Reebok presentation for in context to International Business subject...
MBA Sem – III
• Founded in England in 1895 as J.W. Foster and
Sons, a manufacturer of track shoes
• Renamed Reebok in 1958.
• North American distribution rights purchased
by Paul Fireman in 1979.
• Fireman and a few investors bought the parent
company in 1984.
• The product line of a Reebok retail outlet
generally consists of sports accessories. The
product line is divided into four sections:
Exercising / health products
At Global level
• Red chief
Reebok in India
• It entered the Indian market in the year 1995. When
Reebok entered India, fitness was a primitive industry in
• People used to buy branded shoes only for fashion and
• Reebok started educating people about the fitness and by
the time Reebok established itself in the Indian market, a
significant portion of consumers started buying sports
shoes for fitness activities.
• In year 2006, Adidas acquired Reebok for USD 3.8 billion.
• In India, Adidas and Reebok have integrated in the year
2011. Reebok India strategy is different from Adidas
• In India, government allows foreign
companies to establish their business, this is
• In Q1 2012, the central government approved
100% FDI in single brand retail (with 30%
goods sourced from Indian SMEs) which
means foreign sports shoe retailers can now
set shop more easily in India.
• GDP growth rate is estimated at 7.3% for the FY
2012-13, up from 6.8% for the previous year.
• Inflation rate has fallen to 6.8% as compared to
8.0% last year.
• The rupee has depreciated to record lows and the
country’s high trade and fiscal deficits are
pressurizing financial markets.
• The middle class is rapidly emerging with increase
in the no. of DINK households accompanied by an
increase in disposable income; this is acting as a
driver for the increasing demand for new goods
like branded sport shoes.
• In 2010, approximately 39% of the Indian
population was in the age group of 20-44.
• This growing young population drives up demand
for branded sports shoes.
• The country is steadily moving towards a more
urbanized setup with a forecasted 32% of
population attributed to urban India by 2015.
• The urban Indian middle class as a whole is slowly
moving away from its unhealthy Dalda consuming
habits, and is adopting a healthier lifestyle which
includes exercising and playing sports.
• The online retail market is growing at an
annual rate of 35% helped by increased
internet access; and easy returns by e-tailing
websites like Myntra.com make it easier for
the consumer to buy online.
• India is poised to have the third largest no. of
internet users in the world by 2013.
• First foreign player to change its existing shoe
designs to fit the Indian foot better.
• 1000+ stores across India – highest no. of single
brand sports shoe retail stores in the country
• “Factory outlets” offering discounts all year round
lead to brand dilution
• Franchisees currently work on the Minimum
Guarantee model which has led to high losses for
the company in wake of dipping sales.
• Adidas is planning to reposition the Reebok brand
in India in 2013.
• Change to the Cash and Carry model from the
Minimum guarantee model will drastically reduce
losses in the near future.
• Reebok was booked for Foreign exchange
management act (FEMA) violations in July 2012.
• Plan to switch to Cash and Carry model could
result in the closing of more than 300 stores.
40 Main Footwear Factories in 8 Countries
600 Apparel Factories in 29 Countries
450 Raw Material Suppliers
27 Freight Forwarders
• Transportation modes include Ship, Truck, Rail
• 34 Custom Brokers
• Over 5,000 purchase orders placed each