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Business Plan For Adidas

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The classroom activities to think and plan business plan for sample company. This business plan not related to the real plan for Adidas AG. For more exchange in ideas please comment. Thank you.

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Business Plan For Adidas

  1. 1. BUSINESS PLAN Members 1. 5520212002 : Nabduan D. 2. 5520212004 : Phonphat R. 3. 5520212005 : Omar N.
  2. 2. Table of Content • Company background • External analysis • Company analysis • Corporate strategies • Functional strategies •Market, OM, HR, Financial, Accounting • Monitoring (BSC) • Value chain • Recommendation
  3. 3. 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
  4. 4. Company background About Adidas Group
  5. 5. Company background Overall Brand and Sub-brands % of Group Sales
  6. 6. External Analysis PEST 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
  7. 7. External Analysis 5 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
  8. 8. External Analysis Market 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.
  9. 9. External Analysis COMPETITORS ANALYSIS Nike 31% Adidas 16% Reebok 6% Puma 7% New Balance 6% ASICS 5% Converse 4% K-Series 2% Sletchers 5% Others 18% Credit 1st 2nd 3rd 4th 5th
  10. 10. External Analysis COMPETITIVE POSITIONS
  11. 11. External Analysis COMPETITORS ANALYSIS  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.
  12. 12. External Analysis COMPETITORS ANALYSIS Customize NikeiD
  13. 13. External Analysis COMPETITORS ANALYSIS  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 Mihara Yasuhiro  To bring innovative and fast designs to the sports world.
  14. 14. External Analysis COMPETITORS ANALYSIS Partnership with BMW and Arsenal football team
  15. 15. External Analysis COMPETITORS ANALYSIS  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.
  16. 16. External Analysis COMPETITORS ANALYSIS NB custom : same features NikeiD but can’t choose pattern
  17. 17. External Analysis COMPETITORS ANALYSIS  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.
  18. 18. External Analysis COMPETITORS ANALYSIS Shoes suggestion. By surface, you wear, experience and pronation
  19. 19. Company Analysis Adidas group BCG matrix
  20. 20. Company Analysis Adidas business model Online
  21. 21. 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. We are committed to continuously strengthening our brands and products to improve our competitive position. Company Analysis Adidas 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.
  22. 22. Company Analysis Adidas Group 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.
  23. 23. CORE VALUE Performance Sport is the foundation for all we do and executional excellence. Passion Passion is at the heart of the company and continuously moving forward, innovating, and improving. Integrity The company are honest, open, ethical, and fair. People trust us to adhere to our word. Diversity The company takes people with different ideas, strengths, interests, and cultural backgrounds to make our company succeed. We encourage healthy debate and differences of opinion. Company Analysis Adidas Group
  24. 24. BRAND VALUE Authentic Passionate Innovation Inspirational Committed Honest Company Analysis Adidas Group 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
  25. 25. Company Analysis GENERIC STRATEGY Cost leadership  Products are priced much lower to Nike, Puma but the quality are equal. Customers would buy adidas rather than Nike and Puma because 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
  26. 26. Market Analysis STP – Segmentation GEOGRAPHIC SEGMENTATION: Divided the market into different units of location o Neighborhood, o States, cities o Regions, countries o 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 Achievers o Well-experienced o Hard workers o 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 Benefits o Gym regular users o Sports lovers o Athletes o Image seekers o Brand freaks DEMOGRAPHIC SEGMENTATION: Divided into different segments based on the variables of family size, family life cycle, income, gender, age and etc. As follows: o Age 15-36 o Income level: $15,000 o Social Class: Upper middle, upper class and lower upper. o Gender: Both male and female
  27. 27. Market Analysis STP – 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
  28. 28. Market Analysis STP – 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
  29. 29. Market Analysis STP - 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
  30. 30. 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 Analysis 4Ps - Products
  31. 31. Market Analysis Partnership with Porshe
  32. 32. miadidas A 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 Market Analysis 4Ps - Products
  33. 33. VDO Adidas custom Market Analysis 4Ps - Products
  34. 34. New miadidas A 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 Analysis 4Ps - Products
  35. 35. Market Analysis miadidas
  36. 36. Market Analysis Pronation Suggestion VDO Pronation suggestion
  37. 37. Market Analysis 4PS - Price Price Using 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.
  38. 38. Market Analysis 4PS - Place Place Distribute 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
  39. 39. Market Analysis 4PS - Promotion Promotion Different 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
  40. 40. Market Analysis 4PS – Promotion - Advertisement
  41. 41. Market Analysis 4PS - Promotion Promotion Different 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
  42. 42. Market Analysis Distribution Channel – Wholesale
  43. 43. Market Analysis Distribution Channel – Retail
  44. 44. Market Analysis Distribution Channel – E-Commerce E-commerce The 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.
  45. 45. Market Analysis SWOT Analysis • Low switching cost • High product substitute for customer • Trademark too easy to copy
  46. 46. Operation Management Value Chain • Quality Control
  47. 47. Operation Management Supply Chain
  48. 48. Operation Management Supply Chain  Use of IT to monitoring supply chain innovative rating system for the assessment  Checking the rules are followed Workplace standards - Cover labor rights, training programs, health and safety, and environmental protection  Selecting new suppliers Adidas will give the order to suppliers who approved by SEA(The Social and Environmental Affairs) team  Rewarding good performance Remain Adidas partner and continue to receive orders  Taking action over poor performance Adidas will send a letter. If they not improve Adidas will stop orders and stop working with the factory  Providing information for workers management-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
  49. 49. Human Resource Management STRATEGIES
  50. 50. Human Resource Management STRATEGIES  Commitment to leadership excellence  Enable employees to be the best * Talent Management * Performance Management * Succession Management
  51. 51. Human Resource Management STRATEGIES  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
  52. 52. Human Resource Management STRATEGIES
  53. 53. 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 Responsibility CSR Environmental Strategy 2015 Vision – 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.
  54. 54. 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. Social Responsibility CSR
  55. 55. Social Responsibility CSR
  56. 56. FinancialHighlights
  57. 57. FinancialHighlights
  58. 58. Performance Accounting
  59. 59. Performance Accounting
  60. 60. Performance Accounting
  61. 61. Performance Accounting
  62. 62. Performance Finance Adidas AG stock perform better than DAX-30 and MCSI
  63. 63. Financial Management COST STRUCTURE EQUITY > LIABILITIES
  64. 64. Monitoring Process Strategy Route 2015 Strategy To drive quality growth and sustainable success for the group by fuelling consumer desire with premium products and brand experiment
  65. 65. Monitoring Process Strategy Map
  66. 66. Monitoring Process Balance Scorecard
  67. 67. Balance Scorecard Learning 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 Measurements Performance 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 Bonus80,000 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 (€)
  68. 68. Balance Scorecard Internal 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 & innovation 1. 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 Measurements Performance 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 (€)
  69. 69. Balance Scorecard Customer Perspective 2012 2013 2014 2015 2016 2017 new customers %increasenew customersthrough registration 10% 15% 20% 22% 24% 26% customer retention %repeatedsalesthroughdatabase 72% 75% 78% 80% 80% 80% customer satisfaction %repeatedsalesthroughdatabaseand surverys 95% 95% 95% 95% 95% 95% increasedemand %increasesales: bothnew customers andoldcustomers 50% 50% 50% 55% 60% 65% Perspectives Objectives Measurements Performance 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. 70. 70 Balance Scorecard Financial 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
  71. 71. Predicted Performance Performa 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
  72. 72. o Adidas is market follower o Diversify base on footwear o Most product made for sport activity o Manufacturing locate in Asia, Vietnam and China o Good image in HR and CSR o Strong financial Conclusion
  73. 73. Recommendation 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 inventory More efficient process Continue investing in R&D to keep up the edge Expand women’s segment
  75. 75. 1. 2. references