Adidas Group Is a Multinational essay

Download this essay in word format (.doc)

Note: Sample below may appear distorted but all corresponding word document files contain proper formatting

Excerpt from essay:

This is based on both historical precedent and the fact that the firm has started to see year-over-year revenue declines. The company remains highly leveraged and although they are expected to remain liquid, this reality will place some constraints on Adidas. The company is likely to remain in a holding pattern for the next year, awaiting both economic recovery and the two major marketing events in 2010 -- the Winter Olympics and the World Cup. Thus, the best trading strategy for Adidas in the short-term is to hold.

The long-term strategy, however, will be different. Going out as far as 2015, the decision needs to be made based on the broader trends in the company's business and the likelihood of it extending its competitive advantages and core competencies. As noted, the greatest strength of Adidas is the economies of scale it achieves, in particular with respect to its international marketing campaigns. With respect to this tactic, the company appears well-positioned for the future, although there remains doubt about their ability to rebuild the Reebok brand. Adidas has aligned itself with many top athletes and events, such that the company will continue to have a premium image that will allow them to command substantial margins for their products. In this respect, there does not appear to be a significant threat to the company's business model.

The firm's finances will continue to improve over this period. The company has a long-term strategy in place to reduce costs, improve margins and reduce the debt that it acquired via Reebok. As such, liquidity and leverage positions are expected to improve over the long run. Margins will continue to show incremental improvement as well. The company's marketing efforts have generated consistent revenue gains and this is expected to continue going forward as well, a function of their more focused approach and continued integration of Reebok.

The global economy will recover. As it does, share prices will improve as well. This rising tide will float all boats, that of Adidas included, especially in light of expected improvement in operating results. As such, the current low level of Adidas stock price should signal a buy on the stock. The firm does not have a source of sustainable competitive advantage, so it remains at risk of losing market share to Nike or another competitor. However, it does have strong core competencies that will allow for consistent revenue and profit improvement. This will help propel the share price higher over the course of the next several years. Moreover, the overarching strategy of tighter focus and debt reduction is a strong strategy for the future. The company is pointed in the right direction and will therefore see an improvement in stock price that may exceed market improvement.

It should also be noted that there are few direct threats to the Adidas business. The company is not at any particular risk with respect to the political or legal environments. In the athletic footwear and apparel business, there are few risks with respect to technology. Game-changing technology of the kind that would severely compromise Adidas' market position is not expected to emerge as the focus of almost all players in the market is strictly towards marketing efforts, with technology relegated to a marketing ploy at this point. There is the risk that another athlete will become the next Michael Jordan and deliver correspondingly strong market share growth to a competitor, but there is just as much likelihood that Adidas would win that athlete for their own stable, given their strategy and capability with respect to signing such athletes.

Overall, Adidas is a strong company with solid growth prospects. In the short run, they can be expected to track the broader market closely, but their operational strengths will help them to achieve strong long-term growth. That said, it is unlikely that the Adidas of 2019 will look much different than that of 2009, so the buy recommendation comes with the caveat that by and large the firm's success will depend on its ability to outmarket competitors, especially Nike.

Works Cited:

Some financial data from Reuters. Retrieved June 18, 2009 from

Adidas Group 2008 Annual Report. Retrieved June 18, 2009 from

No author. (2005). Cricket Australia and Adidas Ink Four-Year Partnership Deal. Indian Retrieved June 18, 2009 from

Bajak, Frank. (2005). First Computerized Shoe Thinks on its Feet. MSNBC. Retrieved June 18, 2009 from

No author/Associated Press. (2006). Adidas Broadening Reebok Brand Identity.…[continue]

Cite This Essay:

"Adidas Group Is A Multinational" (2009, June 18) Retrieved October 25, 2016, from

"Adidas Group Is A Multinational" 18 June 2009. Web.25 October. 2016. <>

"Adidas Group Is A Multinational", 18 June 2009, Accessed.25 October. 2016,

Other Documents Pertaining To This Topic

  • Human Rights Violations Are a

    As it pertains to sweatshops, indications that the company was operating sweatshops came first in 1998. During this time sweatshops were found in Asia and the company was only paying workers 80 cents per day. Nike's behavior in both these instances created a backlash that is still present. Prior to the findings of human rights violations, Nike had a good reputation as an employer. However, after the presence of human

  • Nike s Strategic and Financial Position Analysis

    Nike's Strategic And Financial Position Analysis Nike is a globally recognized multinational corporation founded by the Stanford Graduate School of Business graduate, Phil Knight, and Bill Bowerman who was the track and field coach at the University of Oregon. The two appear to be a natural fit as each hailed from a background that would appreciate the underlying design that goes into creating a quality running shoe. Nike's global operations in aggregate

  • Consumer Behavior Self Image Congruence Affects Luxury Goods

    Consumer Behavior: Self-Image Congruence Affects Luxury Goods Retail The concept of luxury has been present in the society in various forms since the beginning of civilization. With very clear differences between the social classes back in the day, the consumption of goods categorized as luxury items were restricted to the elite classes. This also defines the underlying thought behind luxury goods; whatever the poor couldn't afford to have while the elite

  • Nike Strategic Analysis Nike s Strategic

    For any strategic planning activity to be effective there must be the ability to quickly define process-level changes to increase competitive advantage. Mintzberg's critique of the strategic planning process is illustrated in the shortcomings of the Ashoff Matrix in this regard. Lack of strategic prioritization of projects within the context of the Ansoff Matrix - the Ansoff Matrix does not provide for strategic criteria to be applied to specific projects.

  • Marketing Strategy Discuss the Conditions

    being specific. In addition, the use of advertising and sales promotion also is used on products that are quickly purchased yet have a high level of customer loyalty associated with them. All of these conditions would favor using an advertising and sales promotion driven approach over a personal selling one. Examples of products in this category include soft drinks, groceries of all types, and low-end consumer electronics that are

  • Corporate Character Individual Res as

    WorldCom (CEO Bernard Ebbers) supported by years of profitability arising from the deregulation of phone companies was a fast moving stock that was highly toted by stock specialists as a must buy, even while it was seriously hemorrhaging from bad and fraudulent business deals and its own shoddy accounting, cover ups and bad investment deals. WorldCom quickly supplanted at&T as the favorite of many investors, based heavily on Grubman's recommendations.

  • Branding and Communication

    Branding and Communication There has been significant criticism leveled against the branding practices of companies, and most particularly those of multinationals, which have been raised. Drawing on the academic literature this work will identify the primary arguments used in these critiques and will critically examine those arguments and discuss their implications for branding in the age of globalization. This study will further answer the question of how branding has changed under

Read Full Essay
Copyright 2016 . All Rights Reserved