The business sector for a long time has recognized the significance of marketing strategies in the overall success of any organization (Andreasen & Kotler 2003, p. 3; Claycomb, Germain & Droge 2000, p. 219).
The sport sector has not been left behind either and is beginning to embrace strategic marketing as well. Marketing strategy is a process by which companies can maximize great opportunities to enhance sales and attain sustainable competitive advantage using the available scarce resources (Kriemadis & Terzoudis 2007, p. 29-30).
The success of the Adidas Company is accredited to the ethics and laurels of its founder, Adolf Dassler. Dassler who is a veteran and founder of the Adidas group , started producing foot wares out of limited resources available in Germany after the first world war and had a very simple dream for his company: to supply athletes with the finest suited foot ware for their respective sports (Kriemadis & Terzoudis 2007, p. 29).
The simple vision was followed up by three guiding principles: Producing the best foot ware for the requirement of different sports, protection of the athletes from injury, and durable products that can withstand all weather conditions. Original Adidas products were designed for soccer and track activities which were common in Europe during that time (Kriemadis & Terzoudis 2007, p. 30).
The biggest rival of Adidas is Nike, which controls a third of the global market in sports ware, considerably higher than Adidas. In addition, there are other small rivals in US and Europe such as Asics, Puma and New Balance. In Asia we have Li Ning, which is China’s largest sports shoe company. All these companies are hoping to conquer Adidas market share, but with more advanced marketing strategy, Adidas has been able to counter all of its rivals (Kriemadis & Terzoudis 2007, p. 30).
Global Sporting Apparel and Footwear Market
The substitutes for Adidas products come from the rival companies that are spread across the globe. The price margin between these companies is small and consumers can switch to different products with ease (Kriemadis & Terzoudis 2007, p. 32).
Athlete foot ware being the most premium product, these companies focus more on the quality and durability of sports shoes since consumers are also looking for good quality and value for their money. In addition, large rivals such as Puma and Nike, substitutes for Adidas products particularly in the apparel market. Three quarter of the world athletic apparel market and about 20% of the global shoe market belongs to localized companies (Pulendran, Speed & Widing 2003, p. 478).
The common barrier for new entrants into the global sporting apparel and footwear market is the massive economies of scale required for production, distribution, research and development among other operations. Entering this market calls for enormous capital investment for developing and promotion of highly innovative products (McDonald 2002, p.3).
In addition, most consumers are looking to buy high quality products from reputable companies that already have strong brand names. Creation of company with highly innovative products and strong brand name in the global market takes a very long period of time, thus makes it very hard for new entrants to survive in this industry (Dibb Farhangmehr & Simkin 2001. P. 410; Kriemadis & Terzoudis 2007, p. 29).
Consumers possess the bargaining power and can always switch to rival products when forced to. Therefore, the global sports apparel and footwear market is characterized by low price margins and highly innovative products of both small and big manufacturers. Consumers have numerous brand names to choose from, with large price variations. The market also lacks complements, thus consumers have higher bargaining power because they are not tied to specific products (Claycomb, Germain & Droge 2000, p. 221).
The suppliers bargaining power is also high, since they sign contracts with famous sports personalities and clubs (Manchester united, AC Milan, New York Yankees, Christiano Ronaldo) to promote and advertise their products.
However, famous sports personalities and clubs in most cases dictate the terms of the contract, consequently increasing the suppliers bargaining power. In addition, there is a strong competition in signing contracts with famous sports events, such as Olympic Games, FIFA World Cups among others, which also increases the suppliers bargaining power (Kriemadis & Terzoudis 2007, p. 31).
Marketing Strategy of Adidas Group
Adidas group uses numerous marketing strategies to place its products into the global market. Some of the strategies used by the Adidas group have already been mentioned in this paper. They include focusing on big events such as Olympic Games, EUFA Champions Leagues, and FIFA World Cups through acquisition of right of sponsorship. In addition, the group has entered into sponsorship deals with big clubs and famous sports icons worldwide (Andreasen & Kotler 2003, p. 4; Kriemadis & Terzoudis 2007, p. 32).
The group also emphasizes on friendly takeovers of other brands to increase its market strength and gain competitive advantage over rivals such as the takeover of Reebok Company in 2005.
Reebok endorsement boosted Adidas group marketing strategy by adding names of American sports and entertainment celebrities such as Christina Ricci (Hollywood Actor), Yao Ming (NBA Star), JZ ( Hip-hop star) among others. This deal added American Sports Leagues into Adidas group exposing its products further into the American market (Kriemadis & Terzoudis 2007, p. 33).
The company has entered into partnership with Samsung in manufacturing products plus phone scheme that applies wireless biometrics to exhibit information on Adidas-branded Samsung gadgets. Additionally, packaging of footwear with other products such as clothes, eyewear, balls among others creates balance for Adidas.
Furthermore, Adidas sells products which have been signed by famous sports personality and clubs they are in contract with to create a further complement. Technology used in making Adidas clothes for instance Climacool, creates extra complement that attracts consumers globally to Adidas Climacool products (Kriemadis & Terzoudis 2007, p. 32; Claycomb, Germain & Droge 2000, p. 219).
Advanced Marketing strategies of Adidas Group
Product Branding
These are the new strategies Adidas Company have undertaken to build a steady brand image and promote brand value among its diverse brand names to expand its market share among different consumer demographics. Adidas Company has strong reputation for incorporating technology on its product line.
The company is planning to build on this reputation by introducing new product lines that incorporates advanced technology to improve the performance of athletes. For instance, introducing athlete shoes with embedded microprocessor to monitor measures and provide data on the athlete’s body, terrain and body impact. The weight of the electronic gadget will be minimized so as to maintain athletes comfort. The company plans to make this gadget reusable in shoes using similar generation of electronics.
The electronic gadget will also incorporate GPS system for tacking distance and location plus a USB link to the PC. The issue of cost will be very insignificant since Adidas has already developed Adidas 1, which incorporates a microprocessor. The innovative nature of Adidas products has helped the Adidas brand to maintain its technological prowess in the global market (Kriemadis & Terzoudis 2007, p. 33; Dibb Farhangmehr & Simkin 2001. P. 411).
Adidas group has placed a lot of focus in rebranding the image of acquisitions such as Reebok Company. Since the acquisition, Adidas has benefited massively from Reebok and more gains can be realized from its efforts to rebrand Reebok to a highly fashionable line of products for multi-use and active lifestyle.
The group is working hand in hand with the leading fashion designers to develop products that are highly fashionable for active and casual use. Rebranding has made Adidas gain immense inroad with the female consumers. Majority of the female consumers desire products that powerfully incorporate fashion, comfort and functionality. Female consumers have always remained an untapped market segment (Claycomb, Germain &Droge 2000, p. 22; Kriemadis & Terzoudis 2007, p. 33).
Despite of Nike being the number one sportswear company in the world, the re-branded Reebok Company dictates majority of the market share in Asian markets especially in India. “The prime strategy of Adidas is to associate itself with the cricket frenzy consumers in India” (Kriemadis & Terzoudis 2007, p. 34). While Nike spent most of its resources promoting its brand through international sports celebrities, Adidas concentrated on localizing its brand by utilizing local machinery and people
Product Differentiation And Positioning Strategy
Adidas is also putting a lot of emphasis on the emerging new markets in Asia and Latin America. Adidas has already beaten Nike in some of the Asian markets such as Japan and India and are divided over the Chinese market. The group has also seen the rise in its sales volume in Latin America. Adidas group has been achieving this by collaborating with the local apparel manufacturers, sports clubs and sports personalities.
These collaborations have enabled them to easily acquire vital information of different market segments. For instance, in China most of the commercials and advertisements include the Chinese-American Basketball icon Yao Ming who has enabled the Adidas to gain inroad among the Chinese Youths.
Adidas is also working with the local sports like soccer, Rugby, and basketball among others to develop local interests in sports. Initially, such gestures do not create a lot of buyers, but in the long-run it generates interests in sports and markets Adidas brands (Kriemadis & Terzoudis 2007, p. 34; McDonald 2002, p. 6).
In the Asian market especially India and Pakistan, Adidas has developed low-cost products to fit the middle class consumers. In these markets Adidas group has a high reputation in producing high quality products at a low price (Pulendran, Speed & Widing 2003, p. 478).
Adidas focuses a lot in designing high quality products for the favorite sports in each market segments. For example, in India the company has concentrated in making cricket gears allowing it to grow in popularity among the local athletes and consumers (Kriemadis & Terzoudis 2007, p. 36; Dibb Farhangmehr & Simkin 2001. P. 412).
Sustainable competitive advantage
Adidas group has incorporated technology and innovation in the sports apparel and footwear to enhance performance of the athletes. Rebranding of its acquisitions’ products such Reebok has not only increased Adidas reputation but also its marketing strength.
Collaboration between Adidas and the fashion designers helped Adidas to gain major inroad among the female and the youthful consumers, thus enhancing its competitive advantage over its major rivals. Exploration of the emerging markets in Asia and Latin America has increased global Adidas market share and seen its revenue grow exponentially thus indicating that it has a sustainable competitive advantage.
Conclusion
Adidas has gained considerably a large market share in the global apparel and footwear market; this has been achieved through adoption of advanced marketing strategies. These marketing strategies have enabled the Adidas group to gain greater reputation and competitive advantage over its rivals in the foot ware industry.
References
Andreasen, A.R., & Kotler, P. (2003) Strategic Marketing for Nonprofit Organizations.
6th ed. Englewood Cliffs, New Jersey: Prentice Hall
Claycomb, C., Germain, R., & Droge, C. (2000) The effects of formal strategic marketing planning on the industrial firm’s configuration, structure, exchange patterns and performance. Industrial Marketing Management, 29, 219-234
Dibb, S., Farhangmehr, M. & Simkin, L. (2001) The marketing planning experience: UK and Portuguese comparison. Marketing Intelligence and Planning, 19 (6), 409-417
Kriemadis, T., & Terzoudis, C. (2007) Strategic Marketing Planning in the Sport Sector. Sport Management International Journal, 3(1), 27-45.
McDonald, M. H. B. (2002) Marketing Plans: How to Prepare them; How to Use Them. 5th ed., London: Prentice Hall
Pulendran, S., Speed, R. & Widing, R. E. (2003) Marketing planning, market orientation and business performance. European Journal of Marketing, 37(3), 476-497
Adidas is one of the leading manufacturers of sportswear, footwear, toiletries and sports equipment. It sponsors many sports teams including basketball, tennis, rugby, and gymnastics football. It is based in Germany where its founders originated. It trades with many countries across the globe as it can be ranked among the largest manufactures of sportswear. They include Portland, the United States of America, Spain, Australia, South Africa, Japan, UK and Taiwan. These may be distributors, subsidiaries, branches or licensees. Knowledge on the particular law that applies in the contracts undertaken is important as Adidas deals with many countries. It happens because any disputes that may arise from payments or other terms of contracts need to be solved legally.
There are various legal systems that are used internationally. There is the common law and code law. Common law is based on case law. It works in cases when issues have to be taken to court and each party is given a chance to defend themselves even though it may seem clear who the guilty party is. On the other hand, code law is based on codification and it is related mostly to civil law. Most countries use both legal systems as civil law may be applied in some cases and common law is applies in others. Common law is practiced in the US, UK, India, Pakistan, Hong Kong, and Australia. Code law is practiced in Brazil, China (with some exceptions), Japan, Mexico, and Russia. There is Generally Accepted Accounting Principles (GAAP) that guides companies in accounting matters. On international contracting the law that applies in a contract is determined by the contract terms as agreed. An aggrieve party can sue the company in the home county where the particular law is applied (Hood & Young 1979).
Culture and Adidas Company
Diversity in international accounting is depicted in the following areas; legal systems, taxation, inflation, political and economic systems and culture. A company’s culture will influence the way international ground rules are drafted and administered.
“Organization culture is the set of important values, beliefs, and understandings that members share in common. Culture provides patterned ways of thinking, feeling, and reacting that guide decision making and other activities of organizational participants” (Kast & Rosenzweig1958)
Culture will affect the way the financial rules are drafted and implemented in Adidas. There may be the GAAP but Adidas may have drafted their own guiding standards that will be applicable. This may cause differences especially in reporting and handling assets, disposal, warranty, revenue recognition and bad debt management. This may impact their overall financial statements. In revenue comparisons with other competitors like Nike, they may be in the same level but have a big margin due to the reporting structure by Adidas. The analysis and interpretation of financial statement may differ, too. There are nations that may be conservative and those that may be more open to give information on their performance and financial positions in countries that Adidas trades with; this will ultimately affect the way Adidas trades. There may be need to employ people who are conversant with this cultural diversity among nations (Burnes 2004).
These cultural differences cause problems that may relate to various issues like quality standards. Accounting principles on disclosure; measures and recognition placed on several issues are of significant consideration in this endeavor. It may need to be expressly stated in contracts what will be applied to avoid disputes that at times may take longer to solve. This may cause delays in business transactions and animosity between trading partners (Doupnik, 2007).
References
Burnes, B. (2004). Managing Change: a strategic approach to organizational dynamics. Essex: Prentice Hall Publishers.
Doupnik, S. T., Perera, M. H. B. (2007). International accounting (3rd ed.) Boston, Mass: McGraw Hill publishers.
Hood, N., & Young, S. (1976). The economics of multinational enterprises. London: Longman Publishers.
Kast, E. F., & Rosenzweig, E. J. (1985). Organization and management: a system and contingency approach (4th ed.). McGraw-hill Inc.
Strategies used in acquisition are vey important because they help the acquiring company to make maximum benefit out the acquisition deal. Before entering into any acquisition deal it is important for the company to consider its resources, future market opportunities and its targeted consumers and their reactions (Roy 2004).
In this paper we explore two companies which have been involved in acquisition and how it has strengthened their resources and competitive advantage in the market. The companies explored are Adidas in footwear industry and Hp in computer industry.
In 1970s Adidas; a sports company based in Germany was leading in market in the United States of America because of innovations in its products. Through aggressive marketing Nike became the leader in market which triggered the merge of Adidas and Reebok in 2005.
Adidas expressed its desire to acquire all Reebok’s outstanding shares (Antal-Mokos 2009). These two companies have managed to pull together their resources to create new sporting products and also to explore new markets especially North America. The merge raised the value of the two companies to $12 million (Antal-Mokos 2009).
Adidas- Reebok merger has also maintained sustainable competition ability by merging their different competencies. Adidas is a well known strong brand with high performance. On the other hand Reebok has a great conscience for fashion which makes it preferred brand by urban purchasers’.
By acquiring Reebok, Adidas takes advantage of the two ideas without compromising the image of the two brands (Antal-Mokos 2009). The merger allows Adidas to venture into lifestyle market. Adidas also has managed to improve its competitive advantage by involving the youth through music and sports. Combining Reebok’s lifestyle shoe brand with high performance and technology Adidas brand creates a main attraction to youths thus keeping a sustainable competitive advantage in the market.
In order to keep up its competition with other brands, Adidas will boost distribution of its brand in North America where Reebok dominates thus venturing into new market (Antal-Mokos 2009).This idea increased its sales in North America hence remaining at the top of competition. Adidas and Reebok are well known brand names hence their good reputation has helped in building a firm competition base.
Hp has benefited a lot from its merge with Compaq in 2004. It has strengthened its human resources by involving the Compaq’s human resource. Merging these two great work force ensures that the company meets its objectives. The company has over 150,000 in more than 170 countries which makes its consumer base strong (Roy 2004). This has led to increased revenues for the company due to its venture into new markets.
Acquisition has helped Hp to be the leader in computer industry through diversity. Considering both Hp and Compaq are strong brands, they produce wide range of products, both computer hardware and software. This ensures that all customer needs are met hence making its products the desired choice compared to its competitors.
This has enabled Hp to acquire a sustainable competitive advantage (Roy 2004). Another idea that enhances its competitive advantage is Hp brings professionals from different parts of the world together, which in turn improves the creativity and innovative power of the company.
As a result new, improved and reliable computer products are generated. A strong employee base ensures that there are Hp professionals in geographical locations hence improving its customer care.Combination of factors such as customer satisfaction, innovation, creativity, products reliability and services ensure Hp’s enhanced competitive ability (Roy 2004).
In conclusion, we realize that acquisition can be a revival tool to the companies operating at loses. In his paper we have seen how acquisition boosts the revenues of companies as well as their ability to compete with others.
References
Antal-Mokos, Z. (2009). Managing Mergers and Acquisitions. The global business handbook: the eight dimensions of international management, 123.
Roy, P. & Roy, P. (2004). The Hewlett Packard-Compaq computers merger: Insight from the resource-based view and the dynamic capabilities perspective. Journal of American Academy of Business, 5 1, 7-14.
The restructuring of Adidas was primarily aimed at eroding the market share of Nike. This plan involved the acquisition of companies whose products could be aligned with those sporting goods that were offered by Adidas.
However, this approach did not achieve the synergy among businesses because Adidas could not raise its effectiveness or improve the quality of products.
To a great extent, this plan failed to differentiate the products of Adidas. One may examine the differences in performance between various business units of Adidas in order to elaborate this response.
Overall, the management of Adidas was extremely concerned about the growing market share of Nike that clearly became the leader of the sporting goods industry. In response, Adidas attempted to diversify its products and acquired such companies as Solomon and Reebok.
However, the new divisions did not consistently display good financial results. For instance, many consumers were disappointed with Reebok’s failure to improve quality and styling of its products. As a result, its revenues declined during the period between 2007 and 2008.
The main problem is that these acquisitions did not add much value Adidas. More likely, they made the company more vulnerable, especially at the time of the global economic recession.
In this case, much attention should be paid to the process of differentiation. The management of Adidas had to show that their company could offer products which were superior to those ones of Nike in terms of quality or price.
However, they did not pay much attention to this issue. This is why Adidas failed to become more competitive than Nike and their restructuring plan did not make the company more efficient.
Adidas Group, commonly known as simply Adidas, is popular all over the globe for its sportswear, footwear, and sports-related merchandise. Except for garments, the company produces and sells accessories and hardware equipment such as gloves, balls, bats, timepieces, bags, etc. The range of the products is wide enough to attract numerous customers with the most diverse tastes. Because the company has designed several lines of apparel and footwear, including Adidas Original, Porsche Design, Stella McCartney, it contributes to winning customers with various financial statuses. Adidas is a fast-growing company. Its revenues and net savings are constantly growing (Adidas Group with stellar financial performance in Q1 2016, 2016).
Adidas owes its financial success to the focus on the customer and high level of service quality except for the large assortment of goods and working on innovations (Lose control, gain love – speed factory, 2015).
The motivation for choosing Adidas for the company analysis is the fact that the United Arab Emirates has not become an exception in the trend of loving the company. In 2013, Adidas overtook Nike and became the most wanted sportswear brand in the UAE. The company does not want to stop at increasing its popularity and plans to open even more own-brand stores and keep on expanding its market (Euromonitor International, 2014). Such spectacular performance raises the question: What is the key to the company’s success?
The methodology of the Analysis
The primary objective of this task is to conduct the company analysis of Adidas in the United Arab Emirates. The focus will be made on the reflections of the employees, managers, and customers regarding the performance of the company. The survey is designed to have two phases, which will be interconnected. The first stage will cover the speculations of the Adidas employees and managers on the performance of the company with the special attention to challenges they face in their activities, the company’s philosophy regarding the quality of its goods and services, and, finally, how the company in the face of its employees and managers sees its customers.
The second phase of the investigation centers on the customers. Its primary goal is to determine whether there is a connection between the theory and practice, i.e., between what was said by the employees and managers and how it is implemented to reach higher levels of quality and customer satisfaction. That said, this two-stage research aims at determining whether Adidas is successful in incorporating such concepts as service quality, timing, anticipation, and communication in its business activities and what is the level of satisfaction with its service delivery strategy.
This survey will deploy individual interviews as a major tool for obtaining the required information. Interviews have proved to be effective for gathering the most relevant data when it is necessary to analyze individual perceptions of particular situations or phenomena (Myers, 2008). Nevertheless, it is vital to assure the interviewees that they will be guaranteed confidentiality in order to make them feel comfortable and be honest in their responses. So, before conducting interviews, all respondents will sign consents.
The first stage of the survey will involve ten individuals, including Adidas employees and managers. The justification for such a choice is to review the internal perceptions of the company’s performance. The focus will be made on guaranteeing the interviewees’ anonymousness. That is why they will be invited and interviewed separately. The interviews will be conducted in an unofficial atmosphere to hint at the respondents’ openness.
Because of the limited time and resources, the sample for the investigation will be relatively small. As it was mentioned, it will include ten respondents. The interviews will be made up of five open-ended questions, which will be broad enough and cover several topics of interest. In addition to it, they will be supplemented by the questionnaires, which will be deployed for gathering some general information regarding the respondents. The open-ended questions are as follows:
What is the philosophy of Adidas concerning service quality?
How do you view customers?
How does the company’s strategy incorporate timing, communication, anticipation, and service quality?
What are the main challenges you face when working with the company and the customers?
How would you improve the performance of your company?
The questionnaires will include several questions such as:
How old are you? Please, choose one of the options below:
18 – 24 years old.
25 – 34 years old.
35 – 44 years old.
45 – 59 years old.
Older than 60 years.
What is your gender? Please, choose one of the options below:
Male.
Female.
What is your occupation in the company?
Shop assistant.
Manager.
HR Manager.
Other (please, specify).
What is the level of satisfaction with working for Adidas in the light of organizing workflow and service quality philosophy?
High.
Medium.
Low.
Hard to say.
The second part of the investigation will focus on the company’s customers. The number of interviewees will be ten as well as in the case of the first stage. These respondents will be chosen among those attending Adidas retailer stores located in different shopping malls. The justification for such a choice is to guarantee the diversity of the sample. The primary objective is to find out the external perception of the company. All the rest conditions for conducting the interviews are preserved. The list of the open-ended questions will include the following ones:
What have you heard about the Adidas philosophy regarding service quality?
How do you view the performance of the employees?
How satisfied are you with the quality of communication and timing at Adidas?
What do you think should be improved in the company’s philosophy and strategy of delivering services?
What were the main challenges you faced when dealing with the employees? What have they done to overcome the barriers?
The questionnaires will include the following questions:
How old are you? Please, choose one of the options below:
18 – 24 years old.
25 – 34 years old.
35 – 44 years old.
45 – 59 years old.
Older than 60 years.
What is your gender? Please, choose one of the options below:
Male.
Female.
How often do you shop at Adidas? Please, choose one of the options below:
Once a week.
Twice a month.
Once a month.
Once a season.
Once a year.
Other (please, specify).
What do you usually buy at Adidas?
Footwear.
Apparel.
Accessories.
Swimwear.
Other (please, specify).
What is the level of your satisfaction with working for Adidas in the light of organizing workflow and service quality philosophy?
High.
Medium.
Low.
Hard to say.
Results of the Interviews
The interviews have demonstrated that the responses to the questions were, for the most part, similar. It is beneficial for conducting the analysis. However, it raises the issues concerning the sample and its sufficiency. Nevertheless, most respondents among managers and employees stated that the foundation of the company’s service quality philosophy is the focus on the needs of the customers and finding the individual approach to satisfy them.
The consumers’ interests and comfort are taken into consideration when developing new products and introducing new lines of apparel. The customers are seen not only as the source of financial success and the foundation for increasing revenues but also as the inspiration to move forward and improve performance. The company’s philosophy incorporates timing, anticipation, and communication to meet quality requirements.
The primary idea is consumer-centrism, which means that timing should be comfortable for the customers, employees should be communicable and welcoming, so that the customers always want to return to the store, and all the expectation regarding the service of quality are met. The main challenges faced in delivering the services in the language barrier. Because the United Arab Emirates is attractive to tourists, both managers and employees find it necessary to involve either multilingual managers or interpreters to improve the quality of services. Except for this detail, the employees and management are satisfied with the level of service quality.
However, they believe that opening more brand stores across the United Arab Emirates would be beneficial not only for the company itself but also likable by the customers because they would always have their favorite sportswear store close enough. The findings also have shown that males aged 25 to 44 years old are primarily employed by the company. Their occupations are either managers or sales assistant. However, it can be described by the specificity of the sample. Finally, they are satisfied with being employed by Adidas because they see that their work benefits the company, i.e. the level of motivation is high, and makes the customers happy.
Speaking of the customers, the interviews have shown that the customers are not interested in investigating the philosophy of the company. They are interested in being sure that their needs in high-quality products are satisfied and the level of the employees’ communications skills is high. They view the performance of the employees as satisfactory except for the fact of one case of language barriers. However, the employees managed to solve this problem because the manager was multilingual.
The primary finding is that the people want to see more stores across the United Arab Emirates. Except for this detail and coping with the language barrier, no significant improvements were proposed. Customers are satisfied with the timing policy and their expectations are always met. In addition to it, the interviews have shown that the age variety of the customers is wide and there is no particular trend in gender or age. For the most part, people are interested in buying footwear. However, other products are also popular, and they shop at Adidas at least once a month.
Analyzing the Responses
The results of the survey demonstrate that there were a lot of similarities in the responses of both the company’s employees and it customers. This finding might mean that either the sample was too small or the company is successful in following its consumer-centered policy (Ind, Iglesias, & Schultz, 2015). Nevertheless, analyzing the obtained information makes it possible to reach the following conclusion about Adidas: the level of customer satisfaction is high because the timing and communication skills of the employees have received positive feedbacks.
Regardless of the fact that the customers have not heard anything about the philosophy of service quality, they feel that it is well-developed and thoroughly designed because they recognize that the store workers, as well as the company as the whole, focuses on their needs and the employees and designers do their best to meet all expectations. That said, the level of service quality, i.e. the correlation between expectations and performance, is high.
Recommendations
The results of the interviews demonstrate that the level of service quality of Adidas. Nevertheless, there are still some recommendations to enhance the company’s performance in the United Arab Emirates. First of all, because the country is attractive to tourists, the company should make sure that the language barrier is not a significant challenge. This problem can be solved by employing multilingual managers, who know the most widely spoken languages such as English, French, Spanish, and Russian.
Moreover, Adidas should not stop at expanding its influence in the UAE sports market and follow the plan of opening more brand stores, which should be located not only in the shopping malls, but also in separate building. This step might help solve the issue of the requirement to comply with the mall’s timing policy. For example, it might be a profitable idea to open all-day store. Finally, the company should focus on maintaining high levels of employees’ motivation because these are the employees, who build up the successful future and attract customers.
Adidas used to be the most dominant sportswear manufacturer in Europe. This success it achieved through production of performance-geared shoes.
High profile athletes in both track athletics and soccer used these shoes, making their fans want to be associated with them. Many athletes have shown just how much they trust Adidas shoes, for it has helped them achieve high performance. Sportswear is currently the replacement for casual clothing for the youth.
Kang and Esterl (2006) noted that, in the manufacture and sale of sportswear, Adidas has a market share of 22%. It is trailing behind only on competitor, Nike, which has a market share of 33%. Adidas has developed a new strategy that combines marketing and technology. This strategy together with its focus on innovation has significant objectives that are supposed to steer Adidas ahead of Nike in terms of market share.
The purchase of Reebok by Adidas in 2005 has also started to yield positive results in terms of market share expansion. They have taken over emerging markets in Latin America Asia ahead of Nike. On top of that, Adidas is concentrating growing its image as sportswear and general clothing manufacturer. This will help in its ambition of being a head of Nike in the sportswear industry.
Adidas is also bringing new products in the market, most of which counter Nike’s already released products. Adidas-score is one such product. This product will be launched in the United Kingdom next football season. Marketing strategies are in place, and these are geared towards making Adidas-score a household brand. Football fans are the target market for Adidas-score. Marketing strategies target these fans.
Introduction
Adi Dassler is the personality who created the German brand, Adidas, in 1949. According to Jobber and Fahy (2009), “the company was built based on three principles: creating the best sports shoe, protecting athletes from injuries and offering them a durable product” (p.245). Adidas group prides itself in making the customer their primary focus.
After World War I, Dassler (as a teenager) dedicated his time helping his family create slippers from damaged military bags. He then consulted doctors, and coaches in designing shoes for a given sport. Athletes loved his shoes, making them be used in Olympics in the decade that followed.
According to Haig (2004), “Dassler was not just a good innovator. He also had a brain for marketing. He knew that if Adidas would have completely different shoes for different sporting activities, there would have to be an element of unity. In 1949, he came up with the idea of putting three stripes on the side of his shoes, so everyone would be able to tell they were Adidas just by looking at them.
It was not until 1996, however, that the three stripes became the Adidas corporate logo” (8). The legacy of Dassler is still alive to date, and the company still focuses on the performance aspect of the products it produces. Adidas over the years has transformed from manufacturing shoes into all sportswear. Its market has also transformed from sportswear to fashion of the world.
Between 1980 and 1990, Adidas was hard hit by financial difficulties and commercial problems. This made it be overtaken by Nike, a sporting product manufacturing company, which was formed in 1970. Nike is currently Adidas’ key competitor in the manufacture of sportswear. Adidas recovered from this financial crisis, and in an effort to regain its dominance, it purchased Reebok in 2005.
Capon (2008) stated that Adidas focuses on leading sporting activities in marketing its products. It is an official sponsor of the World Cup. Adidas also sponsor sports personalities individually. David Beckham, a famous footballer, is one such personality.
He is the Adidas spokesperson and has a lifetime contract with Adidas that is worth $161 million. The American based basketball star, Tim Duncan is also a beneficiary of such sponsorship.
SWOT analysis
Adidas has been in the sporting market for many years. It has been operational for more than 60 years since its inception. This will make the Adidas-score have a solid background before launch. Adidas’ leadership in the market (about 22%) will make also give the new product, Adidas-score an advantage in its launch.
The brand, Adidas, is a strong brand already. The new channel of production in the name of Adidas-score will be readily accepted as football fans are the target market. The distribution chain of Adidas is vast in the United Kingdom. It has retail outlets at strategic positions in the UK. Adidas-score will thus not have trouble in storage and distribution.
Adidas has been experiencing financial difficulty since the 1980’s. This is a crucial setback because the management is not sure whether there will be enough cash to implement a marketing strategy of Adidas-score. Adidas is also associated with Germany as it is a German-based company.
German products are not that welcome in world markets. Other nations especially the United Kingdom have residents who naturally shun away goods manufactured in Germany.
In the United Kingdom, women are not greatly catered for in terms of sports. Anon (2004) reported that there was an increase in the number of women interested in sport, in the United Kingdom. Adidas-air thus has a good opportunity to design a female version of Adidas-score boots.
Adidas can form mergers with the local shoe retailing firms in the UK. This will help boost distribution. These retailers also have loyal customers who will be introduced to the Adidas-score.
Major threat of Adidas-score is competition. Nike already has a version of this shoe in the market with the name “Nike Total90 Shoot III”. This is a threat because the market share of Nike is about 10% more than that of Adidas. Another threat is taxation.
Being German-based, the UK government may increase the tax just to target Adidas. Lastly, price war between Adidas-score and Nike Total90 Shoot III that may be initiated by the launch of Adidas-score will be a setback.
Marketing mix
The product is Adidas-score, a variation of the Adidas boots on the current market. These boots are introduced to offer a variety to the consumers. A key factor that will influence the price of Adidas-score is the price of Nike Total90 Shoot III, which is the rival product. Currently, a pair of Nike Total90 Shoot III goes for $40. The price range of Adidas-score will be from $35 to $39 per pair.
Other factors such as changes in consumer buying trends may also affect the price of the product. The place is the United Kingdom. Adidas-air will be sold in all Adidas retail store all over Britain.
There will also be an online order portal, which residents of the UK can use to buy the boots. Delivery system will be in place that takes the shoes to buyers in their respective locations. Promotion campaigns will be via television advertisements.
Much focus in the mix is to provide a price that is lower than that of a similar product in the market. Quality of production will be high. This will make the product sell itself hence reducing promotional campaigns. If the product sell itself because of its robust identity, there will not be a need for promotions.
Microenvironment
Adidas has enough employees in all departments to oversee the successful launch of the product into the market. There are about fifty employees in the marketing department alone. Different departments will work hand in hand to ensure that the product is a success. Target customers of the Adidas-score are male football fans.
This is not a problem because more than 70% of the male populations in UK are active supporters of local football. There is enough supply of raw material that is used to manufacture the product. Competitors like Nike will not be a problem to Nike air because their price is higher than Adidas-score’s launch price. This move will instead intimidate them and make consumers go for the cheaper version of the same shoe.
Digital strategy
Digital strategy is a business strategy that employs the application of information technology. Ofek and Wathieu (2010) noted that, “digital products and services are playing an increasingly central role in consumers’ everyday lives” (para. 1).
Manufacturers should take advantage of information technology while marketing. There are numerous digital marketing media channels. These include websites, voice broadcasts, cell phone text messages, banner ads on websites, and pod casts.
Digitizing Adidas-score
Adidas will roll out a global digital strategy. This strategy will find its base on a few football brand Ambassadors. Because the target market is in the UK, the ambassadors will be chosen from the English premier league. For budget purposes, only five players from this league will represent the new product: Adidas-score.
Recommendations for the players to play this marketing role include Andy carol from Newcastle United, Theo Walcott from Arsenal, James Milner from Manchester city, Wayne Roonie from Manchester United, and John Terry from Chelsea football club.
Janoff (2006) noted that the use of high profile football personality in this advertising capacity has worked well for Adidas in the past. This was in 2008 when Steven Gerald, Ricardo Kaka and Lionel Messi were the ambassadors for the boots famously known as Predator and F50.
Jones (2008) suggested that mobile phone users should have the opportunity to download product show rooms in their handset. These showrooms will display the Adidas-score boots by use of videos and animations featuring Andy carol, Theo Walcott, James Milner, Wayne Roonie, and John Terry.
Football fans should have the privilege to download visitones (visual ringtones), of the selected players, attempt almost impossible football feats. On top of that, this campaign should give football fans the opportunity to send a text message to retrieve information about their nearest Adidas retailer.
They will also be able to access football content, video clips and games branded with the Adidas-score label. The mobile use strategy is part of a larger digital push facilitating football fans to use the Adidas portal. In this portal, there will be videos, photos and information regarding the selected football ambassadors associated with the Adidas-score band.
Sponsorship
Over the years, marketing oriented sponsorship in football has risen to a new level. Manufacturers of different products want their brands to be associated with football. They have made it their business to sponsor clubs, personalities or sporting events.
In exchange, they get an exclusive in advertising their merchandise and making their products famous. Anon (2006) said that the most effective way of attracting the attention of football fans was associating one’s brand with their favorite team. This strategy has proved to be true so far.
Football sponsorship with a difference
One vital strategy that Adidas will employ, in an aim to draw attention to the Adidas-score, is the use of sponsorships. By becoming the official sponsor of the English premier league (EPL), Adidas will have its brand notorious in various broadcasting stations that are associated with the league. This will not be easy to achieve, as the current sponsor of the EPL is Barclays bank.
Barclays bank has been the official sponsor for the EPL for several years. Even though their contract is supposed to end at the beginning of the coming season, there are rumors that renewal of the contract is inevitable.
Adidas should also contend for the same, as it will make the brand a household name for the football fans across England. Gohier (2010) found out that, “Adidas remains the most recognizable sponsor of soccer in Europe’s five largest markets” (para. 4).
Sponsoring the EPL is a robust strategy that will make the media attract attention of the football fans to the products that Adidas offer. Match officials; the referee, his two assistants and the fourth official will all wear jerseys with the Adidas logo and the Adidas-score boots as their shoes.
As part of the strategy, these officials will wear shoes of different colors. This will attract the attention of football fans in England. Adidas may also make it big by re branding the premier league name to: The Adidas-score Premier league.
Other than sponsoring the premier league, Adidas will also sponsor at least five teams in the league. Sponsoring the team would imply that all players of that team including the coach to wear Adidas-score boots in all matches that they play for the team.
These will also be worn in all video and photo shoot sessions and during interviews that require players to wear boots. In so doing, the Adidas-score brand will become famous, and every football fan’s dream will be to own them.
Even though all these sponsorship deals are expensive to implement, their long time goals are far more rewarding. If Adidas successfully capture all aspects of marketing by sponsorship, sale of the Adidas-score will be amplified in the UK. It will take Adidas much less time to market this boot by sponsorship than using any other marketing strategy.
Conclusion
Adidas is the second to Nike in the global market in terms of sportswear merchandise production. They have a long time plan to turn the tables and regain their initial prowess in this. As part of this, they have an ongoing plan to launch “Adidas-score”, a new boot. The main challenge is the strategy to for marketing this new product.
The most significant factor is identifying the target buyers. In this case, males residing in the UK are the most targeted group. They form the majority of the population interested in sports. Then various advertising and promotion techniques are put into consideration.
Adidas will use sports personalities in advertising their products. Key footballers like Wayne Roonie, James Milner, Theo Walcott, John Terry and Andy Carol will be at the forefront of these campaigns. Adidas will actively engage in sponsorship deals with, the EPL, clubs and individual players. This will strengthen the Adidas-score brand, making it a household name.
References
Anon (2004) Adidas. Marketing Week, P.83.
Anon (2006) Adidas unveils details of American strategy. Marketing Week, 29(15) p.6.
Capon, C. (2008) Understanding Strategic Management. London, Financial Times.
Gohier, P. (2010) Nike’s new three-minute ad is the latest in the company’s ongoing effort to beat Adidas at soccer. Maclean’s, 64(2).
Haig, M. (2004) Brand Royalty. London, Kogan Page Ltd.
Janoff, B. (2006) And 1 Marketing Strategy: Make Nike, Adidas Sweat. Brandweek, 47(12).
Jobber, D. and Fahy, J. (2009) Foundations of Marketing, 3rd Edition. New York, McGraw-Hill International (UK) Ltd.
Jones, G. (2008) Adidas plots mobile drive for boot lines. Marketing, (00253650), p.12.
Kang, S. and Esterl, M. (2006) At World Cup, Nike and Adidas Fight for Top Spot. Wall Street Journal, (Eastern Edition).
Ofek, E. and Wathieu, L. (2010) Are You Ignoring Trends That Could Shake Up Your Business? Harvard Business Review.
The global sportswear industry is becoming one of the most competitive industries in the world. One of the main companies that operate in the industry is the Adidas Group. The purpose of this paper is to carry out a strategic audit of the Adidas Group.
The paper has taken a diversified approach of analysis; internal analysis and external analysis. Various models of analyses have been applied in the paper, and they include PEST and the Porter’s analysis.
The analysis was aimed at capturing the strategies of the company and how they help it to adapt to the competitive forces in the industry. The findings from the analysis point out that Adidas is still competitive in the industry. The competitiveness has been enhanced through focus on the global approach of management.
Introduction
According to Slack (2004), the global sports industry is growing at a quick pace due to commercialization of sports. The number of sporting events has been rising each day, thus attracting more people directly and indirectly into the sporting industry. In the contemporary times, the sports industry has a wide number of stakeholders.
The most critical question to ask is what the growth of the sporting industry implies for the business world. The growth of the global sporting industry has attracted many business players in the sporting industry by presenting the opportunity to supply the sporting infrastructure and equipment.
There are a substantial number of companies that deal in the global sporting industry (Andreff & Szymanski 2005). Adidas is one of the companies that have operated in the global sporting industry for an extended period of time.
The Adidas company is a Germany based multinational company that deals in the manufacturing and designing of sporting ware and equipment, which include balls, sporting uniforms and clothes, shoes, sports bags, footwear, watches, and eyewear among others.
The company was founded in the year 1920. However, the main operations of the company can be traced from the year 1948, though there had been a lot of developments years back prior to the decision to open the company.
The global headquarters of Adidas are in Herzogenaurach. Adidas acts as the main holding company for the Adidas group, which is comprised of Rockport, Reebok sportswear company and the Taylor-made Adidas golf company.
The company is considered as the most dominant sportswear company in Germany and the entire Europe, while globally, Adidas is ranked as the second most competitive sportswear company.
The company sells its products in over 200 countries across the globe. Though faced with competition from other companies in the world, Adidas has remained to be outstanding through the continued display of creativity in design and production of its products (Bajak 2010).
External Analysis
As mentioned earlier, there is a growth in the global sporting industry, which has attracted many players in the global sportswear industry in which Adidas operates.
As competition keeps mounting a company should keep investing in its strengths and limit its weaknesses by capitalizing on the opportunities that prevail in the business environment. As the global sporting industry keeps expanding, sportswear companies keep coming up so as to meet the demands and capitalize on the business opportunities in the industry (Slack 2004).
Strengths
The strength of a company within the industry lies in a wide variety of developments. One of the key business initiatives that give company strength and competitiveness in production and the market is the brand of the company. Through the over 64 years of operation in the global sportswear industry, Adidas has established a very strong brand in the industry.
The logo of the company, the three stripes and the originality of the products of the company, has given the company a resounding name in the industry. The company has established a portfolio of strong brands in the global market, which makes it have a stronger market position over most of its competitors (Motion, Leitch & Brodie 2003).
Through the strong brand portfolio, the company’s ability to develop a strong retail footprint in diverse markets is enhanced (Joseph 2013). The brands of the Adidas Group include: Adidas, Rockport, Reebok, TaylorMade and Ashworth.
Just like Nike, its biggest competitor in the market, the logo and quality of products by Adidas gives the company a competitive edge over Nike and other companies in the industry. Through its brand, the company has managed to attain customer loyalty across a wider section of the global sporting industry.
Adidas is considered by many people as a global brand through its increased investment in design and the subsequent production of high quality and diverse products (Braun 2008).
Customer loyalty is a key contributing factor to the development and expansion of the company in the market. Having managed to dominate Europe, which is one of the world’s largest sporting regions, the company has managed to retain the second position in terms of the global market share.
As at the end of the year 2010, Adidas had a global market share of 21%, coming second from Nike which had an average market share of 30%. This is considered to be strength since the company has not slipped from this position for a long time, and the percentage of market share keeps rising (Bajak 2010).
Besides being a manufacturer of sportswear products, Adidas also venture into the development of sports technology. This makes the company come out strong in the market. Through the venture in sports technology, the company is able to come up with sporting tools and equipment that meet the modern standards of sporting (Bajak 2010).
As one of the market leaders in the sportswear industry, Adidas benefits from the economies of scale. The company produces large quantities of products, which makes it easy to avail its goods to a wide market. Through this, the company puts itself in a better position to beat other smaller companies in the market. The company was the main supplier of footwear during the 2010 world cup (Bajak 2010).
Opportunities
Andreff and Andreff (2009) observed that the developing markets in the world have been coming up at a quick pace, which denotes the presence of a new market for the company.
These markets are found in Asia, Latin America and Asia, where the sporting industry is being molded in order to match the sporting industry in the United States and Europe. Adidas has been monitoring the growth in the sports industry in these regions.
These regions form the newer markets for the company. In the modern times, different companies make attempts to use all the probable means to expand their market base. The continued focus on the merging markets of the company has been crucial in increasing the revenue of the company (Bajak 2010).
The continued growth in information and communication technology presents a lot of marketing opportunities for the company. As part of the market strategy initiative, the company is embracing internet marketing.
Internet marketing is one of the platforms of marketing that has proven to be quite efficient for marketing enhancement in a substantial number of companies in the world today (Yaveroglu & Donthu 2008).
As the new markets develop information and communication technologies, the company is quickly matching this pace by enhancing online retailing, besides the normal retailing in these markets. Information technology, social; media, blogs and websites, offers the company an opportunity to communicate with its customers, thereby maintaining a sound relationship with them (Shimp 2010).
Threats
As has been known for a long time, the quality of the Adidas products is accompanied by the corresponding relatively high prices. However, there is a lot of rationalization in both the sports market due to the entry of numerous small players. One notable thing is that the new players produce similar products, but at a low price.
Therefore, there is a high threat from the presence of the increased entry of substitute products in the market. The current slump down of the global economy also poses economic threats to the company. This problem is compounded by the entry of new companies in the industry, which are capitalizing on the economic situation and the desire of customers to get products at attractive prices (Newbery 2009).
In the recent times, a lot of concerns about counterfeit products have been raised by a substantial number of companies in the world. The sportswear industry is listed among the industries that are most affected by counterfeit products (Organization for Economic Co-operation and Development, 1998).
Being one of the leading companies in the industry, Adidas is not an exception. The question of counterfeit and duplication of Adidas products was raised quite long ago. As the contemporary business era is marked by volatile business activities, the company is bound to lose billions of dollars in the coming years due to the increasing availability of counterfeit products in the market.
Already, the company has lost a substantial amount of money due to duplication of its products and the marketing of such products using its brands. The efforts to counter production of fake goods have not borne positive results yet as there are cartels of businessmen in the sports industry who coordinate the business.
There are still a lot of challenges in the implementation of laws that are meant for eliminating counterfeit products from the market (Massow 2013; Jack 2008).
Internal analysis
The internal environment of any company plays a great role in increasing the efficiency of production, thereby increasing the competitiveness of the company.
The virtue of long existence in the market has aided Adidas in learning from the business environment, thereby developing strategies that have enabled it to enhance a better internal environment. The company operates within the global sportswear industry, which is considered to be very competitive (Bajak 2010).
Internal strengths
One of the main internal strengths of the company is its investment in innovation. The management of the company has realized the essence of maintaining the company in the market through the embrace of creativity. Research and development is the key to innovative technologies in the products of the company. Research and development is the key to product innovation in any given company.
R&D often puts the company in a better position to come up with newer and more exciting brands, which attract a new ray of customers. The company embraces technology in the improvement of its products in the market. Adidas was the first company to produce the first smart sporting shoe that had a microchip and a wireless mp3 player.
The aim of research and development in the company is to go beyond the fulfillment of their customer needs. Each year, the company strives to come up with at least one revolutionary technology in the market.
This presents a great opportunity for the company as it can enable Adidas to position itself in the market as a technology leader in the industry. The company embraces sustainability of the environment in its new technology by utilizing production systems that are friendly to the environment (Addidas Group 2012).
Figure 1.0 below shows the amount of money, in million Euros, that has been spent in research and development by the company for the last five years. In the graph, it is evident that expenditure in research and development has been increasing each year, which justifies the current innovative ability in the products of the company.
Figure 1.0 Research and Development expenses (million Euros).
Source: Adidas Group 2011.
As a multinational company, Adidas has firms that are spread in different parts of the world. In order to tackle the business challenges in each part of the world, the company management implements different strategies depending on the area in which each particular subsidiary is located.
This makes the company more flexible in terms of the management of employees and functions in diverse global cultures. This is a factor that boosts the ability of the company to deal with the challenges of management in different parts of the world (Solomon & Schell 2009). The management of Adidas has a global business mindset, a feature that is desired in managing multinational companies.
According to Puris (1999), the management through acquisition has helped the Adidas Group to boost the market position of the company as it increases the number of brands of the company.
The acquisition of Reebok, it is argued, has helped the company to gain a 20 percent share in the US market for which it did not have access due to the dominance of the market by competitor companies like nike and Puma (Arends & Preuschat 2007).
There is a high sense of corporate social responsibility in the company. Corporate social activities in the company are implemented in a twofold way; focus on clean technologies in the company’s products and the sponsorship of events. This has made the company to be ranked among the top 100 sustainable companies in the world.
The company has a sustainability website, where it engages audiences on matters of sustainability in production. This is one way through which the company attains a high level of publicity for their products to the wider market (Addidas Group 2008).
In the year 2012, Adidas announced massive sponsorships. The company brokered agreements with the Japan Football Association in which it will sponsor a Japan’s football team in the 2014 World Cup event.
The other sponsorship deal was made between Adidas and the Olympic committee of Australia, in which the company will sponsor the Olympic team of Australia in the upcoming Olympics event. The company has also signed a sponsorship partnership with the NBA (Addidas Group 2012).
Weakness
The main weakness of the company is that the acquisition, especially Reebok has not worked well for the company due to the low performance of Reebok, especially outside the United States.
Therefore, the company has not been able to get the anticipated return on investment from Reebok. This corporate move has not counted well with Adidas and still poses a challenge to the financial outcomes of the company (Gaughan 2011).
The company operates under a high cost structure. This limits the ability of Adidas to maximize its profits in the market. The product line of the company is also limited, which makes it hard for the company to expand business opportunities in the market. The prevailing inflationary pressure in the market is another undoing of the company since it exerts pressure on the prices of raw materials that are used by the company (Bajak 2010).
Summary SWOT
Strengths
A high sense of corporate social responsibility and the embrace of sustainability in managing production.
Widespread operations across the globe.
The cultivation of strong brands in the global sportswear industry.
Global strategy of management
Strong performance arising from the successful participation in the 2010 FIFA World Cup.
An intense level of adoption of integrated marketing communication practices.
Stable financial position amidst the global economic backdrop.
The embrace of sports technology.
Weakness
Managing under a high cost structure.
Poor performance of Reebok.
Weak performance in a number of major sportswear markets.
Manufacturing via third party.
Changing patterns in the global consumption demands.
Opportunities
The growth and development of the emerging markets.
Sponsorship agreements as a benefit of corporate social responsibility.
Growth in information and communication technology usage in the market.
Change in consumer lifestyle, which is accompanied by the growth of the footwear market across the globe.
The revival of Reebok.
Threats
The growth in the production and availing of counterfeit products in the market.
The increase in the number of substitute products from competitor companies.
The rising cost of production materials.
Price fluctuations in the international market.
Strategy Evaluation
As noted in the analysis of the company, it can be said that the global sportswear industry is quite competitive, which requires companies that operate in the industry to master the competitive environment (Spillan 2010). Adidas is one of the companies that have operated in the sportswear industry for an extended period of time.
While this is an advantage for the company, it does not exempt it from the competitive pressures emanating from the industry. There is a wide range of companies in the industry, some of which have operated in the industry for quite long.
Adidas can be termed as a brilliant company due to the strategies that are applied by the company. The value of a company’s strategy is often measured by the level at which they help the company capitalize on the opportunities and the elimination of the threats. Most of the strengths of Adidas resonate from the fact that the company has been able to capitalize on the opportunities that are present in the market.
These include the ability to enter the emerging markets, the use of technology in production and marketing and the embrace of corporate social activities. These strategies have been critical in countering the likely impacts of the threats that are facing the company.
Problems/ Challenges and recommendation
As observed, a number of threats remain to press down the company. These include the problem of counterfeit products. The company is yet to come up with a workable strategy for eliminating counterfeit products. However, the problem affects all the major companies in the industry and collective efforts are being made to address the threat.
The continued adoption and application of global approaches of management helps the company to attain competitive strength in the global market. The problem of performance of Reebok, which has been an impediment to the performance of the company, can be sorted through restructuring of the Reebok Brand.
Currently, the Adidas brand is seen as a Euro-sport brand. There is need to restructure the brand into both a USA-sport and the Euro-sport brand. This will enable the company to penetrate the US market.
Conclusion
As has been observed in the paper, it can be concluded that the global sport wear industry is competitive. The industry is marked by both opportunities and challenges. In spite of the challenges in the industry, Adidas remains to be a competitive player in the industry. The competitive strengths of Adidas are drawn from the managerial quality of the company.
The global inclination of management forms he main managerial strength for Addidas. Other areas of strength in the company include the embrace of technology in products and the focus on the emerging markets of the globe. The main threats to the performance of Adidas are the increase in substitutes and the amount of counterfeiting in the global market.
Reference List
Addidas Group 2008, Corporate responsibility report 2007. Web.
Addidas Group 2012, Annual Report 2011. Web.
Andreff, M. & Andreff, W. 2009, ‘Global trade in sports goods: International specialization of major trading countries’, European Sport Management Quarterly, vol. 9 no. 3, pp. 259-294.
Andreff, W. & Szymanski, S. 2005, Handbook on the economics of sport, Edward Elgar, Cheltenham.
Arends, H. & Preuschat, A. 2007, Adidas isn’t getting traction in north america from reebok. Wall Street Journal. Web.
Bajak, D. 2010, Adidas strategic analysis: 2011 ‐ 2016. Web.
Braun, J. 2008, Strategic sports marketing – the impact of sport advertising upon consumers: Adidas – a case study, Grin-Verl, München.
Gaughan, P. A. 2011, Mergers, acquisitions, and corporate restructurings, Wiley, Hoboken, N. J.
Jack, L. 2008, Analysis: Two stripes and the competition is out?, Marketing Week, 8-8. Web.
Joseph, S. 2013, Adidas unveils new global brand strategy. Marketing Week (Online). Web.
Motion, J., Leitch, S. & Brodie, R. J. 2003, ‘Equity in corporate co-branding: The case of adidas and the all blacks’, European Journal of Marketing, vol. 37 no. 7, pp. 1080-1094.
Newbery, M. 2009, Global market review of active sportswear and athletic footwear – forecasts to 2016: 2009 edition: Chapter 5 the active sportswear and athletic footwear market, 2007-2009. Bromsgrove, United Kingdom.
Puris, M. 1999, ‘Bringing back adidas’, Advertising Age, vol. 70 no. 10, pp. 18-20.
Shimp, T. A. 2010, Advertising, promotion, and other aspects of integrated marketing communications, South-Western Cengage Learning, Mason, OH.
Slack, T. 2004, The Commercialisation of Sport, Routledge, New York, NY.
Solomon, C. & Schell, M. 2009, ‘Managing across cultures’, The British Journal of Administrative Management, vol. 79 no. 7, pp. 67-67.
Spillan, J. E. 2010, ‘A review of global marketing management: Changes, New challenges and strategies’, Journal of Global Marketing, vol. 23 no. 1, pp. 95-96.
von Massow, M. 2013, Do counterfeit products affect international trade? Web.
Yaveroglu, I. & Donthu, N. 2008, ‘Advertising repetition and placement issues in on-line environments’, Journal of Advertising, vol. 37 no. 2, pp. 31-43.
The effectiveness and productivity of most international business enterprises depend not only on competent approaches to managing assets and available resources but also on the quality of employees’ work. Hiring specialists of an appropriate profile is the task of the human resources (HR) department. The professionalism of the members of this sector largely affects companies’ success. One of the strategies promoted by HR specialists today is talent management expressed in retaining potentially valuable subordinates and motivating their high-performance work.
However, despite the goals and objectives that the supreme managerial staff sets for the HR department, employees of this field sometimes neglect important operational strategies, which, in turn, affects the productivity of firms and the employees’ dissatisfaction with their job conditions. As an object of review, the HR sector of the international Adidas corporation will be considered, and the analysis of this organisation’s activities will be carried out in the framework of talent management as an important and integral HR practice.
Adidas is a German sales concern that specialises in the manufacture and marketing of sportswear and accessories worldwide. This corporation also includes the Reebok trademark, which is another world-famous brand. The company is considered multinational since it has branches in different parts of the world and provides services to residents of all continents. According to the 2018 official report, Adidas’ total sales were approximately €21.915 billion, which is an extremely high indicator (Profile, no date).
Nevertheless, despite its popularity, the company is forced to overcome a competitive barrier regularly because the sportswear and equipment industry is in demand in the market. According to official statistics, such brands as Nike, New Balance, Puma and some other trademarks are Adidas’ leading competitors, and consumers are well aware of all these corporations (Adidas competitors, 2020). Accordingly, this multinational organisation in question needs an impeccable reputation and highly professional and creative employees who can promote the Adidas label in the international arena.
The purpose of this work is to develop a relevant training programme for the HR department of Adidas to improve the quality of talent management, thereby enhancing productivity. This plan will need to be implemented in all branches since products are sold at outlets around the world. Managing worker motivation and engagement is a significant aspect of the company’s business success, and stimulating HR initiatives in Adidas is a valuable practice in the context of achieving the highest position in the global trading arena.
Design
The work of the HR team in Adidas is important in view of the number of tasks that this department solves. The activities of HR specialists include not only assessing employees’ professional potential and controlling the hiring of qualified labour but also introducing relevant strategies for staff engagement and stimulating productive work aimed at achieving the company’s intermediate goals. In this regard, it is essential to analyse the learning needs of the employees of this profile and determine which area of work deserves particular attention as a weak and insufficiently advanced field of activity of the department.
For this purpose, the current performance of the corporation will be evaluated in the context of existing gaps in HR practices. According to the official report of 2017, Adidas makes many efforts to test and implement valuable personnel management methods, for instance, involves subordinates to interact on a special online platform where interested parties can evaluate and discuss specific work issues – salaries, career topics and other themes (Group management report – our company, 2017). However, this initiative may not be enough to assess the success of the HR sector comprehensively.
Learning Needs Analysis
Since the corporation is large and world-famous, monitoring the activities of employees is not an easy task. In addition, the situation is complicated by the fact that Adidas has branches in different countries, and the processes of performance control and the interaction of management with subordinates are difficult. Bird (2019) notes that for some teams, it is not easy to work in conditions of dynamic and flexible market trends, and the lack of motivation is manifested.
As a result, a decrease in labour performance and low-income indicators are direct consequences of such a gap, which is unacceptable in the context of competition in the sportswear and equipment market. According to Etim and Uford (2019), such key business parameters as customer loyalty and brand recognition are directly dependent on the professionalism of employees involved in the distribution and advertising of products. In case teams cannot provide sufficient interest to potential customers due to unwillingness to take the initiative, this is fraught with the loss of market positions. Therefore, as the learning needs for the Adidas HR team, managing employee motivation and engagement is defined in the context of existing gaps.
A learning needs analysis is an important process that can help improve the performance of any business organisation, including Adidas. As Cascio and Boudreau (2016) note, learning is inextricably linked to development, and addressing specific gaps in operational activities is the first step to resolving problems. Meyers et al. (2019) add that HRs’ learning agility should be a mandatory professional property since the personnel management sphere is a dynamic environment with constantly changing trends and approaches that are essential to implement timely competently.
In the case of Adidas, addressing relevant learning needs was carried out on the basis of the official reports of the company, as well as the evaluation of individual pieces of news taken online. One of the crucial goals in this analysis is an opportunity to influence talent management as a significant factor in retaining highly qualified employees. Collings, Mellahi and Cascio (2019) argue that today, there are many approaches and strategies in this HR area, and motivation is one of the main drivers. Thus, monitoring employee engagement in order to improve the quality of talent management is the basis of a learning needs analysis.
Another reason for this analysis is the threat of employee turnover. According to Long, Kowang and Chin (2017), turnover intentions are generally not explicit, making it difficult for HRs to identify this problem timely. Consequently, the ability to retain talented subordinates through their active involvement in the work process and effective motivation are conditions for preventing the outflow of professionals in competitive companies. In Adidas, the functions of managers monitoring the area of talent development include a number of obligations, for instance, communication with individual departments, consultations with corporate leaders and other procedures (Senior manager HR talent strategy & projects (M/F/D), 2019).
Meyers (2019) notes that, despite a wide range of tasks, neglecting talent control is unacceptable in a dynamic international organisation with high-profit capitalisation. The author mentions the social exchange theory, the approach that allows assessing the significance of HRs’ activities in the industry in question and helps increase employee productivity (Meyers, 2019). Nevertheless, when assessing this area in Adidas and analysing the company’s internal reports as the main sources to determine learning needs, some challenges have arisen.
Despite the advantages of such a method of evaluating data as analysing internal reports, which can provide objective data regarding specific work results, identifying the issues of talent management has caused difficulties. In Adidas’ white paper, this activity is mentioned; at the same time, company representatives do not provide accurate information on successes and failures in this area of activities, and there are no numerical correlations of work results (Group management report – our company, 2017).
However, identifying gaps in this HR practice does not imply the inherent presence of percentage ratios. Khoreva, Vaiman and Van Zalk (2017) state that the aforementioned social exchange theory involves investing in subordinates as an integral component of corporate strategy where high productivity is encouraged. Accordingly, there is no need to create focus groups and conduct lengthy interviews to determine existing successes or failures in the field of talent management. Enhancing employee work engagement and motivation is driven by the growth needs for which Adidas aspires (Kigo and Gachunga, 2016). Thus, reviewing the organisation’s reports is a sufficient measure to identify basic learning needs and develop an appropriate training programme.
As a rationale for the proposed learning need, the neo-institutional theory may be cited. Beamond, Farndale and Härtel (2016) describe this concept as an approach recognising the relevance of talent management in institutional settings with developed subsidiary systems. Thus, in Adidas, addressing the topic of retaining and motivating highly qualified professionals is an important procedure. Bratton and Gold (2017) remark that this corporation implements talent management practices as part of HR initiatives, focusing on engaging professional employees.
However, increasing subordinates’ motivation is the skill that develops directly within a specific work environment; therefore, in addition to theoretical knowledge, practical skills are crucial. According to Longley (no date) who is a representative of the Adidas HR department, the corporation adheres to a holistic approach to managing talent. Pratap (2019) confirms the company’s activities in this direction and mentions the Talent Carousel programme aimed at identifying and supporting employees who may eventually occupy senior positions. Nevertheless, high competition in the analysed market dictates special conditions for specialist training. Therefore, the identified learning need is important as a driver for maintaining the company’s continuous development and stimulating the productivity of its HR department.
Training Programme
When developing a training programme for the HR department, potential challenges should be taken into account. Tafti, Mahmoudsalehi and Amiri (2017) argue that in this intervention environment, behavioural barriers can arise when specialists are not ready to participate in change projects. To address this issue successfully, Muratbekova-Touron, Kabalina and Festing (2018) recommend paying attention to creative approaches to talent management, which may attract the interest of the target group of the programme.
Organising specialised workshops is a valuable practice for improving HRs’ work and enhancing the productivity of subordinates through sufficient motivation created by managers (Bakker, 2017; Furnham and Treglown, 2017). As Tuck (2019, para. 3) states, in the sportswear and equipment industry in question, “the war for talent” is observed, and the Adidas corporation should make every effort to retain highly qualified professionals. As learning objectives for the involved employees of the HR department, the following tasks are set:
Improving staff motivation and engagement skills;
Enhancing personal knowledge regarding talent management;
Introducing modern and creative methods for solving the issue of retaining highly qualified specialists.
In order to develop a specific development programme, special strategies for working with the target audience are necessary. As these approaches, coaching, mentoring, group work activities and role-play simulations will be involved. According to Glaister et al. (2018), coaching provides an opportunity to maintain close contact with project change participants. Engaging experienced employees to organise master classes is an essential task. Skill training should be constantly monitored to avoid mistakes or task misinterpretation; therefore, both one-on-one coaching and mentoring are crucial elements of the programme in question (Cascio and Graham, 2016; Hartoyo, Efendy and Utama, 2017).
Since Adidas’ HRs have an educational background, it will not be difficult for them to delve into the features of the project; in addition, according to Geoghegan (2018), in the corporation, a supportive environment is encouraged. Organising group activities by creating separate teams without clear leaders can facilitate the sharing of experiences (Armstrong, 2016). Finally, when citing an example from another industry, Pinto and Thalgaspitiya (2017) note that employee engagement should be accompanied by a clear division of responsibilities among HR specialists. Therefore, a role-playing strategy is relevant and convenient as a creative approach.
The proposed training programme will include three main types of sessions that Adidas HRs will attend – workshops where they will be offered practical tasks, webinars for interaction with colleagues from different branches and discussion boards where employees will evaluate the results of the work done. Such an algorithm is universal and convenient since, as Pradhan, Jena and Panigrahy (2016) state, by leveraging knowledge comprehensively, HRs can develop relevant and efficient projects to interact with subordinates in the framework of talent management activities.
According to Mayfield, Mayfield and Wheeler (2016, p. 4), all three components of activity (“talent inventories, workforce planning and training/development processes”) make it possible to create a productive employee engagement system, which is an important objective of the described programme. Therefore, the HR department of the corporation will have the necessary theoretical and practical tools to hone valuable skills. In Table 1, the progress of the project is presented, and the main activities are described in a specific sequence.
Table 1. Training Programme for HRs in Adidas.
Time frame Sessions
Day 1-3
Day 4-6
Day 7-10
Workshops
HR specialists get acquainted with the work plan for the next ten days and study the information proposed by the coaches. Employees learn new approaches to talent management and take part in master classes demonstrating various situations and cases associated with the ability to motivate and retain highly qualified subordinates.
The target audience of the programme recreates possible examples and mechanisms of interaction with talented employees independently and uses the capabilities of all available resources, including the Internet, to solve assigned tasks.
Independent research work prevails over the team one, and periodic tests of knowledge are conducted.
Webinars
Employees explore communication opportunities with colleagues and managers from company branches at various outlets. Both group and individual conversations are held, and those involved share their experiences and receive new information.
Project members share their results with colleagues from different countries and offer possible solutions to ambiguous situations in one another’s practice. The emphasis is on individual communication for deeper and more productive interaction.
Continued communication and the subsequent exchange of contacts with employees from other regions, as well as the mutual evaluation of the programme success.
Discussion boards
HR specialists gather in group sessions and share the data received. Coaches and mentors offer to consider and discuss the most memorable and controversial cases from the considered master classes and role-playing games.
Work in small groups with the subsequent dissemination of the results of assessments and analyses related to assigned tasks. Communication with coaches and mentors is maintained constantly to avoid mistakes.
Summing up, discussing the possibility of implementing individual practices within the company, as well as the individual assessments of the effectiveness and usefulness of the programme.
One of the main advantages of this programme is studying motivational drivers. As Dhamija, Dhamija and Singh (2017) state, this knowledge contributes to the retention of talented employees, although the programme itself does not imply direct contact with subordinates, which is a gap. The sequence of classes is logical and reasonable because specialists hone team and individual skills gradually, which, according to Taylor, Doherty and McGraw (2015), allows avoiding the loss of valuable data during preparation. To enhance learning transfer, more information about HRs themselves needs to be found out because this will make the interaction process more productive and person-centred.
Delivery
The implementation of the training programme for HRs in Adidas should be carried out in appropriate conditions that could stimulate the effective memorisation of learning materials and help employees understand the goals and objectives of the course better. Over ten days, the interaction between coaches and project participants will take place in specially equipped rooms with a convenient layout and all available resources, including visual materials and online communication platforms. Acquiring the necessary knowledge is the key objective of the programme, and talent management training should be accompanied by stimulating action learning as a dynamic process (Smith, 2016).
Therefore, the presence of all possible educational tools, for instance, several laptops with online communication programmes, a whiteboard for visual displaying diagrams and graphs, and teaching aids are significant elements of comprehensive training. One of the disadvantages of the layout is the need to place many specialists inside the same room for productive group work. However, competent pair placement can help save space for convenient learning activities.
An opportunity to present relevant educational materials to the HRs group should be accompanied by comfortable learning conditions. According to Griggs and Allen (2018, p. 43), “the integration of research, practice, reflection, and knowledge sharing” contributes to successful communication and solving assigned tasks. However, for the implementation of these lenses, additional factors are to be taken into account, for instance, the competent distribution of study time with the possibility of refreshments and breaks.
It is anticipated that HRs will spend full time throughout all learning sessions. Consequently, the safety of programme participants should be respected, and special instructions may be provided to avoid overwork or other unpleasant outcomes caused by prolonged activities. Such factors as room temperature and fresh air access are significant aspects of comfortable learning so that no external influences could distract project participants.
Since knowledge sharing is one of the main types of learning activities, the delivery style chosen refers to coaching but not observing. Jiang et al. (2016) note that this way of interacting with the audience stimulates team performance and helps prevent intra-group conflicts because all participants are in equal conditions. At the same time, potential challenges may arise during the programme delivery process. The Adidas corporation can make a mistake when hiring insufficiently professional coaches and mentors, thereby reducing the likelihood of effective HR training. This, in turn, may affect the company’s future operations adversely in relation to personnel engagement and talent management.
Therefore, selection specialists for the training of employees should be thorough and objective. Throughout the programme, feedback should be given to the course participants. According to Heller (2017), this will help learners to be aware of the coaches team’s commitment to achieving high learning outcomes and their support. The combination of means for presenting educational materials, for instance, visual diagrams and tutorial videos, will improve the quality of training and make learning activities more diverse.
The aforementioned learning objectives may be addressed efficiently if group dynamics management is organised in accordance with the specifics of the company in question and the professional background of its HR department. Consequently, it is crucial to take into account the level of the project participants’ preparation and approach each individual case differently to stimulate the progress of low contributors and support the success of those who pass the programme successfully. Such a mechanism will provide an opportunity to not only influence the learners’ group but also maintain effective interaction with each employee.
Griggs and Allen (2018) state that projects involving a large number of participants require assessing the level of course members’ training. This will help not both improve the outcome of the intervention and bring positive implications for the organisation as a whole because the management will have an idea of subordinates’ professionalism.
Finally, in order to deliver the programme, it is essential to take the necessary measures to prevent group conflicts caused by disagreements regarding methods for solving the tasks and misunderstandings among the course members. The theory of transformational leadership can be a valuable concept of behaviour in this case. As Leroy et al. (2018) argue, this method of interacting with colleagues allows addressing the needs of each programme participant, which is important in an unusual learning environment.
In addition, since teamwork involves group discussions, stimulating the interest of all members helps establish a productive working atmosphere and mutual understanding in the collective. When organising the delivery of the programme, the Adidas management should take into account that HR department employees often work individually, and a new form of communication may be unusual for them. Accordingly, establishing a productive work environment may have a positive effect on the organisation’s future work through the development of valuable team skills of programme members.
Evaluation
Evaluating the training programme for the HR department of the Adidas corporation is an important procedure that may help not only determine the level of specialist preparation but also identify the areas of development for the whole company’s subsequent activities. According to Akhondzadeh-Noughabi et al. (2016), assessing contributes to the productivity of employees significantly since the resulting feedback opens up opportunities for self-reflection and the analysis of potential errors. Concerning this project, the outcomes of work and the evaluation of all the involved participants’ activities will not be summed up immediately but several days after the completion of the course.
The company management needs time to discuss the results o with coaches and mentors and hold a meeting with the HR department in order to receive data on the quality of the programme from the project members themselves. In addition to these procedures, the outcomes will be evaluated from a theoretical perspective by engaging a relevant evaluation model that may allow summarising the results of the work done from the standpoint of essential assessment components.
In this context, Kirkpatrick’s concept of four-level evaluation may be of good use. In collaboration with his wife, the scholar has developed a model that includes four reflective components – “Reaction, Learning, Behavior, Results” (Kirkpatrick and Kirkpatrick, 2016, p. 6). When utilising this assessment methodology, the company management can obtain comprehensive data on the different implications of the training programme and analyse subordinates’ feedback regarding this course.
Some opponents of this model define it as the one that lacks important components. For instance, Reio et al. (2017) argue that Brinkerhoff’s model is a more suitable analysis tool because it includes six steps and focuses on needs assessment. Nevertheless, based on the company’s reports, the HR sphere of talent management should be improved due to a number of factors, including high competition in the market segment under consideration and the business dynamics. Therefore, Kirkpatrick’s model is a suitable and convenient methodology for evaluating the results of the work done.
When evaluating the outcomes of the programme, it is essential to analyse several relevant criteria. In particular, such indicators need to be considered as the quality of the course from the position of mentors, coaches and HR department employees, the success of the project regarding the set learning objectives and its importance for the organisation’s future activities. Lussier and Hendon (2017, p. 39) call this activity “360-degree evaluation” because it makes it possible to assess the success of interventions from different perspectives and obtain unbiased analysis results. In addition, such a mechanism facilitates quick interpretation of results since parallel data collection can help speed up the evaluation process.
Some potential challenges may arise, for instance, the complexity of the analysis due to the subjectivity of individual opinions regarding the outcomes. However, a convenient data collection mechanism, such as brief interviews with stakeholders, is a simple and reliable tool for obtaining credible information.
As a result, when analysing the presented programme, one can note that it corresponds with the assigned learning tasks and makes it possible to convey the necessary knowledge to the target audience as efficiently as possible. The exchange of experience helps improve HRs’ personal qualifications and is a valuable tool for enhancing such area as talent management at Adidas. The results of the assessment will be presented visually at the second meeting after all the necessary data has been collected and analysed, and both the top management and the direct participants of the learning course will be invited.
Conclusion
An opportunity to influence such HR areas as talent management and work engagement is valuable in the context of the work of the Adidas corporation as a company that conducts dynamic market activities and competes with other participants in the sportswear and accessories industry. The presented training programme addresses these areas and defines specific learning needs of the employees of the HR department. The entire course is designed to improve the skills of the target group by expanding attainments and knowledge in the indicated areas to retain highly qualified specialists in the company.
The educational load is divided into three key sections, and the ten-day project includes workshops, webinars and discussion boards. The delivery of the programme involves creating optimal conditions for employees’ successful training, and competent mentors and coaches are engaged. The sequence of activities is phased with subsequent individual tasks. Coaching, mentoring, group work activities and role-play simulations are the key learning methods. A comprehensive evaluation proves the compliance of the course with the company’s development objectives and helps strengthen the professionalism of its HR department in the field of talent management.
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This paper is a case study of MNCs’ operations worldwide. It particularly analyses the operations of the Adidas Group and how its handles foreign operations both socially and financially. Multinational Corporations (MNCs) are international enterprise companies that seek to offer services or engage in the manufacturing of products in different countries. The best example here is the Addis (AG). Adidas Group is one of the leading MNCs, whose main brand is the production of sporting goods. Its main headquarters is in Germany but operates in different nations in the world by offering varieties of sporting products and providing thousands of employment opportunities (Stair & Reynolds, 2012).
Addis Group is a company that is interested in joint ventures with other like-minded companies all over the world. Addis Group is a company that is interested in joint ventures with other like-minded companies all over the world. It has successfully contextualized its brands to fit into the local and global markets. According to Borowski (2011), Adidas is arguably the second-largest sporting firm globally, with annual revenue ranging to about 10 Billion Euros. Part of its brand, that could be included in bench making a study of the sporting goods industry are Taylormade, Reebok, and Rockport. Being a Multinational Corporation, Adidas is often subjected to if not affected by changes within Foreign Exchanges rates in most of its foreign operations.
There are two main ways in which a firm like Adidas Group can carry out its foreign operations, one way is by transacting foreign currencies, and the other way is through foreign operations. International companies can also present their financial statements in a foreign currency if they so wish (Hayes and Kuchinskas, 2003). However, the organization usually studies all the items within its foreign currency and translates them into a functional currency. It is at this point that the study will reveal whether or not the differences within the exchange rates have had an effect on its finances, whether loss or gain (IFA, 2000).
Just like any other international firm working in foreign countries, the Adidas Group is often exposed to experiencing losses or gain in foreign exchanges, due to volatile socio-economic and political situations around the world. It is due to these reasons therefore that the Adidas Group often carries out though assessment of all the financial risks and the impact of social-economic and political environments of their foreign operations. This assessment provides them with accurate details on how to carry out their foreign cash transactions and balances (Greuning et al, 2011).
This benchmarking study focuses on foreign statement analysis. Financial statement analysis usually covers a large scope but focuses on three main areas, which the Adidas Group should utilize within its operation. The first aspect of a financial statement deals with accounting analysis. This analysis mainly tries to reflect on the economic reality of any given foreign-based company. The Second aspect of the financial statement looks at the financial analysis focusing on the flow of cash, profitability, and the analysis of risks made. The third aspect of financial statement analysis deals with prospective analysis which operates through accounting, financial, and business analysis to forecast the future of cash flow as well as the income (Doupnik & Perera, 2012).
Adidas Group continually analyses its foreign financial statements for a variety of reasons. The first one is to create the company’s foreign investment portfolio that can potentially spread the risks of investments for international investors who rely on international mutual funds, foreign financial statements, and US stock markets. The second reason for analyzing foreign financial statements is to provide information to assist international companies to analyze the financial status of other foreign companies that they wish to acquire or merge with. Thirdly, the foreign financial statements enable companies to extend credit to their customers, evaluate international vendors, and compare their international competitors (Doupnik & Perera, 2012).
In conclusion, it can be argued that Adidas Group is a perfect example of how MNCs operate in foreign countries taking into the socio-economic, cultural, and environmental situations of the host countries.
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The financial performance front of Adidas AG is evaluated in three fiscal domains; the investment center, the profit center and the cost center. Strengthening investments by increasing the operating cash flows has seen the realization of impressive returns from virtually every Adidas AG product, coupled to the increase in operating cash flow is the accumulation of the operating savings to such stable levels as would secure the investment confidence of Adidas AG. These heightened investments spell the indispensable presence of Adidas in the sporting-wear market, which in spite of the substantial cost of production due to massive supplies and the sky rocketing marketing budget, is always characterized by high levels of returns (Catovic, 2010, p. 1).
Non-financial evaluation
The non-financial progress of Adidas AG is evaluated along the twin domains of foreign operating unit and the managers of the unit evaluation. As such, the management of Adidas AG has prioritized its operation strategy towards lifestyle branding; this has seen an increased involvement of the youth in sports, music, and technology, the management team of Adidas AG has also consented to Adidas-Reebok merger which is projected to display a sustainable competitive advantage at the regional and global level (Eli, 2005, p. 1). The foreign operating unit of Adidas AG on the other side of the coin has focused its attention on increasing the international command of Adidas in sport-wear by maintaining a steady supply of superior products in the global market (Balboul, 2010, p. 1).
Management control systems and national cultures
The management control systems and national culture forms another perspective from which the performance of Adidas is evaluated, under this domain the sensitivity of Adidas to such national concerns as gender inequalities are addressed, as such Adidas has integrated the design of women wear in its functions and the consequence of this is the active involvement of women in the sporting world which is a plus for the general welfare of the nation.
Why invest in Adidas AG?
Stock investors should consider Adidas AG as one of the most viable grounds of investment for it is one of the giant players in the production and supply of broad spectrum of sporting wear, with the 2009 statistics showing that Adidas enjoyed a great market advantage scooping 72.4% of the net sales. For instance, under the capital investment evaluation as listed in Exhibit 13.3; an investment with the payback period settlement one can invest a principal of $500,000 and the annual after-tax inflows would be of $100,000, the play back period being five years (Adidas Group, 2012, p. 1).
The Sarbanes-Oxley Act of 2002
Sarbanes-Oxley Act of 2002 is a bill that was enacted into law by President Gorge W. Bush which was aimed at developing checks and balances in the corporate world for a fair play ground in the public company accounting arena. It was aimed at reclaiming public trust in the corporate accounting procedures which was already marred with irregularities and high levels of accounting discrepancies. As such it was designed to befit the functions of restoring corporate and public auditing to high levels of professional integrity, responsibility, transparency and equity.
The impact of the law on the MNC Adidas AG
This legislation encompasses a broad spectrum of fresh ideas and does heighten the threshold operating standard of any public company, accounting entities and the corporate body of management. The law thus provides a fair playing ground which in spite of restricting the operating frontiers of Adidas AG, does bequeath it with an impressive competitive advantage over its competitors.
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Eli, K. (2005). With Adidas and Reebok Combined, Will Nike Still Crush the Competition. Web.
