Adidas Global Business Paper

Adidas Global Business Paper

Adidas Kisha Dean Tusculum College BSN-554 Introduction Adidas was formed in 1948 and named for its founder Adolf “Adi” Dassler. It is currently the largest manufacturer of sportswear in Europe, while it is second worldwide after Nike. It is based in Germany and currently has more than one-hundred and seventy subsidiary companies. The company was formed after Dassler and his brother Rudolf disbanded their previous company, Gebruder Dassler Schuhfabrik (Dassler Brothers Shoe Factory).

The company was divided after a rift between the brothers, and two separate companies were formed. Adidas, named for Adi Dassler, and Ruda, named for Rudolf Dassler. Ruda was later renamed Puma, and the two companies went into competition against each other. Both companies utilized varying marketing strategies that included advertising to the masses via athletes. This marketing strategy was duplicated by the American run Nike Company, and by the 1990s, both Adidas and Puma were practically completely replaced in the U. S. market.

In 2006, Adidas acquired the Reebok Company, which helped to rejuvenate its place in the U. S. market (Esterl, 2008). The company now exists second in the world behind Nike as the leading manufacturer of sportswear. The company’s main strategy is to “lead the sporting good industry with brands built upon a passion for sports and a sporting lifestyle” (Strategy, 2011). Strategies for Functional Areas Marketing/Sales Adidas has employed a successful marketing strategy since its inception. In its earliest days, the company simply relied on word of mouth and product placement.

While Adidas and Puma competed in early years, the people in their small town in Germany were the main faces of the companies. Over the next several years, though Adidas turned to spreading its advertisements across the world and began using famous faces to sell shoes. Professional athletes were employed to be spokespersons for the company, and several particular shoe designs were made specifically for the person selling them. Recently, Adidas has moved onto larger ventures. In 2010, the company announced that it would be sponsoring the FIFA World Cup along with one-third of the competing teams.

Adidas is widely considered to be the world’s largest soccer brand and has been actively involved in supporting and sponsoring events and teams related to the sport since the company’s foundation. While Nike still retains the lead on basketball and running sponsorships, Adidas actively competes to make sure it holds onto the top title for soccer. The current Chief Executive Officer, Herbert Hainer, said, “Football is, of course the heart and soul of our company” (Townsend & Elfes, 2010).

The FIFA World Cup sponsorship was one of the largest ventures that Adidas has ever undertaken, but it was a success in terms of advertising to a world-wide audience. In an effort to challenge Nike in the areas of sponsorship and sales, Adidas has recently unveiled a new advertising campaign featuring some of the biggest stars in the world. This campaign moves beyond the general recipe of solely featuring athletes and includes musicians and other celebrities, such as David Beckham and Katy Perry (Babej, 2011).

The company has also made plans to feature new products that could drive a wedge into the basketball sportswear top level, which is currently occupied by Nike. In June, Adidas will release the lightest basketball shoe currently available in a direct rivalry with the current preferred shoe, Nike’s LeBron Air Max 8 V/2. The AdiZero Crazy light shoe is fifteen percent lighter than the LeBron Air Max and weighs only 9. 8 ounces (Elfes & Steele, 2011). Operations The current global operations plan for Adidas is broken down into several parts.

The Adidas Group’s website outlines these parts as being replenishment, end-to-end profitability, adaptive supply network, end-to-end planning, and accelerated creation to shelf. The company plans to focus on identifying the most in-demand goods and making sure that these products are available to the consumers in a timely and easy manner. The operations group will focus on looking at their products as a whole and planning the most effective manufacturing and distribution process doable for their company.

Recently, Adidas has named Russia and China as major “growth markets,” and the company is working on implementing marking plans that will directly reach out to those specific areas. In 2011, Adidas has plans to add more than one-hundred stores to its current collection, many of those in the targeted areas. A majority of those stores will open in Asian countries and other emerging markets. In 2010, the company’s shares more than doubled in value, and they are expected to grow ten to fifteen percent in 2011, proving that the “growth markets” provide a solid basis for company expanse (Elfes, 2011).

Human Resources The Adidas Group relies heavily on the Internet as its current main basis for hiring new employees. It advertises itself as an international company with a basis in sportage and offers several different opportunities in a variety of areas and fields. In addition to simply offering potential applicants the chance to discover and apply for new careers online, the Adidas Group asks for feedback in a variety of different places on its website.

It is actively looking for ways to improve its hiring process, and the human resource department requests that all new team members relay their own feedback in regards to the hiring and orientation periods. Manufacturing/Distribution The Adidas Group has fallen under some scrutiny for their well-known practice of outsourcing production of their goods. The company does most of its production in private third party companies, leaving few manufacturing jobs to its home-based area.

In an effort to expand itself within the proposed “growth markets” of Russia and China, Adidas plans to increase production in Laos, Cambodia, and Vietnam. The employees of these third party production agencies will likely see an increase of up to seventeen percent in their wages (Elfes & Jarvis, 2010). Another country that Adidas plans to target for growth is the United States. Increasing productivity and manufacturing power will allow Adidas to open more stores within the U. S. and gain exposure for its U. S. target audience of schoolchildren (Wilson, 2010).

The company plans to offer new products and plans to put more effort behind its manufacturing of Reebok, which it acquired in 2006. Increased manufacturing and distribution of Reebok is backed by marketing campaigns featuring some of the country’s most famous athletes such as Peyton Manning and basketball star John Wall (Wong, 2011). Conclusion Adidas is a long-standing company with plenty of room for growth. Though it has hit rough spots during its years, it has survived and has focused on reinventing itself many times over.

One of the company’s main strength lies in its marketing campaigns. It was one of the first sportswear companies to use famous athletes to sell its products, and it continues to utilize this strategy today. It places faith in the selling ability of these men and women and has seen very good results from these sort of tactics. In addition to employing famous faces to sell its goods, Adidas has started jumping into huge sponsorship opportunities, such as the 2010 World Cup. Its World Cup sponsorship was hugely successful and created millions of dollars of revenue for the company.

Another strength that Adidas holds is the fact that it has a heavily-involved marketing campaign to many different types of people. Besides athletes, the company and its subsidiaries target several different groups, including children and teenager and middle-aged men and women. Adidas’s main weakness lies in the fact that the company has had to fight its way back into the American market. With the U. S. being one of the most desirable markets in the world, Adidas faces the challenge of reinventing itself and gaining ground in a country where Nike has ruled for decades.

Adidas spent many years in the 1990s being basically obsolete in many American markets. It was forced to make drastic changes to pull itself back into the spotlight and has still not reached the levels of popularity and sponsorship power that its main competitor has. Despite the fact that Adidas has yet to reach Nike’s level of power in the United States, there are opportunities for growth. By utilizing its successful marketing techniques, Adidas has the opportunity to reach its target audiences and put more face recognition to its name.

It is already hugely successful in Europe, and the chance to bring some of that success to the U. S. market is definitely doable. If the company continues on its current marketing path and continues to manufacture products that are both comparable and sometimes better than its main competitor, Adidas definitely has the opportunity to continue its successful reinvention in the U. S. The main threat that the company faces is the fact that Nike is such a huge powerhouse, particularly in the United States.

Targeting other “growth markets,” such as the ones in Russia and China, will help the company to gain ground in areas not already overrun with its main competition. Adidas plans to open hundreds of new stores over the next several years, but it runs the risk of over-populating itself if its marketing campaigns are not hugely successful in its proposed “growth markets. ” In addition, the company has a long history of being forced into reinvention, particularly in the U. S. , as it goes from hugely popular to hugely irrelevant. The threat of this cycle repeating itself is always a possibility.

Adidas is already one of the world’s leading sportswear production companies, and it has the potential to grow even more successful. The company should continue to utilize its successful marketing techniques and should focus its attention on expanding to markets where its main competitor, Nike, is not already an overpowering force. In addition to expanding, the company should focus on becoming more visible in world-wide events, such as its successful sponsorship of the FIFA World Cup. It should also focus on expanding itself into sports markets outside of its main area of soccer.

Employing these marketing strategies, along with increased production of both its most popular products and those new products aimed at its target markets, should help the company continue its streak of success Europe and should help it become a powerhouse company in countries where it is less well-known. References Babej, M. (2011). Adidas sees opportunity in sustainability. Forbes. Retrieved from http://blogs. forbes. com/marcbabej/2011/03/22/adidas-sees-opportunity-in-sustainability. Elfes, H. (2011). Adidas rises after forecasting higher profit, sales for year. Business Week. Retrieved from http://www. usinessweek. com/magazine/content/10_21/b4179022112034. htm. Elfes, H. & Jarvis, P. (2010). Adidas predicts 2011 growth on China rebound, Russia. Businessweek. Retrieved from http://www. businessweek. com/news/2010-09-21-adidas-predicts-2011-growth-on- china-rebound-russia. html. Elfes, H. & Steele, M. (2011). Adidas debuts lightest basketball shoe to tackle Nike. Businessweek. Retrieved from http://www. businessweek. com/news/2011-03-02/adidas-rises-afer-forecasting- Higher-profit-sales-for-year. html. Esterl, M. (2008). A run for their money. Wall Street Journal, W5. Retrieved from http://online. sj. com/article/SB120606066903653643. html? mod=googlenews_wsj. Townsend, M. & Elfes, H. (2010). Adidas’ big money defense against Nike. Businessweek. Retrieved from http://www. businessweek. com/magazine/content/10_21/b4179022112034. htm. Wilson, J. (2010). Adidas targets US youngsters for sales. Financial Times. Retrieved from http://www. ft. com/intl/cms/s/0/c13f7b72-eb3a-11df-811d- 00144feab49a,s01=1. html#axzz1McVSY4tB. Wong, E. (2011). Is Reebok Adidas’s next footwear darling? Forbes. Retrieved from http://blogs. forbes. com/elainewong/2011/03/02/is-reebok-adidass-next-footwear-darling/.