Primary Question for Adidas
Does Adidas's corporate strategy, including
recent acquisitions and restructuring, stay
true to its brand while positioning itself to
improve shareholder value and challenge
Nike as the leader of the global sporting
• What enabled Adidas to be the market leader in the past?
• How did Adidas lose its lead to Nike?
• What has the Adidas brand represented in the past and what
does it represent today?
• How has Adidas's corporate strategy changed over time,
specifically before and after the 2005-2006 restructuring?
• Has Adidas's acquisitions helped position itself against its
• What role do developing countries have in Adidas's future
success and how is Adidas's position in those countries?
• Should Adidas be concerned about losing North American
market share to Nike?
• Is there another corporate strategy Adidas should be
What enabled Adidas to be the
Market Leader in the past?
Track and Field Soccer Results
Analysis – Adidas was an • 1925:studs • 1954 – • Over 700
early entrant into athletic and spikes screw in patents
shoe industry. They • Arch spikes • Strong
developed many of the support • 1963- Began reputation
• 1949 – producing among top
features still present in soccer balls athletes
shoes today. rubber • 1967 – • 1970 –
cleats athletic leading
• 1952 - apparel brand in
Created a strong brand consumer
based on high quality, spikes jogging
innovative products that shoes
top athletes choose to use
in training and
•Developed strong following with
top track and field athletes. Gave shoes to
athletes in 1928
•Applied this same model years Olympics
later with soccer shoes and
75% of track and
•Successful because adidas was field athletes
wearing adidas in
creating innovative, high quality 1960 Olympics
•Product innovation enabled 78% of athletes
marketing innovation. 2 stripe (and
later 3 stripe)
•Different than Nike –
marketing is what set them
apart from the start.
How did Adidas lose its lead to
What has the Adidas brand
represented in the past and what
does it represent today?
How has Adidas's corporate
strategy changed over time,
specifically before and after the
Adidas’s Evolving Strategy
Return to form via
Loss of focus…
Adi’s Focused on Puma, while differentiated image
leadership… Nike underestimated. for brands, improved
Tries to catch up via retail and supply
Focused on athletic acquisitions which chain
footwear/apparel. yields product breadth
Success factors are instead of
marketing and specialization.
Adidas’s Current Strategy
Has Adidas's acquisitions helped
position itself against its
Salomon Acquisition: Was it
Product Line Before Product Line After
Athletic Shoes Athletic Shoes
Athletic Apparel Athletic Apparel
Winter Sports Apparel
•Analysis:Paid 1.5bn to diversify product line. Surpassed Reebok world’s
2nd largest sporting goods company, however…
Adidas’s Stock Price
Stock Price (in euros)
30 Adidas Stock Price
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
•Stock price fell soon after acquisition in 1998, Salomon divested
except for Taylor-Made Golf line. Adidas overpaid for acquisition.
Adidas after Salomon was divested
Product Line Product Line Product Line
Before After After Divestiture
Athletic Shoes Athletic Shoes Athletic Shoes
Athletic Apparel Athletic Apparel Athletic Apparel
Ski Equipment Golf Clubs*
•Only added Golf Clubs to product line
What role do developing
countries have in Adidas's future
success and how is Adidas's
position in those countries?
Adidas is a global player
•43% of sales from Europe,
which is slowest growth
•Encouraging that #1 in
European market, Russia
expected to be most
profitable market in
Europe by 2010
•2006 acquisition of Reebok
not enough to overcome Nike
in North America
•Growing number of sales in
Asia market, fueled by adidas
success in China.
•Strong demand and
Net Sales in Emerging Markets
Analysis – strong growth trend in sales in two very attractive emerging
markets. Growth may be result of Adidas brand strength in soccer, world’s
most popular sport.
Regional Footwear/Apparel Markets
Region Size Market Adidas Sales Adidas Sales Adidas
Growth Growth Position
North $42.5 billion 3% $2.9 billion 5% #2 behind
Europe N/A 2% (20% $4.3 billion 8%, mainly #1
Eastern in Russia
Asia 3.2 billion 13% (South $2.2 billion 17% #1
people and Central)
Latin N/A N/A $657 million 39% #2 behind
Analysis – Adidas is strong in several developing markets (Eastern Europe,
China) but its focus and acquisitions have been geared towards overtaking
Nike in the large, but slow growth North America market.
Should Adidas be concerned
about losing North American
market share to Nike?
Retail Store Strategy
Adidas Retail 875 1003
Reebok Retail 283 430
Adidas AG Geographic
€ 4,000 31.5%
€ 3,000 -9.4% Europe
€ 2,500 North America
17.6% 32.6% Latin America
€ 1,500 27.8%
€ 500 1229.2%
2004 2005 2006 2007
Key Growth Potential:
Europe – continue focus on soccer (including endorsements) and build brand
Asia/Latin America – increase distribution network and brand awareness
- All three regions averaging double-digit growth rates
Revenues from Asia: Metalwoods currently Over 70 touring pros
1999 – 13% of total hold number one lift apparel presence.
2007 – 35% of total ranking.
Decreasing reliance Irons hold less than
on U.S. Market: half market share of
1999 – 69% of total industry leader
2007 – 52% of total
Golf balls have seen TM
limited success 8%
Conclusion – TaylorMade should hold U.S.
market share in U.S. given the brand’s
strenghts, however, TM is only 8% of Adidas Adidas
AG global revenues. TM cannot help Adidas 69%
overtake Nike in U.S. market
Adidas Global Revenue Sources (2007)
Remaining regions =
71.3% of revenues
Conclusion – The majority of N.A. market 28.7% of
Adidas’s revenue streams are revenues
outside U.S. market and are
growing significantly – let Nike
lead U.S. market but dominate
Europe and emerging markets.
Reebok Global Revenue Sources (2004)
U.S. market 54.7% of
Conclusion – Use Adidas’s 2004 revenues
control and production
efficiencies to enhance Reebok’s
distribution network in U.S. to
increase U.S. revenues.
Is there another corporate
strategy Adidas should be
Alt Strategy Options
• Use Adidas as revenue driver outside of U.S.
market – restructure Reebok strategy to
capitalize on historic revenue performance in
– Decrease number of Adidas retail outlets in U.S. -
convert to Reebok retail
– Increase Reebok U.S. endorsements
• Use Adidas global distribution to further
increase TaylorMade international revenues
Slides that follow
still need to be
placed or cut.
External Environment: PEST
Category Issue Threats/Opportunities
Operating multi-nationally – awareness of Threat- mistakes can be
cultures, laws, image, environment, regulations costly
Current state of economy – customers may be Threat – high quality
less willing to pay for higher priced items means higher prices
Opportunity – supply
chain efficiencies and
Extreme forces in competitor pricing. 4
Keeping up with the wants of the younger Opportunity – Reebok’s
generation strength in this area
Opportunity – core
Technological Product innovation is a key driver in the industry 4
competency for adidas
Porter’s 5 Forces
Bargaining Power of
Threat of Substitutes
Bargaining Power of
Threat of New Entrants
Porter’s Five Forces
Factor Description Impact
Threat of Substitute Products •adidas’s strength is product innovation and meeting customer expectations Low
•Strong presence of established brands and distribution channels
Threat of New Entrants •Customers already loyal to their brand Low
•Huge resources required of new entrants
•Huge number of buyers means adidas must market products effectively
•Must be able to differentiate from the competition
Bargaining Power of Buyers High
•Buyers more conscious of their spending
•Buyers have access to more information
•Multiple sources of materials for shoes and apparel – commodity status
Bargaining Power of Suppliers •Suppliers are very dependent on adidas and others Low
•Ease in switching suppliers if necessary and can do so globally
•Recent acquisitions in industry
•All competition has global reach – internet and e-commerce
Competitive Rivalry High
•Remaining a leader is expensive – aggressive sales and marketing
•Always struggling to get a competitive edge
•Large event sponsorships •High quality and innovation are costly
•Brand reputation / recognition •Controlling subcontractor quality –
•Diverse product portfolio negative effects can be devastating
•Culture driven by innovation / R&D •Wasting resources trying to overtake
•Dominant in soccer and hockey Nike in the US?
•Supply chain management
•Increasing female participation in sports •Nike’s reputation and presence; a leader
•E-commerce to increase market share in marketing and advertising
•Growth rates for footwear and apparel •Sponsorships and endorsements may go
•Central Asia (13%), wrong (Kobe Bryant)
•Eastern Europe (20%)
How has Adidas evolved since it was
Timeline of Adidas
• Fouded 1920 by Adi Dassler – wanted to design shoes for athletes in
soccer, T&F, & tennis.
• The Dassler brothers (Rudi & Adi) made their first major innovation in
athletic shoes, integrating studs & spikes in track & field shoes.
• Innovators in Marketing – gave away shoes to German athletes
competing in Olympic games. By 1936 most athletes would compete
1928-1936 only in Dassler shoes.
• Bitter family feud, company dissolved. Rudi established Puma. With
his departure Adi renamed company Adidas & registered the
1948-1949 trademark 3rd strip to Adidas shoes.
• Adi expanded spikes concept in track shoes to soccer shoes. Partial
credit was given to the soccer shoes for Germany’s World Cup
1954 Championship that year.
Timeline of Adidas
• Adidas is the clear favorite among athletes – 75% of T&F
athletes wear them in Olympics. ’63 started producing soccer
balls, ’67 athletic apparel
• Adidas became leader in consumer jogging shoes in the US. T-
shirts and apparel bearing the 3 stripes became popular
1970’s among teens.
• Adi Dassler dies, Adidas remains worldwide leader in athletic
footwear but they are losing market share fast to Nike in US.
Market share loss continues through the 80’s and mid 90’s.
• Through cost cutting, new model launches, and endorsement
contracts with popular athletes Adidas increased sales by 75%
1994 over prior year in US. Becoming 3rd largest athletic footware
company in US – trailing only Nike and Reebok.
Timeline of Adidas
• Acquisition of Salomon SA – diversified beyond shoes &
apperal to ski, golf, bicycle, & winter sports.
• Stock price takes a hit possibly due to Salomon acquisition.
Adidas mgt divested all of Salomon’s winter sports & bicycle
• Acquistion of Reebok, included Rockport footware, Greg
2006 Norman apparel, & CCM hockey equipment.