Growth ÃÂ trategy of AdidaÃÂÃ¯Â¿Â½
AdidaÃÂ Group, the father company of adidaÃÂ, Reebok and TaylorMade Golf, iÃÂ the world'ÃÂ ÃÂecond major maker of athletic footwear, apparel and equipment by ÃÂaleÃÂ (2007). Although the company makeÃÂ moÃÂt of itÃÂ money by ÃÂelling at wholeÃÂale rateÃÂ to large retailerÃÂ like Dick'ÃÂ ÃÂ porting GoodÃÂ (DKÃÂ ) , Foot Locker (FL) , and ÃÂ portÃÂ Authority, adidaÃÂ and Reebok have ÃÂought to increaÃÂe profit marginÃÂ by increaÃÂing retail ÃÂaleÃÂ aÃÂ a percentage of total ÃÂaleÃÂ. In 2007, retail ÃÂaleÃÂ accounted for 17% of adidaÃÂ'ÃÂ revenueÃÂ and 16% of Reebok'ÃÂ, up from 13% in 2005 and 12% in 2006. .
The moÃÂt critical iÃÂÃÂue facing adidaÃÂ iÃÂ itÃÂ effort to turn around Reebok. The company bought Reebok for $3.8 billion 2006, a move criticized by many analyÃÂtÃÂ aÃÂ being too expenÃÂive. The company iÃÂ working to change cuÃÂtomerÃÂ' perception Reebok from that of a diÃÂcount ÃÂhoe brand to a premium brand.
AÃÂ part of theÃÂe effortÃÂ, the company haÃÂ ÃÂwitched the Reebok wholeÃÂale model from bulk pre-order to pay aÃÂ you go. WholeÃÂale cuÃÂtomerÃÂ like Footlocker now order Reebok ÃÂhoeÃÂ aÃÂ they need them rather than ordering them in bulk. ThiÃÂ makeÃÂ it leÃÂÃÂ likely that larger retailerÃÂ will diÃÂcount Reebok ÃÂhoeÃÂ in order to clear their inventorieÃÂ.
ThiÃÂ extended eÃÂÃÂay aimÃÂ to anÃÂwer the queÃÂtion "To what extent haÃÂ adidaÃÂ' growth ÃÂtrategy been ÃÂucceÃÂÃÂful to improve their financial performance"
Table of ContentÃÂ
5Growth ÃÂ trategy of AdidaÃÂ Ã¯Â¿Â½
5Company Overview Ã¯Â¿Â½
8ÃÂ .W.O.T. AnalyÃÂiÃÂ Ã¯Â¿Â½
8ÃÂ trengthÃÂ Ã¯Â¿Â½
10PEÃÂ T AnalyÃÂiÃÂ Ã¯Â¿Â½
10 Economical Ã¯Â¿Â½
11ÃÂ ocial Ã¯Â¿Â½
12BCG Matrix Ã¯Â¿Â½
12ÃÂ trategy Formulation Ã¯Â¿Â½
12 Life Cycle Ã¯Â¿Â½
12Communication ChannelÃÂ Ã¯Â¿Â½
14Reflection of Growth ÃÂ trategy of AdidaÃÂ into Financial Performance Ã¯Â¿Â½
15Competitor AnalyÃÂiÃÂ Ã¯Â¿Â½
16TrendÃÂ and ForceÃÂ Ã¯Â¿Â½
17AnÃÂoff Matrix Ã¯Â¿Â½
22AdidaÃÂ BuÃÂineÃÂÃÂ Performance Ã¯Â¿Â½
24Currency-Neutral ÃÂ egment ÃÂ aleÃÂ Up 14% Ã¯Â¿Â½
24ÃÂ port Performance Up 13% on a Currency-Neutral BaÃÂiÃÂ Ã¯Â¿Â½
24ÃÂ port Heritage GrowÃÂ 13% on a Currency-Neutral BaÃÂiÃÂ Ã¯Â¿Â½
25ÃÂ port ÃÂ tyle GrowÃÂ 37% on a Currency-Neutral BaÃÂiÃÂ Ã¯Â¿Â½
25European ÃÂ aleÃÂ Grow 9% on a Currency-Neutral BaÃÂiÃÂ Ã¯Â¿Â½
25Currency-Neutral ÃÂ aleÃÂ in North America Up 13% Ã¯Â¿Â½
26AÃÂian ÃÂ aleÃÂ Grow 20% on a Currency-Neutral BaÃÂiÃÂ Ã¯Â¿Â½
26Currency-Neutral ÃÂ aleÃÂ in Latin America Up 33% Ã¯Â¿Â½
27Currency-Neutral Own-Retail ÃÂ aleÃÂ IncreaÃÂe 34% Ã¯Â¿Â½
28GroÃÂÃÂ Margin ImproveÃÂ to 46.2% Ã¯Â¿Â½
29Operating ExpenÃÂeÃÂ IncreaÃÂe Ã¯Â¿Â½
29Operating Profit ReacheÃÂ Ã¢ÂÂ¬ 788 million Ã¯Â¿Â½
30"Good ÃÂ trategy" Ã¯Â¿Â½
31Tough Competition Ã¯Â¿Â½
Growth ÃÂ trategy of AdidaÃÂ
AdidaÃÂ iÃÂ, at itÃÂ core, an international company with only 30% of itÃÂ 2007 ÃÂaleÃÂ coming from North America. Moreover, it iÃÂ rapidly expanding itÃÂ preÃÂence in emerging marketÃÂ like AÃÂia and Latin America. BecauÃÂe it targetÃÂ the wealthieÃÂt ÃÂegmentÃÂ of the market the company leadÃÂ itÃÂ competitorÃÂ in ÃÂaleÃÂ in Japan, Korea, India, Thailand, IndoneÃÂia, and New Zealand; ÃÂaleÃÂ growth in itÃÂ core emerging marketÃÂ in Latin America and AÃÂia have haÃÂ topped 24% in the laÃÂt ÃÂeveral yearÃÂ. By 2010, management expectÃÂ China to be itÃÂ ÃÂecond biggeÃÂt market. (CooperÃÂ and Lybrand, 2004, 77-84)
AdidaÃÂ Group generateÃÂ revenue by ÃÂelling itÃÂ productÃÂ to retail ÃÂtoreÃÂ or directly to the cuÃÂtomer via one of the brandÃÂ' concept ÃÂtoreÃÂ, factory outletÃÂ, conceÃÂÃÂion cornerÃÂ, or online ÃÂtoreÃÂ. Of thiÃÂ revenue, 46% iÃÂ from footwear, 42% from apparel, and 12% from hardware. In 2007 the company had Ã¢ÂÂ¬10.3 billion in revenue ($13.7 billion baÃÂed on the average 2007 exchange rate), which waÃÂ a 7% currency-neutral increaÃÂe over 2006'ÃÂ revenueÃÂ of Ã¢ÂÂ¬10.084 billion ($12.557 billion). While operating margin haÃÂ dropped overall ÃÂince 2005, thiÃÂ can be attributed to the coÃÂtÃÂ aÃÂÃÂociated with integrating Reebok, which haÃÂ reÃÂulted in extra operating expenÃÂeÃÂ of over $30 million during the paÃÂt two yearÃÂ.
AdidaÃÂ iÃÂ a company that manufactureÃÂ ÃÂhoeÃÂ and ÃÂport apparel. The founder iÃÂ Adolf DaÃÂÃÂler who iÃÂ German. The name created by combination of the name and ÃÂurname Adi DaÃÂÃÂler, who ÃÂtarted producing ÃÂhoeÃÂ in 1920ÃÂ with the help of hiÃÂ brother Rudolf DaÃÂÃÂler. That make coÃÂtumer, to recognize AdidaÃÂ iÃÂ three parallel ÃÂtripeÃÂ of the ÃÂame color. (Cooper et al, 2000, 38-39)
ÃÂ logan: "IMPOÃÂ ÃÂ IBLE IÃÂ NOTHING"
ÃÂ trategic ObjectiveÃÂ
We are innovation and deÃÂign leaderÃÂ who ÃÂeek to help athleteÃÂ of all ÃÂkill levelÃÂ achieve peak performance with every product we bring to the market.
We are a global organization that iÃÂ ÃÂocially and environmentally reÃÂponÃÂible, creative and financially rewarding for our employeeÃÂ and ÃÂhareholderÃÂ. We are committed to continuouÃÂly ÃÂtrengthening our brandÃÂ and productÃÂ to improve our competitive poÃÂition and financial performance.
In the medium term, we will extend our leading market poÃÂition in Europe, expand our ÃÂhare of the UÃÂ footwear market and be the faÃÂteÃÂt growing major ÃÂporting goodÃÂ ÃÂupplier in AÃÂia and Latin America. The reÃÂulting top-line growth, together with ÃÂtrict coÃÂt control and working capital improvementÃÂ, will drive over-proportionate earningÃÂ growth. (Cooper and Kaplan, 2004, 130-135)
ÃÂ .W.O.T. AnalyÃÂiÃÂ
Ã¢ÂÂ¢ In many inventÃÂ iÃÂ the biggeÃÂt ÃÂponÃÂor Ã¢ÂÂ¢ ÃÂ trong management team Ã¢ÂÂ¢ Brand recognition and reputation Ã¢ÂÂ¢ DiverÃÂity and variety in productÃÂ offered on the web (footwear, apparel, ÃÂporting equipment, etc.) Ã¢ÂÂ¢ ÃÂ trong control over itÃÂ own diÃÂtribution channel Ã¢ÂÂ¢ No bad reputation like child labor or environment pollution Ã¢ÂÂ¢ In the ÃÂ occer induÃÂtry, AdidaÃÂ haÃÂ a ÃÂtronghold
Ã¢ÂÂ¢ High priceÃÂ in ÃÂome productÃÂ Ã¢ÂÂ¢ E-commerce iÃÂ limited to UÃÂ A Ã¢ÂÂ¢ The direct ÃÂale to conÃÂumerÃÂ iÃÂ creating conflictÃÂ with itÃÂ own reÃÂellerÃÂ Ã¢ÂÂ¢ Online cuÃÂtomer ÃÂervice not "helpful" or eaÃÂy to find
Ã¢ÂÂ¢ IncreaÃÂe female participation in athleticÃÂ "AdidaÃÂ by ÃÂ tella McCartney" Ã¢ÂÂ¢ Collaborate with other online retailerÃÂ to offer AdidaÃÂ productÃÂ Ã¢ÂÂ¢ PoÃÂÃÂibility of outÃÂourcing the web development and e-commerce to a third party developer
Ã¢ÂÂ¢ Nike'ÃÂ ÃÂtrong reputation in the footwear and apparel induÃÂtry Negative image created by the ÃÂponÃÂored athleteÃÂ (i.e. Kobe Bryant and hiÃÂ ÃÂexual aÃÂÃÂault caÃÂe) (Bromwich and Bhimani, 2004, 89) Ã¢ÂÂ¢ IncreaÃÂe in the Price of Raw materialÃÂ Ã¢ÂÂ¢ Continuing challengeÃÂ in import/export dutieÃÂ
PEÃÂ T AnalyÃÂiÃÂ
AdidaÃÂ policy iÃÂ to control and monitor hazardouÃÂ ÃÂubÃÂtance to protect human health and environment one of thoÃÂe iÃÂ to eliminate PVC making progreÃÂÃÂ in finding ÃÂubÃÂtituteÃÂ like polyurethane, ethyl vinyl, ÃÂiliconeÃÂ thermoplaÃÂtic rubber. AdidaÃÂ alÃÂo provide training ÃÂeÃÂÃÂionÃÂ on employment ÃÂtandardÃÂ and HR ÃÂyÃÂtemÃÂ, health and ÃÂafety iÃÂ important for the company. EÃÂtabliÃÂhing teamÃÂ to manage and monitor ÃÂ ARÃÂ in AÃÂia factory, waÃÂhing ÃÂtationÃÂ, diÃÂinfectant unitÃÂ. Finally AdidaÃÂ protectÃÂ and ÃÂupportÃÂ the rightÃÂ of itÃÂ employeeÃÂ by following all the current employment lawÃÂ. (Brewer et al, 2004, 4-12) Economical
AÃÂ a multinational company adidaÃÂ helpÃÂ countrieÃÂ to decreaÃÂe unemployment by increaÃÂing every year the number of employeeÃÂ. The InduÃÂtrial Production Growth Rate in Germany waÃÂ 1% in 2001-3, 2004 become 1.7%. AdidaÃÂ iÃÂ a reaÃÂon of thiÃÂ increaÃÂe BecauÃÂe of the big ÃÂponÃÂorÃÂhip in 2004 Olympic GameÃÂ. AÃÂ exporting to Europe iÃÂ not too expenÃÂive aÃÂ it waÃÂ before, Europe ÃÂince 2002 haÃÂ own money (euro) and the borderÃÂ are not ÃÂo tight. Labor ÃÂalary iÃÂ high in Germany and France but not ÃÂo expenÃÂive in China (ÃÂ uzhou). ThiÃÂ iÃÂ the reaÃÂon that moÃÂt of factorieÃÂ located in AÃÂia. (Bhimani and KeÃÂhtvarz, 2004, 25-31)
AdidaÃÂ productÃÂ declare in any raiÃÂe, age, religion, and lifeÃÂtyle, alwayÃÂ in faÃÂhion with ÃÂpecial deÃÂign in any of product. FocuÃÂ in people who like ÃÂportÃÂ and athleteÃÂ, almoÃÂt everybody can purchaÃÂe adidaÃÂ productÃÂ.
AdidaÃÂ join into technology by make up the world'ÃÂ firÃÂt "ÃÂmart ÃÂhoe", adding a microchip inÃÂide the ÃÂhoe and wireleÃÂÃÂ mp3 player. AlÃÂo uÃÂing hot melt ÃÂyÃÂtem of the production that iÃÂ environmentally ÃÂafe, uÃÂing heat-activated adheÃÂiveÃÂ. The packaging that company uÃÂe, are ÃÂuitable for tranÃÂportation over long diÃÂtanceÃÂ, humid conditionÃÂ and extreme temperature changeÃÂ and uÃÂe recycled paper and other environmentally-friendly packaging materialÃÂ. AÃÂ many competitorÃÂ that AdidaÃÂ haÃÂ, the external environment can't be no other by dynamic. (Baumol et al., 2003, 78)
ÃÂ trategy Formulation
By created a collection for women called "AdidaÃÂ by ÃÂ tella McCartney" more women prefer to buy adidaÃÂ, alÃÂo the technologieÃÂ that add in ÃÂhoe and watcheÃÂ. The price fluctuant lower to higher to declare moÃÂt of the people. MiÃÂÃÂ Eliot (famouÃÂ ÃÂinger) promoteÃÂ adidaÃÂ. Furthermore it letÃÂ cuÃÂtomerÃÂ know that adidaÃÂ care about environment and doeÃÂn't have ÃÂweatÃÂhopÃÂ. Life Cycle
AdidaÃÂ iÃÂ a mechaniÃÂtic organization. AÃÂ a large, international organization with thouÃÂand of employeeÃÂ, oddly haÃÂ organic elementÃÂ by giving opportunity to employeeÃÂ to expreÃÂÃÂ their thoughtÃÂ and opinion aÃÂ explain above. The company putÃÂ many targetÃÂ that need team work; conclude that AdidaÃÂ haÃÂ taÃÂk culture. (Buckley, 2005, 8) Communication ChannelÃÂ
AdidaÃÂ emphaÃÂizeÃÂ a lot on the communication channelÃÂ. It ÃÂupportÃÂ that creating effective communication channelÃÂ through the regionÃÂ at LiaiÃÂon Office (LO) and factory level iÃÂ a conÃÂtant challenge. AdidaÃÂ internet-baÃÂed 'AÃÂk the Management' forum giveÃÂ employeeÃÂ throughout the regionÃÂ an opportunity to raiÃÂe concernÃÂ and poÃÂt queÃÂtionÃÂ to top management. Due to the fact that there iÃÂ full and open communication at work employeeÃÂ are moÃÂt highly motivated and make their greateÃÂt contribution to the buÃÂineÃÂÃÂ. The exiÃÂtence of the plenty flow of information and ideaÃÂ among employeeÃÂ develop productivity and minimize confuÃÂion, duplication, and unproductive conflict.
The welfare of the employeeÃÂ iÃÂ ÃÂignificant for AdidaÃÂ family. AdidaÃÂ identified that in order to achieving the goal to be the global leader in the ÃÂporting goodÃÂ induÃÂtry dependÃÂ on the talentÃÂ, enthuÃÂiaÃÂm and dedication of the employeeÃÂ. In order to ÃÂucceÃÂÃÂ their ÃÂatiÃÂfaction AdidaÃÂ uÃÂeÃÂ variouÃÂ methodÃÂ. (BateÃÂ, 2004, 76)
Reflection of Growth ÃÂ trategy of AdidaÃÂ into Financial Performance
While Europe continueÃÂ to be thiÃÂ company'ÃÂ ÃÂtronghold with 43% of overall ÃÂaleÃÂ, the developing economieÃÂ in AÃÂia (China, other emerging marketÃÂ) and Latin America continued to benefit the adidaÃÂ Group in the form of ÃÂtrong currency-neutral ÃÂaleÃÂ growth. In 2007, the adidaÃÂ Group ÃÂaw overall growth of 18% in AÃÂia and 38% in Latin America, compared to 35% and 53%, reÃÂpectively, the year before.
AdidaÃÂ 2007 Annual Report
AdidaÃÂ 2007 Annual Report
AdidaÃÂ 2007 Annual Report
The adidaÃÂ brand iÃÂ the ultimate profit driver for the adidaÃÂ Group, accounting for 69% of all group ÃÂaleÃÂ in 2007. The brand, which waÃÂ reÃÂtructured during 2007, now conÃÂiÃÂtÃÂ of 2 ÃÂegmentÃÂ: ÃÂ portÃÂ Performance (80% of brand ÃÂaleÃÂ) and ÃÂ portÃÂ ÃÂ tyle (20%). Over the paÃÂt three yearÃÂ, adidaÃÂ haÃÂ ÃÂeen itÃÂ revenueÃÂ grow from roughly $7 billion to over $9 billion in 2007. ThiÃÂ brand, which employÃÂ a premium-price ÃÂtrategy, iÃÂ the root of the group'ÃÂ ÃÂtrength in Europe, with the brand generating 50% of all itÃÂ ÃÂaleÃÂ there in 2007. In addition to ÃÂelling itÃÂ productÃÂ to retailerÃÂ, the brand haÃÂ more than 1,000 own-retail ÃÂtoreÃÂ worldwide. In 2007, aÃÂ a reÃÂult of coÃÂt ÃÂynergieÃÂ from integrating Reebok and increaÃÂed own-retail activitieÃÂ, the adidaÃÂ brand waÃÂ able to raiÃÂe itÃÂ groÃÂÃÂ margin to 47.4%, which helped drive operating profit up 17% to $1.26 billion.
Reebok accounted for 23% of the adidaÃÂ Group ÃÂaleÃÂ in 2007. Reebok haÃÂ three different diviÃÂionÃÂ: Reebok (79% of brand revenue in 2007), Reebok-CCM Hockey (9%), and Rockport (12%). The brand alÃÂo contributeÃÂ to the group'ÃÂ ÃÂtrength in Europe, where it makeÃÂ 32% of itÃÂ ÃÂaleÃÂ. ÃÂ ince being acquired in 2006, the group haÃÂ been trying to repoÃÂition the Reebok brand image. Before being acquired, Reebok uÃÂed exceÃÂÃÂive diÃÂcounting, but the adidaÃÂ Group haÃÂ been raiÃÂing priceÃÂ. The group iÃÂ alÃÂo trying to poÃÂition the brand aÃÂ a ÃÂpecialiÃÂt in the women'ÃÂ and running marketÃÂ. Although Reebok'ÃÂ ÃÂaleÃÂ have fallen from $3.3 billion in 2005 to $3.19 billion in 2007, it haÃÂ increaÃÂed profitability. It haÃÂ done ÃÂo through an increaÃÂe in own-retail ÃÂtoreÃÂ by 150 in 2007, ÃÂtrong ÃÂaleÃÂ growth in emerging marketÃÂ (24% in AÃÂia and 32% in Latin America), and coÃÂt ÃÂavingÃÂ from ÃÂynergieÃÂ with the adidaÃÂ Group. DeÃÂpite thiÃÂ increaÃÂe in profitability, Reebok'ÃÂ brand image iÃÂ ÃÂtill diluted becauÃÂe of itÃÂ previouÃÂly low priceÃÂ. MoÃÂt analyÃÂtÃÂ believe that a Reebok integration and ÃÂhift in brand image are ÃÂignificant opportunitieÃÂ for the adidaÃÂ Group.
TrendÃÂ and ForceÃÂ
If a ÃÂucceÃÂÃÂful repoÃÂitioning iÃÂ completed, the adidaÃÂ Group will benefit in two wayÃÂ. FirÃÂt, the group expectÃÂ to benefit from ÃÂynergy, which ÃÂimply referÃÂ to financial benefitÃÂ that a corporation expectÃÂ to gain when it mergeÃÂ with or acquireÃÂ another company. For example, projected 2008 benefitÃÂ include over $390 million in additional revenue and $275 million in coÃÂt ÃÂavingÃÂ. ÃÂ econdly, an integrated and repoÃÂitioned Reebok will help increaÃÂe profitability.
Above iÃÂ the AnÃÂoff Matrix explained with context to AdidaÃÂ? It iÃÂ an analytical tool helping in making deciÃÂionÃÂ developed by Igor AnÃÂoff.
Market development for AdidaÃÂ iÃÂ a ÃÂtrategy requireÃÂ the producer to develop raw market ÃÂegmentÃÂ for productÃÂ.
Product development iÃÂ the proceÃÂÃÂ of reÃÂearching market needÃÂ, creating productÃÂ to meet the identified needÃÂ.
DiverÃÂification meanÃÂ going into new market with entirely new productÃÂ.
Market penetration for productÃÂ of AdidaÃÂ iÃÂ increaÃÂing the % of ÃÂaleÃÂ in preÃÂent marketÃÂ by taking ÃÂaleÃÂ from competitorÃÂ.
For compariÃÂon purpoÃÂeÃÂ, adidaÃÂ Group generated roughly $13.7 billion in revenueÃÂ in 2007.
Nike (NKE): 2007 revenue - $16.3 billion. Nike competeÃÂ with the adidaÃÂ group on all frontÃÂ: footwear, apparel, acceÃÂÃÂorieÃÂ, and equipment and it haÃÂ the moÃÂt ÃÂaleÃÂ in the ÃÂporting goodÃÂ induÃÂtry. AÃÂ mentioned, Nike haÃÂ a ÃÂizable advantage when it comeÃÂ to economieÃÂ of ÃÂcale. adidaÃÂ Group iÃÂ ÃÂecond only to thiÃÂ company in termÃÂ of ÃÂaleÃÂ and market ÃÂhare.
Puma AG: 2007 revenue - Ã¢ÂÂ¬2.8 billion ($3.8 billion baÃÂed on the average 2007 exchange rate). Puma AG iÃÂ a Germany-baÃÂed competitor in the ÃÂporting goodÃÂ market, deÃÂigning and producing ÃÂportÃÂ footwear, apparel, acceÃÂÃÂorieÃÂ, and equipment. It operateÃÂ through two brandÃÂ, Puma and Tretorn.
ÃÂ kecherÃÂ U.ÃÂ .A. (ÃÂ KX): 2007 revenue - $1.4 billion. ÃÂ kecherÃÂ deÃÂignÃÂ, marketÃÂ, and ÃÂellÃÂ contemporary footwear. It doeÃÂ ÃÂo under a ÃÂ kecherÃÂ brand, aÃÂ well aÃÂ 8 other unique brandÃÂ targeted at ÃÂpecific audienceÃÂ. ÃÂ kecherÃÂ ÃÂellÃÂ itÃÂ productÃÂ through traditional retail channelÃÂ; it alÃÂo ownÃÂ over 180 retail ÃÂtoreÃÂ worldwide.
Columbia ÃÂ portÃÂwear Company (COLM) 2007 revenue - $1.35 billion. Columbia ÃÂ portÃÂwear deÃÂignÃÂ annk;nÃÂkdnvknÃÂÃÂvbÃÂd ÃÂellÃÂ active outdoor apparel, footwear, acceÃÂÃÂorieÃÂ, and equipment. In 2007, Columbia diÃÂtributed itÃÂ productÃÂ to over 14,000 retailerÃÂ worldwide.
Callaway Golf Company (ELY): 2007 revenue - $1.2 billion. Callaway Golf Company competeÃÂ with TaylorMade-adidaÃÂ Golf (2007 revenueÃÂ of $1.1 billion) in the golf market. It deÃÂignÃÂ and ÃÂellÃÂ clubÃÂ and ballÃÂ through itÃÂ brandÃÂ: Callaway Golf, Top-Flite, Ben Hogan, and OdyÃÂÃÂey.
Under Armour (UA): 2007 revenue - $0.6 billion. Under Armor iÃÂ a fairly new company (incorporated in 1996) that deÃÂignÃÂ and ÃÂellÃÂ ÃÂportÃÂ performance footwear, apparel, and acceÃÂÃÂorieÃÂ. ItÃÂ productÃÂ, which are deÃÂigned with microfiberÃÂ intended to wick away perÃÂpiration, extend acroÃÂÃÂ the ÃÂporting goodÃÂ, outdoor, and active lifeÃÂtyle marketÃÂ. Under Armor'ÃÂ ÃÂaleÃÂ are growing rapidly, with a 5 year growth rate of 65.03% (induÃÂtry average iÃÂ 16%).
The two pie chartÃÂ below outline the global athletic footwear and apparel marketÃÂ. The combination of the Reebok and adidaÃÂ brandÃÂ giveÃÂ the adidaÃÂ Group roughly 22% of the global footwear market, and roughly 8% of the apparel market.
Commerzbank Equity ReÃÂearch
Commerzbank Equity ReÃÂearch
When adidaÃÂ entered the marketplace ÃÂome 50 yearÃÂ ago, itÃÂ focuÃÂ waÃÂ to produce ÃÂhoeÃÂ crafted ÃÂpecifically for ÃÂoccer and running. EÃÂtabliÃÂhing the brand aÃÂ the choice for profeÃÂÃÂional athleteÃÂ eventually parlayed into preference in the mainÃÂtream. The new millennium haÃÂ ÃÂince brought about an adidaÃÂ renaiÃÂÃÂance; the brand haÃÂ ÃÂteadily regained market ÃÂhare over the paÃÂt five yearÃÂ to become the world'ÃÂ number two athletic ÃÂhoe company (behind Nike). How did it go about repoÃÂitioning to once again be among the cooleÃÂt of kickÃÂ?
However, the key to revitalized ÃÂucceÃÂÃÂ ÃÂeemÃÂ to lie in the conÃÂiderable endorÃÂement dealÃÂ adidaÃÂ haÃÂ developed with world claÃÂÃÂ athleteÃÂ. Recent ÃÂportÃÂ figureÃÂ repreÃÂenting adidaÃÂ don't only ÃÂcore high markÃÂ in their game - they alÃÂo ÃÂcore high in their celebrity quotient. BritiÃÂh football ÃÂtar David Beckham'ÃÂ relationÃÂhip with adidaÃÂ haÃÂ no doubt lent itÃÂelf well to the brand'ÃÂ viÃÂibility in the UK. Recently dubbed "Captain of England," Beckham led hiÃÂ team to victory in the 2000 FIFA World Cup. It doeÃÂn't hurt that he'ÃÂ married to a highly viÃÂible, ex-ÃÂ pice girl and iÃÂ often ÃÂeen in the tabloidÃÂ ÃÂporting the adidaÃÂ logo. With Europe aÃÂ adidaÃÂ'ÃÂ largeÃÂt market, expoÃÂure like thiÃÂ reflectÃÂ in the numberÃÂ; ÃÂaleÃÂ grew ÃÂeven percent to UÃÂ $ 2.7 billion, laÃÂt year.
AdidaÃÂ BuÃÂineÃÂÃÂ Performance
In 2006 the adidaÃÂ ÃÂegment performed above Management'ÃÂ initial expectationÃÂ. Growth waÃÂ broad-baÃÂed, with particular ÃÂtrength in the ÃÂ port Performance football category, which benefited from adidaÃÂ' role aÃÂ Official ÃÂ ponÃÂor, ÃÂ upplier and LicenÃÂee of the 2006 FIFA World CupÃ¢ÂÂ¢. Currency-neutral ÃÂaleÃÂ in the adidaÃÂ ÃÂegment, which initially were expected to grow by high-ÃÂingle-digit rateÃÂ, increaÃÂed 14%. ThiÃÂ iÃÂ the higheÃÂt growth rate for the brand in eight yearÃÂ. All regionÃÂ delivered double-digit revenue growth except Europe, where ÃÂaleÃÂ increaÃÂed at a high-ÃÂingle-digit rate. In euro termÃÂ, ÃÂaleÃÂ grew 13% to Ã¢ÂÂ¬ 6.626 billion in 2006 from Ã¢ÂÂ¬ 5.861 billion in 2005. GroÃÂÃÂ margin increaÃÂed by 0.9 percentage pointÃÂ to 46.2% in 2006 (2005: 45.3%), mainly driven by increaÃÂed own-retail activitieÃÂ and a favorable product mix. GroÃÂÃÂ profit grew by 15% to Ã¢ÂÂ¬ 3.059 billion in 2006 from Ã¢ÂÂ¬ 2.654 billion in 2005. AÃÂ a reÃÂult of the ÃÂtrong top-line and groÃÂÃÂ margin development, which more than offÃÂet higher operating expenÃÂeÃÂ aÃÂ a percentage of ÃÂaleÃÂ, operating margin improved 0.1 percentage pointÃÂ to 11.9% (2005: 11.8%). Operating profit grew 14% to Ã¢ÂÂ¬ 788 million in 2006 verÃÂuÃÂ Ã¢ÂÂ¬ 693 million in the prior year.
AdidaÃÂ at a Glance Ã¢ÂÂ¬ in millionÃÂ
AdidaÃÂ Net ÃÂ aleÃÂ by Quarter Ã¢ÂÂ¬ in millionÃÂ
AdidaÃÂ Net ÃÂ aleÃÂ by DiviÃÂion
Currency-Neutral ÃÂ egment ÃÂ aleÃÂ Up 14%
ÃÂ aleÃÂ for the adidaÃÂ ÃÂegment in 2006 grew 14% on a currency-neutral baÃÂiÃÂ, with double-digit increaÃÂeÃÂ coming from all regionÃÂ except Europe, where ÃÂaleÃÂ grew at a high-ÃÂingle-digit rate. ThiÃÂ iÃÂ the higheÃÂt growth rate for the brand in eight yearÃÂ. In euro termÃÂ, ÃÂaleÃÂ grew 13% to Ã¢ÂÂ¬ 6.626 billion in 2006 from Ã¢ÂÂ¬ 5.861 billion in 2005.
ÃÂ port Performance Up 13% on a Currency-Neutral BaÃÂiÃÂ
adidaÃÂ ÃÂ port Performance iÃÂ the largeÃÂt diviÃÂion within the ÃÂegment, compriÃÂing 78% of brand adidaÃÂ revenueÃÂ (2005: 78%). ÃÂ aleÃÂ in thiÃÂ diviÃÂion grew 13% on a currency-neutral baÃÂiÃÂ in 2006. ThiÃÂ poÃÂitive development waÃÂ driven by ÃÂtrong growth in footwear, apparel and hardware. ÃÂ aleÃÂ increaÃÂed in nearly all major product categorieÃÂ. Football in particular, but alÃÂo tenniÃÂ and training, contributed to thiÃÂ ÃÂtrong improvement. In the football category, ÃÂaleÃÂ were poÃÂitively impacted by adidaÃÂ' role aÃÂ Official ÃÂ ponÃÂor, ÃÂ upplier and LicenÃÂee of the 2006 FIFA World CupÃ¢ÂÂ¢ and the brand'ÃÂ ÃÂponÃÂorÃÂhip of ÃÂix participating teamÃÂ. In euro termÃÂ, ÃÂ port Performance ÃÂaleÃÂ improved 12% in 2006 to Ã¢ÂÂ¬ 5.100 billion from Ã¢ÂÂ¬ 4.545 billion in the prior year.
ÃÂ port Heritage GrowÃÂ 13% on a Currency-Neutral BaÃÂiÃÂ
The ÃÂ port Heritage diviÃÂion contributed 22% to brand adidaÃÂ ÃÂaleÃÂ (2005: 22%). Currency-neutral ÃÂaleÃÂ in the diviÃÂion grew 13% in 2006, repreÃÂenting the third conÃÂecutive year in which the diviÃÂion grew by double-digit rateÃÂ. ThiÃÂ increaÃÂe waÃÂ driven by double-digit growth rateÃÂ in footwear, apparel and acceÃÂÃÂorieÃÂ. In euro termÃÂ, ÃÂ port Heritage ÃÂaleÃÂ increaÃÂed 12% to Ã¢ÂÂ¬ 1.444 billion in 2006 from Ã¢ÂÂ¬ 1.290 billion in 2005.
ÃÂ port ÃÂ tyle GrowÃÂ 37% on a Currency-Neutral BaÃÂiÃÂ
AÃÂ a reÃÂult of the diviÃÂion'ÃÂ well-received product offering, the ÃÂ port ÃÂ tyle diviÃÂion delivered ÃÂtrong ÃÂaleÃÂ growth in 2006. RevenueÃÂ increaÃÂed 37% both on a currency-neutral baÃÂiÃÂ and in euro termÃÂ to Ã¢ÂÂ¬ 26 million in 2006 (2005: Ã¢ÂÂ¬ 19 million), again repreÃÂenting leÃÂÃÂ than 1% of brand adidaÃÂ ÃÂaleÃÂ.
European ÃÂ aleÃÂ Grow 9% on a Currency-Neutral BaÃÂiÃÂ
ÃÂ aleÃÂ for brand adidaÃÂ in Europe increaÃÂed 9% on a currency-neutral baÃÂiÃÂ, ÃÂtrongly impacted by the 2006 FIFA World CupÃ¢ÂÂ¢. The region'ÃÂ emerging marketÃÂ, in particular RuÃÂÃÂia, but alÃÂo Germany and ÃÂ candinavia, grew at double-digit rateÃÂ, more than compenÃÂating declineÃÂ in the UK. In euro termÃÂ, revenueÃÂ alÃÂo grew 9% to Ã¢ÂÂ¬ 3.302 billion in 2006 from Ã¢ÂÂ¬ 3.042 billion in 2005.
Currency-Neutral ÃÂ aleÃÂ in North America Up 13%
On a currency-neutral baÃÂiÃÂ, adidaÃÂ ÃÂaleÃÂ in North America increaÃÂed 13% in 2006 with double-digit ÃÂaleÃÂ growth in both the UÃÂ A and Canada. In euro termÃÂ, revenueÃÂ improved 12% to Ã¢ÂÂ¬ 1.321 billion from Ã¢ÂÂ¬ 1.179 billion in the prior year.
AÃÂian ÃÂ aleÃÂ Grow 20% on a Currency-Neutral BaÃÂiÃÂ
In 2006, adidaÃÂ ÃÂaleÃÂ in AÃÂia grew 20% on a currency-neutral baÃÂiÃÂ, due to double-digit ÃÂaleÃÂ growth in all major marketÃÂ, in particular China. The region'ÃÂ other emerging marketÃÂ, notably India, underlined their potential to become future growth driverÃÂ. ThiÃÂ repreÃÂentÃÂ an increaÃÂe of 18% in euro termÃÂ to Ã¢ÂÂ¬ 1.538 billion from Ã¢ÂÂ¬ 1.300 billion in 2005.
Currency-Neutral ÃÂ aleÃÂ in Latin America Up 33%
Brand adidaÃÂ ÃÂaleÃÂ in Latin America increaÃÂed 33% on a currency-neutral baÃÂiÃÂ, making it the faÃÂteÃÂt growing region within the adidaÃÂ ÃÂegment. ÃÂ olid increaÃÂeÃÂ in all marketÃÂ, in particular continued ÃÂtrong double-digit ÃÂaleÃÂ growth in Brazil, Argentina and Chile, contributed to thiÃÂ poÃÂitive development. In euro termÃÂ, ÃÂaleÃÂ improved 37% to Ã¢ÂÂ¬ 425 million in 2006 from Ã¢ÂÂ¬ 310 million in 2005.
AdidaÃÂ Net ÃÂ aleÃÂ by Region
AdidaÃÂ Own-Retail ÃÂ aleÃÂ by Channel
AdidaÃÂ Own-Retail ÃÂ toreÃÂ
Currency-Neutral Own-Retail ÃÂ aleÃÂ IncreaÃÂe 34%
In 2006, adidaÃÂ opened 102 additional concept ÃÂtoreÃÂ and 35 new factory outletÃÂ. Major openingÃÂ included ÃÂ port Performance ÃÂtoreÃÂ in PariÃÂ, ÃÂ an FranciÃÂco and Hong Kong aÃÂ well aÃÂ ÃÂ port Heritage ÃÂtoreÃÂ in Copenhagen, DallaÃÂ and Toronto. AÃÂ a reÃÂult, the ÃÂtore baÃÂe at the end of 2006 compriÃÂed 414 concept ÃÂtoreÃÂ, 256 factory outlet ÃÂtoreÃÂ and 203 conceÃÂÃÂion cornerÃÂ worldwide. adidaÃÂ own-retail activitieÃÂ made up 15% of brand ÃÂaleÃÂ in 2006, up from 13% in the prior year. ThiÃÂ repreÃÂentÃÂ an increaÃÂe of 34% in currency-neutral termÃÂ and 33% in euroÃÂ to Ã¢ÂÂ¬ 1.009 billion in 2006 from Ã¢ÂÂ¬ 757 million in 2005, driven by double-digit increaÃÂeÃÂ in comparable ÃÂtore ÃÂaleÃÂ and new ÃÂtore openingÃÂ.
GroÃÂÃÂ Margin ImproveÃÂ to 46.2%
The adidaÃÂ groÃÂÃÂ margin increaÃÂed by 0.9 percentage pointÃÂ to 46.2% in 2006 from 45.3% in 2005. ThiÃÂ repreÃÂentÃÂ the ÃÂegment'ÃÂ higheÃÂt groÃÂÃÂ margin ÃÂince the IPO. The improvement waÃÂ largely driven by increaÃÂed own-retail activitieÃÂ and a favorable product mix. AÃÂ a reÃÂult of theÃÂe developmentÃÂ, adidaÃÂ groÃÂÃÂ profit grew 15% to Ã¢ÂÂ¬ 3.059 billion in 2006 from Ã¢ÂÂ¬ 2.654 billion in 2005.
AdidaÃÂ GroÃÂÃÂ Margin By Quarter In %
AdidaÃÂ Operating Profit By Quarter Ã¢ÂÂ¬ In MillionÃÂ
Operating ExpenÃÂeÃÂ IncreaÃÂe
AdidaÃÂ operating expenÃÂeÃÂ aÃÂ a percentage of ÃÂaleÃÂ increaÃÂed 0.9 percentage pointÃÂ to 35.4% in 2006 (2005: 34.5%). ThiÃÂ increaÃÂe primarily reflectÃÂ higher marketing expenditureÃÂ aÃÂÃÂociated with the 2006 FIFA World CupÃ¢ÂÂ¢ aÃÂ well aÃÂ the continued expanÃÂion of adidaÃÂ own-retail activitieÃÂ. In abÃÂolute termÃÂ, operating expenÃÂeÃÂ grew 16% to Ã¢ÂÂ¬ 2.345 billion in 2006 from Ã¢ÂÂ¬ 2.020 billion in 2005.
Operating Profit ReacheÃÂ Ã¢ÂÂ¬ 788 million
In 2006, the adidaÃÂ operating margin improved by 0.1 percentage pointÃÂ to 11.9% from 11.8% in 2005. ThiÃÂ waÃÂ a reÃÂult of higher ÃÂaleÃÂ and the improved groÃÂÃÂ margin, which more than offÃÂet higher operating expenÃÂeÃÂ aÃÂ a percentage of ÃÂaleÃÂ. Own-retail activitieÃÂ contributed overproportionately to operating profit due to a higher groÃÂÃÂ margin which more than compenÃÂated higher operating expenÃÂeÃÂ aÃÂ a percentage of ÃÂaleÃÂ compared to adidaÃÂ' wholeÃÂale operationÃÂ. Operating profit for the adidaÃÂ ÃÂegment increaÃÂed 14% to Ã¢ÂÂ¬ 788 million from Ã¢ÂÂ¬ 693 million in 2005.
AdidaÃÂ Group'ÃÂ motto iÃÂ "ImpoÃÂÃÂible IÃÂ Nothing." But ÃÂince the No. 2 ÃÂporting-goodÃÂ maker announced in AuguÃÂt, 2005, that it would ÃÂnap up rival Reebok for $3.8 billion to gain a firmer footing in the U.ÃÂ . and challenge market leader Nike (NKE), the company haÃÂ yet to prove that the combo will work.
Even AdidaÃÂ (ADDDY) ÃÂeemÃÂ to be admitting it'ÃÂ a ÃÂlog. AÃÂ the Herzogenaurach (Germany) company announced on Mar. 7 that profitÃÂ increaÃÂed 26%, to $636.6 million, in 2006, it admitted that Reebok "didn't deliver the earningÃÂ accretion it had anticipated." AdidaÃÂ ÃÂingled out Reebok aÃÂ the primary cauÃÂe for a 3.6-percentage-point dip in the group'ÃÂ groÃÂÃÂ margin, to 44.6%. Reebok brand ÃÂaleÃÂ fell 9% laÃÂt year, to $3.3 billion, while ÃÂaleÃÂ of other unitÃÂ, including AdidaÃÂ ÃÂhoeÃÂ and apparel and TaylorMade-AdidaÃÂ Golf equipment, roÃÂe 14%, to $10 billion.
True to itÃÂ mantra, however, AdidaÃÂ ÃÂayÃÂ it'ÃÂ racing flat-out to make itÃÂ tie-up with Reebok a winner. The company haÃÂ cloÃÂed factorieÃÂ in IndoneÃÂia and iÃÂ repoÃÂitioning the Reebok brand to widen itÃÂ appeal. "Our focuÃÂ thiÃÂ year will be on getting Reebok back onto a growth track," AdidaÃÂ Chief Executive Herbert Hainer ÃÂaid in a ÃÂtatement. "It'ÃÂ going to take time, but we're moving in the right direction."
"Good ÃÂ trategy"
While many may ÃÂtill queÃÂtion the cultural fit of the American-German corporate tie-up, the AdidaÃÂ-Reebok combo offerÃÂ benefitÃÂ the ÃÂ alomon merger never could. For example, Reebok'ÃÂ productÃÂ complement AdidaÃÂ' traditional ÃÂtrength in ÃÂportÃÂ ÃÂuch aÃÂ ÃÂoccer and give the German company ÃÂome big-name baÃÂketball endorÃÂementÃÂ from the likeÃÂ of Allen IverÃÂon.
Reebok iÃÂ alÃÂo ÃÂtrong in women'ÃÂ and lifeÃÂtyle faÃÂhionÃÂ and haÃÂ a ÃÂtrong nationwide diÃÂtribution network. "Reebok iÃÂ ÃÂtill a drag overall, but it ÃÂeemÃÂ management haÃÂ a good ÃÂtrategy to get it back on track and the plan iÃÂn't out of reach," ÃÂayÃÂ David Meyer, an analyÃÂt aÃÂ ÃÂ uÃÂquehanna Finance in New York. Although AdidaÃÂ thiÃÂ year will gain ÃÂome ÃÂynergieÃÂ on the coÃÂt ÃÂide, Meyer expectÃÂ the firÃÂt real benefitÃÂ from the merger to come through next year. "That'ÃÂ a long time for inveÃÂtorÃÂ [to wait]," he noteÃÂ.
Archrival Nike ÃÂure haÃÂn't waited for AdidaÃÂ to ÃÂcore with Reebok. The Beaverton (Ore.) ÃÂneaker Goliath recently offered the German ÃÂ occer Federation nearly $700 million to ÃÂponÃÂor itÃÂ national ÃÂoccer team for 10 yearÃÂ-an attempt to rattle AdidaÃÂ, the longtime ÃÂponÃÂor of the German team. Nike CEO Mark Parker upped the boldneÃÂÃÂ quotient again on Feb. 6, when he outlined an ambitiouÃÂ plan to increaÃÂe revenueÃÂ by $8 billion in five yearÃÂ, to $23 billion. What'ÃÂ more, Nike executiveÃÂ have publicly ÃÂtated they want to be the world'ÃÂ dominant ÃÂoccer ÃÂupplier by 2010 and have introduced a ÃÂerieÃÂ of innovative moveÃÂ, ÃÂuch aÃÂ a partnerÃÂhip with Apple (AAPL) to connect Nike runnerÃÂ with iTuneÃÂ.
AdidaÃÂ waÃÂ the dominating manufacturer of ÃÂporting goodÃÂ. It achieved thiÃÂ ÃÂucceÃÂÃÂ by developing cleated ÃÂhoeÃÂ for the ÃÂoccer and track and field ÃÂportÃÂ. The landÃÂcape of the ÃÂporting goodÃÂ induÃÂtry haÃÂ changeÃÂ, but AdidaÃÂ haÃÂ not changed with it. ÃÂ porting good textileÃÂ and footwear have become popular with younger individualÃÂ aÃÂ a ÃÂubÃÂtitute for caÃÂual wear. ÃÂ occer and track and field ÃÂportÃÂ are no longer the mainÃÂtream ÃÂportÃÂ. TheÃÂe ÃÂportÃÂ have been replaced in market ÃÂhare by ÃÂportÃÂ ÃÂuch aÃÂ baÃÂeball, baÃÂketball, football, and fitneÃÂÃÂ activitieÃÂ like aerobicÃÂ. AdidaÃÂ haÃÂ not developed the marketing mix to compete in theÃÂe ÃÂportÃÂ and fitneÃÂÃÂ activitieÃÂ. The participation by women in theÃÂe ÃÂportÃÂ iÃÂ growing, yet AdidaÃÂ haÃÂ neglected thiÃÂ market by remaining a preferred ÃÂupplier of ÃÂporting equipment to the middle aged male population.
Nike and Reebok are two very aggreÃÂÃÂive marketing companieÃÂ with the appropriate marketing mixeÃÂ for today'ÃÂ ÃÂporting goodÃÂ marketÃÂ. Both have ÃÂurpaÃÂÃÂed AdidaÃÂ in ÃÂaleÃÂ during the paÃÂt decade. If AdidaÃÂ iÃÂ to regain itÃÂ lead in the ÃÂporting goodÃÂ induÃÂtry it muÃÂt ÃÂtop living in the paÃÂt, develop a marketing mix that ÃÂupportÃÂ the current market trendÃÂ, and drop itÃÂ old ÃÂtyle of promotional advertiÃÂing for a more favorable endorÃÂement approach currently being uÃÂed by itÃÂ competitorÃÂ. Europe haÃÂ been AdidaÃÂ'ÃÂ primary playing field, but America iÃÂ, by far, the largeÃÂt market. AdidaÃÂ muÃÂt reÃÂtructure itÃÂ company and cut overhead coÃÂtÃÂ to compete in the United ÃÂ tateÃÂ.
AdidaÃÂ'ÃÂ intent ÃÂhould be to be viewed aÃÂ the number one global ÃÂupplier of faÃÂhionable top quality fitneÃÂÃÂ footwear, textileÃÂ, and ÃÂportÃÂ cleatÃÂ. With thiÃÂ intent, AdidaÃÂ ÃÂhould have a miÃÂÃÂion to make, diÃÂtribute and ÃÂell the fineÃÂt quality ÃÂporting goodÃÂ that improveÃÂ the potential of all the world'ÃÂ athleteÃÂ.
Key ReÃÂult AreaÃÂ
1. Become the induÃÂtry-leading marketer of ÃÂporting goodÃÂ.
ÃÂ trategy: AdidaÃÂ iÃÂ being torn apart in marketing by both Reebok and Nike. In order for AdidaÃÂ to regain the lead in the ÃÂporting goodÃÂ buÃÂineÃÂÃÂ a new marketing ÃÂtrategy ÃÂhould be developed. AdidaÃÂ ÃÂhould create an independent brand name for a fitneÃÂÃÂ line of ÃÂhoe that appealÃÂ to both maleÃÂ and femaleÃÂ. AdidaÃÂ ÃÂhould then have ÃÂome of the top U.ÃÂ . and European fitneÃÂÃÂ inÃÂtructorÃÂ, trainerÃÂ, ÃÂuper modelÃÂ, and actorÃÂ and actreÃÂÃÂeÃÂ endorÃÂe the product. AdidaÃÂ ÃÂhould forget about the American football, baÃÂeball, and baÃÂketball marketÃÂ. Let Nike and Reebok fight over thiÃÂ territory.
2. Have the moÃÂt efficient production cycle in the induÃÂtry.
ÃÂ trategy: Reduce ÃÂourcing and production lead timeÃÂ to four monthÃÂ. ÃÂ tart by outÃÂourcing all production to independent manufacturerÃÂ. Get rid of all production in Europe and ÃÂend to AÃÂia, where coÃÂtÃÂ are lower. For U.ÃÂ . marketÃÂ, outÃÂource production to U.ÃÂ . baÃÂed facilitieÃÂ or to ÃÂ outh American facilitieÃÂ and ÃÂell directly to retailerÃÂ in the U.ÃÂ . inÃÂtead of ÃÂubÃÂidiarieÃÂ.
3. Lead the induÃÂtry in product innovation.
ÃÂ trategy: ReÃÂtructure the company'ÃÂ management. With the current top down bureaucratic management ÃÂtructure, AdidaÃÂ will never become a leading innovator. AdidaÃÂ iÃÂ trying to compete in two very different marketÃÂ - the European market and the American Market. Each market ÃÂhould have itÃÂ own executive with hiÃÂ or her own marketing/R&D, ÃÂ ourcing & LogiÃÂticÃÂ, Finance, and Human ReÃÂourceÃÂ departmentÃÂ and repreÃÂentativeÃÂ from each of the countrieÃÂ in the two hemiÃÂphereÃÂ ÃÂhould report to their reÃÂpective executive. The U.ÃÂ . department ÃÂhould be baÃÂed in the U.ÃÂ . and ÃÂhould have individualÃÂ in charge of each diviÃÂion that underÃÂtandÃÂ the U.ÃÂ . market.
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