Reebok

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Reebok

  1. 1. Stephanie Barrett November 1, 2005 Strategic Management Reebok International, Ltd.: Facing the Twenty-First Century Established in the 1890s, Reebok has held strong from the ups and downs of itsindustry. The adverse effect of an economic decline and a strong US dollar did not stopReebok from increasing profit by 27%. The key objectives established in Reebok wereas follows: • Establish a results-oriented culture • Strengthen our management team • Contemporize our products • Create relevant advertising and effective retail and consumer marketing campaigns • Grow quality market shareWith these objectives and the leadership of a new COO of Reebok International and CEOof the Reebok brand, Reebok had the tools to create an effective brand. Reebok has done many things to further promote its brand message to consumers.Some of its strategies include the following: 1. Realign and restructure product creation teams to connect them to the consumer and make them more successful at creating product and market initiatives. 2. Promote a campaign towards women called “It’s a Woman’s World” which is meant to send a contemporary and inspirational message to target young women. 3. Promote a campaign towards fashion customers called “The Sounds and Rhythm of Sport.” Page 1 of 6
  2. 2. Stephanie Barrett November 1, 2005 Strategic Management 4. Introduced a football business venture where the Reebok brand will be exclusively worn by all 32 NFL teams in the next 10 years. 5. Continue the company’s multi-brand strategy to drive synergies and reduce expenses. 6. Initiated a leadership change for struggling products (Rockport, Ralph Lauren Footwear, and Greg Norman) to improve performance. Reebok faced trouble with its department store products. The difficulty Rockport,Ralph Lauren Footwear, and Greg Norman faced in the previous year might be attributedto the overall decline in department store sales. Consumers can not buy Reebok productsat department stores if they are not shopping at department stores. In 2001 Reebok had a hopeful outlook for the future and many well plannedstrategies in line to further promote its brands. However, Adidas plans to purchaseReebok for $3.78 billion (a 34% premium over current shares). This merger’s goal is tobetter compete against Nike. The companies currently have the number 2 and number 3spots, but combined they might be able to pool their resources to give Nike a biggerchallenge. Page 2 of 6
  3. 3. Stephanie Barrett November 1, 2005 Strategic ManagementInternal and External Factors Affecting ReebokStrengths 1. Profits increasing 2. Jay Margolis, COO 3. David Perdue, CEO 4. Teams more connected to the consumer 5. Multi-brand strategy 6. Dedication to employeesWeaknesses 1. difficult year for Rockport, Ralph Lauren Footwear, and Greg Norman 2. Rely on retail stores to sell productsOpportunities 1. Established objectives a. Result-oriented culture b. Strengthen management team c. Contemporize products d. Relevant advertising and marketing campaigns e. Grow quality market share 2. Restructured production creation teams 3. “It’s a Woman’s World” – young women 4. “The Sounds and Rhythm of Sport.” – fashion consumers 5. NFL campaign 6. Changed leadership for difficult brands 7. Ability to create synergy between brandsThreats 1. Strong US dollar 2. Weak department store channel 3. Foreign market is suffering 4. Economic decline in key marketsTows Matrix:S-O strategies 1. Use the expertise and experience of Margolis and Perdue to carryout objectives (S2, S3, O1) 2. Further increase profits by utilizing the restructures production creation teams (S1, O2) 3. Further strengthen the multi-brand strategy with planned campaigns (S5, O3, O4, O5) 4. Further strengthen the multi-brand strategy with changed leadership and synergy (S5, O6, O7) Page 3 of 6
  4. 4. Stephanie Barrett November 1, 2005 Strategic ManagementS-T strategies 1. Utilize the teams’ connection to the consumer to counteract sales lost because of the strong US dollar, weak department store channels, and suffering foreign market (S4, T1, T2, T3) 2. Utilize multi-brand strategy to find a connection to foreign markets (S5, T3) 3. Use the increased profits to research other profitable markets to strengthen the foreign market and avoid the negative effects of declining key markets (S1, T3, T4)W-O strategies 1. Strengthen objectives to curb the effect of difficult brands (O1, W1) 2. Utilize the changed leadership to correct difficult brands (O6, W1) 3. Strengthen campaigns to correct difficult brands and lessen the need to rely on department stores (O3, O4, O4, W1, W2)W-T strategies 1. Maintain brands to lessen the effect of the US dollar and foreign markets (W1, T1, T3) 2. Strengthen brands to be less dependent on department store channels (W1, T2) 3. Lessen the reliance on retail stores to avoid the effects of weak department store channels (W2, T2) 4. Promote brands in different markets to lessen the reliance on suffering key markets (W1, T4) Page 4 of 6
  5. 5. Stephanie Barrett November 1, 2005 Strategic ManagementRECOMMENDATION Reebok has a strong name and even stronger campaign plans. However, thecompany has a few areas that need to be analyzed and corrected. The areas include: • Reliance on department store channels • Suffering foreign markets • Find markets that are not in an economic decline • Strengthen the brand name and message of suffering brandsThis paper will address each of the concerns and recommend solutions.Reliance on Department Store Channels Relying on an outside resource that the company can not control is a dangerousand challenging way to do business. Reebok should concentrate its efforts in otherterritories. Reebok should do most of its promoting for tennis and sports shoes inspecialized athletic stores. The company should buy a designated area in each sportsstore where customers can shop for only Reebok shoes. As for its other fashion brands(i.e. Ralph Lauren), Reebok should open its own specialized stores under a differentbrand name. This name should communicate a message of stylish and quality shoes. It isimportant that Reebok does not incorporate its athletic shoes in these stores. Reebokdoes not want its athletic store customers to think that it is competing with them.Suffering Foreign Markets Reebok should position themselves in foreign countries to make its shoes easier toobtain. The company should open its own stores in chosen countries. This gives Reebokcomplete control over where and what it sells. Its stores would be large with different Page 5 of 6
  6. 6. Stephanie Barrett November 1, 2005 Strategic Managementsections (i.e. athletic, fashion, etc.). Reebok also needs to strengthen its foreignadvertising by associating its shoes with a famous foreign football player.Find Markets that are not in an Economic Decline Reebok should invest some of their increasing profits in market research toexplore markets that are ready to buy Reebok products. This will give Reebok a newdirection to grow their business and their profits.Strengthen the Brand Name and Message of Suffering Brands The current promotional strategies will take Reebok a long way withstrengthening its brands. Opening stores specializing in fashion tennis shoes anddesignating private areas for athletic shoes will further distinguish Reebok’s brands.Reebok has a plan is progress to promote athletic products. The company needs a planefor their fashion line also. It should choose a celebrity spokesperson for each of thefashion lines. Reebok has come far with its brand names and what they represent. The companyhas taken dramatic steps (i.e. the NFL promotion) to get the brand name across theUnited States. However, there is always room for improvement. The company needs tostrengthen advertising in foreign markets and strengthen the brands of fashion shoes. Fora commodity such as shoes Rebook needs a way to distinguish itself. They are on theright track, but other steps must be made. Page 6 of 6

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