world to fulfil their potential through producing great and innovative products and through Reebok’s Human Rights Program that aids underprivileged youth around the world meet their potential and maintain an active and healthy lifestyle” Two largest segments: Reebok-CCM Hockey and Rockport 3. TaylorMade is the world leader in metal wood suppliers. In 2007-2009. 6.3 Nike Callaway Golf Callaway Golf founded by Eli Callaway in 1982. and Nike Golf. It offers products made from moisture-wicking synthetic fabrics designed to regulate body temperature regardless of weather condition. Sales of Under Armour have increased from 430 million USD to 725 million USD in just three years’ time.1 In 1964. This company sells. and green goods. consumer electronics. A difference of $4643 million USD in revenue and $1144 million USD in net income higher compared to Adidas. This company prides itself on technology and good corporate citizenship. and other apparel. gloves. Nike was founded by Phil Knight and Bill Bowerman. All Star. design.2 Footwear Lower cost footwear is expected to outperform higher end items. 5. As sports related apaprel is expected to outperform. Nike means “Goddess of Victory”. and manufactures golf clubs and ball worldwide including accessories golf bags. Chuck Taylor. Bragano. Company has a reputation of producing top quality products and all products are tested and developed under the vision of the founder that is to make golf easier to everyone. In introducing new products. Cole Haan. many companies will try to enter to this market. shoes. COMPETITORS 6. it should offer significant advantages over previous products not just marketing ploy. Nike also market products under the brand names of Converse. According to S&P Surveys. First quarter of 2008 and 2009 apparel expenditures by consumers decreased. prepared foods.2 Under Armour Under Armour is very popular among young athletes. the categories that are expected to outperform include sports and exercise-based apparel. Hurley International. Umbro.The Cohesion Case With many external factors affecting the growth of the company it is a challenge to create products that the customers “must haves”. shoes and accessories. Nike designs and develops products for many sports and athletic applications. 3 . 6. 6. Positioning “green brands” is starting to become an effective strategy. RECOMMENDATION Adidas Group should establish its Vision to guide its divisions to make the company successful as a whole. Make their products affordable (cost leadership) if possible. THREAT Increase in input cost. and sports hardware producers in the world Increased market position. OPPORTUNITY Expansion in international market Have contracts with famous athletes to boost sales More sponsorship agreements around the world Expanse new market which to fulfil the ‘green brand’ demand WEAKNESS The company doesn’t have a vission A form has an extensive long term debt and high goodwill that could spell trouble to the company in the future. and expensive raw materials Significant wage cost pressures Fluctuations in exchange rates Existence of competitors such as Nike. its divisions include Adidas..The Cohesion Case 7. Decreased in overall company’s financial performance. TaylorMade.) or decrease their cost to gain a higher profit margin. Rockport and Reebok-CCM Hockey Several promotion partnerships around the world 141% increase in net cash from operations. Create products that are in demand now like environment friendly products. Reebok. Create products that the customers “must haves” to gain wider market and for company’s survival and growth. Should minimized their long term debt and focus on company’s productivity and profitability. Under Armour. Must increase their revenue (by adding marketing efforts and etc. Decreased net sales for 2009 Decreased net income attribute to shareholders in 2009 Inventories and net borrowing were too high. 4 . to abreast the current trends of the market. if not they can focus on making superior quality or unique products (product differentiation). and Callaway Golf Global economic crisis Imitations / Counterfeits Change in trends 8. apparel. SWOT ANALYSIS STRENGHT Sponsors some of the largest sporting events in the world such as the FIFA World Cup One of the top athletic footwear. 30% decreased in net income. AG needs a clear three-year strategic plan to compete effectively with rival and new firms that trying to enter in this market.The Cohesion Case Should accept he partnership with another company such as Armani Group due to the fact that sport-related products with fashion style designs are more exciting and interesting especially for youth market. Giorgio Armani (one of the leading fashion and luxury goods group in the world) and Reebok International Ltd. and currently-devaluation effects related to Russian ruble. has announced a multiyear-global alliance to create special collection. 5 . CONCLUSION Athletic shoes are still the heart of Adidas’s business but the company’s 3 stripes logo appears on apparel and other sports accoutrements. and Gross Profit Margin dropped to 45.. AG reported a third-quarter 2009. AG’s decreased in currency-neutral sales by 7% due to the fact that growth in the Sport Style division could not offset declines in major sports categories of Sport Performance division. 6% decreased in revenue.3% from 49% due to higher clearance sales and input cost. Company today has more than 1150 retail location and thousands of distributors. Adidas has many contracts with famous football and basketball athletes. combining active lifestyle with sport and technology. 9. Moreover.