Main issues about Adidas
Adidas group is facing some struggles in different aspects of the value chain. As our report focuses on the brand strategy, we found out that sales of Reebok in the third quarter of 2012 fall by 25 per cent while the sales of adidas brand rose 10 per cent accompanied by the double-digit amounts at the group’s golf brands. In this case, this report will focus on the Reebok struggle, as it happens to be their major problem.
? Loss of contracts
Firstly, in 2012 Reebok lost contract with the NFL and was replaced by its main competitor-Nike, who became the official outfitter for the next 5 years. Such replacement will result in a loss of $250 million a year in revenue for Reebok. Secondly, the cancellation of NHL games for preseason Sept-Nov, which is due to the dispute between owners of NHL franchise and NHL Players association, will result in larger revenue loss for Reebok, the official outfitter (ibid). As a result, due to the two main factors listed above, Reebok's 2015 sales target has been reduced to 2 billion euros from 3 billion euros.
?Lack hold in emerging market
In 2012 India, Reebok’s managing director Subhinder Singh Prem and Chief Operating Officer Vishnu Bhagat got fired for alleged involvement in a Rs 870 fraud. Such financial and commercial irregularities made the company to pay $155 million and a further $87 million in restructuring cost, which could affect the consolidated financial statements of adidas Group. Moreover, adidas Group decided to close one third of its 1000 Reebok stores in India as a part of a restructuring strategy for the brand in the country. However, such closure might lead its competitors to seize the market share first, making it more difficult to win back in the future. ?Invalid claims
Reebok’s easy tone shoes were claimed to work well for leg-sculpting miracles. However, it turns out to be invalid and got fined $25 million by The Federal Trade Commission in America in...
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