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Adidas in North America


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Current battle with Nike regarding gaining market share in North America

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Adidas in North America

  1. 1. adidas Group Brad Andal Jeff Leong Kyle Mattson Joel Myers Sudhir Pathak November 28th, 2012 Mgmt 4090
  2. 2. Key Strategic Issues• Specific Focus on North American Sporting Apparel Market• Direct Competition again Nike• How does adidas gain a larger market share in North America?North American Shoe Market• Nike has 43.1%• Adidas has 13%
  3. 3. •Company overview•Culture•External Environment•Internal Environment•Financials•Recommendations•Conclusion
  4. 4. adidas Group Overview• Founded in 1949 by Adolf Dassler• “Adi” = Adolf “Das” = Dassler• Focused on athletic shoes and Apparel• Three main units: Adidas Reebok, Taylor-Made• Over 170 subsidiaries• Over 42,000 employees
  5. 5. Corporate Culture• Leadership: Adolf Dassler/Hebert Hainer• Talent/Succession Management• Rewarding Employees• Work Life Balance Ethics• Accusations• Cancelling Contracts
  6. 6. External AnalysisHigh Rivalry among Competitors• Intense rivalry between adidas & Nike for market share• Powerful competitive strategies used by market leaders
  7. 7. External AnalysisLow Threat of New Entrants• Strong brand preferences and customer loyalty• Market leaders benefit from significant economies of scale• Difficult for new entrants to establish distributor/retailer networks
  8. 8. External AnalysisHigh Threat of Substitute Products• Substitutes are readily available and attractively priced• Low Switching Costs• Low Supplier Power• Manufacturing is outsourced to low cost producers
  9. 9. External AnalysisHigh Buyer Power• Buyers benefit from intense rivalry for market share• Low switching costs for buyers• Buyers have discretion in purchasing products• Buyers are well informed on purchased products due to intense marketing
  10. 10. PEST AnalysisPolitical• Employment laws• Environmental RegulationsEconomic• Recession• Economic Growth• Oil Prices/Cost of inputs
  11. 11. PEST AnalysisSocial• Consumer trends, age distribution• CSR demands, safetyTechnological• Intellectual property• Market Consolidation know –how• Constant innovation
  12. 12. KSF’s Well-known and well-respected brand name Clever target advertising campaigns Strong distribution and retail channels Direct sales capabilities Expertise in sporting apparel technology and R&D Constant Innovation (live or die)
  13. 13. SWOT Analysis  STRENGTHS       WEAKNESSES     Strong financial Position       All product outsourced     Strong brand recognition       Wholesale business doesnt give adidas     Large portfolio of IP & patents       control over customer experience at point of sale      Established online presence       Wide breath of brands and products     Large portfolio of strategic partnerships        may spread resources thin causing lack of      with designers, teams, & athletes       focus on core competencies     Diverse distribution channels             Diverse breath of brands and products                           OPPORTUNITIES       THREATS     Emerging high growth markets: China       Cut throat competition     Apply technologies across multiple brands        Increase in the cost of inputs     and product lines       Government regulations in countries where     Use of social media as marketing tool        products are produced     to capture the important youth demographic       Economic slowdown     Growth through acquisitions/merger       Negative PR (partnerships/CSR/etc.)     Lots of room to carve market share from             competitors           
  14. 14. Financial AnalysisKey MetricsNet Sales (€ in millions)        2010  2011Sales            (year-over-year change)   9.0%  13.0%             Gross margin     47.8%  47.5%Other operating expenses (% of sales) 42.1%  41.4%             Operating margin     7.5%  7.6%             
  15. 15. Financial AnalysisLiquidity & DebtMetric       2011         Quick Ratio     0.92         Debt Ratio     0.53         Debt-to-Equity     1.13         Interest Coverage     7.2
  16. 16. Financial AnalysisOther MeasuresMetric        2011         Marketing budget (percentage of sales)   10.2%O          R & D budget (percentage of sales)   0.01%          
  17. 17. RecommendationsMake Corporate Social Responsibilitya Focus • Sensitive market • Learn from Nike mistakes • Labour Laws and Regulations • Sustainable Materials • Supernova Glide 3 running shoe • DJSI • #38 Corporate Knights list • Promote/Advertise CSR accomplishments
  18. 18. RecommendationsIncrease Marketing and R & D • Two biggest G & A expenditures that drive market growth • R&D • Invest in product customization • Marketing • Athletes endorsement • Social Media
  19. 19. RecommendationsIncrease Own Retail Presence • Customer Experience • Control space • Franchising • Risks
  20. 20. RecommendationsMarket Share Through Acquisitions• Under Amour • $5.67 Billion Market Cap • Trading at $54 per share• Lululemon • $10.40 Billion Market Cap • Trading at $72 per share
  21. 21. SummationIt will not be a quick and easy process togain market share from Nike in NorthAmerica
  22. 22. Questions?