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1. Student ID
32179082
32179378
Unit Code BUS317 32368487
Unit Name Strategic Management 32351603
Assignment Group Case Report
Weightage 25%
Marker Frankie Yee
Range Marks
8 - 10 !
!
4 - 7
0 - 3
Range Marks
8 - 10 !
4 - 7
0 - 3
Range Marks
15 - 20 !
7 - 14
0 - 6
Range Marks
15 - 20 !
7 - 14
0 - 6
Range Marks
18 - 25 !
10 - 17
0 - 9
Range Marks
7 - 10 !
0 - 6
Range Marks
0 - 5 ! 3.5
86.5
21.6
Total (100%)
Total (25%)
23
Recommendations are reasonable, generally follow from the analysis and are adequately
justified;only some value chain activities are identified for action during implementation (what
change is needed?)
Drew on marginally relevant and reliable literature; Referencing is weak
Budget (5%)
Presentation of paper & Quality of research (10%)
Recommendations follow logically from the analysis and well justified; Key value chain activities are
identified for action during implementation (what change is needed?)
Recommendations are not sound; value chain activities for change are not identified (what action is
needed?)
The budget presented is based on realistic assumptions and consideres the major cost drivers.
Wide range of relevant and reliable literature utilised to support argument; Vocubulary, fluency and
clarity of expression; Proper referencing conventions followed.
8.5
Name
Keshan Kumar S/O Thanagopai
Gu Yudie
Wong shi min
Sherly Dwi Putri
Environmental Analysis (General) 10%
Thorough PEST undertaken; key environmental forces and trends identified; comprehensive
evaluation of opportunities and threats
Adequate PEST - some key forces and trends identified, others overlooked, resulting in incomplete
opportunity and threat evaluation
Poor PEST - key forces and trends overlooked, descriptive in nature, lacking analysis; opportunity
and threat evaluation is poor.
7.5
Environmental Analysis (Industry) 10%
Industry power analysis is comprehensive and persuasive; major driving forces and key trends;
comprehensive evaluation of opportunities, threats and industry attractiveness relative to the firm
identified.
8.5
Industry power analysis is adequate, with some driving forces missed; somekey trends are
identified; evaluation of opportunties, threats and industry attractiveness relative to the firm is
satisfactory.
Industry power analysis is weak with major factors missing; few industry trends identified; evaluation
of opporotunities, threats and industry attracytiveness relative to the firm is poor/absent.
Recommendations & Implementation (25%)
Environmental Analysis (Internal Evaluation) 20%
Clear description of organisation's competencies and capabilities constructed from application of
appropriate tools (value chain, functional analysis)
18
Organisation's capabilities and competencies are outlined but the basis is vague as the tools are not
applied well.
Organisation's capabilities and competencies are vague and unclear; tools are poorly applied or
absent
17.5
Significant strategic issues and key problems overlooked; conclusions are not logical and/or not
substantiated in fact; alternatives do not relate to the problems identified; SAVED not conformed to
general and industry analyses weak
Analysis, Argument & Strategy Formulation (20%)
Sharply focussed diagnosis of strategic issues and key problems ; reached logical, insightful and
well substantiated conclusions; reasonable alternatives generated and conform to SAVED
Major strategic issues and key problems identified but with lack of clarity and focus; conclusions are
generally logical and substantiated in fact; some alternatives generated do not follow logically from
the analysis; SAVED described.

2. BUS 317 Strategic Management
Strategy Plan-Adidas Group
LECTURER:
Mr Frankie Yee
STUDENT:
S

3. 2
Table of Contents
Page
Executive summary 3
1. Introduction 4
1.1 Company Profile 4
1.2 Current situations 4
2. Environmental Analysis 5
2.1 External Environmental Analysis (PEST) 5
2.2 Internal Environmental Analysis 6
2.2.1 Past financial performance assessment and implication 6
2.2.2 Value Chain Analysis 6
2.2.3 Boston Consulting Group and implication 9
3. Industry Analysis 10
3.1 Key Success Factors for Adidas 10
3.2 Porter’s Five Forces 11
3.3 Competitors Analysis TOWS matrix 12
3.3.1 Form Competition Analysis 12
3.3.2 Strategic Group Analysis 13
3.3.3 Implication of Stragegic Group Analysis 13
3.4 TOWS matrix 14
4. Objectives for Adidas 15
5. Recommended strategy 16
5.1 International Coporate Strategy 16
5.1.1 AVDSE (SAVED framework) 16
5.1.2 Selection Criteria for Strategy 21
5.1.3 Revamped Value Chain Analysis 22
6. Evaluation and Control 23
6.1Balanced scorecard and Budgeting 23
7. Conclusion 24
8. References 25

4. 3
Strategic management enable organisation to achieve and maintain advantage in competition.
This report aimed to propose strategic plan for Adidas in order to assist business to move towards a
long-term objectives while contributing to short-term decision making and gather general interests.
The increasing demand for fitness and health, provide opportunities for Adidas to extend its
existing market and move forward to other new markets. Moreover, the strong financial power
enables Adidas to merger and acquisition other brands, for example Reebok thus create new product
lines and make brand differentiation.
In this report, strategic analysis covered both internal and external perspectives. PEST and
TOWS framework evaluated the external environments, where internal environments were analysed
by adopting value chain, Boston Consulting Group model and past financial assessments.
Competitor’s analysis with the Porter’s five forces identified competitor’s performances that Nike is
the biggest competitor; Puma, New Balance and Under Armour are smaller competitors.
Strategic formation concentrated on international expansion; budgeting was made separately
for each forecast for the future benefits and costs. For achieving and sustaining strategic
competitiveness, balance scorecard was used to evaluate and control the strategic implementations.
Adidas recognises passion as the core that encourage to continuous innovation and
improvement while being highly customer focused and offer eco-products for sports and sporting life.
Adidas is projected to take over Nike’s first position in the sector for the long term.
A good executive summary
Executive Summary:

5. 4
1.Introduction
1.1 Company Profile
Adidas AG (Adidas) is the largest sportswear manufacture in Europe that started
out as a small family business during the 1920s in Germany and it was later officially
founded by Adolf Dassler in 1948 (Daly, 2014). Over the years, it has successfully
become to the second largest sportswear manufacturer around the world behind
Nike. In order to extend marketing, the company has merged other multiple brands,
for example Reebok (Smit, 2008).
1.2 Current situation
Source from: (Scherer, 2007)
About Adidas
Adidas Sport Performance: offering products that make athletes perform
better.
Adidas Sport Style: it is defined as the “Future of Sports-wear” which
positioning statement is “style your life”.
Adidas Originals: the authentic, iconic sportswear label for the street with
philosophy is “Celebrate Originality”.
Brand Mission
To be the leading sports brand in the world.
Brand values
Authentic, passionate, innovative, inspirational, committed, honest.
Focus areas
Football, Basketball, Running, Training, Outdoors, Adidas Originals, Adidas
NEO label, Customisation, Interactive.
New sales in 2013 €14.49 Billion
Key strategic pillars
" Gaining sales and market share with key growth categories such as
running and basketball within Adidas Sport Performance.
" Leading the industry in the fields of customisation and interactivity across
categories.
" Expanding Adidas Sport Style in the fast-fashion business with the
Adidas Neo label.
Opportunities
" Acquisition of companies adding product differentiation to Adidas.
" Fitness and health trend is increasing.
Challenges
" Competing with Nike in US marketing driven culture.
" The intensive changing demands and requirements for products to be
eco-friendly.

6. 5
2.Environmental Analysis
2.1 External Environment Analysis
External environments involve with several factors, which can dramatically influence
business strategy (Dess at el, 2008). PEST (Politics, Economy, Social, Technology) analysis will
identify the external factors that affect surrounding business environment of Adidas.
Political
! German government intervenes the supply of raw materials.
! Trade conflict arises when Germany and European countries continue to struggle in
the battle for raw materials with China (Tomlinson, 2005).
! US Government is considering deducting the tax rates for imported footwear (Lian &
Tong, 2008).
Implication
! As the largest sourcing country, increasing labour costs in China threaten Adidas.
! Adidas under risk to be boycotted by China.
! Reformation of the tax rates in US increases the chance to extend US market.
Economical
! Decreased consumer spending due to Europe’s economic crisis (Davis, 2014).
! Increasing unemployment rate.
! China’s total salaries would rise by 9% over the next 2 years (Tomlinson, 2005).
Implication
! Decreased competitiveness of Adidas’ merchandise due to production becomes
more expensive.
! Consumers spend lesser on non – essential goods such as sportswear.
! Adidas will continue to suffer the consequences of economic crisis as Europe makes
up 1/3 of sales growth.
Socio –
cultural
! Increasing attention on fitness and health (Blaise, 2006).
! Global consumer cultures are emerging (Jonson, 2008).
! Environmental organisations and eco-customers demand eco-friendly products.
! The requirement of sustainable business base on triple bottom line (Brammer,
Rayton & Millingto, 2007)
! Increasing travel and improved communications have contributed to a convergence
of tastes and preferences in a number of product categories (Opoku & Akorli, 2009)
Implication
! New opportunities for Adidas to produce sporting goods and service which suitable
for fitness.
! Increasing environmental sustainability standards of raw materials used and
manufactory process.
! Increasing innovation ability in order to fulfil changing demands.
Technological
! Innovatory new technology used to product designing (Law et al, 2004).
! Increasing usage of Internet.
! New form of promotion strategy (Orlik, 2014).
Implication
! Adidas should combine the best materials with latest technology together to
manufacture products, which make customers perform their best.
! Influences from social media for example, Facebook being the most popular social
networking site and best online marketing platform. Adidas can get feedback from
customers faster.
! Improve advertisement, distribution and online shopping.
A good PEST analysis, beautifully
presented.

7. 6
2.2 Internal Environment Analysis
2.2.1 Past financial performance assessment and implication
Through assessing past financial performance of Adidas to measure its current financial
health and sustainability.
Years 2013 2012
Current Ratio 1.45 1.57
Quick Ratio 0.72 0.77
Debtor Collection (Days) 44.04 41.63
Creditor Collection (Days) 89.74 86.23
Stock Turnover (Times) 2.87 3.13
Leverage 2.12 2.20
ROCE 23.6% 19.3%
Return on sales 5.43% 3.53%
Gross profit to sales 49.3% 47.7%
Profitability
" The increased number of Return on
Investment, Return on sales and Gross
profit to sales are the indicators of healthy
financial position, which result of
incremental profits.
" Adidas 2013 financial report has illustrated
that the financial performance in third
quarter was negative, however, in the
fourth quarter had a strong sales and
profitability growth. It attributed to the
coming event - 2014 World Cup, which
created a lot of opportunities and profits to
sporting goods industry.
2.2.2 Value Chain Analysis
The value chain analysis contributes to identify both primary and secondary activities,
which can develop company’s competitive advantages while also making vale to customers
(Kaplinsky, 2000). By identifying the value chain listed below, it can clearly find out two core
competencies that Adidas has – Technology and Procurement.
Liability
" Current ratio indicates Adidas’ ability to
pay debts over the next accounting year. A
slight decrease of current ratio could be
caused by the growth of cash outflow,
which may expended on purchasing
inventories or expended the Days Sales
Outstanding.
" Current ration locates between 1.5~3.0
presents that company has healthy
business and strong financial power.
Adidas had dropped from that region in
2013; however, the figure still maintains
above 1.0, which means Adidas has no
problems dealing short run obligations.
Source: Calculation based on Adidas Annual Report 2012 & 2013

8. 7
Value Chain
Activity
Strategy Value Created
Value
Rareness
Imitability
Organized
Sustainability
Inbound
Logistics
! A specified inbound logistic chain for moving
raw materials and unassembled goods insider
the company.
! Purchase and manufacture the products at
same place. Normally, at the developing
countries like China with cheaper price.
" Decrease transportation costs.
" Decrease the production costs.
‫ݲ‬
‫ݲ‬ X X X √
Operations ! Establish “Workplace Standard”.
! Working closed with suppliers:
" Checking the rules are followed.
" Selecting new suppliers.
" Rewarding good performances.
" Taking action over poor performance.
" Providing information for worker.
" Working with Licensees.
" Enhance its reputation of
environmentally sound factory
operations.
" Position itself as the sustainable
business operators.
" Ensure the high quality of products.
" Create the strong relationship with
supplier.
√ X X X √
Outbound
Logistics
! Distribute products with a strong focus on
controlled space, including: Own-retail
business, e-commerce, Shop-in-Shop, Joint
ventures with retail partners, mono-branded
franchise stores, co-branded stores with sports
organizations and other brands.
! Set up “Integrated distribution roadmap”
program.
" Create a high level of brand control.
" The distribute channel-focused
approach has established strong
market positions globally, deepening
and expanding cooperation with
leading wholesale partners, operating
one of the biggest mono-branded store
chains in Adidas industry and
becoming a significant e-commerce
player with one consistent global
platform.
√ X X X √
Marketing and
Sales
! Sell products in virtually every country of the
world. The group has set up an unparalleled
portfolio of promotion partnerships with
international recognized sports associations
(e.g. UEFA, FIFA, NBA, NFL, and NHL).
! Henceforth, commercials, ads, apps for
smartphones, product placement, sponsorships
for athletes and sport events (e.g. Berlin
Marathon 2011) are implemented.
! The group is using adapted pricing strategies,
which is depending on which market they are
operating in.
" Reduce the number of lost customers
and to increase sales.
" Ensure that the products stay
competitive at the point of sale.
" Attack more customers from different
segmentations.
√ X X X √

9. 8
Service ! Encourage customers to create personal
account, based on the information and
purchase history to offer future favourite
production information.
! Allow customer e-shopping and offer free
deliver services.
! Offer pre-ordering and special ordering.
" Building trust and understanding
relationship with customers will
maintain customers’ loyalty.
" Taking advantages of online-shopping
to fulfil consumers’ behaviour.
√ X X √ √
Procurement ! Using global and multi-layered supply chain with
several types of business partners.
" Adidas influences in terms of social and
environmental compliance is linked to
the strength of its partnerships, and is
often proportional to the scale and
stability of the orders placed with its
suppliers.
√ √ √ √ √
Technological
development
! Continentally implementing research and
development.
! Corporate with Germany government and join
manufacturing of innovative products program.
" Saving cost by enhancing production
effectiveness.
" Contribute to environmental friendly
thus increase the reputation of
branding.
√ √ √ √ √
Human
Resource
management
! Employee-oriented leadership
! Talent Management strategy focuses on
developing the old employees and give them
opportunities to their career.
! Remuneration based on market requirement
and performance level.
! Motivating employees by gave the bonus.
! Long-term incentive programmes: encourage
senior manager achieve financial and
compliance target.
! Work-life balance concept.
" Talent workers maintain and
recruitment directly influences the
competitive power of company.
" Employee branding impacts on future
recruitment and organization image.
√ X √ √ √
Firm
infrastructure
! As global brand, Adidas has separate
Supervisory Board based on the different
regions.
! Decentralization is adopted by the Adidas.
! Distinct identity of range of brands and manage
separately.
Better understanding of regional business.
Allow global expansion.
Focused to meet the needs of a specific
sector within the sport market and maximize
the impact with consumer.
√ X √ √ √

10. 9
2.2.3 Boston Consulting Group (BCG) and implication
BCG as a ‘ portfolio techniques’ assists managers in locating resources among organisation businesses in order to achieve
final strategic objective effectively. BGC generally positions products either base on the rate of growth of the market or the market
share of the product from the competitors; it also divides products into cash cows, stars, problem child and dog (Lakhani et al.,
2002). The table below considers three products’ lines of Adidas.
Source from: (Adidas Group, 2013), (Nike, 2013) and (Puma SE, 2013)
Sales
€ in million
No. of direct
competitors
Sales of the largest firms in the
sector
(€ in million)
Forcast annual
growth rate
Relative market
share
Footwear 6.873 15 11.184, 6.873*, 1.403 5% 0.6
Apparel 5.813 17 5.813*, 5.246, 1.170 10% 1.11
Hardware 1.806 12 1.806*, 1.080, 605 6% 1.7
Apparel
Footwear
Hardware
" In short term the business still gains profits
however, footwear once was the top
attractive products now is turning out to be
dog, due to loss of strong competitive
advantages. And it is impossible to abandon
this product category as it is still contributing
47% of the total revenue.
" Apparel and hardware located at cash cows
category but the position is not strong
enough to support Adidas’ large size
business.
" For long-term success, Adidas must take
action either to improve its existing market
performances or enter other new markets.

11. 10
3.Industry Analysis
Industry analysis concentrates on economic, political and market factors, which can impact the
development of industry.
3.1 Key Success Factors for Adidas
Key Success Factors (KSF) decides the success of an organisation through correctly identifying
available resources to achieve strategic goals (Wu, Tand and Shyu, 2010). Besides, KSF assist
management in identifying future direction to keep competitiveness in order to sustain in market
challenges (Bullen & Rockart, 1981). Source from Adidas Group
Success Factors Industry Descriptions Adidas’s Descriptions Sustainability
Quality Control
" Safe, reliable and
reputable products
" Need for testing
examined by licensees.
" Expertise in sports
technology.
√
Partnership
" Bound relathionship
with partners, which
is valuable, hard to
substituted.
" Strange relathionships
with partners for
example, made alliance
with FIFA since 40 years
ago.
√
Sales and
Marketing
" Branding recognised
" Mass social media
appearances.
" Effectve promotion
strategy
" Refined distribution
channels and expanded
more than 1000 outlets.
" Sponsoring with
sportsmen/women to
attract public focus.
√
Strategic
Location
" Economies of scale
" Ability to reach out
to more customers
" Mass location.
" Central districts.
√
Financial " Sustainability
" Strong sustainble
financial assets.
√
Corporate
Governance
" Corporate Social
Responsibilities
" Position itself as
sustainable business.
" Adidas almost uses non
– polluting materials and
processes.
√

12. 11
3.2 Porter’s five forces
Porters five forces Model is powerful tool to determine the attractiveness that an organisation
has. It contributes to identify the current advantage position while also locating the position that
organisation is moving on (Porter, 2008). This model includes five components, which are listed
down below. It clearly illustrates Adidas’ positions as:
" High Rivalry among competitors
" Low Threat of New Entrants
" High Threat of Substitute Products
" Low Supplier Power
" High Buyer Power
Five-Forces Model of Competition on Adidas
Threat of entrants: Barriers to entry High Low
Can entrants gain economies of scale quickly? √
Can entrants climb the experiences curve quickly? √
Do entrants have a differentiated product? √
Are the capital requirements to enter the industry low? √
Do customers incur a low switching cost? √
Can entrants gain easy access to distribution channels? √
Do entrants have non-size related advantages? √
Supplier power High Low
Are supplier’s small and many in number? √
Are suitable substitute products available? √
Do supplier has a few buyers? √
Can Adidas succeed in the market place without the suppliers’ product? √
Can Adidas switch to another product easily? √
Is it difficult for supplier to integrate forward in to the Adidas’ industry? √
Buyer Power High Low
Do buyers purchase a small portion of an industry’s total output? √
Are buyers’ purchase constitute an insignificant portion of Adidas’ annual revenues? √
Do buyer incur a high switching cost when switching to another product? √
Is it difficult for buyers to integrate backward into the Adidas’ industry? √
Threat of substitutes High Low
Do buyers of these substitute products face high witching cost? √
Is the substitute product’s quality and performance worse than the existing product? √
Industry rivalry High Low
Are there few competitors or are the competitors of unequal size? √
Is industry growth high? √
Are fixed and storage costs low? √
Are there differentiation opportunities or high switching costs? √
Are the strategic stakes low? √
Are exit barriers low? √

13. 12
3.3 Competitor analysis
3.3 Competitor analysis
3.3.1 Form Competition Analysis
Level competition
Competitors
Implications
Strengths Weaknesses
Brand competition
Brand recognition
! Nike is one of the most
widely known companies
in the world with its
trademark “swoosh” is
one of the most instantly
recognizable corporate
symbols in history.
! Its reputation for
exploiting
inexpensive and
child, labor in the
Asian factories where
its products are
manufactured.
! Focus on customer
orientation.
! Put more attention on
diversity cultures.
! Hold more events
and get customers
involved with.
Innovational
products
! Puma uses cutting edge
designs to attract new
buyers and stand out
from the crowd of
competitors.
! Puma’s advertising
strategy and
promotional
strategies are far less
resulting in the brand
not be as projected to
consumers as
Adidas.
! Carrying on R&D to
explore new design.
! Take advantage from
the latest technology.
! Better understand
customers’ demands
and market trends.
Industry Competition
! Those brands are more
adoptive by national
customers.
! The price is more
affordable.
! Low brand
recognition in
international market.
! Low quality resource
and out-date
designing.
! Correctly position
Adidas branding.
! Producing new
products with
national culture
features.
Form Competition
! Fashion and modern
features.
! Cheaper prices.
! Wider products lines.
! Successful
promotional strategies.
! Not suitable for
sporting activity.
! Easily become
outdate.
! Low quality
! Limited targeting
groups.
! Emphasize the
function of Adidas’
products.
! Identify the correct
target
segmentation.
! Improve
promotional
strategy.

14. 13
3.3.2 Strategic Group Analysis
A very good environmental analysis so far. Well done.
3.3.3 Implication of Strategic Group Analysis
Adidas is the market challenger and in order to be the number one sports apparel brand, it
needs to continue producing innovative products and be prepared to deal with threatens from
competitors.
Sports have gained more importance than before. For example, Singapore has been
promoting citizens to maintain healthy lifestyle and to facilitate that the government has been
building stadiums and swimming pool in neighbourhood hubs (Dogiamis & Vijayashanker, 2009).
There should be increased demands that users demand for sports apparel.
1
Adidas has to position itself correctly and set right targeting groups. Furthermore, Adidas
needs to create its own uniqueness in the sports apparel and lead in developing products that are
innovative.
1
1
International
National
Regional
Local
Narrow Wide
analysis so far Well done
Market Segment
Nike
Adidas
Puma
Li-Ning
Under Armour
Forever 21
H & M

15. 14
3.4 TOWS matrix
Internal Strengths
! High brand reorganization
! Over 2400 stores worldwide
! High level brand control
! Innovative R&D department
! Owns Reebok, Rockport and Taylor
Made
! Large geographical foot print in
diverse markets
Internal Weaknesses
! Vendor and manufacturer fail to
achieve and maintain high
manufacturing standards.
! Easily changeable consumer loyalty
due to intense competition
! Outsourcing 97% of its global
production to third party manufacturer
which make the consumers question
its product quality
External Opportunities
! Generates over 60 new designs every
year
! Adidas has sponsorship agreements
for major sports events across the
globe
! Strong partnership
SO Strategies
! Business growth in new markets
through applying technologies. For
example, Adidas in medical industry,
which enhance devices to enable
paraplegics
! Enrich product lines.
! Broad Differentiation.
WO Strategies
Building higher consumer loyalty through
understanding customers’ culture and
demands then get them involved and
introduce them the value and unique of
the brand.
External Threats
! Similar or better products with lower
prices offered by competitors
! Affected market share due to pirated
or fake imitations
! The marker for sports apparel and
footwear had declined in 2009.
ST Strategies
Repositioning Adidas branding and
emphasizing on environmental friendly in
order to recreate or increase its value in
consumers’ mind.
WT Strategies
Restructuring Adidas in order to move it
beyond “Euro-sport” and enter other
national markets.

16. 15
4. Objectives for Adidas
Below table illustrates the long-term and short-term goals for Adidas based on the SMART (Specific, Measurable, Achievable,
Relevant and Time-bound) method.
Short-term objectives (1-5 years) Long-term objectives (6-10 years)
Finance achievement
! Total Group sales achieve 45% to 50% on a currency-neutral basis
within the five-year period.
! Growing bottom line faster than the top line therefore, grow annual
earnings at a compound annual growth rate of 15% and to reach an
operating margin of 11%.
Sales
! Becoming a top retailer within the world.
! Yield healthy, sustainable development through making
investments worthwhile for consumers.
Market Positioning
! Adidas Sport Performance: gaining sales and market share in the
running and basketball categories.
! Adidas Originals & Sport Style: expanding in the fast-fashion
business with the Adidas NEO label and maintaining the
strong momentum of Adidas Originals.
! Reebok: establishing Reebok as the leading fitness brand.
Market Positioning
! To become the global leader in the sport goods industry
Branding
! To ensure that the brands seize market and category opportunities.
! Recognising brand with social corporate responsibility.
Operations
! To ensure cost competitiveness.
! To modernize the group infrastructure.
Technology
! Combining state-of-the-art information technologies with
manufacturing processes and innovative products.
! Fitting into ‘High-Tech Strategy 2020’ the German national plan
to take the country to the next level in terms of innovation.

17. 16
5.Recommended Strategy
Adidas must leverage on its core competencies and differentiate itself from other competitors
so that become the market leader. In order to move toward to final objective, this report proposals:
! International Corporate Strategy: Adidas has powerful financial resources to implement
international expansion. With goal to increase profits and market shares, International
Corporate Strategy has advantages of better understanding local cultures, political and legal
systems while also minimizing linguistic barriers (Dess et al., 1995).
5.1 International Corporate Strategy
5.1.1 AVDSE (SAVED Framework)
Reduced trade barriers and government cooperation for production have increased
globalisation as a result of intense rivalry among market. Although the annual report shows that
Adidas gathers profits and has large geographical footprints in markets, however, the major
amount of profits were gained from Europe and China, which means there are more regions that
are not fully developed. Especially, countries are driven by American cultures and prefer Nike
branding. In order to increase market shares and compete with Nike, Adidas should consider
assessing potential markets where Adidas has not performance dominantly yet.
" Arenas
Market selection determines the best regions to further develop and Arenas can assist to
identify those locations by adopting General Electric Model (GE).
GE model provides direction regarding resources allocation and opportunities available in
markets. This report takes four steps format GE model, which are:
Step 1: Identification of Strategic Business Unit (SBU)
Base on the geographic position, there are seven SBUs identified to measure, which are Asia
(exclude China), China, North America, South America, Europe, Africa and Oceanic.

18. 17
Criteria Asia China Europe
North
America
South
America
Oceanic Africa
Factors that affect market attractiveness
Market size Large Large Large Large Large Large Large
Pricing trends Upward Upward Downward Downward Downward Maintain Maintain
Market Growth Increase Increase Decrease Maintain Maintain Increase Maintain
Intensity of the competition Medium High High High Low Medium Low
Overall risk in the industry Low Low Medium Medium Medium Low High
Ability to differentiate Low Low Medium Medium Medium Medium High
Technology requirement High Medium High High Medium High Low
Emerge requirement High High Medium High Medium High Low
Factors that affect business strength
Product or service uniqueness High Low Low Low Medium Medium High
Brand recognition High High High High High High High
Market share growth High High Medium Low Medium Medium Low
Customer loyalty High Low High Low Low Low Low
Relative cost position Medium Low High High Medium Medium Low
Production capacity Medium High Medium Medium High Low High
Product quality High Medium High High Medium Medium Low
Record of innovations High Medium High High Medium High Low
Distribution network High High Medium Medium Medium Medium Low
R&D performance High Medium High High Medium High Low
Management High Medium High High Medium High Low
Step 2: Determination of SBUs’ position on the basis of factors that measure Market Attractiveness and Business Strength

19. 18
Step 3: Ranking SBUs
Step 4: Implementation
North American, Oceanic and other Asia counties excluding China are identified as fast
growing SBUs. However, North American will be targeted as first priority where has high profitable
market and worth to take further R&D. Especially, the US within that region has the strongest
purchasing power and there is emerging trend of fitness and health, which will create demands of
sports products. Therefore, Adidas needs to concentrate on North American for future investment.
China, Europe and South American still remain value for developing. However, rather than
put those regions at priority to grow, they should adopt selective investment that depends on local
management and corporate capabilities.
Africa should have minimization of invest unless there is good reason or special event that
create valuable opportunities to enter that market.
Invest for Growth
North American
Invest to Build
Oceanic
Build Selectively
Build selectively
Other Asia counties
Develop Selectively
South American
Europe
Limited expasion
Africa
Protect Refocus
China
Harvest Diverst
Strong Medium Low
Business Strength
Competitive
Attractiveness
Low
Medium
High

20. 19
" Vehicle
Vehicle considers the method used to achieve the international strategy. And in order to extend overseas markets, there are
several options listed down in the table below:
Mode Advantage Disadvantage Application Adopt
Exporting
! No requirements
of facility needed.
! Economies of
scale can be
used.
! Create dependence
on intermediaries.
! Transportation costs.
! Low level of
involvement.
! Country like America has set importing policy in order
to protect local business. Adidas have to pay extra tax
for exporting products, which will affect the price.
! American culture resists adopting European product;
especially when they have local brand Nike as a
stronger substitution.
No
Licensing
! High financial
return.
! Limited financial
exposure.
! Loss of control and
quality of services.
! Create potential
competitors.
! It is important for Adidas to find right partner to licence
within a local situation. The long distance control may
result of unqualified services that will damage Adidas
branding.
No
Joint
Ventures
! Sharing risks
! Permission to
enter markets.
! Confliction of two
parties’ interests.
! Lack of intergradation.
! It will take long time to make public recognise the new
brand.
! It will reduce Adidas branding value.
No
Acquisition
! Quick access to
new market.
! Totally control of
resource and
decision making
rights.
! High cost
! Create problems of
integration and
coordination.
! Through acquiring local brand for example, American
brand Under Armour. Adidas can directly gain profits
from it without over considering business culture.
! Acquisition assists to market penetration, especially
for those regions slowly adopt foreign brand.
! Adidas can access market quickly and get return from
investment.
YES
Strategic
alliances
! Sharing risks.
! Permission to
enter international
markets.
! Interest conflict
between two parties.
! Limitation of
intergradation.
! It also has similar advantages like acquisitions.
! Besides, two companies share resource and
technology can create new ideas and extend product
lines thus make they become more competitive.
YES

21. 20
" Staging and Economic Logic
" Differentiators: Porter’s generic strategies
Uniqueness
Perceived by
the
customer
Low cost
position
Industry
wide
Differentiation
Overall
cost
leadership
Particular
Segment
Only
Focus
Strategic Advantage
Adidas should position itself at Broad Differentiation:
Strategic Target
! A broad cross-section of the market
Basis of Competitive Advantage
! Ability to offer buyers something attractively
different from competitors.
Product Line
# Many product variations, wide selection
! Emphasis on differentiating features
Keys to sustaining the strategy:
! Concentrate on a few key differentiating
features
! Stress constant innovation to stay ahead of
imitative competitors
er
tion
n
n
n
n
n
n
n
Activities Timeline
Budget
(€ Billion)
Identify the partners and build up relationship By 2015 5
Selecting management working with partners By 2016 0.02
Recruiting staffs and retraining exiting staffs to adopt diversity cultures By 2016 0.03
Working toward hybrid products based on local features By 2017 0.5
Monitoring the process of strategy and make the next short term
decision
By 2018 0.01
Ongoing Branding Campaign to raise awareness of Adidas By 2019 3
Continuously R&D process in order to trace the latest demands and
technology
By 2019 2
Total 15.6
Strategic
Target

22. 21
5.1.2 Selection Criteria for Strategy
Adidas’ next movement will be in line with its objectives meanwhile also considering the risks
and required resources to implement future strategy.
Criteria for International Corporate Strategy to succeed:
! Continentally research and fully understand US external business environments and
customers’ demands.
! Incrementally develop internal business structure so that to better cooperate with local
alliances.
! Transfer customers’ perspective from European brand to ‘US-European’ brand thus minimizes
the resistance to adopt foreign products.
! In short term, be able to survive in highly competitive market.
! In long term, be able to acquire customers and compete with Nike.
Adidas will implement International Corporate Strategy and enter US market first. When the
brand is successfully adopted by US public, Adidas should continually push their brand to other
markets that were suggested to selective investment in the earlier stage of the report, such as Asian
and Oceanic countries therefore, to be ahead of Nike.
Excellent. It would have been perfect if the group had actually discussed about the criteria in selecting
the mode of entry rather than just listing out the advantages and disadvantages.

23. 22
Value Chain
activity
Strategy Value created
Inbound
Logistics
! Manufacture products in nearby places with
cheaper resources, such as Moxico or other South
American countries.
! Through marketing research to increase the
accurancy of future forecasting so that it is
implemented Just-In-Time inventory strategy.
! Reduce the transportation costs.
! Reduce inventory costs.
Outbound
Logistics
! Reinforce online shopping channel and redesign
the product change policy.
! Build strong relationship with local vendors, such
us sports clubs, event organisations, gym & traning
instituation and EA inc, etc.
! The emerge of technology usage enable customers to
shop online rather than visiting retail shops. Proporate
product change policy will create convenient on e-
shopping and enhance customers satisification.
! Through coporation with vendors it will increase the
target segementation beyond Adidas supporters.
Firm
Infrastructure
! Implement incremental development.
! Improve the information sharing system.
! Improve the diversity management.
! Approprately manage restrenchment
! There is a high prosibility that Adidas will enter US
market by aqusition or strategy alliance, which may
cause culture conflict between two companies and also
result of downszing and internal restrcture. Appropriate
manage is necessary to retain talented workers.
Procuremnt ! Select suppliers from either America or Europe
regions instead of China.
! Removing image of “Made in China” due to the majory
American match chinese factories with low quality and
cheap products.
5.1.3 Revamped Value Chain Analysis
The current value chain of Adidas needs to be modified therefore to support proposed strategy.

24. 23
6. Evaluation and Control
6.1 Balanced Scorecard and Budgeting
Since Adidas company operates in a dynamic environment, control and measurement becomes an important process to
identify how the business is preforming, also indicating the reasons that causes certain performances (CICEI, 2014). Balance score
sheet as a tool to measure Adidas performance more than financial perspective. It contributes to attain a sustainable business by
comparing Adidas strategies with its objective and based on the results to improve internal systems and external outcomes (Kaplan
and Norton, 1996).
Perspectives
Strategic Objectives Strategic Controls
Financial
! Creating long- term value
! Being a sustainable company
! Revenue growth
! Increase share value
! Operating Margin
! Operating Expenses
! Gross Margin
! New income attributable to shareholders as a percentage of
new sale
Customer
! Attract new customers
! Ensure customer retention
! Increase customer satisfaction
! Increase demands
! % Increase of new customers through registration
! % Repeated sales through database and survey
! % Increase sales from both new and old customers
Internal process
! Reduce product and supply chain cost.
! Reduce standard lead times for footwear
and apparel.
! Increase number of new designs.
! Increase quality of designs.
! Standard lead time
! % Change in cost of sale
! % Increase in R&D expenses
! Number of product launch
Learning and
growth
! Create leadership excellence
! Employees satisfactions
! Create an attractive work environment.
! Diversity management.
! Turnover rate.
! Average length of service
! % Management position from different groups.

25. 24
In the processes of strategy management, environment analyses are implemented by applying
BCG model to identify the business environments, which assists in suggesting strategy plans for
Adidas in order to enhance its competitive advantages. Meanwhile, value chain aids to find out
Adidas’ core competencies and key success factors. Besides, TOWS model recognises the
advantage that support business prevision; and those disadvantages hinder the business to achieve
its final objectives.
Strategy formation conducts international corporate strategy that suggests entering US market
and selectively invests in other Asian and Oceania countries.
Ultimately, financial budgeting is set for forecasting possible future costs while evaluation and
monitoring are necessary to identify and response external environment changes therefore balance
scorecard is adopted in the end of report.
7. Conclusion

26. 25
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