General Description and Historical Background Adidas
With the growth of the number and strength of international corporations all over the world, much attention is paid to studying their performance. The current work represents the research of one of the world’s leading manufacturers of sports products and apparel Adidas. This company has a long history that shows that it always directs its intentions towards a constant search for innovative ways of attracting new clients. Much attention will be paid to explaining the organizational culture, stressing Adidas’ values and norms.
Adidas is an international company engaged in designing, manufacturing, marketing, and selling sports and athletic products in numerous countries all over the world (Yahoo Finance, 2016). The company also performs retail and e-commerce business activities for the promotion and distribution of such brands as Adidas, Reebok, Taylor Made, Adidas Golf, and Adams Golf (Yahoo Finance, 2016). It is involved in the business activities of such labels as Y-3, Porsche Design Sport, and Five Ten (Yahoo Finance, 2016). Among the offered production are footwear, hardware, and apparel.
The company was founded in 1924 after the registration of the “Gebrder Dassler Schuhfabrik” by Adi Dassler who aimed to provide the athletic equipment of the highest quality (Adidas Group, 2016a). In 1949, he hired 47 workers for his manufacturing facility in Herzogenaurach (Adidas Group, 2016a). The same day, he registered the label with the famous 3 stripes, which are currently recognized all over the world. The company got its fame in 1954 when the German football team whose members wore uniforms manufactured by Adidas won the World Cup final (Adidas Group, 2016a).
During later years, the company decided to increase the diversity of the proposed production and started manufacturing apparel (in 1967) and balls (official ball TELSTAR for the FIFA World Cup in 1970) (Adidas Group, 2016a). Adidas followed the large sports event and tried to present some innovations for the public before these events. For example, in 1972, it introduced the new logo Trefoil to the Olympic Games in Munich (Adidas Group, 2016a).
The further development of the brand was reflected in the merger of the arts and sports in 1986 (Adidas Group, 2016a). Adidas set the everlasting street fashion after the release of the song My Adidas by American hip-hop group Run DMC (Adidas Group, 2016a). During the nearest five years, the company tried to hold its audience and to attract the new one by constantly presenting innovative solutions, like “Torsion (1989), the Equipment concept (1991), the Street campaign (1992) and the Predator football boot (1994)” (Adidas Group, 2016a). However, these innovations did not allow the company to improve its performance and hold its top position for a long time. At the beginning of the 1990s, Adidas went almost bankrupt. The situation improved only in 1995 when it went public (Adidas Group, 2016a). In 1997, the company acquired the Salomon Group with its brands Mavix. Bonfire, and TaylorMade (production of metal woods tailored for players since 1979). The further expansion of the market was connected with the presentation of the sports-inspired streetwear in the 2000s (Adidas Group, 2016a). The close cooperation with popular designers like Stella McCartney and Yohji Yamamoto lead to the creation of such new brands as Porsche Design Sport and Y-3 (Adidas Group, 2016a). More attention was paid to the development of the memorable marketing campaign with an all-star cast like Muhammad and Laila Ali, David Beckham, Lionel Messi, Katty Perry, and Haile Gebrselassie are still popular (Adidas Group, 2016a). The later path of the company was also connected with the further acquisition of sports brands like Reebok (specialized on manufacturing shoes and fitness products for women) and Rockport (offering casual footwear) in 2006, and Adams Golf (golf equipment producer) in 2011(Adidas Group, 2016a).
The company’s development was closely linked not only to the acquisition but also to the development of continuous innovations in sportswear and shoes. In 2013, the corporation introduced the Energy Boost shoes for running that were made from the unique cushioning materials developed by German specialists from BASF (Adidas Group, 2016a).
Adidas showed rather strong performance during the previous year. Its currency-neutral sales development increased by 10 %, operating margin raised by 6.5 %, gross margin improved by 48.3 % (Adidas Group, 2015). Overall, group sales reached 16.915 billion euros, net income from continuing operations comprised 720 million euros with the capital expenditure of 513 million euros (Adidas Group, 2015). At the same time, the company lowered its gross borrowings to 1.830 billion euros (Adidas Group, 2015). Currently, dividends per share are 1.60 euros (an increase of share price by 56 %), and share buyback is 300 million euro (Adidas Group, 2015).
Adidas is presented in the following areas: Western Europe, Commonwealth Independent States, North and South America, China, Japan, South Korea, Southeast Asia, Pacific Region, and Middle East (Yahoo Finance, 2016). Currently, it operates in 2,772 stores (53 % are under the Adidas brand and 13 % are under the Reebok brand) and 872 factory outlets (Yahoo Finance, 2016).
Culture of Adidas
The success of Adidas is based on its competitive global culture. It is reflected in the treatment of people as members of a united team that gives them a joint purpose (Phelps, 2015). On the one hand, this attitude fosters active cooperation between employees. On the other hand, co-workers remain highly ambitious and competitive. Thus, they strive for developing unique solutions and presenting the product in the best possible manner. Much attention is paid to the creation of personal accountability (Phelps, 2015). This trend helps in assessing personal and corporate performance and building plans for further improvement. The competitiveness and personal accountability form a strong background for constant innovations of processes and products that lead to change and strengthening of the company’s position on the market. Currently, Adidas is driving innovation by using the concept of open source: “finding new ideas be engaging all employees and tapping into their collective wisdom” (Phelps, 2015). CEO Mark King believes that Adidas should have enough courage to do common things differently in order to remain successful on the market (Phelps, 2015).
Values and Norms
The major values of the company are diversity and creativity. They are based on the understanding that “a workforce made up of individuals with different ideas, strengths, interests, and cultural backgrounds is a prerequisite to success” (Adidas Group, 2016b). Allowing people to be themselves and encouraging constant development of innovative ideas enables the company to impress the customers through unique solutions. This becomes possible thanks to equal treatment and serious attention to thoughts of all employees irrespective of their previous working experience, age, race, ethnicity, and sexual orientation. Adidas takes the proactive approach directed towards increasing and further promoting diversity through the recognition of similarities and differences, striving for mutual respect and appreciation, welcoming divergent views, which ensures that products of the company take up the leading position on the market.
Adidas also has a set of attitudes and behaviors that were developed over a long period of time and comprise its norms. It operates a sustainable business that is directed towards the protection of the environment through the minimization of harmful effects. Management of environmental issues represents an integral part of the daily operations of the company.
The above figure shows that the company directs its efforts towards sustainable use of water, material and energy resources, a decrease in the emissions into the water and air, and the lowering of hazards and risks of contamination of the groundwater and soil by chemicals.
One more norm of Adidas’ performance is a deep respect for human and employees’ rights, which are protected by the company’s policies based on the United Nations Universal Declaration of Human Rights (Adidas Group, 2016e). These policies cover the following matters: recruitment, hiring, career promotion, compensation, and benefits (Stephen, and Ducan, 2002). Good corporative governance is also assured by the Adidas’ Code of Conduct and Global Policy Manual (Adidas Group, 2016e). These documents form the framework for ethical behavior towards coworkers, company’s parties, and third parties, and protection of the information relevant to the company (like financial matters).
Much attention is also devoted to the health and safety of the working environment and compliance with numerous legal imperatives, which may differ in various countries. Such consideration is important because the company highly values its employees and intends to promote a healthy lifestyle. Adidas offers the assistance of the company doctors (for example, physiotherapists), medical checks, burnout prevention initiatives, an SOS 24/7 crisis home practice, etc. (Adidas Group, 2016d). Moreover, the company developed a procedure for the effective handling of incidents and minimization of risks to human life and the company by means of defining internal and external communication. It is presented in the form of the Major Incident Response Policy (Adidas Group, 2016d).
Entry into the Markets
Currently, Adidas is successfully presented in almost all sport directions in both developed and developing countries. However, there are still some not so widespread directions, which are underrepresented by the brand. One such directions is the market of badminton equipment. The additional attention should be paid to the fact that this market is rather unpredictable and complicated. In recent years, the rand HEAD was withdrawn from it and the brand THWACK failed to introduce any attractive production (Badzine, 2013). At the same time, this area seems to be rather attractive because currently about 200 million people are playing this game all over the world (Badzine, 2013). Moreover, this kind of sport showed the tendency of spreading from Europe and America to the Far East.
In 2012, Adidas entered this field with a full and complete range of badminton production (Badzine, 2013). The company successfully used its strong presence as a sports manufacturer (i.e. the established connections with dealers and distributors, high-quality manufacturing, and a reliable logistics chain). It is notable that Adidas developed its products for both recreational and professional players in order to cover as much audience as possible. The company chose the strategy of inspiring the community through its solutions and technologies. The company paid additional attention to delivering second-to-none customer service.
The expansion of the market was started from the setting of the company’s employees and leading experts in the key badminton markets. These people were highly knowledgeable and experienced in this field. Moreover, they had a clear understanding concerning the perceptions of the local customers. The last strategy was represented by the development of a broad range of products to meet the demands and wishes of all categories of players. Adidas also used a sponsorship strategy by financing such talented players as Victor Axelsen and Nozomi Okuhara (Badzine, 2013). Thus, the company introduced rather strong strategies for the further expansion of the market.
The company is positioned as a creator of unique sports goods and apparel that brings emotions and changes lives (Cheff et al., 2013). Adidas is oriented towards the young and adults, who complete or have completed higher education (Adythia and Hudrasyah, 2015) with medium and high income, i.e. the representatives of the lower upper and upper-middle classes. It offers production both for men and women engaged in various kinds of sports. That means that the company is multi-gender. It has positioned itself as a company that provides products to professional sportsmen, amateurs, people who use gym seldom or regularly, image seekers, and brand freaks (Fletcher, and Crawford, 2014).
The company places stress on its long and successful history of offering high-quality products and innovative solutions. The reliability and constantly adding value attract new customers and holds the existing ones by offering a variability of models (Derakhashide, and Emadzadeh, 2012). The major stress is put on the fact that Adidas uses modern technologies and unique ideas for satisfying and impressing its customers. This feature forms the background for positioning the company as the number one producer of sports commodities: “we will become the first true fast sports company. Fast in satisfying consumer needs, fast in internal decision-making” (Adidas Group, 2016a, p. 56).
Additional attention should be paid to the fact that notwithstanding the set global strategy for all the brands introduced by Adidas, there are still some minor differences in their positioning. Reebok is positioned as the brand of fitness goods and apparel through a strong focus on innovation (Adidas Group, 2016a). Reebok-CCM is more oriented towards designing and manufacturing sports goods for hockey players (Adidas Group, 2016a). Taylor-Made-Adidas Golf is widely recognized as the best producer of golf products that offer innovative designs and uses unique technological solutions to enable the users to significantly improve the quality of their game (Adidas Group, 2016a). The establishment of the multi-brand strategy and offering a great variety of products enables Adidas to “cater all segments of the market from players to almost everyone” (Mahid et al., 2015, p.171).
Adidas also effectively uses innovation tactics in its marketing campaigns (Seb, 2016). It successfully uses the available content for presenting solutions that would satisfy the customer to the full. The company creates special hubs in different locations all over the world in order to perform the most precise assessment of customers’ perceptions with the help of social networks (like, Twitter (Kruger, Stteiglitz, and Potthoff, 2012)) and online games (Scherer, 2007). It also actively cooperates with celebrities to determine the most effective way of influencing the audience (Kruger, Stteiglitz, and Potthoff, 2012). All these efforts are necessary for the successful realization of the company’s global tactics.
As it has been mentioned above, the most relevant aspect is the presentation of the company as an innovative leader. It is accomplished with the help of creative advertisements with celebrities and sports stars recognized all over the world (mentioned above). The high quality of videos with numerous spectacular effects and creative features are directed towards attracting and impressing the viewers. Moreover, the statement “Impossible is nothing” brings the audience to the understanding that the company (and the users of its production) could reach virtually everything they desire (Seb, 2016).
In addition, close attention should be paid to the wide presence of Adidas in notable sports events, like football cups. This reflects the company’s marketing tactic to be perceived as a sports brand for mass audiences in the future. The company also sponsors football, cricket, and rugby teams all over the world to show that it is actively involved in the sporting life of the planet (Motion, Leitch, and Brodie, 2000).
As it has been mentioned above, currently, Adidas directs its efforts towards attracting women by presenting innovative solutions for them. This tactic is realized by the introduction of a new campaign under the name “I’ Here to Create” (Pasquerelli, 2016). The new advertisings “will air globally with 15-and 30-second spots in over 50 countries, during popular events such as the Grammys and the Oscars” (Pasquerelli, 2016). Each commercial will show some distinct sports icon (like Caroline Wozniacki, Candace Parker, and Karlie Kloss) that is the most popular in a particular region (Pasquerelli, 2016). These videos would combine the elements of sports and personal creative moments of the celebrities. Thus, the marketing tactic is oriented not only towards showing the sportish appearance of the users of Adidas goods but also putting stress on the individuality of each woman. This approach is chosen for attracting both active sportsmen and females who intend to reflect on their lifestyle and to be perceived as strong striking personalities.
One more marketing tactics is reflected in the encouragement of the audience “to create their own future despite the predictions society lays upon them” (Allen, 2016). In the new advertising “Your Future is not Mine” the famous Adidas’ three stripes are given a new meaning: they struck the word future and symbolize the refusal to accept the limitations posed by others. Thus, the company once again places stress on uniqueness and individuality, on personal ability to withstand the morals of the society. It is worth noting that a similar message is introduced in the advertising “Creators Never Follow” (Allen, 2016). This commercial also “encourages independence and turns out surrounding negativity” (Allen, 2016).
To summarize, the current work provides a general description of the global sports production manufacturer and distributor Adidas. The main emphasis is placed on the evaluation of the following aspects: culture (especially values and norms), entry into the markets, strategic positioning, and marketing tactics. The company highly values diversity and inclusion. It believes that every worker irrespective of their age, gender, race, and ethnicity are able to develop innovative solutions that can further strengthen the company’s position on the market. Much attention is paid to the protection of the rights of employees, assurance of their safety, and environmental sustainability. Currently, Adidas explores and expands new directions, like badminton. It develops a strong strategy directed towards attracting the attention of both amateurs and professional sportsmen in these fields. The company positions itself as an innovator and a creator that introduces unique solutions that add value to the life of its customers. Nowadays, it directs its efforts towards gaining the attention of women and encouraging independence.