ADIDAS/NIKE/ASICS

REPORTCOMPANYANALYSIS

REPORT COMPANY ANALYSIS

SPORTSWEAR INDUSTRY

Lisa Wurden

Camilla Lindheim Nilsen

Veerle HesselsM2Ei

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TABLE OF CONTENT

I. Introduction

II. Industry Analysis

Porters five forces

Bargaining Power to Buyers

Barriers to entry

Bargaining power of suppliers

Competitive Rivalry

Threats of substitutes

III. Company Analysis

A. NIKE LISA WURDEN

Profile

Strategy

5P’s of Mintzberg

Marketing Strategy Analysis

Financial Situation / 4KPI´s

B. ADIDAS CAMILLA LINDHEIM NILSEN

Profile

Strategy

5P’s of Mintzberg

Marketing Strategy Analysis

Financial Situation / 4KPI´s

C. ASICS VEERLE HESSELS

Profile

Strategy

5P’s of Mintzberg

Marketing Strategy Analysis

Financial Situation / 4KPI´s

Positioning

Benchmarks

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IV. Market Analysis

DESTEP

Trends and Sustainability

Target Group and Survey

Market Share and Growth Rate

Developments

Opportunities and Threats

Distribution Channels

V. Conclusion

Appendix

A. NIKE LISA

Company Culture / Principles

Strength and Weakness

Business Model Canvas

Balanced Score Card

Strategy Analysis Extra

Financial Analysis Extra

Organisational Structure

Supply Chain Analysis

B. ADIDAS CAMILLA

Company Culture / Principles

Strength and Weakness

Business Model Canvas

Balanced Score Card

Strategy Analysis Extra

Financial Analysis Extra

Organisational Structure

Supply Chain Analysis

C. ASICS VEERLE

Company Culture / Principles

Strength and Weakness

Business Model Canvas

Balanced Score Card

Strategy Analysis Extra

Financial Analysis Extra

Organisational Structure

Sources

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I . INTRODUCTION

Sport apparel is starting to become a trend, fashionable and to be worn as normal day wear. Where

even designers are creating collections inspired on sportswear and showing these on the catwalk. This

made us curious, which let us deicide to take the sports market under the loop.

To make sure athletes and sportsmen and women will reach the best performance sports apparel is

improving often by innovating and developing to get the most comfortable and functionality. Moreover,

this is one of the most competitive markets where big brands such as Nike, Adidas and Asics are

playing.

In our report we will compare, observe and analysis these brands to learn more about strategies,

theories and identities. How do we see these brands and how do these brands make sure they will be

seen by us, the customers?

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PORTERS FIVE FORCES I

COMPETITIVE RIVALRYBARGAINING POWER OF SUPPLIERS

II . INDUSTRY ANALYSIS

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Porters Five Forces is a framework to analyze the

level of competition within an industry and busi-

ness strategy. It leads to the assessment of the

competitive intensity and therefore attractiveness

of an industry (industry profitability).

The analysed forces influence how a company

serves its market and whether it is able to turn a

profit. Any change in these might force the com-

pany to strategic revaluation.

COMPETITVE RIVALRY- The global market for sporting goods and per-

formance wear is characterized by intense compe-

tition and a large number of players in the field

such as, Puma, Adidas, Asics, Nike, ect.

- the global industry is in continuous develop-

ments in consumer preferences and technological

advancements. If the companies in the industry

are unable to adapt to these changes it will turn

out as losses of market share.

- There is a rising competition for smaller emerg-

ing companies such as Under Armour and Lulu-

lemon, these focus more on a niche market such

as performance wear and yoga-focused sporting

goods. These might take away some of the mar-

ket share from the bigger players

- In the industry two large competitor Nike and

Adidas, have a large amount of resources avail-

able at their hands, which makes it easy for them

to pay with the performance of sportswear and

gaining market share

- Statistics tells that Nike and Adidas are the

most dominant companies within sportswear and

sporting goods worldwide, a combines revenue of

almost US$50 billion in 2013/2014.

- The big competitors such as nike, asics and

adidas hold fabric and process patents, hence

their product portfolio cant not be copied in the

future.

- The preferred place to buy athletic apparel for

the age group 23-24 is mass merchants (37%),

followed by chain stores (15%) and sports retailers

(14%).BARGAINING POWER OF SUP-PLIERS- Having a diverse supplier portfolio will limit the

power to bargain the price.

- Most of the bigger players in the industry now

manufacture their product by a third-party contract

outside of their headquarter country, such as Viet-

nam, China, Indonesia, Argentina, Brazil, India and

Mexico.

- With these suppliers that based all across the

globe for the larger companies the bargaining pow-

er become limited.

- For the smaller players in the industry the bar-

gaining power is higher as for them it would come

extra costs and a higher loss by switching suppli-

ers.

- Switching costs in changing suppliers is signifi-

cant, even tho suppliers in general share the infla-

tionary pressure due to material costs and labor

expenses.

- In the industry two large competitor Nike and

Adidas, have a large amount of resources available

at their hands, which makes it easy for them to

pay with the performance of sportswear and gaining

market share

- Statistics tells that Nike and Adidas are the most

dominant companies within sportswear and sporting

goods worldwide, a combines revenue of almost

US$50 billion in 2013/2014.

- The big competitors such as nike, asics and

adidas hold fabric and process patents, hence their

product portfolio cant not be copied in the future.

- The preferred place to buy athletic apparel for

the age group 23-24 is mass merchants (37%),

followed by chain stores (15%) and sports retailers

(14%).

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PORTERS FIVE FORCES II

BARGAINING POWER OF CUSTOMERSTHREATS OF NEW ENTRANTS

THREATS OF SUBSTITUTE PRODUCTS

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competitors to enter the market.

- NSGA’s 2013 study report showed that sports

participation over the previous year had increased;

indoor games increased by 11%, snow sports de-

creased by 11%, fitness activities increased by 5%

Physical fitness participation have been showing

substantial growth in popularity. Where amateur

participation in team sports grew 29% from 2011-

2012.

- Financial forecasting company Trefis predicting

the global sportswear market to grow to $178bn

by 2019. However more existing companies in the

apparel industry are trying to enter the sportswear

market and in the future could try to penetrate

the performance apparel market because of this

growth in market share and demand.

- Another big factor that can come to play are

E-Businesses, that could start selling competitors

footwear, sporting apparel and equipment as the

barriers to entry are quite low in this business.

THREAT OF SUBSTITUTE PRODUCTS- The demand for sporting goods and apparel

wear is expected to grow and continue in the fu-

ture as customers can not substitute these prod-

ucts.

- The problem of counterfeit products is an area

to watch, the quality of counterfeit products have

improved over the recent years and this could

threaten the rest of the companies in the indus-

tries sales in emerging markets, and potentially

change the brands value.

- Another big factor that can come to play is In-

ternet companies, that could start selling compet-

itors footwear, sporting apparel and equipment as

the barriers to entry are quite low in this business.

BARGAINING POWER OF CUS-TOMERS- Nike, Adidas, Puma, Asics and the bigger players

caters to their customers both in their wholesale

sectors and in their direct-to-customer channels.

- Out of all wholesale consumers, only some hold

the bargaining power to become partners with com-

petitors or start their own private label to earn a

higher profit

- Bargaining power of the end-customer is quite

low in the industry as the bigger companies already

have a very strong brand image and holds already

a wide product portfolio with new innovative solu-

tions. However, customers choose brands on sever-

al factors such as price, advertising, product spon-

sorship and changing style.

- The big competitors such as nike, asics and

adidas hold fabric and process patents, hence their

product portfolio cant not be copied in the future.

- The preferred place to buy athletic apparel for

the age group 23-24 is mass merchants (37%),

followed by chain stores (15%) and sports retailers

(14%).

THREATS OF NEW ENTRANTS - In sportswear large capital costs are spent on

marketing, branding, advertising and creating the

product demand. This restricts the entry of new

players on the field.

- The amount of capital investment a compa-

ny would need to enter this segment of sporting

goods and performance wear, suspecting that the

threat of new entrants are fairly low in this industry

due to the fact of such a huge company market to

choose from consumers have already gotten their

feel of the different brands out there.

- For brands such as Nike they already have the

brand recognition and partly loyalty from their

customer, these factors will make it harder for new

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A. NIKE BY LISA WURDEN

PROFILE NIKE is a worldwide well-known and established

sports brand. Due to the general Health Trend,

also sports and being sporty in general turned

into a very attractive topic. That’s just one of the

biggest key players in the boom of sports brands

and Nike as the market leader profits most. What

makes Nike not only special but much more

unique is their Research Centre. Nike invests a

big deal into testing, improving and innovating

products.

„NIKE, Inc. fosters a culture of invention. We cre-

ate products, services and experiences for today’s

athlete while solving problems for the next gener-

ation.“ (Nike.com, 2015)

With this statement it comes very clear what the

core of Nike Inc. represents: Innovation, Supply

as well as Sustainability.

The key to their success as they state though is

Data.

“Data is the new voice of the athlete.“ (Nike.com,

2015) The needed information they provide them-

selves due to extensive market research, company

owned laboratories and data exchange systems in

their supply chain.

The Mission of the company owned laboratories

the so-called “Sport Research Lab” can be short-

ly explained as the following, by Matthew Nurse,

Senior Director of the Nike Explore Team Sport

Research Lab, “Our function is to provide knowl-

edge and insights. We are the global repository

for the science of human performance and po-

tential.” — (Nike.com, 2015) With this laboratories

Nike makes sure to be on top of innovation at

all times and specifically enable the athletes to

perform new best levels with their product.

Nike is also one of the first companies next to

IKEA to incorporate a data exchange system in

their supply chain to track how much pollution

originates where and by which operation. Due to

this tracking system they can reduce the size of

their carbon footprint to a minimum. By doing so

they managed to get themselves at the top of

green companies.

I I I . COMPANY ANALYSIS

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HISTORYIn 1964 at the University of Oregon, track-coach

Bill Bowerman and his athlete Philip Knight found-

ed the company “Blue Ribbon Sports”. They start-

ed selling the former Onitsuka Tiger shoes out of

the back of a car. After some time coach Bow-

erman started making the first NIKE shoe himself

for another track athlete, which then would win

the Summer Olympics in 1960. After seeing his

success, Bowerman and Knight decided to dig

deeper into making shoes themselves and estab-

lished the Sports brand NIKE in 1971. Nowadays

Nike Incorporated owns NIKE Brand, which creates

85% of the total revenue, Cole Haan, Converse,

Hurley, Jordan Brand, NIKE Golf and Umbro and

targets a yearly revenue of almost $30billion.

At Nike the focus lies on creating a high quality athletic product not only for the footwear but also

apparel for athletes of all kinds. Nike highlights the fact of no differentiation between human beings and

tries to highly encourage everyone to a better, healthier self.

VISION“To help Nike, Incorporated and our customers

thrive in a sustainable economy where people,

profit and planet are in balance.” (Nike.com, 2015)

MISSION“To bring Inspiration and Innovation to every Ath-

lete* in the world. *If you have a body, you are

an athlete” (Nike.com, 2015)

11 MAXIMS OF NIKE Building the Core Philosophy and a guideline for epmloy-

ees.

1. It is our nature to innovate.

2. Nike may be a company.

3. Nike is a brand.

4. Simplify and go.

5. The consumer decides.

6. Be a sponge

7. Evolve immediately.

8. Do the right thing.

9. Master the basic principle.

10. We take presctiption the offense always.

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5P’s OF MINTZBERG P L A N

In May 2010 NIKE published it´s current “Global

Growth Strategy” for 2015, with the goal to reach

a sustainable, long-term growth across it´s world-

wide portfolio. In this strategy statement they

unveiled their key-initiatives to reach a revenue

target of $27billion at the end of fiscal year

2015. Their key-initiatives are called Category

Offense, Geographic Opportunities and Direct to

Consumer.

“We’ve never been more inspired, innovative and

aligned to achieve our goals,” said NIKE, Inc.

President and CEO Mark Parker. “We have pow-

erful competitive advantages in our portfolio –

innovative and compelling products, brands that

are distinct and relevant to their consumers, and

the world’s greatest athletes and teams. Our fo-

cus is to build, fuel and accelerate the power of

our portfolio.” (Nike.com, 2015)

CATEGORY OFFENSE

The powerful and competitive advantages in the

NIKE Incorporated Portfolio will be strengthened

to reach the targeted revenue in this plan of

strategy. The so-called “consumer-focused cate-

gory strategy” is splitting up sports into different

categories and offense tactics. While doing that

they try to be as present as possible due to

increasing market place capacity and penetra-

tion. The categories are as the following: Action

Sports, Athletic Training, Basketball, Football,

Running, Sportswear and Women´s Training. With

each of the categories it is stated how large of a

share of the revenue it has and what will be new

things that are being developed.

GEOGRAPHIC OPPORTUNITIES

Concerning the strategy geographically wise,

Nike first wants to broader expand in it´s furthest

developed geographies, which are North America,

Western Europe and Japan. Additionally they want

to put high investments into their developing mar-

kets, which are Greater China, Central & Eastern

Europe and the Emerging Markets.

DIRECT TO CONSUMER

Concerning Nike´s direct consumer contact, the

plan is to open round about 250-300 additional

NIKE-branded stores allover the world to broaden

the consumer experience especially in premium

shopping locations. Further there will be a high

focus on the digital commerce to explosively

grow the NIKEID.

P L O Y

Nike´s plan to outmaneuver the competition is set

on several levels of operation. Firstly as men-

tioned in the strategy, more brand shops will be

opening in the number one locations around the

globe to deepen the consumer’s ability to experi-

ence the product. Further new products of never

seen performance and innovation will be devel-

oped and launched. Additionally on the digital

front there will be more incorporation in the daily

life of the costumer in form of helpful apps and

“do it yourself” design shoes and competitions.

Lastly there is to say that the market presence

due to various sponsor ships with athlete celeb-

rities, campaigns with African track athletes and

NIKE runs in all major towns around the globe

are the easiest catch of consumer engagement.

P A T T E R N

NIKE´s pattern to outwit it´s components and com-

petitors are based on three fundamental pillars

that hold the company and help gain the market

share that it has.

1. Sustainability and business growth are

complementary. NIKE says that it is a common

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misunderstanding that growth in revenue and

sales goes up with growth in greenhouse gas

emissions per company. It is the goal to create

value and innovation but at the same time to

reduce the company´s impact on the environment.

NIKE technologies like Flyknit and Colordry are

company owned inventions, which reduce an im-

mense amount of waste while producing.

2. Materials Matter. “Six years ago we identi-

fied that nearly 60 percent of the environmental

impact of a pair of NIKE shoes was in materials

used to make it“ (nikeresponsibility.com, 2015)

That is insight that gave reason for improvement

and since then NIKE has it´s own research lab to

develop new less polluting materials. Further they

seek out for rather unconventional partnerships

with for example NASA or the US Agency for In-

ternational Development to get insight and knowl-

edge from other industries.

3. Climate change requires business change.

NIKE highlights the fact that the on-going climate

changes are also influencing the athlete and

his performance. Those new conditions require

new products that are adjusting to the different

surrounding. All this they are trying to do while

turning the named risks into innovative opportuni-

ties.

P O S I T I O N

NIKE themselves state their position as: “For seri-

ous athletes, Nike gives confidence that provides

the perfect shoe for every sport.” (nikeresponsi-

bility.com, 2015) As the leader of the top of the

worldwide Sportswear market, they appeal to ev-

ery demographic around the world. NIKE attracts

due to:

- high level of design and innovation while

being sustainable

- cover of all sports and niches and price

ranges

- wide range of choices for individuals

- premium-brand

- sponsorships and personal engagement for

customer

P E R S P E C T I V E

The evaluated strategy of NIKE is planned to

reach a goal. This goal consists of several attri-

butes.

Firstly, NIKE has already shown it´s performance

at the top of the greenest companies worldwide

and will now have the challenge to stand it´s

point there since the competition will follow. This

means to keep up with innovations and reach a

zero emission goal.

Secondly, performance and innovation can only

go that far. For NIKE it is important to see what

more there is. The goal is to think out of the

box and create something that is not the usual.

More than just an aid to sport.

And thirdly they will have to fight for their con-

sumers. Trends and mood driven purchasing

could threaten revenues as well as brand image.

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GLUE VALUENIKE is categorized in GV III and IV since the

brand is understood in a very broad social con-

text in terms of the sneaker trend and is reflect-

ing the zeitgeist but also recognized in smaller

niches due to high performance value.

ANSOFF MATRIXThe Ansoff Matrix is existing of four strategies:

market penetration, product development, mar-

ket development and diversification. By using the

Ansoff matrix as a tool in relation to NIKE, it will

be visible how the brand can gain market share.

MARKET PENETRATION

NIKE´s market penetration is strong, but might be

increasing soon since nobody can foresee how

long they will be able to get credit on their prod-

uct due to general trends.

PRODUCT DEVELOPMENT

NIKE´s product development can be considered

as very strong, since they are constantly adding

services as well as products in already existing

markets. For example the NIKE app´s and various

collaborations and events are pushing conscious-

ly.

MARKET DEVELOPMENT

Market development is a rather weak topic for

NIKE. Due to their fast product development

phases and always new, innovative collections,

they won´t use existing products on their new

markets.

DIVERSIFICATION

Diversification is one of the strongest points for

NIKE since their development never sleeps and

their expansion to not necessarily new but not

big enough markets is an ongoing project.

MARKETING STRATEGY

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COMPETITIVE ADVANTAGE

VALUE CONNECTION PYRAMIDTIER 1

The core of NIKE´s value proposition is high quality

innovation for high-performance athletes. Diversity,

Development and Determination is the core of the

working force at NIKE.

TIER 2

Translating this value proposition:

Innovation is all that NIKE is about and that is why

they have their own research labs to create their

own innovation and that’s also why they are col-

laborating with other parties like NASA or the Unit-

ed States department for development. With this

strategy they make sure to give their very best at

being on top of research. High quality just is nec-

essary for a high performance athlete and that is

why the developed a system in which the design-

ers can directly communicate with the workers in

the factory to make sure all quality standards are

taken. Diversity, Development and Determination is

the mantra of the HRM and that is how they treat

every employee. Their trying to recruit diverse peo-

ple and push them to their very best at NIKE.

TIER 3

The consumer experiences the brand NIKE as very

fresh and desirable. The NIKE swoosh is world-

wide well known and associated. It appeals in

a very sporty and strong image. NIKE gives the

consumer the feeling of being cool, belonging

to the tribe and to be fashionable as well as

determined. Further does NIKE sponsor various

prominent athletes who make the brand even

more desirable. (see also consumer and NIKE in

appendix)

TIER 4

NIKE promotes itself very well with various ac-

tivities. For example different runs in all major

towns where the consumer take part alone or

with a group and make it a fun thing. To train

for these runs even is fun with the NIKE run

app with which you can share your success

on social media while you´re running with your

“personal” NIKE ID shoes, which makes it feel

even more intimate. The feeling of success is a

healthy push for the brand image at NIKE. Addi-

tionally there are also various artists, designers

or athletes who promote the brand or events

that get sponsored by NIKE.

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FINANCIAL ANALYSISThe four most important KPI´s of NIKE

are: ROA, ROE, Debt to equity ra-

tio, the current ratio and the quick

ratio. Nevertheless the Revenue will

be mentioned to get an overview. All

Graphs represent on the scale 1-10

the last 10 years. Which means 1 =

2014 and 10 = 2005. (Please find all

calculations in the Appendix)

To understand the KPI´s of NIKE the

best, it is first to look at their Reve-

nue, which has more than doubled in

the last 10 years.

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A ROA above 5% is good, means no large

investment is required.

ROE’s around 15-20% are generally con-

sidered good. It measures the profitability

of stockholders investments. It’s an import-

ant indicator to see whether the company

is doing well.

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Nike has half as many liabilities than there

is equity. This is a postive ratio for Nike.

The the lower the debt to equity ratio the

more stable the business is financially.

Companies with a high ratio are consid-

ered more risky for investors than compa-

nies with a low ratio.

Over the last 10 years Nike has had a

very positive current ratio and can easi-

ly pay off more than 2x times its current

liabiliaties.

Nike’s acid ratio (quick ratio) shows that

the company has almost twice as many

quick assets than current liabilities.

B. ADIDAS BY CAMILLA LINDHEIM NILSEN

PROFILE Adidas works in a unique way to help athletes

perform better, play better, feel better. Their

products are breaking records, setting trends and

making history, every day all over the world. This

is the Adidas group.

“We strive to help you perform at your best. Your

success is our ambition. Your defeat spurs us

on to be better” is the simplest thought of their

products. It doesn’t matter it you’re the fastest

person or all about being a style setter.

Their consumer’s brand love is because of the

employees of Adidas and their passion for the

brand, their vision, mission and culture. With ded-

ication, commitment and team spirit.

Adidas is currently employing more than 53,731

people divided over 160 countries, producing

more than 600 million product units per year.

Thinking that no one should be reduced to just

one of many facets and talents. Adidas serve a

multi-brand strategy enabling Adidas to do just

that, grabbing opportunities from various points

in the market, as both a mass and niche player.

Providing distinct and relevant products to either

the sporting fanatic or just the casual player.

HISTORYIn 1924 the two brothers Adi and Rudolf Dassler

in Germany founded Adidas. Originally the com-

pany name was Dassler shoes, in 1948 Rudolf

Dassler decided to leave the company they built

together and start up the company PUMA. That

is when Adi Dassler changes the name to Adidas

and came up with the three stripes logo. At first

the three stripes were made to keep the foot

stable that turns up to become their trademark.

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MISSION STATEMENT“The 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.”

Five mission pillars

1. Commitment to strengthen the brands, prod-

ucts and improvement the position of the market

share.

2. Innovation and design that seeks to help all

athletes in every level of skill, making it possible

to peak performance with all products brought on

the market.

3. Consumer-focused and continuously improving

the quality, look, feel and image of each product

and organizational structures to match and ex-

ceed consumer expectations and to provide them

with the highest value.

4. A global organization that think socially and

environmental responsibility. Rewarding the em-

ployees and shareholders for creativity and diver-

sity.

5. Dedication to delivering superior financial re-

sults.

VISIONTo enhance social and environmental performance in the company and the supply chain to become

an industry leader, thereby improving the lives of the people making our product and wearing them

through sport. Becoming a part of something that is as meaningful as a lifetime opportunity.

MISSION“The 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.”

VALUESAfter analyzing and researching the company it

is noticeable that they have 4 set values which

are: Performance, Passion, Integrity and Diversity.

They pride on their values as it creates a culture

within the company in all the 160 countries they

are set in.

Performance

Sports are the foundation for all that is being

built upon, creating excellence in all segments is

a core value.

Passion

Passion is the heart of the company, pushing

forward in innovation and quality.

Integrity

We are honest, open, ethical, and fair. People

trust us to adhere to our word.

Diversity

We know it takes people with different ideas,

strengths, interests, and cultural backgrounds

to make our company succeed. We encourage

healthy debate and differences of opinion.

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5P’s OF MINTZBERG - PLAN

Every fifth year Adidas sets a new plan (strategy),

goals and guidelines. That is developed con-

sciously and purposefully. Their current business

plan is built upon three strategic choices; speed,

cities and open source.

- Speed

New standards on speed to market, by reduction

of production lead times and increasing in-sea-

son creation. The company plans to work this

throughout the whole organization, and further

sales increase in their controlled space up to

60%. A investment in future growth of e-com-

merce up to more than €2 billion by the year

2020, by implementation of the Omni-channel

approach. And last wanting to evolve production

and expanding product customization for consum-

ers.

- Cities

Having 80% of the Gross Domestic Product, Adi-

das want to reach out and grow in all geograph-

ical markets but focuses on key cities such as:

Los Angeles, New York, London, Paris, Shanghai

and Tokyo. Here investing in talents, attention

and marketing.

- Open source

Wanting to create growth more efficiently, the

group will focus their investments on the core

brand portfolio: Adidas, Reebok and Taylor Made.

Opening open source, they created a stronger

commitment with the consumers, and engaging

the consumers desire in creation, designing and

product presentation in making them a part of

the process.

Today Adidas is working together with organiza-

tions such as Stella McCartney, Kanye West, BASF

or Google.

- PLOY

As a strategy to outmaneuver their competitors

Adidas will put extra money in marketing in their

key cities, building a new partnership with an up

and coming athlete or the big stars to scare the

competitors and create sales. Save more on pro-

duction by using open source this allowing them

to gain market share as customer engages into

the brand even more.

- PATTERN

When it comes to outwit an opponent or compet-

itor,

a technique for dealing with things, most

non-strategic strategy. To outmaneuver a compet-

itor, their pattern has been 3 ways of action; 1:

being relevant, 2: being resourceful and 3: stay-

ing true. These actions have been a consistency

in the behavior of Adidas.

1. Being relevant: Keeping up with the trends,

following marketing campaigns. Planning up to

special sporting events and making sure their

ready for the event and generating interest which

sponsorships create.

2. Being resourceful: for Adidas just about every

company is competition, they’re selling the same

kind of things. But for Adidas staying true and

keeping true to their customers, they work on

the whole market to cover all the needs of the

consumer but also thinking environmentally and

sustainable. Now they have set open source as a

plan with this they manage to get more resource-

21

ful and better knowledge of the consumer and

the demand.

3. Staying true: Adidas have stayed true to their

statement for decades and through decades of

competition and changes. Making sure the desire

to grow and increase revenue doesn’t blur their

key values.

- POSITION

German roots with a mission to be the best

sports brand in the world

- broad and unique level of sports product

- addressing multiple consumer needs

- exploitation of market opportunities

- less affected by one-dimensional market

risks

Adidas is mainly targeting competitive sports

bases on innovation and technologies with their

performance wear, positioning themselves in the

market of sporting goods, performance wear and

casual footwear.

- PERSPECTIVE

The way Adidas views the world around them,

the customers, competitors and environment is

worked into the company culture, goals and plan.

The group strives to be the global leader in

sporting goods, providing the consumer with the

highest value. Innovative design leaders seek-

ing to help all athletes perform better with each

product brought to the market. Committed to

strengthen the brand and products improving

their competitive position and financial perfor-

mance

Being responsible and accountable for develop-

ing and implementing sustainable business, just

in 2014 they invested €126 Million in innovation.

And according to Forbes is seen as the 2’nd

most sustainable brand amongst their consum-

er, meaning that their view on the world around

them reach the consumer and they read the

same message.

Growth by making their employees feel valued

and engaged. Using performance, benefits and

opportunities for all to grow.

Adidas received ECRA’s middle rating for their

environmental report. Showing good understanding

of the impacts they have. And showing commit-

ment to eliminate all toxic chemicals and hazard-

ous chemical in every step of their supply chain

and product life cycle by the year of 2020.

22

ANSOFF MATRIXLooking at the Ansoff Product Market Growth matrix relating to Adidas, it shows which ways they can

achieve market growth. The matrix consists of four strategies:

COMPETITVEADVANTAGE

As Adidas works mar-

ket oriented they work

towards exceeding cus-

tomer orientation and

meeting their exact

needs. Adidas is build-

ing their competitive

advantage by following

the above diagram.

stant product developments and the competition

gets harder and more products are entering the

market. Therefore product development is a crucial

strategy if they want to keep their market share

and growth.

- Market Development

Most likely this will not affect Adidas on a larger

scale, due to the focus they now have on their

products in known markets and segments as they

both serve the mass and niche market already. If

they would switch markets such as they did when

they came up with Reebok a sub brand to reach

the brand aware person they have the resources

to develop a new strategy for that market.

- Diversification

Adidas has the resources and power to do this

but it has been limited more to sports accesso-

ries such as headphones and casual footwear than

developing it further into computers, phones and

electronic accessories.

- Market penetration

As Adidas is already established well in the

market this will not necessarily occur, but Adi-

das might be able to get some of the consumers

from the competitors or get current customers

to buy more and increase sales by advertising,

promotions and marketing.

- Product Development

This is affecting Adidas, as they’re under con-

23

GLUE VALUEAdidas belongs to the glue values of nr.3 and 4

by serving the bigger part of the market share

and the niche market with their diverse brand

portfolio.

Value Connection Pyramid Tier 1:

The core of the value proposition to Adidas is

based on 4 words: Performance, Passion, Integrity

and Diversity.

Tier 2:

Translating their 4 values:

Performance: Sports are the foundation for all

that is being built upon in Adidas, creating ex-

cellence in all segments is a core value. Making

sure the performance is not only at its highest

in the products but all steps of the chain from

making of the raw material, employees till the

consumers wear the product and get help with

their performance.

Passion is the heart of the company, pushing

forward in innovation and quality.

Integrity: Being honest, open, ethical, and fair.

Gaining the trust of people to adhere to their

word.

Diversity: Taking in people with different ideas,

strengths, interests, and cultural backgrounds to

make our company succeed. Encouraging healthy

debate and differences of opinion.

Tier 3:

Younger appeal, casual athletics, elitist in celebri-

ty endorsement, sporty, creative, spirited, reliable

and strong.

Tier 4:

Sporting events such as the NBA, Golf tourna-

ments, Sponsorships of popular athletes and

clubs such as FCB(FC Barcelona), also events to

support political and global issues. Advertisements

with the motto “impossible is nothing” and “All

in”, one of the latest was in a collaboration with

FIFA and the game FIFA 15.

24

FINANCIAL ANALYSISAs the four main financial KPI’ of Adidas are: Revenue, Operating Margin, Gross Margin and Return on

Equity.Looking at figure 1: Revenue we

see that from 2012 the revenue of

Adidas went down this is from the

negative currency effect that hit

them by the 4’th quarter and cost

them 9% points on the top-line. But

the main reasons stated in their

annual report for the decrease is

the interest income. They also had

problems with sales of the Taylor

made golf line by Adidas in the

United states which lead to resign-

ing of workers and a increase in

expenses.

25

Figure 2. Operating Margin tells

of the quality of the company.

As the margin of Adidas has

been going up and down since

2007 we can see that their

business model did not work as

well in 2014 as 2013. And they

were not as profitable as be-

fore with a decrease of 2,07%.

And this year Adidas came out

with a new 5-year strategy and

a goal to increase sales.

26

Figure 3, shows the 3’rd KPI

the Gross Margin, as seen on

the line chart the gross profit

margin decreased both in 2009,

2011 and 2014. This is due to

more investments in quality of

service, materials and lower-

ing prices at the costs of the

goods they sell. The lowering

of costs and investments of

higher quality goods, we can

see increased and raised the

profit margin further on in the

future as we see a growth from

all the decreasing periods they

have had. This is used as an

effective business strategy.

Figure 4. Return on Equity as

a KPI measures Adidas’s ability

to generate revenue for each

unit of shareholder equity. It

tells about their profitability and

efficiency, and helps the inves-

tors to see that the company is

generating profit and measure-

ment of management team per-

formance. As Adidas is investing

in employee engagement and

building up their management

and departments to grow the

strengths, efficiency and quality.

As Adidas had a lower ROE in 2014 it can make it harder to grow without a large capital. In gen-

eral the wanted ROE ratio would be between 15-20% before growing further. One of the reasons

for a lower ROE in 2014 was the decision to buy back their shares and in 2014 they bought back

4.889.142 shares.

C. ASICS BY VEERLE HESSELS

PROFILE

A.S.I.C.S. – Anima Sana In Corpore Sano = “ A sound mind in a sound body”

Founded: September 1, 1949

Founded by: Kihachiro Onitsuka

Principal business: Manufacture and sales of sports goods

Number of employees: 6585 (consolidated basis Asics is established in 1949 as Onitsuka Co. by

VISION

Create Quality Lifestyle through intelligent sport technology

VALUESSportsmanship

Respect Rules

Be Courteous

Be Persistent

Work as one team

Be prepared

Learn from failure

PHILOSOPHY

- Provide valuable products and services through sport to all our customers

- Fulfill our social responsibility and help improve conditions for communities around the world.

- Share profits brought by our sound services with our shareholders, communities and employees

- Maintain a spirit of freedom, fairness and discipline, respectful of all individuals.

27

THE COMPANYAsics is established in 1949 as Onitsuka Co. by Kihachiro Onitsuka, with producing sneakers later

on developing into sport shoes. The name Asics is inspired by the saying “ Anima Sana In Corpo-

re Sano”, which stands for you should pray for a sound mind in a sound body. This brand name is

used after the emirging of three companies GTO Co., Jelenk Co. and Onitska Co. in 1969.

With their Japanese roots, this company produces footwear and sports apparel for athletic uses and

is designed for a wide target group in generally the upper-middle to uper range. ASICS has been ran-

kend as one of the top performence footwear in their segment.

HISTORYin 1949 Kihachiro Onitsuka established the com-

pany Onitsuka Co. Where he produced sneak-

ers for schoolchildern. His comrade, Kohei Hori,

inspired him with the saying: “ Anima Sana In

Corpore Sano”, which stands for you should pray

for a sound mind in a sound body. This kept

Onitsuka driven and would be the inspiration for

his new brand name later on ASICS.

in 1950 Onitsuka started to produce basketball

shoes under the brand name Onitsuka Tiger and

in 1953 he released the first Marathon shoes

inspirered on the Marathon tabi.

To create the best shoes in performance and

function, Onitsuka collaborated with some great

established manufactureres such as GTO Co.

and Jelenk Co., which all three together in 1969

emerged as a vertical integrated company called

ASICS. Where the production, promotion and sell-

ing are managed in one company.

With their new brand strategy they created the

slogan: “Sport: the universal language” in 1977.

This slogan made them the first sports manufac-

turer targeting the world. Fast afterwards in 1979

offices of ASICS opened in South-Africa and

Latin America.

To create more coherency Onitsuka Tiger and

Asics emergede as one and ASICS tiger co.

established in 1981. And started to be listed on

many stock exchanges next to the already list-

ed one on the Osaka securities exchanges in

1964. They got listed on the Luxembourg stock

exchange (1981), Signapore exchange (1982),

Frankfurt and Vienna (1983) and Paris (1988).

In 1990 Asics opened their by now well know

research institute of sports science. This is great

advantage for Asics, where they can establish

theirselves as one of the most innovative and

most specialized sports brands in the world.

To grow further, Asics starts opening own stores

in name of ASICS starting in 2002 and with Onit-

suka Tiger in 2003 in Tokyo. Moreover, the first

overseas store opens in 2008 in London.

28

5P’s OF MINTZBERG Plan:

Asics made a growth strategy for 2015, where

they want expand their business on a global

scale and increase their net sales up to ¥400

billion. By operating globally, ASICS wants to

create a global company with equal goals and

terms. Divided in five sales regions: Japan, USA,

EMEA (Europe, middle east, Africa), Oceania/south

east/south Asia and East Asia.

Moreover, they want to grow in e-commerce by

increasing their sales with 2%.

Create more brand awareness and broaden their

focus on the sports market.

Ploy:

The ASICS group created a new foundation, to

share the new corporate spirit. This foundation is

called ASICS SPIRIT, and is created to add extra

value on top of their already existing corporate

philosophy.

To grow globally, the company has been opening

new sales corporations and headquarters around

the world to have to be more on top of the facts

and situation in that certain region and have a

better relation with the retailers whom sell their

products. Moreover, ASICS and Onitsuka Tiger are

opening more flagship stores around the globe to

create more brand awareness.

ASICS also wants to focus more on other sports

next to running. Which can complement and

strengthen the running business. These other

sports are Tennis, track and field, Volleyball, and

rugby. In these specific sports markets ASICS

foresees a potential achievement to place itself in

the top three of the global market share and in

the top two of the regional market share.

Pattern:

o ASICS has been opening flagship stores and

headquarters around the globe.

o Opening Asics institute of sports science to

innovate and develop new and better products.

o They have started to create IT platforms to

combine al the systems and immerge them into

one ERP system to promote efficiency, increase

productivity and reduce cost

o They are Strengthen the recruitment to enrich

the core of ASICS spirit by recruiting personnel,

which is globally orientated and want to play an

active role in this stage.

Position:

Asics provides sports wear and shoes in high

quality.

By producing it in their own factories and also

selling it.

Business to business to multi brand stores, de-

partment stores etc. store business to customer

in their flagship store.

Perspective:

They want to keep up with the big companies, to

reduce the gap in the market share and become

third in the ranking. To show their true values

and their competitive strategy compared to for

example Nike and Adidas.

They are applying all of these strategies to im-

prove quality and broaden their already existing

target group. To give this target group the feeling

they are engaged to the brand and provide them

with new innovational products. Next to that,

they are creating a department in south-Africa to

reach the African market and spread their geo-

graphical regions.

29

Market StrategyAsics prioritizes the developments for marketing

in the United States. By focusing on growth in

women’s products and e-commerce. By starting of

with the United States, they want to influence the

other markets with success. To accomplish this

goal Asics is starting to launch innovative new

products within the latest market trends.

While the focus in on the States, Europe is also

an important part of the growth in marketing

developments. The interest in Sport and healthy

lifestyle increased and became a social trend

over the years and running is one of the most

popular sports to practice in Europe, this is their

core business. Asics wants to expand the sales

and create a stronger brand value by organizing

more sponsorship activities in a broader range of

sports businesses.

In contrast to Europe needs China more pro-

moting in running. Asics wants to provide this

promotion by using marathon sponsorships and

creating sales expansion. In Southeast Asia, there

is already a good foundation and they want to

grow further in that by strengthening the business

base.

The truth is that every market has to be ap-

proach differently, however Asics wants to cre-

ate a more global business and management

structure. By providing equal goals and terms,

to let employees communicate better to reach

and realize a more true potential. To create this

structure Asics started a trainings program for

the managers.

Value connection pyramideTier 1:

what is the core of the value proposition?

Sound mind, Sound body

Create quality lifestyle through intelligent sport tech-

nology

Tier 2:

A company, which provide valuable products and

services. Where spirit of freedom maintains fairness,

discipline and respect for all individuals.

Tier 3:

Both male & Female, middle to upper class income

Young and active to young at heart

Tier 4:

Keep developing innovative products

Development of the global asics e-commerce plat-

form

Developing a lasting impression of our lifestyle

brands among consumers through digital channels.

30

Financial analysis / 4 KPI’s

Net Sales:

Over the period of time from 2004 till 2014 the

sales have been growing. You can see a big gain

from 2013 to 2014, the possible reason for this

gain is the opening of stores in the States and

England. Moreover, Asics started at this time to

sponsor more marathons, which can have led to

bigger sales.

Operating margin:

The operating margin is the amount of the

company’s revenue to pay for the fixed costs. In

the figures you can see that the operating margin

of ASICS is going up and down over the years.

However, the percentage is always around the 8%

what is quite stable. This means that ASICS has

averagely less fixed costs.

31

Gross profit margin:

In 2008 the gross profit margin went down, this

means that the production cost were getting more

expensive against the amount of products pro-

duced or the sales went up, but the prices went

down. This is possible by a less good year of

sales with a bigger sales period. After 2009 the

gross profit margin rises again, what means the

company got healthier and there was more reve-

nue left over after paying the costs of goods sold.

Return on equity (ROE):

The return on equity has been decreasing from

2005 till 2010. This means they needed more

capital to keep the company working efficiently as

plan. This happened, because around 2005 ASICS

and Onitsuka Tiger started to open flagship stores.

Next to that, they invested a lot of money in in-

novations and developments where the technology

trend started rising up. After 2010 the company

starts to stabilize and the Return of Equity gets

stable around the 10% as well.

32

POSITIONINGWe have made two positioning matrix’s to show where our brand stand compared to other brands in

the market. Focusing on price/usability and usability/quality. As you can see are the brands we are

analysing all focused on the sports market in the same price range. However, they have a different

perception on the fashionability. Where Nike wants to offer a more fashionable product and Asics is

more focusing on the performance of the shoe instead of the fashionability. We choose the compa-

nies H&M and Hema in our positioning matrix as well, to compare the price/fashion ratio next to that

they are very popular brands in The Netherlands.

33

BENCHMARKING

MEASURES ADIDAS NIKE ASICS

Revenue €14,534 Million $27,799 Billion ¥ 329,465 Million

Gross profit margin

47,64% 44,8% 44%

Operating margin

6,61% 13,2% 8%

Net profit margin 3,41% 9,7% 5%

Return on Equity 8,82% 24,9% 11%

Return on assets

4,00% 14,5% 5%

Market share 19,95% 27,8% 3,2%

Inventory turnover

3,01 3,9 2,28

Sustainability 1.250.000 liters water saving. 50% less energy and chemicals

20% reduction of CO2 levels

140 products in collection made by recycled materials. recycled 2,576 tonnes of transportation pagaging.

Delivery performance

80% 86% Numbers could not be found

Employee engagement

­ 80% satisfaction on survey ­ integrated work­life style

­78% satisfied in general on survey and 86% satisfied of the most engaged eployees

traineeships working­life style created with creating home at work

BENCHMARKS

As we are comparing the numbers in the benchmarking table, we see many differences between the

three companies. For example the gross profit margin where Adidas has a 3-3,5% higher gross profit

margin, which means the company is the most healthy of the three and has the most profit. Secondly,

we looked at the operating margin there are big gapes between the companies, where nike is rising

with the highest margin. What means have a larger amount of the revenue available to use for cost

such as interest expenses and other operations.

As a conclusion you can say that Nike with their biggest share of the market with 27,8% is the

healthiest of all. This is all been possible by their great margins which are many procents higher than

Adidas and Asics. They are the most healthy because of their high revenues. This makes them the

most likely keep up and stand on their own. Next to that they will stay healthier over a long period

of time.

34

I I I . MARKET ANALYSISDESTEPDESTEP is short for demographic, economic, social-cultural, technological, ecological and political factors. It

is a tool used to create an image of the eternal (macro) environment of which the cooperation is active in.

Demographic

Economical

Economic growth has been 0% in the first quarter of

2014.[1]

In just one year (from the second quarter of 2013 till

the second quarter of 2014) the willingness of con-

sumers to buy something has increased. It is still not

in positive numbers but it has escaped the deep pit

it was in. especially in West-Holland the numbers are

looking better than before.[2]

The consumer trust is highest in West-Holland. the rest

of Holland has an average of -6 while the western area

has -2. [3]

Social-cultural

The ration of running man/female changed from 60/40

to 50/50

There are 50 million runners in Europe, spending over

10 billion on running apparel and accessories.

technological:

There are a lot of new innovations in product devel-

opment. Fore example, in materials to increase the

functionality such as heat absorbance or elasticity.

However, there is also an increase of in innovations in

automated machinery. This will improve the productivity

and reduce labor activity. Nevertheless, in the apparel

industry there will always stay a part labor intensive,

while not possible to automate it.

Ecological

More brands are using ecological materials in their

designs

Where they are trying to reduce or recycle the water

and chemical consumption

Brands are joining the organizations IFAT or EUR-

ATEX to get checked on their sustainable perfor-

mances

Political

World trade is founded on rules laid out by the

World Trade Organisation that help ensure that

trade agreements and obligations between countries

are open and fair.EU trade policy is made exclusive-

ly at EU level. The Commission negotiates agree-

ments on behalf of the EU within WTO rules and

works closely with national governments and the

European Parliament to maintain the global system

and enable it to adapt to worldwide changes.[4] All

members have to agree to proposals under WTO

rules, this means that a single country can block

any changes.[5]

In dealing with the aftermath of the global financial

crisis, a movement against globalisation has ar-

rived. This new nationalism takes different econom-

ic forms: trade barriers, asset protection, reaction

against foreign direct investment, policies favouring

domestic workers and firms, anti-immigration mea-

sures, state capitalism, and resource nationalism.

In politics this results in populist, anti-globalisation,

anti-immigration, and in some cases outright racist

and anti-Semitic parties.[6]

35

TRENDS

Technology:

With the great developments in technology, they are

improving and making our lives easier to live. By imple-

menting these technologies into sport apparel we can

improve and challenge physical actions. Technologies

in the way of devices are the most common and used

by the leading brands. For example, Nike with their own

Nike+, this is a chip and app to track your activities.

Brands use this trend to broaden their customer base

and this is a way to let people buy more often.

However, these technologies are mostly devices imple-

mented on clothing or just as a device such as a chip

or a bracelet. The next thing will be wearable technol-

ogy, fabrics, which can do things or implement engi-

neered molecules in fibers to e.g. moisture your skin.

This something what the collaborating brands Roxy

and Biotherm have done. They have created a neck

warmer with moisturizing and nourishing molecules in

it to help the skin of the neck keep stable in unusual

weather circumstances.

Healthier and sporty life

People want to start living a healthier life, the number

of runners is increasing, supermarkets are broadening

their biological assortment and health blogs are hot

topic.

This to have a fit and relaxed feeling, to get rest

and feel awake for our busy lives. With increasing of

obese people, people start to notice how important

a healthy life is.

36

SUSTAINABILITYADIDAS

Adidas has a global sustainable team existing out of 70 people who are making sure that the company is

developing keeping up with their sustainability program. Next to their focus on reducing water and using the

most sustainable chemicals they are trying to differentiate themselves from other sportswear brands is that

they are very concerned about improving workers rights and the labor circumstances. They also engage with

local trade unions to improve industrial relations.

They have been providing services to make sure the workers by their suppliers are working in good conditions.

Creating a SMS worker hotline for factory workers where Adidas can act on concerns or questions has done

this. Next to this initiative they have started an online university, where employees can learn in a informal

surrounding.

NIKE

In Nike’s point of view, you have to improve and innovate what you got into more sustainable products or

services. They have done a lot of research on materials to create a more sustainable production. This has

been done by implementing lean manufacturing. This means you will get the maximum value out of your

productiveness.

Herby, they want to deliver profitable growth through sustainable manufacturing and sourcing.

Nike believes sustainability is the world’s greatest innovation opportunity where materials and manufacturing

have the most impact on workers, community and environment.

ASICS

Asics has 3 prioritized goals firstly, reducing environmental impact throughout the value chain. Secondly,

improving chemicals management in our supply chain. Thirdly, improving labor practices in our supply chain.

These goals are for longer term and are applicable for all sectors.

37

CONSLUSIONSportswear brands can contribute to improve sustainability mostly within the materi-

als and manufactur

ing part. These parts use the most water, CO2 and other waste we want to de-

crease. With decreasing these points you will have the most influences on workers,

community and environment in a positive way. These are the goals the industry

wants to achieve. Within sustainability you have different direction, as we have said

before waste, but what is also a very important issue is the working conditions

at the factories. To provide good working conditions the sports industry is putting

a lot of pressure on the suppliers in the way of setting guidelines and arranging

trainings. Which hopefully will all lead to a great and better world in the end.

38

MARKET SURVEY

target group:

The sportswear industry includes everyone and almost everyone wants to be part of that group. Practicing

sport is a way of relaxation, staying healthy or a social gathering. But the focus is mostly on people in

between the age of 15 until 65. It starts with 15, because that is the age you will start to understand the

importance of good quality sporting goods and will choose selectively and it ends with 65 because around

this age people mostly start to exercise less, because of elderliness.

These people use the sportswear for fanatics sporting, casual sporting including all kind of sport activi-

ties or casual/loungewear. Sportswear is worn around the whole globe and the industry is now starting

to introduce their brands in Africa as well, which makes in a universal market without excluding anybody.

Therefore are there many brands competing in different price segments, with diverce range of products and

39

We have done a survey over 31 persons to gain more knowledge about the buying interests in the sports-

wear industry. In addition to this information, we wanted to know what their interests in sports and sports

brands were, to know where are brands stand and what kind of influences are important to choose our

brands.

Over the people who have filled in our survey you see that people are not consistent in buying at one

brand. This is interesting, because you want to know, by whom or what they got influenced. 32% gets

influenced by the specialization/function of a product and 26% is convinced buying a product by the ad-

vertisements in magazines or on the television. Next to that, reviews are very important. 58% recommends

friends to buy from a certain brand and 13% does give friends bad reviews about brands as well. What

means the customer service and the help offered in a store to find the perfect fit is very important as

well.

40

MARKET SHARELast year

Statistics tells that Nike and Adidas are the most dominant companies within sportswear and sporting

goods worldwide, a combined revenue of almost US$50 billion in 2013/2014.

Nike generated the most revenue in the sporting goods market in 2014 with around 27,8 billion dollars in

revenue.

2014 statistics:

Total revenue 2013 = 222 billion U.S dollars

Fashion 1,5 trillion us dollars

sportswear market has a market share of 15% the global fashion industry:

- nike: 27,8

- adidas, 19,95

- VF corporation 7

- puma 4,38

- asics 3,2

This statistics we can compare with the newer statistics from 2013/2014

This statistic shows that in 2011 Adidas was the biggest athletic apparel vendor with an estimated global

market share of 11,2 percent compared to in 2013 Adidas had a market share of 19,5% but then were

the second biggest athletic apparel vendor.

Sportswear/sporting goods were marked by region according to the market and sales in 2013.

- North America US$91 billion(3,7%)

- Latin America US$28 billion(16,6%)

- Western Europe US$53 billion (4,0%)

- Eastern Europe US$16 billion (13,6%)

- Asia Pacific US$15 billion (8,9%)

- Middel East/Africa US$15 billion (10,1%)

- Australasia US$4 billion (3,1%)

According to research shown the global sportswear market is growing strong with the trends coming. The

US market in fact remains the most important by size.

IHRSA did a research in 66 countries and found following results:

- The number of health clubs worldwide is 165,300

- The number of health club members worldwide are 138,7 million

41

Market share 2013/2014

Market share 2011

42

GROWTH RATEFrom 2010-2015 the market share of sports, sportswear and sporting goods have improved its economic

conditions due to TV advertising and penetration into popular sporting events.

Counting the whole market size in US$ the global retail sales in 2013 were at $263 billion where sports-

wear sales constituted to 15,3% of the overall clothing market. From 2012 to 2013 its estimated that

sportswear sales grew 6,9%, compared to the growth of the overall apparel industry with a growth of only

5,1%.

- Mergers Alliance Headwaters MB report on Global sportswear sector (spring 2014)

Sporting goods can mean different things for different people, it is now a global growing industry with

spectators and players all around the globe. Sports is an experience but its an personal experience, that

is different to all. For the industry sports is a merging marketplace that is worth investing in. NSGAs 2013

research report shows that participation in sports have grown over the previous year.

- indoor games increased by 11%

- snowsports decreased by 11%

- fitness activities increased by 5%

Physical fitness participation have been showing substantial growth in popularity.

- Amateur participation in team sports grew 29% from 2011-2012

DEVELOPMENTSIn the apparel industry there have been major developments and the sporting goods companies are tak-

ing them all in and keeping up with the switching market and trends. Some of the developments that are

emerging more are: wearable technology, smart textiles, recycled garments especially in the footwear of

sporting goods companies are looking at using recycled materials for production and of course then you

have the virtual fitting that is coming and will make it a question of will we even need to go to the shops

to fit the garment or is it simply enough to just have a webcam at home?

In all of these developments the biggest players on the market are also in development with medical care

seeing how performance can be improved and if there are some factors that might harm you and then

your clothing in the future can let you know before it even happens.

43

OPPORTUNITIES• Growing demand in sporting goods and their

accessoires

• Research in Innovation&Technology applicable

• Expand to Africa -> first South Africa

• Increased female participation in athletics

THREATS• Rise in international counterfitting

• Increase of raw material costs

• Continuing challenges in import/export duties

• Negative image created by the sponsored

athletes

• Economic downturn in North America and

Asian Countries

• Negative image due to “sweatshops”

DISTRIBUTION CHANNELSExisting distribution channels: Retail, Wholesale, Online, specialty stores, specialty fitness, department stores,

discount stores, warehouse clubs

Trends and emerging channels: Omni-channel shopping, outlets, pop-up store.

This statistical result shows the sporting goods sales by different channels of distribution only in the U.S

from 2008-2013.

44

45

APPENDIX

Appendix Nike by Lisa COMPANY CULTURENIKE´s human resource management system is cre-

ated to diminish competition in-between co-work-

ers at the company. It clearly separates every

individual from its competition. Further there is to

say that NIKE promotes diversity at a high scale

inside of the organization.

The motivation for the HRM team is built up on

six values.

1. To foster the professional development

2. To enhance the work performance of every

individual

3. To identify mentors for every department

and sectors to stand help

4. To assist in recruiting diverse professionals

5. To develop community interaction of the

whole organization

6. To encourage increased teamwork

PRINCIPLES For NIKE the most important slogan every day

is to provide their customer with a compelling

and innovative product and that they run a very

strong, healthy and efficient business.

STRENGHTS & WEAKNESSESSTRENGTHS

- high value of brand recognition

- recently worked hard to put down the re-

cently distended image du to “unethical views”

- NIKE has numerous collaborations and

joint ventured with companies like Apple for their

shoe and Ipod technology

- Company owned distribution channels and

therefore strong control over it

- Very strong financially seen while having a

very small number of long term debts

- High customer engagement, enabling them

to design their own shoes online

- the company NIKE itself is a very competi-

tive organization and has a healthy dislike to their

competitors with a well established corporate strat-

egy in all markets

- due to the fact that the company NIKE

does not own its own factories, they don´t have

any money stuck in buildings or workers and can

invest that money in other departments

WEAKNESSES

- as a weakness it can be seen that they

have no own factories which means that the pro-

duce wherever they get the highest quality for the

lowest price

- NIKE has a very diverse range of products

eventhough their main income comes from the

footwear, that could make them vulnerable if their

market share would decrease and they can´t keep

up with trends nomore

- Due to the general individualism trend, con-

sumers might get sick of NIKE at some point and

move to smaller and more intimate brands

- NIKE got a very negative image portrayed

due to fairly poor working conditions in their fac-

tories

46

BUSINESS MODEL CANVAS

PORTERS 5 FORCESIn the following 5 Forces analysis I quickly

summed up which would be the strongest and

what would be their reasons.

Rivalry: high

- high competition

- strong product competition also in differ-

entiation

Substitutes: high

- athletic shoes necessary for sports but

other products interchangeable for comfort

Buyers: moderate

- competitive products all compete on dif-

ferentiation

- low switching costs

New Entrants: low

- strong and well established brand name

- high capital requirement

- economics of scale

Supliers: low

- subcontracts for more than 500 small

factories

- NIKE´s economics of scale & high value

NIKE STRATEGY ANALYSISThe marketing strategy of NIKE consist of a

high investment into commercials and product

promotion. Further explanation by using the

Marketing Mix.

PRODUCT

Nike started selling sport goods in 1979 and

offers nowadays a wide range of shoe, apparel

and equipment products. All of these products

are currently in the top-best-selling categories.

PRICE

The pricing is designed to be competing with

their competition. Their prices are vertically

integrated and considered high premium. Due to

their vertical strategy in the pricing, they have

enough room to control costs and appeal differ-

ent levels of customers.

PLACE

Nike products are mostly sold by multi-brand

stores but also at exclusive Nike stores and

online across the world. Nike sells its product

to over 20000 retailers in almost 200 countries.

The production facilities of the company are in

ASIA and other operational unites around the

globe.

PROMOTION

Nike promotes its product on various channels.

Endorsements with athletes, commercials, news-

papers, online and in “person” via events. Due

to it´s quality product and loyal customers while

using these marketing techniques, NIKE is a

huge success.

FINANCIAL ANALYSIS: RESEARCHTHE ALTMAN Z SCORE

The Altman Z Score is a formula that calculates

and evaluates a company´s credit risk. A score

of 1.81 or less is not good and a score of 2.67

or greater is an indication for the company´s

small risk of bankruptcy.

For NIKE the current ALTMAN Z Score for 2014

is 10,93171964 which indicates that NIKE is a

very healthy company.

In the following image you can see the ALTMAN

Z calculations and result.

In the upper two images you can see the financial analysis calculations, which have been the founda-

tion for my previous statements. The first one is a general overview over year 2014, like a zoom in,

the second one are an overview of all numbers from the last ten years which were published about

NIKE and the last image shows the results of my calculations.

CONSUMER

PERCEPTION

NIKE NON FIANCIAL KPICARBON FOOTPRINT

NIKE is constantly working on get-

ting their Carbon footprint to a new

low. Their philosophy says that a

high quality product with more and

more innovation does not need to go

hand in hand with the emission it will

create. That’s why they consciously

developed systems to diminish they

greenhouse gasses.

Like in the image below it is visible

how their show and it´s emissions has

developed in only 6 years.

I

NNOVATION

Innovation is one of the most promi-

nent non financial KPI´s of NIKE. With

their own research labs and continu-

ous redesigning and in depth analysis

they try to always be at the very top

of things.

MARKET SHARE

NIKE´s Market Share has raised 3.8%

in 3 Years, now 20.8% in year 2014.

Nike is the biggest player in the

sportswear industry worldwide and

therefore leading.

ORGANIZATIONAL STRUCTURE

In the following graphs you can

see the organizational structure at

NIKE worldwide.

Appendix Adidas by CamillaCompany profileAdidas works in a unique way to help athletes perform better, play better, feel better. Their products are

breaking records, setting trends and making history, every day all over the world. This is the Adidas group.

“We strive to help you perform at your best. Your success is our ambition. Your defeat spurs us on to be

better” is the simplest thought of their products. It doesn’t matter it you’re the fastest person or all about

being a style setter.

Their consumer’s brand love is because of the employees of Adidas and their passion for the brand, their

vision, mission and culture. With dedication, commitment and team spirit.

Adidas is currently employing more than 53,731 people divided over 160 countries, producing more than

600 million product units per year.

Thinking that no one should be reduced to just one of many facets and talents. Adidas serve a multi-

brand strategy enabling Adidas to do just that, grabbing opportunities from various points in the market, as

both a mass and niche player. Providing distinct and relevant products to either the sporting fanatic or just

the casual player.

Principles that are important to them

Commitment to continuous strengthening of brands and products,

while improving the competitive position

Consumer-focused and continuous development and improvement of

quality, design, feel and image of products and the organizational

structures. Matching and exceeding customer expectations

Innovation and design leaders, seeking to help athletes in all divisions

with all the products they bring to the market.

Dedication to consistently deliver outstanding financial results

A global organization, being socially and environmentally responsible,

embracing creative and diverse thinking, financial rewarding employees

and shareholders

47

Strengths

- Long heritage and big brand value

- Sponsorship for the major sporting events and

athletes

- Diverse product portfolio

- Strong and innovative marketing

- Workforce of 53 731 employees in over 160

countries

- Financial strength

- Worldwide presence and international recognitions

Weaknesses

- Similar products out on the market

- Big competition and high level of brand switching

among customer

- Costly products due to innovative new technological

advances and production method.

- By being an international organization they are

highly effected by the currency changes.

- High dependency of raw materials

- Poor share price in U.S market

OPPORTUNITIES- A growing demand in sporting goods and their

accessories

- New markets, sporting as a lifestyle growing into

apparel wear

- New technological advancements

- Expanding to the African market

- Increased interest on the female sporting market

THREATS- Increasing raw material costs

- New competition on the market

- Currency effect

- Negative image due to sweat shops

- Rise in counterfeit

- Negative image from sponsored athletes

- Continuing challenges in import and export duties.

- Strong competition

48

49

Balanced Scorecard

50

51

Strategy analysis extra

ADIDAS STRATEGYAccording to the corporate strategy of Adidas their focus is based on innovation and giving the market a

new product to talk about. But their focus is not only in the product itself, their focus goes beyond that

and into the services offered and processes made in order for them to keep their market share. As in

2009 Adidas changes a structure and went from being an vertically integrated brand structure into a func-

tional multi-brand strategy with sub brands such as Reebook.

Implementing the multi-brand strategy they created a diverse brand portfolio, which has allowed them to

cater all segments of the market. Keeping a unique identity and concentrate on their core competences.

52

Adidas keeps a focus on investments in marketing, supply and distribution in different countries by con-

stant evaluation of consumers buying behaviors and keeping their shelf space. Adidas embraced the e-com-

merce business understanding the efficiency and appeal of the consumer they have put in a click and

collect function, making their customers able to order online and pick up in store. Therefore if something

would be wrong with the order or the shoe the consumer would get immediate help. Adidas sets their sup-

ply chain as a key point indicator by OTIF(On-time In-full) measuring how many orders comes on time and

keeping the level of supply on 80% On-time In-full, achieving a new level of efficiency. The supply chain

is also very closely communicated which helps them to customize their products to an appeal for a wide

range of customers.

Adidas set six key strategic pillars to understand their choices and priorities in investments:

1. Diverse brand portfolio:

- embracing a multi-brand strategy, prioritizing the difference in needs, habits, fitness level, motivation and

goals for playing sports or enjoying a sporting lifestyle.

- Being both a mass and a niche player applying their competencies in a goal-oriented manner reaching a

larger target market, and allowing them to set and respond to trends in an efficient and effective way.

2. Investments focused on highest-potential markets

- Targeting the leading market position in both the mass and niche market.

- Prioritizing the investments based on those markets that offer the best growth and profit opportunities.

While expanding the activities in emerging markets, such as China and Russia, and building market share in

their underpenetrated market in the United States.

- Tailoring the distribution strategy to present the brand to the consumer in the most effective and effi-

cient way.

3. Creating a flexible supply chain

- With speed and agility setting as their key elements to outpacing the competition.

- Shortening creating and production lead times by continuously improving the infrastructure, processes and

systems.

- Connecting and integrating all the elements of supply chain in a more efficient way, they are able to

react to quickly changing trends.

4. Leading through innovation

- The founder of Adidas Adi Dassler developed the first shoes back in the 1920s, setting the attitude of

innovation in not only the product but in every part of the brand.

- Fostering a culture of challenging convention and embracing change, as a requirement they set that all

areas of the Group to generate at least one new meaningful innovative improvement per year.

5. Develop a team grounded in heritage

- Continuously shaped by the influences from the past and the present as well as their future goals and

aspirations. Focused on the founders commitment to the athletics, pride, quality and love of sport.

53

- Fostering a corporate culture of performance, passion, integrity and diversity at the work environment

stimulating innovative thinking, team spirit and achievement based on strong leadership and employee en-

gagement.

6. Becoming a sustainable company

- Committed to find the right balance between shareholder interest and the needs concerning their employ-

ees, the workers in their suppliers factories as well as the environment.

- Reporting publicly on the steps their taking to have a positive impact on society and the planet.

GLOBAL SALES STRATEGY:As their global sales strategy their focusing on six points of view.

1. Wholesales & franchise; driving a long-term partnership with dynamic retailers, sporting good chains,

department stores, buying groups, lifestyle retail chains e-tailer and franchisees. With this focus their cre-

ating a joint effort on early trend identification, joint campaign planning, shared inventories and seamless

consumer journeys.

2. Direct to consumer; a new differentiated and consistent customer service model with concept stores and

a growth in E-commerce by an omni-channel approach.

3. Key cities; focus on their key selling points and cities, making sales more efficient and effective by tak-

ing action.

4. Omni-channel strategy; using click and collect a purchasing method where you buy online and pick it up

in store. Integrating different customer data bases such as global CRM/Loyalty program.

5. Speed; taking immediate action when responding to sell-out and new lifestyle & fashion trends, creating

important top-line and margin potential.

6. Innovation; using big data to analyze and generate actionable insights on the consumer demand, work-

ing with external and non-traditional partners.

GLOBAL BRAND(S) STRATEGY: 1. Focus on the consumer

- Constant development of desirable product and inspiring brand experiences

- Right market segmentation strategy = universal target consumer

2. From the pure performer to style setters

- Understanding their consumer creating loyalty.

3. Brand architecture and differentiation

- In-depth research and knowledge about the popular sports and activities.

- Leadership in product innovation to inspire and excite the consumer.

- Marketing and communication to drive brand advocacy.

- Activation and validation via relevant set of production partnerships.

- Extending brand reach and appeal.

54

FINANCIAL ANALYSIS: RESEARCHWith researching into Adidas and their financials all the way down to 2007, giving some conclusions on

findings and research from the annual reports from 2011 up to 2014

2011:

- sales went up 13% this year, and just the brand Adidas had an increased sales position of 14%

- the gross margin decreased 0,28% from 2010 when it was 47,79% to 2011 being 47,51%

- Gross profit increased by 599 thousand.

- The operating margin decreased from 7.46% to 7.15%

- Return on Equity decreased 1,03% 11,84% from 12,31%

2012:

- Sales increased by 6% to a new record revenue

- Adidas brand based sales increased by 10%

- Gross margin improved by 0,2 pp, despite significant pressure from input costs

- Operating margin went down from 7,15% to 6,18%

- Inventory turnover went up to 3,13% from last years 2,79%

- Management purposed a 35% raise of the dividend of the share from €1,00 per share up to €1,35 per

share by 2013

- Negative exchange rates made the financial expenses decrease

- Return on Equity decreased by 1,96% from 11,84% to 9,88%

- Accounts receivable increased due to the groups business reduction in allowances for doubtful debts due

to an improvement in accounts receivable.

2013:

- Dividend per share went up 35% to €1,35 per share from previous year standing at €1,00

- Revenue increased by 3%

- Gross margin went up 1,5 pp to 49,29%

- Operating margin went up to 8,68%

- Earnings per share went up to €3,78

- Management purposed a dividend of €1,50 per share

- Management want to keep the operating margin between 8,5% and 9,0% the following year

- The gross profit margin went up because of favorable pricing and regional sales mix.

- Return on equity went up to 14,42%

55

2014:

- Dividend per share went up to €1,50 per share

- Sales increased 6%

- Gross margin decreased 1,7% points to 47,64% due to negative currency effects, higher input costs and

increased clearance activities.

- Operating margin decreased to 6,61%

- Group inventories went down 4% as a result reflecting the focus the group had on inventory manage-

ment.

- Accounts receivable increased as a result of the growth of the business.

- Return on equity went down to 8,82%

56

Functional: separating functional employees according to a specialized or similar set of roles.

This strengthens the organization within specializations and productivity, as it is possible for employees to

strengthen their skills and performance. Because of the expertise, the employees can perform tasks quickly

and efficiently and reduces mistakes.

Divisional structure: this is needed for Adidas to have companies in different geographical areas.

By using a divisional structure Adidas allows the different geographical areas to focus on their markets

with a leadership that supports them. And allows them to focus on the culture and product portfolio, mak-

ing sure to exceed customers expectations of the company.

Matrix structure: as the employees are both required to report to their functional and product managers to

make a decision of resources and production.

Using the matrix structure Adidas creates a company culture that brings the employees and managers from

separate departments to work together The Matrix structure combines the functional and divisional struc-

tures of a company.

Organizational structure

Adidas is based on 3 structures; functional, divisional and matrix

- figure 1 is showing Adidas functional structure

- figure 2 is showing Adidas brand based structure

57

Supply chain analysisMost of the production at adidas is outsources. They work with 1200 independent factories around the

world that manufacture the products in 65 countries.

With a multi-layered and global supply chain, it created new types of partnerships. Some are direct con-

tract factories and others are not.

The top five countries per region of adidas are:

- The Americas: United States, Brazil, Canada; Argentinia and Mexico

- Asia: China, Vietnam, Korea, Japan and Indonesia

- EMEA: United Kingdom, Germany, Italy, Turkey and Spain

58

Appendix ASICS by Veerle

Strengths

o Highly developed R&D department

o Sponsors many internationals teams, players and

events

o Customized service for customers

o Has it’s own training app, MY ASICS

Weaknesses

o Don’t advertise much

o On the higher segment

o Doesn’t have many flagship stores, sells through

retailers

o Is only focusing on the countries where they are

have great brand awareness, should more focus

on the countries where it isn’t

Opportunities

o Increasing brand awareness in upcoming coun

tries

o Applying E-business in the distribution channel

o Launching new innovative products

o Focusing also on a fashion line

Threats

o Big competitive segment

o Fashion in sports is rising

o Indirect competitors are entering the sport

segment

59

Business model canvas

Value propositions:

o Create Quality Lifestyle through intelligent

sport technology

o Sustainability is part of everything we do

Customer relationships

o Customer service around the world

o MY Asics program

Channels

o Stores

o Website asics.com, corp.asics.com

o Social media FB, Instagram, twitter

o Online and offline advertising

o Organized events/sponsorships

Customer segments:

o B2C flagship stores

o B2B multi brand stores, department

stores, retailers

o Any athletic or casual sportsman, who

wants to wear qualitative sportswear

o Middle to higher class

Revenue streams

o Sales

o Events

Key partners:

o ASICS India Pvt. Ltd. (marketing support and

promotional activities)

o France Cityzen Sciences (sports-related re

search and development)

o ASICS institute of Sport Science (My ASICS,

innovation, developemts)

Key activities:

o R&D

o Design

o Production development

o Buying

o Supply Chain management

o Sustainable production & resources

o Quality control

o Marketing & event management

o Sponsorships & collaborations

Key resources:

o Physical: employees, sponsored Pro’s, Teams

& Clubs

o Intellectual: partnerships, marketresearch

o Financials: shareholders

Cost structure:

Fixed costs

o Rent

o Inventory

o Insurances

o Administration

o Utilities

o Salaries

o R&D

Variable costs

o Manufacturing

o Marketing

o Event management

o Transportation

60

61

Organizational structureAsics has a flat organizational structure, where managers have a lot of responsibilities. This lets the em-

ployees be more involved in the companies situation. Moreover, they get more involved in all the sections

of the business. This is an advantage for the company, because this creates a whole and the concept is

been used properly in every devision of the company.

The board of directors include important stakeholders, whom can create opportunities for the company.

Next to that, they have great knowledge in different markets. The board of directors is also the final re-

sponsible for the CSR & sustainability departement. They will be integrated and supported by the manage-

ment teams.

62

Marketing mix 4 P’s

product:

Where Asics is creating sports wear and accessoiries for the whole sporting segment, they are focussing

mainly on the footwear. Their products are in a broad range of sports orientated. By focusing on a niche

of the segment they want to be the best in this area with being the most innovated and developed one

with applying technologies and best fittings. Next to the tangible products they also offer the service of the

app MY ASICS, which is a free app for runners to create their personal training and tracking down their

own performances.

Price:

Price is the only one in the marketing mix which let ASICS make profit, with their tangible products. Target-

ing the middle-upper to upper segment ASICS want to reach people who want to buy performance prod-

ucts. The reason for this choice is made by the psychological underlying thought of paying for quality. If a

shoe is to cheap, people will refuse to buy the shoe. However, they focus on different price segments to

reach different target groups, because expensive is a relative perception.

Place:

Asics has different distribution channels, where different third parties are playing a big role such as depart-

ment stores, multi brand stores and smaller retailers. Since a few decates they also have their own flagship

stores around the world selling their brands ASICS and Onitsuka tiger.

Promotion:

They are mostly known by promoting sportmen, teams and events. Next to that, they have promotors in

every flagship store, which will promote and introduce the customers to the products face to face. Howev-

er, their is a lack of promotion in the way of advertising through magazines or television. This makes them

less known under the non-sporters and casual sporters.

63

Financial analysis extra

64

65

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