Business Plan For Adidas

BUSINESS PLAN

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Table of Content• Company background

• External analysis

• Company analysis

• Corporate strategies

• Functional strategies•Market, OM, HR, Financial, Accounting

• Monitoring (BSC)

• Value chain

• Recommendation

Company background About Adidas Group

Adolf "Adi" Dassler

His brother Rudolf returned to Herzogenaurach to join his younger brother's business

Industry Apparel, Accessories

Founded 1924 as Gebrüder Dassler Schuhfabrik(registered in 1949)

Founders Adolf Dassler

Headquarters Herzogenaurach, Germany

Area served Worldwide

Key people Herbert Hainer (CEO)

Products Footwear, sportswear, sports equipment, toiletries

http://en.wikipedia.org/wiki/Clothing

http://en.wikipedia.org/wiki/Fashion_accessory

http://en.wikipedia.org/wiki/Adolf_Dassler

http://en.wikipedia.org/wiki/Herzogenaurach

http://en.wikipedia.org/wiki/Herbert_Hainer

http://en.wikipedia.org/wiki/CEO

http://en.wikipedia.org/wiki/Sportswear_(activewear)

http://en.wikipedia.org/wiki/Sports_equipment

http://en.wikipedia.org/wiki/Toiletries

Company background About Adidas Group

Company background Overall Brand and Sub-brands

% of Group Sales

External AnalysisPEST ANALYSIS

Political: To control and monitor

hazardous substances To protect human

health and environment: eliminate PVC

To provide training sessions on employment standards and HR systems

To protects and supports all current employment laws

Economical: To help countries

decrease unemployment rate by increasing employees

The salary high in Germany but low in China - most factories in Vietnam

Social: Adidas products are

always keeping up with the latest fashion

focus on people who like sports and athletics

Technology: The world’s first smart

shoe by adding microchip inside the shoe

The wireless mp3 player The hot-melt system in

production that is safe for the environment

The environmental friendly/recycled packaging systems

External Analysis5 FORCES ANALYSIS

Rivalry(H)

- The firms are globally recognized and have a huge number of loyal customer

Threat of entry (M)

- Adidas is a globally recognized brand and has a huge royalty customer around the world- Continuous research to come up with new innovation, design and feature.

Threat of Substitute (M)- Most of footwear can use for sport purpose but it doesn’t have same feature with sport shoes

Supplier power (L)- The principal materials used in our footwear products are natural and synthetic rubber, plastic compounds, foam cushioning materials, nylon, leather, canvas. mostly supplier are offer same product.

Buyer power (H)

- Price sensitive customers

External AnalysisMarket Trend

The global athletic footwear market was worth USD 74.7 billion in 2011 and is expected to reach USD 84.4 billion in 2018, growing at a CAGR of 1.8% from 2011 to 2018.

Credit : Transparency Market Research "Athletic Footwear Market - Global Industry Size, Market Share, Trends, Analysis and Forecast, 2012 - 2018,

Factors driving the global athletic footwear market include

The growing awareness about healthy and active lifestyles

The rising demand for comfortable footwear

The rising demand for innovative footwear designs and technology

The growth of population

The rising disposable income levels.

External AnalysisCOMPETITORS ANALYSIS

Nike 31%

Adidas 16%

Reebok 6%

Puma 7%

New Balance 6%

ASICS 5%

Converse 4%

K-Series 2%

Sletchers 5%

Others 18%Credit http://ridgewoodavenuejournal.blogspot.com/2013/06/footwear.html

1st

2nd

3rd

4th

5th

External AnalysisCOMPETITIVE POSITIONS


NIKE, Inc. is the world’s leading innovator in athletic footwear, apparel, equipment and accessories that is engaged in the design, development and worldwide marketing and selling.


Customize NikeiD


PUMA offers performance and sport-inspired lifestyle products in categories such as Football, Running, Training and Fitness, Golf, and Motorsports.

To engages in exciting collaborations with renowned design brands such as Alexander McQueen and MiharaYasuhiro

To bring innovative and fast designs to the sports world.


Partnership with BMW and Arsenal football team


New Balance Athletic Shoe runs on its everyman (and everywoman) appeal.

Besides making and selling men's and women's shoes for running, cross training, basketball, tennis, hiking, and golf

The company offers fitness apparel and kids' shoes and owns leather boot and shoe maker Dunham.


NB custom : same features NikeiD but can’t choose pattern


ASICS Corporation manufactures and sells sports goods in Japan, the Americas, Europe, the Oceania, and the East Asia.

The company provides sports shoes, sportswear, and sports equipment, as well as bags and other accessories. It also manufactures and sells outdoor products under the “HAGLOFS” brand.

The company sells its products through its own retail stores. ASICS Corporation was founded in 1949 and is headquartered in Kobe, Japan.


Shoes suggestion. By surface, you wear, experience and pronation

Company AnalysisAdidas group BCG matrix

Company AnalysisAdidas business model

Online

MISSIONThe Adidas Group strives to be the global leader in the sporting goods industry with brands built on a passion for sports and a sporting lifestyle. We are committed to continuously strengthening our brands and products to improve our competitive position.

Company AnalysisAdidas Group

vision The company is innovation and design leaders who seek to help athletes of all skill levels achieve

peak performance with every product we bring to market. The company are consumer focused and therefore we continuously improve the quality, look,

feel, and image of our products and our organizational structures to match and exceed consumer expectations and to provide them with the highest value.

The company are a global organization that is socially and environmentally responsible, that embraces creativity and diversity, and is financially rewarding for our employees and shareholders.

The company are dedicated to consistently delivering outstanding financial results.


Strategic Objective

Financial Objective

To increase market share to be the market leader.

To Decrease cost 10% and improve the company sustainability performance to increase net income 15% annually.

CORE VALUEPerformance

Sport is the foundation for all we do and executional excellence.

PassionPassion is at the heart of the company and continuously moving forward, innovating, and improving.

IntegrityThe company are honest, open, ethical, and fair. People trust us to adhere to our word.

DiversityThe company takes people with different ideas, strengths, interests, and cultural backgrounds to make our company succeed. We encourage healthy debate and differences of opinion.


BRAND VALUEAuthentic

Passionate

Innovation

Inspirational

Committed

Honest


BRAND ATTITUDE Impossible is Nothing

KEY MARKETS North America Russia Greater China

SIX KEY STRATEGIC PILLARS Diverse brand portfolio Investments focused on highest-potential markets and

channels Creating a flexible supply chain Leading through innovation Develop a team grounded in our heritage Becoming a sustainable company

Company AnalysisGENERIC STRATEGY

Cost leadership Products are priced much lower to Nike, Puma

but the quality are equal. Customers would buy adidas rather than Nike and Pumabecause of the price.

Diversification Strategies adopted by adidas are concentric

and horizontal strategies

Concentric miCoach interactive training system (2010) was introduced along with miCoach pacers also

deodorant and shower gel and can also sell healthy drinks and juice because consumers trust the brand related diversification

strategy advantage of related diversification is the sharing of resources and capabilities between various brands

Market AnalysisSTP – Segmentation

GEOGRAPHIC SEGMENTATION: Divided the market into different units of location o Neighborhood, o States, cities o Regions, countrieso Adidas Bold 2009 have operated in urban and

semi-urban cities of India.

PSYCHOGRAPHIC SEGMENTATION: Divided different personalities of each consumers and only key is to be different.o Achieverso Well-experiencedo Hard workerso Goal achievers

BEHAVIORAL SEGMENTATION: Divided the consumers according to their attitude, knowledge, response and use of the product. Below are the behavioral segmentation for Adidas:o Benefitso Gym regular userso Sports loverso Athleteso Image seekerso Brand freaks

DEMOGRAPHIC SEGMENTATION: Divided into different segments based on the variables of family size, family life cycle, income, gender, ageand etc. As follows:o Age 15-36o Income level: $15,000o Social Class: Upper middle, upper class and lower

upper.o Gender: Both male and female

Market AnalysisSTP – Targeting

• Sports personalities involved in various sporting activities such as soccer, rugby, athletics and basketball.

• Young people• Male and Female• Ages between of 10 to 30

Market AnalysisSTP – New Targeting

• Sports personalities involved in various sporting activities such as soccer, rugby, athletics and basketball.

• Young people• Male and Female• Ages between of 10 to 30• People who has problem with pronation• People who want customize their shoes

Market AnalysisSTP - Product Positioning

adidas• The brand strive to be the globally

leading and most popular sporting goods brand

• Focus is on innovation and technology

adidas Originals• The first brand leveraging its sports

assets in the lifestyle area • Regarded as a legitimate sports lifestyle

brand.

adidas Sport Style• "Future of Sportswear" • Includes the labels Y-3• Porsche Design Sport

adidas NEO• From the track to the catwalk, it helps you to

"Style your Life"

New product will emphasize in Sports fashion shoes

Products Providing high quality products aimed at providing the best value to the

costumer. The products portfolio is continuously enhanced through creations and

innovations throughout the companies various categories. This is pursued in order to cater to the various needs and wants of consumers worldwide.

Well-known brands for sports apparels, equipment and accessories, the Adidas group has a diverse brand portfolio consists of: Adidas , Reebok , TaylorMade Adidas Golf , Rockport, CCMHockey

Partnership with Porches miadidas, offered in online store, customer can customize shoes color Enhance miadidas

Customize pattern, color and engrave letters Support customer running style(Pronation)

Market Analysis4Ps - Products

Market AnalysisPartnership with Porshe

miadidasA wide selection of distinctive colors lets you mix and match for a shoe that lives up to your look

Stand out on the street thanks to a range of materials that let you create unique combinations

Select an extra pair of laces for contrasting color to freshen up the vibe

Customize your heel loop for a truly personal statement

Product offered only in U.S and nearby


VDO Adidas custom


New miadidasA wide selection of distinctive colors lets you mix and match for a shoe that lives up to your look

Stand out on the street thanks to a range of materials that let you create unique combinations

Select an extra pair of laces for contrasting color to freshen up the vibe

Customize your heel loop for a truly personal statement

Can customize shoes as can choose materials(selected) ,pattern, color, engrave letters

Support personal pronation

Offer service to Asia


Market Analysismiadidas

Market AnalysisPronation Suggestion

VDO Pronation suggestion

Market Analysis4PS - Price

PriceUsing adapted pricing strategies, depending on which market they

are operating in, so as to achieve its goals.

Penetrating attack markets with lower prices or using market skimming tactics, for instance.

In intense competition in the global market, the company is involved in regular evaluation of its price to ensure that the products stay competitive at the point of sale and online shop.

Market Analysis4PS - Place

PlaceDistribute its products to the consumer with a strong focus on controlled space, including: Own-

retail business, e-commerce, Shop-in-Shop, Joint ventures with retail partners, mono-branded franchise stores, co-branded stores with sports organizations and other brands. Hence, a high level of brand control is provided.

In addition, an “integrated distribution roadmap” has been set up to ensure further growth and to increase brand presence in under-penetrated, affluent cities, without cannibalizing their own brands and distribution mix.

Emphasize online store which variety of products and services

In shop customize, using touch screen computer

Market Analysis4PS - Promotion

PromotionDifferent promotional tools are used in order to reduce the number of lost

customers and to increase sales.

The group has set up an unparalleled portfolio of promotion partnerships with international recognized sports associations (e.g. UEFA, FIFA, NBA, NFL, and NHL).

Commercials, ads, apps for smartphones, product placement, sponsorships for athletes and sport events (e.g. Berlin Marathon 2011)

Emphasize advertising and promotion on online channel

Market Analysis4PS – Promotion - Advertisement

Market Analysis4PS - Promotion

PromotionDifferent promotional tools are used in order to reduce the number of lost

customers and to increase sales.

The group has set up an unparalleled portfolio of promotion partnerships with international recognized sports associations (e.g. UEFA, FIFA, NBA, NFL, and NHL).

Commercials, ads, apps for smartphones, product placement, sponsorships for athletes and sport events (e.g. Berlin Marathon 2011)

Emphasize advertising and promotion on online channel

Market AnalysisDistribution Channel – Wholesale

Market AnalysisDistribution Channel – Retail

Market AnalysisDistribution Channel – E-Commerce

E-commerceThe success of our e-Commerce strategy rests on ability to attract,

convert and retain the consumer in a highly competitive marketplace.

Therefore, activate key unique selling proposition by offering broad ranges with high size availability to showcase the depth of our brands.

Company want to attract consumers by having the right products and the right marketing at the right time through our e-shops.

To drive conversion, we consistently improve our site visibility online and how it ranks in online searches.

Market AnalysisSWOT Analysis

• Low switching cost

• High product substitute for customer• Trademark too easy to copy

Operation ManagementValue Chain

• Quality Control

Operation ManagementSupply Chain

Operation ManagementSupply Chain

Use of IT to monitoring supply chaininnovative rating system for the assessment

Checking the rules are followedWorkplace standards - Cover labor rights, training programs, health and safety, and environmental protection

Selecting new suppliersAdidas will give the order to suppliers who approved by SEA(The Social and Environmental Affairs) team

Rewarding good performanceRemain Adidas partner and continue to receive orders

Taking action over poor performanceAdidas will send a letter. If they not improve Adidas will stop orders and stop working with the factory

Providing information for workersmanagement-worker communication project with one of our suppliers in Indonesia: workers can now send SMS text messages to hotlines to raise the alarm if they think their rights are being compromised.

Working with Licensees have people check the factories and help them stay true to our rules

Human Resource ManagementSTRATEGIES


Commitment to leadership excellence Enable employees to be the best

* Talent Management* Performance Management* Succession Management


Performance-driven remuneration* Bonus Programme* Profit Participation* Long Term Incentive Program

Online communication platform to drive employees engagement

Create an attractive work environments* Work-life integration* Diverse work force key to Success

Managing our environmental impacts at our own sites and along the value chain, where our products are designed, created, manufactured, transported and sold, is a key focus of company work.

Social ResponsibilityCSR

Environmental Strategy 2015Vision – Our commitment to improve our environmental footprint is embedded in all our products, processes and services.Mission – Adopting a leadership role in environmental management supports our business performance.

Objectives: Save energy and reduce carbon emissions

Save water

Reduce the use of non-renewable raw materials, using more environmentally

friendly materials

Reduce waste

Reduce toxicity, for example through using less hazardous chemicals and

through efforts to reduce the pollutants in waste water at supplier factories

Improve the environmental footprint of raw materials and products

Manage supplier performance through auditing, measuring and reporting

against key performance indicators

Use management systems to drive continuous improvement.


Finan

cial High

lights

PerformanceAccounting

PerformanceFinance

Adidas AG stock perform better than DAX-30 and MCSI

Financial ManagementCOST STRUCTURE

EQUITY > LIABILITIES

Monitoring ProcessStrategy

Route 2015 StrategyTo drive quality growth and sustainable success for the group by fuelling consumer desire with

premium products and brand experiment

Monitoring ProcessStrategy Map

Monitoring ProcessBalance Scorecard

Balance ScorecardLearning and Growth Perspective

2012 2013 2014 2015 2016 2017

Create leadership excellence -% global engagement survey 80% 82% 84% 86% 98% 90%

Enabling employee to reach their personal

best

- Annual training hours by employee (in

hours)18 19 20 18 19 20

Employee satisfaction - Turn over rate 1% 1% 1% 0% 0% 0%

Creating an attractive work environment - Average length of service (in years) 5 6 7 8 9 10

- Number or new system support 2 3 4 5 6 7

-Number of employees 42,541 46,623 48,518 48,700 49,000 49,100

Reorganization of culture -% product defection 25% 20% 15% 10% 5% 0%

Increase the propotion of women in

management- % Management position 28% 32% 35% 37% 39% 41%

Perspectives Objectives MeasurementsPerformance Targets

Learn & Growth

Perspective Online communication platforms to drive

employee engagement and learning

Programs

Leadership excellence programme / Best-in-class tools 100,000

Targeted development programmes 50,000

Rewards programme / Global Salary Management System / Bonus programme,Profit participation programme,Long-term incentive programmes, Champion Bonus 80,000

Work-life Integration Programme 30,000

Learning Management System / Ask the Management / e Learning 30,000

Recriutment process N/A

Internal Training Programmes / Employee engagement surveys 100,000

Mixed leadership team / Work-life integration /Gender balance 100,000

Budget (€)

Balance ScorecardInternal Process Perspective

2012 2013 2014 2015 2016 2017

Ensuring cost compititiveness

Reduce product cost cost of sales € 7780 m € 7118 m € 6990 m € 6980 m € 6800 m € 6500 m

Reduce standard lead times for footwear

and apparel Standard lead times 60 days < 60 days < 60 days 60 days < 60 days < 60 days

Product development, creation &

innovation1. Increased number of new ideas R&D expenses € 128m € 129.28m € 132m € 135m € 137.5m € 139m

2. Improved quality of ideas No. of successful product launch 17 19 21 23 25 27

3. More efficient implementation of quality

ideas

MeasurementsPerformance Targets

Internal Process

Perspective

Perspectives Objectives

Programs

Cycle process system 30m

Cycle process system/ customer order management/ distribution management10m

Production creation system 50m

Quality control management

Budget (€)

Balance ScorecardCustomer Perspective

2012 2013 2014 2015 2016 2017

new customers% increase new customers through

registration10% 15% 20% 22% 24% 26%

customer retention % repeated sales through database 72% 75% 78% 80% 80% 80%

customer satisfaction% repeated sales through database and

surverys95% 95% 95% 95% 95% 95%

increase demand% increase sales: both new customers

and old customers50% 50% 50% 55% 60% 65%

Perspectives Objectives MeasurementsPerformance Targets

Customers

Programs

promotions/ advertisment/ marketing/ new products+ 200M

promotions/ advertisment/new products + good quality+ reasonable price 100M

value customer project/ surveys 25-50M

advertisment/ marketing, more outlets/ new products 200M

Budget (€)

70

Balance ScorecardFinancial Perspective

Programs

Measures profitability a company is for the owner of the investment, profitably a company employs its equity.-

From using ABC costing,ABM,EmployeeLeadershipProgram,BetterSupplyChainProcess,Outsourcing

Indicator of the profitability of the company -

From using ABC costing,ABM,EmployeeLeadershipProgram,BetterSupplyChainProcess,Outsourcing-

From using ABC costing,ABM,EmployeeLeadershipProgram 2500M

Strong balance sheet increased flexibility to the best interest of sharesholders -

From using ABC costing,ABM,BetterSupplyChainProcess,Sales,Marketing,OnlineRetailer1,500M

From using ABC costing,ABM,EmployeeLeadershipProgram,BetterSupplyChainProcess,Outsourcing2,000M

Better performance of the company -

Budget (€)

2,600M-5,200M

2012 2013 2014 2015 2016 2017

Return on Equity(NI/Equity) 12% 12% 12% 12% 12% 12%

Net income attributable to shareholders

as a percentage of net sales

Earning per share increased 10%-15% 12%-16% 14%-18% 16%-19% 16%-19% 16%-19%

Operating Margin 8% 9% 10% 11% 12% 13%

Operating Expenses 40% 40% 40% 38% 36% 34%

Net borrowing/EBITDA below 2 below 2 below 2 below 2 below 2 below 2

Revenue increased 11% 11% 12% 13% 14% 15%

Gross Margin 47.50% 49.30% 49.5%-49.8% 50.00% 51.00% 52.00%

Increase Share Value Share Price increased above standard 10% 12% 15% 17% 19% 21%

Targets

20%-40% 20%-40% 20%-40%

Sustainable company

Performance

20%-40% 20%-40% 20%-40%

Financial

Creating long-term value

Perspectives Objectives Measurements

revenue growth

Predicted PerformancePerforma Income

Currency : € in millions 2,014 2,015 2,016 2,017 2,018

Sales 16,000 17,600 19,360 21,296 23,426

Cost of Goods Sold 7,052 6,664 6,298 5,951 5,624

Operating Income 8,948 10,936 13,062 15,345 17,802

Total Expenses 6,000 6,180 6,365 6,556 6,753

Earning Before Interest and Tax 2,948 4,756 6,697 8,788 11,049

Taxes 2,093 3,377 4,755 6,240 7,845

Net Income 855 1,379 1,942 2,549 3,204

o Adidas is market followero Diversify base on footwearo Most product made for sport activityo Manufacturing locate in Asia, Vietnam and Chinao Good image in HR and CSRo Strong financial

Co

nclu

sion

Reco

mm

end

ation

Continue develop strong consumer-oriented brand for continued growth with advanced tech can understand customer needs better and in turn can deliver that demand

Tap into untapped markets like China, India, Latin America, etc.Equip sales with wireless tech to provide them real-time inventoryMore efficient processContinue investing in R&D to keep up the edgeExpand women’s segment

THANK YOU FORYOUR ATTENTION

1. www.nasdaq.com/symbol/addyy

2. www.adidas-group.com/en/referen

ces

http://www.nasdaq.com/symbol/addyy

http://www.adidas-group.com/en/

Business Plan For Adidas

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