The Cohesion Case

1. HISTORY
Adi Dasler is the founder of Adidas.
In 1920, Adi Dasler created his first shoe made of canvas
1949: Adi Dasler formally registered his company ADIDAS (Three Stripes Company)
Adi Dasler courted many famous athletes to endorse his products and received biggest
marketing opportunities when German football team won the 1954 world cup using
Adidas products
Adi Dasler died in 1978.
In 1980s, Adidas struggled to keep its reputation and market share due to its new rival
Nike
Robert Dreyfus as CEO in 1992
In 1995, he had 3-stripes back on the sportswear map and listed as a new IPO o the
German Stock Exchange
In 2001 Acquired Salomon Group (TaylorMade as brand)
In 2006 - Acquired Reebok International Ltd

2. VISION AND MISSION

The company doesnt have a Vision

Its current Mission reads as follows:
Adidas AG is committed to being a global leader in the sporting goods industry by
producing brands that are novel, fun and have a passion for athletics and active people
worldwide. We are committed to delivering industry leading financial results, innovating
the most advance products, focusing on our consumers, and maintaining all of this while
being a good corporate citizen

3. ADIDAS GROUP DIVISION

Adidas AG three primary divisions:
i)
ii)
iii)
3.1

Adidas
Reebok
TaylorMade
Adidas

Adidas produces a wide range of sports apparel for both amateur and professional
athletes and their respective organizations.
In 2006, Adidas signed an 11 year partnership with the NBA, making Adidas the official
uniform provider until the year 2017
In 2009, Adidas introduced their TECHFIT line of under-jersey compression garments to
aid performance of basketball players
Two primary divisions of Adidas Brand:
i)
Sport Performance: focuses mostly on athletes in 4 areas; football, running, training,
and basketball.
ii)
Sport Style: targeted at youth and fashion-minded people, linking the sport theme to
fashion.

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3.2

American inspired global brand keeping its roots in womens sports and fitness but also
expanded to mens fitness.
Has an exclusive contract with National Football League (NFL) and NHL
Its vision is Fulfilling and Leading Through Creativity
Its purpose is being committed to corporate responsibility and enabling youth around the
world to fulfil their potential through producing great and innovative products and through
Reeboks Human Rights Program that aids underprivileged youth around the world meet
their potential and maintain an active and healthy lifestyle
Two largest segments: Reebok-CCM Hockey and Rockport

3.3

Reebok (Canton, Massachusetts, USA)

TaylorMade

In 1979, it started by Gary Adams, the inventor of metal woods.

TaylorMade is the world leader in metal wood suppliers.
In 2006, TaylorMade became only the second brand in golf industry to have over $1 billion
USD revenue in a single year.
In 2008, TaylorMade sold their Maxfli brand to Dicks Sporting Goods.

4. FINANCIAL INFORMATION
4.1

45% revenues generated were from apparel, 45% from footwear, and 10% from
hardware.
Apparel revenues increased in 2007-2009 while hardware and footwear decreased.

4.2

Revenue by Region

In 2008, Adidas derived more revenue in Asia then North America.

In 2007-2009, revenues for Adidas from Asia and Latin America increased while North
America decreased.

4.3

Revenue by Product

Consolidated Financial Statement

In 2009, net income and revenues of Adidas decreased than 2008

The firm has an extensive long ter debt and high goodwill that could spelltrouble to the
company in the future.

5. EXTERNAL ISSUES
5.1

Apparel

The Cohesion Case

With many external factors affecting the growth of the company it is a challenge to create
products that the customers must haves.
According to S&P Surveys, the categories that are expected to outperform include sports
and exercise-based apparel, consumer electronics, prepared foods, shoes and
accessories, and green goods.
First quarter of 2008 and 2009 apparel expenditures by consumers decreased.
As sports related apaprel is expected to outperform, many companies will try to enter to
this market.

5.2

Footwear

Lower cost footwear is expected to outperform higher end items.

Positioning green brands is starting to become an effective strategy.

6. COMPETITORS
6.1

In 1964, Nike was founded by Phil Knight and Bill Bowerman. Nike means Goddess of
Victory.
Nike designs and develops products for many sports and athletic applications.
Nike also market products under the brand names of Converse, Chuck Taylor, All Star,
Umbro, Cole Haan, Bragano, Hurley International, and Nike Golf.
A difference of $4643 million USD in revenue and $1144 million USD in net income higher
compared to Adidas.

6.2

Under Armour

Under Armour is very popular among young athletes.

It offers products made from moisture-wicking synthetic fabrics designed to regulate body
temperature regardless of weather condition.
This company prides itself on technology and good corporate citizenship.
Sales of Under Armour have increased from 430 million USD to 725 million USD in just
three years time.

6.3

Nike

Callaway Golf

Callaway Golf founded by Eli Callaway in 1982.

This company sells, design, and manufactures golf clubs and ball worldwide including
accessories golf bags, gloves, shoes, and other apparel.
Company has a reputation of producing top quality products and all products are tested
and developed under the vision of the founder that is to make golf easier to everyone.
In introducing new products, it should offer significant advantages over previous products
not just marketing ploy.

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7.

SWOT ANALYSIS
STRENGHT
Sponsors some of the largest sporting
events in the world such as the FIFA
World Cup
One of the top athletic footwear, apparel,
and sports hardware producers in the
world
Increased market position, its divisions
include Adidas, Reebok, TaylorMade,
Rockport and Reebok-CCM Hockey
Several promotion partnerships around
the world
141% increase in net cash from
operations.
OPPORTUNITY
Expansion in international market
Have contracts with famous athletes to
boost sales
More sponsorship agreements around the
world
Expanse new market which to fulfil the
green brand demand

WEAKNESS
The company doesnt have a vission
A form has an extensive long term debt
and high goodwill that could spell trouble
to the company in the future.
Decreased in overall companys financial
performance.
Decreased net sales for 2009
Decreased net income attribute to
shareholders in 2009
Inventories and net borrowing were too
high.

THREAT
Increase in input cost, and expensive raw
materials
Significant wage cost pressures
Fluctuations in exchange rates
Existence of competitors such as Nike,
Under Armour, and Callaway Golf
Global economic crisis
Imitations / Counterfeits
Change in trends

8. RECOMMENDATION

Adidas Group should establish its Vision to guide its divisions to make the company
successful as a whole.
Should minimized their long term debt and focus on companys productivity and
profitability.
Must increase their revenue (by adding marketing efforts and etc.,) or decrease their cost
to gain a higher profit margin.
Make their products affordable (cost leadership) if possible, if not they can focus on
making superior quality or unique products (product differentiation).
Create products that are in demand now like environment friendly products, to abreast the
current trends of the market.
Create products that the customers must haves to gain wider market and for companys
survival and growth.

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Should accept he partnership with another company such as Armani Group due to the
fact that sport-related products with fashion style designs are more exciting and
interesting especially for youth market.

9. CONCLUSION

Athletic shoes are still the heart of Adidass business but the companys 3 stripes logo
appears on apparel and other sports accoutrements.
Adidas has many contracts with famous football and basketball athletes.
Company today has more than 1150 retail location and thousands of distributors.
AG reported a third-quarter 2009, 30% decreased in net income, 6% decreased in
revenue, and Gross Profit Margin dropped to 45.3% from 49% due to higher clearance
sales and input cost, and currently-devaluation effects related to Russian ruble.
AGs decreased in currency-neutral sales by 7% due to the fact that growth in the Sport
Style division could not offset declines in major sports categories of Sport Performance
division.
AG needs a clear three-year strategic plan to compete effectively with rival and new firms
that trying to enter in this market. Moreover, Giorgio Armani (one of the leading fashion
and luxury goods group in the world) and Reebok International Ltd., has announced a
multiyear-global alliance to create special collection, combining active lifestyle with sport
and technology.