What Happened to Adidas in 2009?

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At the beginning of the year 2009, Adidas Company marked the first quarter by closing its European and Asian headquarters as a result of a sharp drop in its profits.

Herbert Hainer, the CEO and Chairman of the Adidas Group, claimed that this would go a long way in ensuring that great savings would be achieved. In the description of the restructuring process, there has been a new creation of the organisational structure aimed at yielding some long-term developments in the company. In the restructuring process, the aim of the company was to get closer to the consumer through its products.

The company sought to develop new levels of management in its structure, where different initiatives would be developed to come up with more effective sales strategies. This restructuring was also meant to look at key markets, in which a global retail market structure would be adopted to enhance financial gains. Lastly, the company sought to have a € 100 million as its annual savings for all the costs incurred (Barton 2).

These restructuring processes were of importance in the financial aspect and business situation. As with the creation of a structure in the organisation, this would enhance realignment in the business. In turn it would report Adidas efforts to successfully compete with the international markets, albeit in a challenging environment.

A joint model with Reebok has been established to restructure the company’s strategy, which has made it possible to achieve synergy. It is through such collaboration that Adidas products have found their way into foreign markets throughout the world. With this strategy, the consumer and the company are in a good relationship. In addition, this has made finances in the company gain increased significance due to increase in volume of sales.

The Chairman of the Adidas Group firmly states that adopting some game changing structures, such as collaborating with other companies, has the potential to refine their business, which is a core task in bringing the consumer and the Adidas brands closer. The first quarter had reported a drop in sales. Therefore, to the business, it was necessary to seek new ideas in an aim to eliminate any unnecessary cost that would in turn contribute to business success.

To adopt a restructuring process that would be flexible and effective, Adidas (in partnership with other companies such as Reebok) came up with a joint operating model in European and American. With this strategy, major markets have been accessed with less difficulty. Through this form of collaboration, either partners remains as a single entity, but with renewed strength in its financial sector.

Complexity reduction is another restructuring strategy at Adidas Group, where simple products have been greatly accepted in the society. This, in turn, increases the volume of sales.

With the above initiatives, a better and healthy business environment has been achieved and financial sustainability will be achieved in the long run. One of the financial and business reasons that influenced restructuring at Adidas was to save on cost of up to € 100 million. Through this, the company expected € 1.8 billion of its annual sales (Beaudry and Groves 2).

Another reason was to reduce the regional offices to retail shops, which would bring the consumer closer to the company. Avoiding subsidiaries in the company would contribute to the cutting on costs and an increase in revenue.

The business restructuring observed in 2009 was primarily through management. It reported an increase in the company’s revenue and healthy financial reports. With the elimination of regional office, there has been a strong bond resulting from an interaction between global organisation and the local markets.

This holistic approach is still being adopted, especially with an increased market speed supported by technologies that are connecting Adidas Group to the rest of the world. In the process of restructuring the company’s own retail business, there is evidence of improved growth in retailers.

For instance, this has motivated Adidas Group to appoint a Chief Retail Officer with the responsibility of managing the company’s products (Barton 4). The development of a new organisational structure in different departments such as Finance and Information Technology has enhanced sharing of services. In addition, it has cut on costs, hence a good way of financial saving.

The collaboration between Adidas Group and other companies such as Reebok helps the company to identify different synergies. In fact, this is achieved through restructuring process where clear strategies have been developed. With these strategies, company and employees interests have been considered. Synergy has brought about success, with all the strategies under implementation being handled and planned adequately. Through this, a lot of cost is saved due to collective sharing of responsibilities.

There is much creativity derived from synergy and through integration, restructuring and dependency, the group has adopted a corporate culture that has helped in achieving its financial and business goals. Synergy has also been a good way of creating sustainability because it has brought about a strong relationship between the company and its material suppliers and stakeholders. This restructuring strategy of having supportive members in the group has the effect of achieving collective performance.

Works Cited

Barton, Elena. “Adidas Aims For Brighter Half.” FN: Footwear News 65.31 (2009): 4-1. Print.

Beaudry, Jennifer and Ellen Groves. “Adidas Plans Restructuring.” FN: Footwear News 65.18 (2009): 2-1. Print.

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What Happened to Adidas in 2009?

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