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Assignment 1

Building IT systems at Reebok

Company History
The athletic shoe industry in the United States was an $8.25 billion market in 2003. By 2010, industry revenue had hit $21.9 billion with sales of over 362 million shoes a year. The four largest companies (Nike, New Balance, and Adidas-Reebok) controlled 70 percent of that market. Reebok can trace its history back to Joseph William Foster, who made some of the first spiked running shoes by hand in London in 1895. In 1958, two grandsons started a companion company known as Reebok. But, the modern version was born in 1979 when Paul Fireman saw the shoes at an international trade show and negotiated for North American distribution rights. At $60 a pair, the shoes were the most expensive running shoes in America.

In 1982, Reebok helped launch the aerobic dance industry with a shoe specifically targeted to women. With explosive growth, the company went public in 1985. Growth continued and Reebok’s 1993 sales of $2.9 billion placed it second behind $4.4-billion Nike. The nearly $1 billion increase in sales from 1989 to 1993 indicates Reebok’s success in gaining market share. IT Head

Tom Trainer joined Reebok in 1991 as the chief information officer (CIO). He noted that his role “is to enable the kid in Reebok to stay fresh and creative while also allowing the grown- up corporation to compete in global markets”. To accomplish these objectives, Trainer implemented videoconferencing, computer-aided design, the Internet, and laptops for the sales force. The goal was to improve communications among employees, faster development of products, and more effective sales presentations.

Before Trainer joined Reebok, the information systems area was less than up-to-date, with no global information system or way to look at data. Communications, primarily by telephone and fax, between the manufacturing partners and worldwide distribution network were slow. Turnaround on new products was equally slow. This was a critical problem because Reebok is a fashion-oriented business with three product cycles a year in footwear and five in apparel. While sales representatives from Nike were walking in with laptops to display their lines, reps from Reebok were walking into offices with bags of shoes.

Trainer’s early days were spent accomplishing short-term projects that got him points with the board of directors. He fired six of eight senior staff. He kept 85 percent of the old programming staff, retraining many of them. In addition to his IS responsibilities, Trainer drove the reengineering process in the company. To do so, he spent a great deal of time on the road, building relationships with Reebok executives around the world. He also studied Sony Corporation to learn ways that it meets customer needs.

To accomplish his re-engineering, Trainer formed five mega processes that streamlined procedures for production, sales and marketing, research and development, administration, finance, and distribution. In 1992, he presented a four-year, $75-million strategic information systems plan to Reebok’s executive committee. The board approved it on the condition that it give Reebok strategic advantage.

The Systems
To improve its communications, Reebok installed a privately designed architecture for voice, video, and data. Reebok communicates not only with its worldwide distribution base but also with its ad agency and other suppliers. Before the new ordering system was installed, orders were first printed out locally and faxed to the international headquarters in London. London would take all of the faxes and send them to the United States to be entered in the mainframe. Different standards for shoe sizes from different countries added to the delay. Once the information was entered in the mainframe, production and manufacturing would evaluate the orders.

To improve this process, Trainer developed a software package called Passport. Passport...
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