Adidas Group
Company Description
The history of Adidas Company can be traced back in 1924 when the company's founder, Adi Dassler established the "Gebrüder Dassler Schuhfabrik" to focus on offering athletes with the high-quality products. In 1928, the company produced the Gold medals to be presented in Amsterdam and Berlin in 1936 as the first journey for the company. In 1949, the Adi registered the "Adi Dassler Adidas Herzogenaurach" and started working with only 47 employees in Herzogenaurach, Germany. During the same year, Adi registered a shoe brand that had the Adidas 3-stripes brand. The introduction of the football boots during the World Cup in 1954 marked the beginning of the brand recognition and success on the football pitch. During the same year, the two brothers, Jeff and Joe Foster, established the Adidas' subsidiary Rebook (Adidas Group).
Between 1968 and 1970, the Adidas Group focused on the producing innovative product that earned the company the athletes' trust. The personal secret behind Adi's innovative idea was his interaction with the athletes to determine their needs and preferences. During the same period, the company was recognized for producing footwear for gold medal winners and apparel associated with the record breakers (Adidas Group). In 1972 during the Olympic Games in Germany, the company announced its new and reputable logo known as the Trefoil, which was a symbol of performance. Today, the logo stands for street and lifestyle. Between 1972 and 1978, the company became a true multi-sports specialist. In 1984, Adidas invented in technology and produced a Micropacer, which is now known as miCoach, which provides the performance statistics to the athletes. Later in 1989, the company launched a marketing campaign that aimed to "make athletes better" (Adidas Group). Other innovation includes Torsion, the Equipment concept, the Streetball campaign, and Predator football boots in 1989, 1991, 1992, and 1994 respectively. The company's success was boosted when it merged with Rebook. In 2010, the company launched its business plan known as "Route 2015" that included sales channels, the special target for the company's brands, and Group functions global. In 2011, the company focused on sport, style and street and included some of the world's renowned artists such as David Beckham, Lionel Messi, Derrick Rose, and Katy Perry (Adidas Group). Today, the company has become one of the reputable corporation and have subsidiaries such as Reebok, TaylorMade-Adidas, and Adidas Canada among others.
Company Ethics and Social Responsibility
Company ethics
The company has provided the Adidas Group Code of Conduct that provides insight into the duties of the employees to enhance ethical business behavior. The code of conduct defines integrity as the core ingredient of the Adidas Group. All employees are required to be responsible and fair as well as complying with the existing regulations and laws when carrying out their duties. In addition, the Code is the foundation of the ethical work behavior for all the employees in the organization. The employees are expected to abide by the rules to ensure they behave ethically to business partners, third parties, and other employees. A compulsory online training enhances this Code of Conduct and is available in ten languages.
The company also abide by the Labour Rights Principle that allows the Group to commit to the United Nations Universal Declaration of Human Rights. Such commitment helps the Group to act ethically in their day-to-day practice. It also provides a guiding framework for the policies such employee development, equal opportunities, development, benefits, and compensation. The Group also have compliance programs related to data protection to ensure privacy around data. In addition to the cases of non-compliance and complaints around the world with approximately 20 compliance officers. The Group announced a global hotline known as "Fair Play Hotline" in 2013 (Adidas Group).
Social responsibility
The Adidas Group is committed to the corporate social responsibility through a community engagement approach and the environmental sustainability. The company's social responsibility programs include corporate volunteering programs that are promoted by the Adidas Fund, support for the human rights groups globally, and the TaylorMade-Adidas Golf program that supports golf charities. All the Group's programs are based on three pillars that include employee engagement, community involvement, and corporate giving, and are determined by local economic, culture, and social factors. In addition, the Group understands that sustainable business involves balancing between the expectations of the shareholders and the concerns and needs of their employees, suppliers, and the environment. the company's sustainability strategy focus on address the challenges and issues related to the spaces where sport prevails.
Leadership
The Adidas Group's leadership is based on the executive board that comprises of five members, who are responsible for the major business area in the group. Such member includes Chief Executive Officer-Herbert Hainer, Global Sales-Roland Auschel, Global Operations – Glenn Bennett, Global Brands – Eric Liedtke, and Chief Financial Officer-Robin J. Stalker. This leadership is committed to helping the company achieve its long terms goals. For instance, the Group has been in the frontline to achieve sustainability through a well-known sustainability leadership. Recently, the company has been ranked eighth in the 2014 Global 100 Most Sustainable Corporation globally (Adidas Group).
Global Competition
Over the last few decades, the footwear and athletes clothing industry have been dominated by the only two logos: Adidas stripes and Nike swooshes. The two companies have been rivalries in the global industry competing to achieve a sustainable consumer base. However, as the technology has developed various global corporations have emerged into the industry, hence creating stiff competition. These competitors include, Under Armour, Asics, New Balance, Skechers, and Li Ning. Despite the stiff competition, Adidas group remains one of the top competitor and number one globally in Sports Apparel brand according to its market share (Roberts and Kasuida). However, in the United States, the company has been struggling and was ranked number 2 after Under Armour in 2014. This illustrates that the company has invested significantly in various part of the world but have not invested enough in the United States (Roberts and Kasuida). Nike is the main competitor, which has a reputable brand image in the United States. For instance, in 2014, Nike Company sold LeBron James signature sneakers to sales worth $340 million while Adidas sold only $32 million worth of Derrick Rose shoes. This illustrates that Nike has the competitive advantage over Adidas in the United States.
Marketing Strategy of the Organization
The Adidas Group has identified three strategic choices that will define its market strategy. In this case, the company focuses on Cities, Speed, and Open source as the next five years strategic plan. The company has identified that the sporting goods industry is growing at the accelerating speed compared to the other industries such as consumer electronics. Therefore, the Group is focusing on "creating new" to the sports, because it believes the sport is their core competency. The company has created a unique portfolio of brands. The company's executive board member responsible for global brands argues that the company will be the first sports company to invite consumers, partners, and athletes to be the part of their brands. The company believes that the success of their core brands is the cornerstone of their success. Such brands include Reebok, Adidas, and TaylorMade that have a reputable identity in the sports. Through this unique portfolio, the Group meets the desires and the needs of more consumers than any other competitor in the industry does. The three strategic choices are discussed below.
Speed: the company is aiming to become the first real fast company in two broad perspectives. These perspectives include being fast to satisfy their consumer needs and fast to make internal decisions.
Cities: the company has identified six cities in which they can grow share of the market, the share of mind, and share of the trend.
Open Source: the company is aiming to be the first sports company that invites consumers, partners, and athletes to be the part of their brand.
Such strategic choices are aimed at creating a conducive and sustainable environment that enhances competitive advantage. "Creating new" strategy will help the group provide new products, which is a relevant trend in the fast-changing world. Therefore, the company identifies fast as the fundamental competitive advantage to help them transform Adidas Group into the first real fast sports company (Adidas Group). The company aims to accomplish the strategic choice by 2020.
Promotion Techniques
Adidas utilizes different promotional methods to reach the potential customers and maintain the existing customers. Although there are various marketing vehicles, the major promotional techniques include product placements and televisions. The innovative marketing team of Adidas has developed various television ads that are filled with energy and creative to ensure they send the right message to the consumers about the brand. In 2004, the company developed a slogan, "Impossible is Nothing," which later became a phenomenal term for achieving one's goal.
Apart from the television ads, the Adidas Group also focuses on the product placement to promote their brands subtly usually through appearances in television, sports, film, and media. The popularity of the Adidas brands is based on its connection with the top athletes in the world such as Ronaldinho, David Beckham, Lionel Messi, Derrick Rose, and Katy Perry. In addition, Adidas is committed to sponsor teams ranging from football teams to cricket teams. For instance, the company has sponsors teams such Real Madrid Football Club, Chelsea Football Club, and South Africa cricket team. Such sponsorship ensures that the Adidas brands are represented in various areas of athletics.
Products and Services
Adidas Group believes in doing everything based on their passion so that they can make athletes better. Performance and innovation are the core and the heart of Adidas's brand and ensures that the customers are satisfied with what they purchase. The customer service team is available from 8 AM ET to 11 PM ET, for seven days in a week to ensure they respond to the needs and questions of their customers. The Group also ensures to offer top notch products based on technology, quality standards, and innovation.
Adidas Groups products are categories into three main brands, which include Adidas, Reebok, and TylorMade-Adidas Golf. The popular brands for Adidas include the Originals, Adidas Neo, Stella McCartney, and Skateboarding. In general, Adidas Group is categorized under sportswear, footwear, toiletries, and sports equipment.
During the creation of the Adidas' company the technicians ensures that the products meet the product safety. This measure ensures that the company does not sell defective products that may result in injury to their consumers or tarnish the brand reputation. Through the product safety policy, the company ensures that they consistently apply chemical, physical product safety and comply with the standards that ensure quality and safe products. In addition, all the product samples and the materials have to be tested to ensure they comply with the standards set by the company. The company has dedicated teams that monitor the quality of the products within the supply chain by applying rigorous testing before, during, and after production.
Company profitability
For the past five years, Adidas Group operating profit has been fluctuating significantly. In 2013, the Group experiencing highest operating income of €1,233 million for the period of five years since 2011. The operating profit decreased significantly to €961 million in 2014 but increased in 2015 to €1,094 million. This is also reflected in the net income attributed to shareholders. For the last five years, the company achieved net income of €613 million, €791 million, €839 million, €568 million, and €668 million for 2011 to 2015 respectively. In 2015, the Adidas brand had the highest net sales of €13,939 million, followed by Reebok, TaylorMade-Adidas Golf, and Reebok-CCM Hockey with €1,751 million, €902 million, and €317 million respectively (Adidas Group).
The Future of the Company
In the next five years, Adidas aim to close the gap with the leading competitors such as Nike. Currently, Adidas is the second-largest sportswear group and it future objectives include increasing the net profit by 15 percent in every year. This translates that the company net profit will have doubled by the year 2020. Last year, the company presented its future strategic business plan of ‘creating the new'. The company will work hard to inspire people to harness the power of sports. The company also aim to increase it competence regarding reaching its customers with its brand. To achieve the objective of creating something new for the consumer, the Adidas group put three strategies. The first one is speed. The company intends to reduce the production time and increase its sales through expanding e-commerce business to above two billion by 2020. The second strategy is cities. Adidas aim to continue increasing its growth to all relevant geographical markets. It targets to reach six global key cities, which are London, Shanghai, New York, Los Angeles, and Tokyo. The last strategy is open source. Adidas will not only increase the consumer desire by how they design, create and present their product but also it will engage the consumers more by making them part of its brand.
Works Cited
Adidas Group. "Adidas Group - Community Engagement Approach." Adidas Group - Home. N.p., 2016. Web. 26 Apr. 2016. <http://www.adidas-group.com/en/sustainability/community-engagement/community-engagement-approach/>.
Adidas Group. "Adidas Group - Five Year Overview." Adidas Group - Home. N.p., 2016. Web. 26 Apr. 2016. <http://www.adidas-group.com/en/investors/key-financial-data/five-year-overview/>.
Adidas Group. "Adidas Group - General Approach." Adidas Group - Home. N.p., 2016. Web. 26 Apr. 2016. <http://www.adidas-group.com/en/sustainability/managing-sustainability/general-approach/#/our-sustainability-strategy/>.
Adidas Group. "Adidas Group - Product and Consumer Safety." Adidas Group - Home. N.p., 2016. Web. 26 Apr. 2016. <http://www.adidas-group.com/en/sustainability/products/product-and-consumer-safety/>.
Adidas Group. "Adidas Group - Strategy Overview." Adidas Group - Home. N.p., 2016. Web. 26 Apr. 2016. <http://www.adidas-group.com/en/group/strategy-overview/>.
Adidas Group. "Adidas Group - Rights and Rules." Adidas Group - Home. N.p., n.d. Web. 26 Apr. 2016. <http://www.adidas-group.com/en/sustainability/employees/rights-and-rules/>.
Roberts, Daniel, and Analee Kasudia. "This Chart Shows How Adidas is Losing the Sneaker Wars." Fortune. N.p., 5 June 2015. Web. 26 Apr. 2016. <http://fortune.com/2015/06/05/adidas-footwear-fall/>.
