Reference no: EM131308970

1) INDUSTRY ATTRACTIVENESS

High barriers for new entrants

Attractive for market leaders

Asia and South America are attractive emerging markets

Industry prospects for profitability and growth remain good in most of the product segments since the customer demand is still increasing. Due to changing economic factors, certain product lines such as bike & ice sports gear may not have good prospects for long term growth and high profitability due to limited volumes in sales.

Porters five force model shows that there is high business rivalry between Nike, Adidas and other manufacturers. This leads to innovation which attracts more buyers and lowers operation costs.

The external driving forces of change all support increase in demand, supply and profitability.

Adidas has made improvements in its KSF's for the external environment. Such improvements include revamping its supply chain to world class standards, increasing the number of outlets, improving innovation and increasing online presence. Such improvements mean that there are positive prospects of profitability and growth in the industry.

Stakeholder analysis shows that as long as the customer's needs are taken care of, there is guaranteed prospects for profitability and growth increase

2) Increase Marketing Activities

Improve innovation

Divest Reebok

Expand Sport style line (collaboration)

Sponsor more high profile North American Athletes

This analysis on the strategic decisions undertaken in recent years up to the year 2009 is evidence that corporate restructuring at Adidas has not significantly increased shareholder value in the short run. This is because since acquiring Reebok, Adidas and Reebok have continued to lose market share in the United States to Nike. In the brands analyzed, Nike was the only brand that displayed a steady increase in Market share from 2006 to 2008 to achieve a market share of 34%. Adidas and Reebok achieved a reduced market share of only 8% during the same period.

The analysis also reveals that the investment in Reebok has not increased shareholder value since the sales of the brand has been going down from 2006-2008. Taylor Made only made a slight increase in sales over the years.

The idea to divest from some of the Salomon business units was wise since the operations of these brands were not in line with the core business of Adidas. Also, the some of these brands were facing declining popularity and would no longer be profitable.

Investing in Reebok was a good idea since Adidas acquired a competitor and thus increased its market share in the athletic footwear category. Therefore, the company must focus on enhancing marketing and building brands of Taylor Made and Reebok and the action plan should include three steps in which they:

1. Incorporate customer feedback index in all products and on online platforms and link this information with product developments.

2. Increase marketing activities, store locations and online shops

3. Improve innovation and introduce a new product every month

It is important for the company to engage in serious product innovation, branding and marketing on the Taylor Made and Reebok brands so that they can realize increase in shareholder value in the long run as anticipated by the company restructuring.