Continuation of Business Plan

Adidas Business Plan

The following pages present an in depth business plan on Adidas developing a customized footwear line. This is the updated version of the preliminary plan submitted previously. This project plan describes in detail the necessity of Adidas developing a customized shoe line in accordance with the strategy behind NikeID. The project objectives, scope and deliverables have been updated in order to satisfy the changing needs that Adidas must face on environmental level. Project risk and the responsibility matrix have also been improved as a requirement of project plan updates. The Schedule and Constraints section addresses each activity included in the project in detail.

The competitive environment in which Adidas develops its activity requires the company to establish innovative strategies on product development and marketing. With Nike investing significant resources in product innovation, but also in modern marketing techniques, Adidas is forced into copying its competitor's strategy in order to maintain its position on the market, and to improve this strategy in order to become the leader of the footwear industry.

Project Background

The necessity of developing a project on product innovation of Adidas' footwear that is focused on customizing the company's products is determined by the activity of its main competitor, Nike. The company understands the fact that it is more efficient to target several different customer segments with little differentiated footwear, by allowing customers to customize their footwear themselves (Nike, 2013). This is intended to address customers that are interested in the sports qualities of the footwear, customers that want their footwear guaranteed by celebrities, and customers for which footwear represents a fashion statement. Basically, the footwear developed by NikeID segment has little variation, but customers can customize it in accordance with their preferences.

Justification Summary

The reasons behind developing this project are represented by Adidas' need to pursue its main competitor, Nike. The company's NikeID product range success requires that Adidas also develops a strategy based on product customization. Such a strategy is able to address several types of different customers more efficiently.

Corporate Goals

The goals that this project must reach on corporate level are represented by increasing sales, improving customer satisfaction, an increasing the flexibility of Adidas' product range. In addition to this, the company intends to diversify the customer segments it targets through this project, and to challenge Nike's position on the market. These goals are supported by financial, technical, and human resources.

Project Objectives

The objective of this project is represented by developing a strategy that allows Adidas to successfully develop a customized footwear line.

Scope

Deliverables

The project's deliverables are represented by a supply chain management that is in accordance with the customized shoes line, developing an online platform for customizing and purchasing these shoes, and developing in person mechanisms through which customers can personalize these shoes.

Measures

The efficiency of the supply chain will be measured by the time of days it takes from receiving a customized shoes order to the customer receiving the products. The measures for the online platform are represented by the number of orders for customized shoes in comparison with orders for regular Adidas shoes.

Deliverables

In the case of regular footwear lines, Adidas established its supply chain and stocks based on analyses of previous sales and market trends estimations. But in the case of customized shoes, the production process is longer. The production process is finished after the client makes an order and selects how he wants his shoes to look like. The production and client delivery are likely to add to four weeks. During this time, Adidas' supply chain is charged with customized shoes that are in different production stages. Therefore, it is necessary that the company develops a flexible supply chain management strategy.

Other deliverables of the project are represented by the online platform that will allow customers to customize and purchase their shoes, as well as in-person mechanisms for placing customizing orders in Adidas stores or in other stores that sell Adidas shoes.

Assumptions

An important assumption that is associated with this project is that Nike is likely to reduce the prices of its customized shoes after Adidas' customized footwear line is launched. Initially, Adidas will be forced to have higher prices for its customized shoes line in order to return its investment. Another important assumption that must be made is that the success of this project can significantly increase if Adidas reduces the period from the customer's order to customized shoes and its delivery. In the case of NikeID this usually takes a place within four weeks. This can be considered a long period to wait for shoes to be delivered. Some impatient customers might not enjoy this, and purchase regular shoes. If Adidas manages to reduce this period, it is likely that some of NikeID's customers can purchase Adidas customized shoes.

Project Justification

Nike has found a simple strategy in order to increase its sales and customer satisfaction: customized shoes. This product line satisfies the needs of several types of customers. It addresses customers that are into fashion footwear, customers that want their footwear guaranteed by sports celebrities, and customers that are interested in the technical benefits of footwear. In this context, Nike gains new customers. Therefore, it is required that Adidas develops such a project also.

Project Risk and Uncertainty

In addition to tight schedule, inventory risk, cost escalate, product innovation, logistics, and suppliers risks Adidas must add the risk of overcharging the production line. Adidas' production line is scheduled on working in order to satisfy current demand. If the company develops a customized shoes line its demand is likely to increase. This means that Adidas must also expand its product line in order to keep pace with its innovation.

Responsibility Matrix

Activity

Marketing Department

Sales Department

IT Department

Production Department

Research and Development Department

Finance Department

Project initiation

R

Production line scheduling

R

Analyze Market

S

R

Website

S

R

Process request

R

S

Raw materials necessary

R

Marketing strategy

R

Sales plan

R

Financial analysis

Deliver

R

R

Summary

The customized shoe line requires the cooperation between most of Adidas' departments. This is a team effort. In order to reach the project's objectives it is important that a project team is formed with members from all departments.

Detailed

The initiation of the project is attributed to the Marketing Department. The Production department is in charge with establishing the raw materials necessary by developing a customized shoes line, with the scheduling of the production line, and of actually performing the production process of the footwear in case. The Sales department must develop a sales plan in accordance with the investment level and return on investment determined by the Finance department. The IT department must optimize Adidas's website in order for it to support a larger number of user operations associated with customized footwear orders. The Research and Development department basically develops the new products that will be developed by Adidas based on market requirements.

Schedule and Constraints

Summary

The schedule has modified since the preliminary stage of the process. Several activities have been added to the schedule as a necessity determined by the project's objectives. These are activities attributed to each department.

Detailed

The project will start with the Marketing department conducting a research survey among footwear users in order to determine their satisfaction with the current product offering, and to identify their needs and preferences on customizing shoes. The results of the study will be discussed with the Research and Development department that will develop the shoe prototype in accordance with customers' needs. During this time, the Finance department will determine how much and at what prices the company has to sell the new products in order to return its investment.

The marketing department will also develop the marketing strategy intended to help reach the sales level established by the Sales Department. In addition to this, it is the IT department's job to expand the online platform in order for customers to be able to order and customize their shoes on Adidas' website. Each department will assign members in the project team.

Calendar, Duration, Network

Task

Duration

Start time

End time

Predecessors

1.

Market study

2 weeks

06 nov 2013

20 nov 2013

2.

Project team creation

1-week

21 nov

28 nov

1

3.

Project team discussions

1-week

29 nov

08 dec

2

4.

Production capacity, raw materials necessary

3 days

09 dec

12 dec

3

5.

Financial analysis

5 days

14 dec

19 dec

4

6.

Production process

3 weeks

20 dec

10 jan

5

7.

Marketing strategy development

2 weeks

11 jan

25 jan

6

8.

Website development

1-week

26 jan

3 feb

7

9.

Product launch

2 days

19 feb

21 feb

8

Budget

Labor

The project will require internal and external human resources. The external resources will be used in conducting the market study. The budget that is estimated for labor is of $545,000.

Non-labor budget, for raw materials, travel and others is estimated at $30 mil.

Unresolved Issues

At this point, there are no unresolved issues regarding the customized shoes project. The project team has been developed, and each activity is established. The schedule, duration, and budget of each activity are established.

Work Breakdown Structure

Market study -- 2 weeks

Project team creation -- 1 week

Project team discussions -- 1 week

Production capacity, raw materials necessary -- 3 days

Financial analysis -- 5 days

Production process -- 3 weeks

Marketing strategy development -- 2 weeks

Website development -- 1 week

Product launch -- 2 days

Charters

Roles, Expectations, Authority

In this case, the highest authority belongs to the Marketing Managers. The Marketing Managers initiates the project, explains its necessity, and established the marketing strategy. The other department managers have the role of supervising the project in order to follow the established budget and schedule.

Project Manager

The project manager is also represented by the marketing Manager. It is the Marketing department that is in charge with most of the project.

Team

The team also comprises people from the Finance, Sales, Production, Research and Development, and IT departments.

Key Issues and Assumptions

It is expected that the project cannot exceed its budget and scheduling. Each activity has been thoroughly planned, which makes it easy to follow.

Change Control

All changes that take place during the project must be approved by the marketing Manager. If these are financial issues they must be approved by the Finance Manager also. Technical issues must be approved by the IT department.

Administration

Standing meetings must be held at least weekly, or each time it is considered necessary. The problem severity coding is the following: red code for urgent important problems, orange code for important problems that are not urgent, and yellow code for smaller issues. It is important to establish the administration of the project in order to improve the team, its work and its productivity.

PROJECT IMPLEMENTATION PLAN CONTENTS:

Project Status and Reporting and Control System

Variance

Analyzing variance is one of the most important steps in this project, as projected schedules and costs practically provides individuals in charge of the project to determine whether or not it is important for them to reconsider particular aspects of the project.

Cost

Project costs need to stay within the budget allocated for Adidas' customized line. As a consequence, the project needs to stay around $30,545,000 in order for the company and its shareholders to benefit on the long run. While it is certain that the company needs to allocate more funds than its main competititor, Nike, Inc., the company's budgeted cost of the work performed is lower than the actual cost of the work performed ($33 million). A negative cost variance would seem like a bad thing, but the fact that the company is concentrated on an effective strategy means that it is very likely for it to come up with funds that can cover the excess cost.

Schedule

When considering the Budgeted Cost of Work Performed and the Budgeted Cost of Work Scheduled, it would appear that the schedule variance is positive. This means that the project is ahead of schedule and that it is very likely to generate positive effects when taking into account its overall consequences. Even with the fact that the project is ahead of schedule, it is still difficult to determine whether or not it is surely going to benefit the company. The company needs to analyze why the project is ahead of schedule and mitigate the risks associated with this concept.

Performance tracking

The fact that marketing is going to involve a large aspect of this projects makes it absolutely necessary for this branch of the project to be in accordance with required revenue and profit levels. Materials suppliers need to provide materials that are in agreement with the initial plan in order for the company to avoid buying subpar materials. Furthermore, the company's infrastructure has to work perfectly in order to avoid any kinds of problems that might arise as a result of designing and creating a new product.

Change Control System

Description

Customization in accordance with the Nike ID strategy is going to involve having to change much about how the company behaves with regard to its customers. As a consequence, by introducing the customizable option concerning shoes, Adidas is going to install a framework that is going to treat both customers and shareholders differently. The company thus needs to concentrate on being able to address diverse issues that are likely to appear as a result.

Impact

Installing a perfectly coordinated system involves having to deal with initial problems associated with how customers and shareholders perceive the idea of change. In order for change to be effective, Adidas customers need to express their support with regard to the project. This can make it possible for the project to actually reach it final stage and to be implemented on a full-scale for both customers and shareholders to benefit.

Alternatives

The company needs to consider a series of alternatives in order to be able to effectively deal with change. Even with the fact that it has access to all the resources it requires in order to do so, it is still essential for it to be prepared to deal with unforeseen problems and this means that it has to consider a series of possible strategies that are likely to help it recover in case of trouble.

Recommendations

Ranging from the Marketing Manager to the Finances Manager, all individuals involved in the project need to be well-acquainted with the project's phases. This can make it possible for each of them to be able to intervene and approve strategic changes when these are required and when there is no solution but to proceed with these respective changes.

Approval List

As previously mentioned, each branch manager has to be prepared to analyze changes and to approve ideas when it is important for them to do so. Whether the issue involves marketing, finances, or the technical aspect of the project, the managers of each of these groups have to approve a change in strategy before it actually takes place.

Configuration Control

Description (Prototype and Final Design)

As Built

The project is going to involve devising a complex system that customers can use with the purpose to design the products they are interested in. This practically means that the project entails building a strategy that can be used rather easily and that produces positive results through the final products that are created. The project's success largely relies on building a system that combines a customized shoe with the ability to get actively involved in its design.

This provides customers with the feeling that they are partly responsible for the products they are buying and improves their relationship to the company.

As Delivered

The moment when customers are provided with products they buy also represents an important aspect of the production process. These individuals virtually come to feel that the products they acquired are not as ordinary as other products they bought throughout their lives. The fact that they have had the ability to customize the shoes before buying them have make it possible for them to consider that the product itself is more valuable.

Impact

The internet experience associated with using the company's website with the purpose of customizing shoes before buying them is likely to confuse some users. Even with this, they are probable to express appreciation with regard to this change as they become better familiarized with the new environment.