Nike and Adidas Companies’ Analysis

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Table of Contents

Description and Analysis of the Companies
Business Industry Analysis
Conclusion
Works Cited

Description and Analysis of the Companies

Adidas

Adidas is a leading sports apparel retailer founded in 1924. Since that time, the company develops a multibillion dollar business operating on the global scale. The company employs 38,980 people and generates €642 million a year. For Adidas, the essence of value unquestionably lies in providing products or services that fulfill customer needs. The long term success of a firm in the marketplace is predicated upon its ability to react to, anticipate, and even create needs.

The customer could explain his/her needs–air travel routing with stopover, variations on a dinner order, advice from a securities analyst–and often receive service in real time. Again feedback could also be instant, resulting in high communicated value, provided responsiveness, flexibility, and learning ability are incorporated into the system.

Firms that have staked their success on standardized services must offer customers enough to replace personalized attention. Lower prices as in the case of routinized legal counsel, a combination of prices and quality/cleanliness provided by fast food firms like McDonald’s, and speed of service offered by quick oil change specialists are some of the compensatory benefits customers are often willing to settle for (Adidas Home Page 2009).

Nike

Nike, a direct competitor of Adidas, was founded in 1864. For Nike, the mingling of value construction and communication that occurs in businesses in which the customer enters the system is worth striving toward in manufacturing firms as well.

Today, net income of the company is US$ 1.883 billion. Since operations personnel are familiar with the caliber of product value built into the product/service, who better to communicate value to customers and receive feedback than those who installed the value in the first place? While we do not advocate the abolition of Marketing Departments everywhere, the establishment of direct links between producers and buyers of a product facilitates not only quick, accurate feedback and responsiveness to market needs but also provides operations personnel a higher purpose (value enhancement) stimulated by direct contact with the beneficiary of this value, the customer.

Overall cost is an inseparable part of all the value activities. The design affects the materials and process used (and vice versa) while the message of value conveyed to customers has to be tailored to the value constructed. Cost reduction efforts, therefore, should not focus exclusively on any one part of the value process (Nike Home Page 2009).

Business Industry Analysis

The sport apparel manufacturers operate on the global scale in order to achieve competitive advantage and attract millions of buyers. The functions of retailers in the channel have been to assemble merchandise, maintain an inventory, price, promote, advertise, sell, and account for the merchandise, again as a service to the manufacturer and the ultimate consumer. Further, retailers have also provided a place for consumers to shop and find other services that might assist them in obtaining or using the available goods.

The channel systems that have developed and, granted, have been improved over the years, have been built on some very basic beliefs about consumers, their needs and wants, and what they are willing to accept from channel members. It is these basic marketplace assumptions that are being challenged by direct and database marketers (Dobson and Starkey 43). As was discussed earlier, technology and communication allow consumers to learn about and demand increasingly differentiated and even personalized products.

As this occurs, the traditional economies of scale that have accrued to those manufacturers and retailers with extensive facilities and large sales volumes are no longer important in the marketplace. Smaller companies, using technology and direct and database marketing approaches, can compete not only effectively, but in many cases more efficiently than can large companies. As technology expands and sales-driven inventorying becomes more prevalent, the balance will shift to direct/database marketers simply because of their ability to respond more quickly and more effectively to consumer demand (Drucker 43).

Sport retailing can be defined as businesses primarily engaged in the final sale of tangible goods to individual, ultimate consumers and households. In recent years, marketing professors have increasingly realized that some or most sectors of the service industries, those establishments engaged in selling intangibles, have many location, operational, and promotional opportunities and problems analogous to those of merchandise retailers. In fact, many writers now speak of services retailing. The major types of retailers include specialty stores, department stores, supermarkets, convenience stores, discount stores, off price retailers and superstores (Adidas Home Page 2009).

Although there are variations across the retail categories surveyed women’s specialty apparel, men’s specialty apparel, department stores, and by region of the country. Sport product retailing is most price sensitive; furniture is least price sensitive. Supermarkets are large retail stores proposing a low cost and large merchandise. A supermarket may carry fifteen to twenty different products while a department store would require over a million to track every item down to the lowest price (i.e., by color-size-style). This movement toward lowest-level the products will accelerate and expand to all of retailing and will spread most dramatically to department and specialty stores. Special sport appeal chains are again experimenting with home delivery service (Drucker 65).

How well direct selling Organizations prosper in the future will depend on how well the opportunities offered will match the various rewards sought by this legion of independent performers as their needs and lifestyles evolve. Marketplace changes in buying behavior, values, and accessibility will impact product lines offered and mechanisms for channeling them to buyers (Drejer 51). Thus, it may be that direct/database marketing, if only because of the lower capital requirements, may become the retailing form of choice for new businesses around the world.

Where once the manufacturer had control, today it is the powerful retailers with major market shares who are demanding and gaining concessions from the manufacturer. Because of the power of technology, logistics, and marketing expertise, we will likely see more and more of this domination of the manufacturer by the retailer. For instance, many large companies such as General Motors and BMW have representative offices in big cities around the world (Dobson and Starkey 31).

In this industry, customer behavior and response, a competitor’s action, and the impact of socioeconomic forces, all fit this prescription. They are complex factors beyond the control of the marketing decision-maker, though having a marked impact on the results of decisions. For instance, a favorable economic climate, though uncontrollable by the decision maker, may nevertheless affect the payoff of any particular strategy.

Similarly, competitors’ actions, which cannot be controlled by an individual may easily affect the market impact of any alternative choice. While decision makers “control” the acts, nature “controls” the events. In determining which alternative to choose, therefore, it is desirable to try to assess future states of nature. Complete assessment can never be attained, since it is difficult, if not impossible, to identify all these states (Drejer 71).

In Adidas, strategic marketing is based on strategic thinking which can be seen as a unique vision of the problem. The subject of decision making raises the larger issue of the planning organization’s strategic thinking; specifically, the question is about prerogative and responsibility. Although most “professionally managed” organizations now subscribe to “participatory” decision making, there is nowhere any uniform understanding of exactly what that means.

The opportunities of Nike include high potential to growth and profitability, professional management team and unique corporate culture, customized order system and discounts (Dobson and Starkey 54). There is a great opportunity for supermarkets in this field, because specialized shops, throughout the world are interested in goods produced in the environmentally friendly manner (Drucker 71).

The opportunities include high potential to development and expansion, professional approach to management and wider product range. Retail service assesses the areas in which the organization can benefit the most from greater emphasis on creativity and innovation. Competitive advantage serves both as a way of identifying what creative and innovative things competitors are doing as well as finding out for each of the areas requiring imagination and innovation who is the best (Adidas Home Page 2009).

Conclusion

The main weaknesses of Nike and Adidas are low market potential in some geographical areas. Competition is the main threat for Adidas and Nick. In spite of weaknesses and threats, Nike has an attractive position based on a combination of cost management and customer services. In spite of weaknesses and threats, Nike has an attractive position based on a combination of cost management and customer services. The market trends establish challenges for generating creativity and innovation for large companies like Nike and Adidas. They also provide research challenges from a creative and innovative management perspective.

Research challenges fall into two major approaches of further success: one deals with methodologies and the other deals with issues to rethink, realign and reorganize large-scale retail companies. Limited geographical market and increased competition are the main threats for Nike (Drejer 71). The main threat for Nike and Adidas is increased competition and near monopolistic position of other entailers on the market. New methods of accountability will be needed to ensure that creative and pioneering activities are truly better than traditional ways. The case of both companies shows that firms can behave this way because they are big and powerful.

Therefore, they reinforce survival of the fattest. Though, these companies must realize that by not being proactive and not attempting to counteract instability in business is likely to lose money in both the present and future. Continuous value enhancement in a single product area is certainly laudable, but prudence dictates that other stakeholders’ needs (shareholders, employees, creditors, and suppliers, for instance) also be taken into consideration. Diversification is an important strategy in assuring that the needs of a variety of stakeholders are given careful enough attention to merit their strong approval.

Works Cited

Adidas Home Page. 2009. Web.

Dobson, P., Starkey, K. The Strategic Management: Issues and Cases. Blackwell Publishing, 2004.

Drejer, A. Strategic Management and Core Competencies: Theory and Application. Quorum Books, 2002.

Drucker P. F. Management: Tasks, Responsibilities, Practices. New York: ] Harper Collins, 2003.

Nike Home Page. 2009. Web.

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