Vous êtes sur la page 1sur 39

CHAPTER 1: INTRODUCTION

Reebok is an American-inspired, global brand that creates and markets sports and lifestyle products built upon a strong heritage and authenticity in sports, fitness and womens categories. The brand is committed to designing products and marketing programs that reflect creativity and the desire to constantly challenge the status quo. Reebok International Limited, a subsidiary of the German sportswear company Adidas, is a producer of athletic footwear, apparel, and accessories. The name comes from the Afrikaans spelling of rhebok, a type of African antelope or gazelle. In 1890 in Holcombe Brook, a small village 6 miles north east of Bolton, England, Joseph William Foster was making a living producing regular running shoes when he came up with the idea to create a novelty spiked running shoe. After his ideas progressed he joined with his sons, and founded a shoe company named J.W. Foster and Sons in 1895. In 1960, two of the founder's grandsons Joe and Jeff Foster renamed the company Reebok in England, having found the name in a dictionary won in a race by Joe Foster as a boy; the dictionary was South African edition hence the spelling. The company lived up to the J.W. Foster legacy, manufacturing first-class footwear for customers throughout the UK. In 1979, Paul Fireman, a US sporting goods distributor, saw a pair of Reeboks at an international trade show and negotiated to sell them in North America.

In the past, Reebok had an association with outsourcing through sweatshops, but today it claims it is committed to human rights. In April 2004, Reebok's footwear division became the first company to be accredited by the Fair Labor Association. In 2004, Reebok also became a founding member of the Fair Factories Clearinghouse, a non-profit organization dedicated to improving worker conditions across the apparel industry. Supplier information, according to the Reebok website as of May 2007: "Footwear Reebok uses footwear factories in 14 countries. Most factories making Reebok footwear are based in Asia primarily China (accounting for 51% of total footwear production), Indonesia (21%), Vietnam (17%) and Thailand (7%). Production is consolidated, with 88% of Reebok footwear manufactured in 11 factories, employing over 75,000 workers. "Apparel Reebok has factories in 45 countries. The process of purchasing products from suppliers is organized by region. Most (52%) of Reebok's apparel sold in the United States is produced in Asia, with the rest coming from countries in the Caribbean, North America, Africa and the Middle East. Apparel sold in Europe is typically sourced from Asia and Europe. Apparel sold in the Asia Pacific region is typically produced by Asian-based manufacturers.

The Adidas Group at a glance:


Adidas a name that stands for competence in all sectors of sport around the globe. The vision of company founder Adolf (Adi) Dassler has long become reality and his corporate philosophy the guiding principle for successor generations. The idea was as simple as it was brilliant. Adi Dasslers aim was to provide every athlete with the best possible equipment. It all began in 1920, when Adi Dassler made his first shoes using the few materials available after the First World War. Today, the Adidas product range extends from footwear and apparel to accessories for all kinds of different sports. The key priorities are: running, football, basketball and training. In 1949 Adi Dassler first registered Adidas in the commercial register (Handels register) in Frth (near Herzogenaurach). The official name of the company back then was Adolf Dassler Adidas Sportschuhfabrik. After a period spanning almost 70 years, the Dassler Family withdrew from the company in 1989, and the enterprise was transformed into a corporation

(Aktiengesellschaft). French-born Robert Louis-Dreyfus was Chairman of the Executive Board from April 1993 to March 2001. It was he who initiated Adidas flotation on the stock market in November 1995. Since 2001, Herbert Hainer has been leading the Group. Adidas Group In 1997, Adidas acquired the Salomon group, and the companys name changed to Adidas-Salomon AG. The Salomon group also included the Taylor Made golf brand. In October 2005, the Salomon business segment, including the related subsidiaries and brands Salomon, Mavic, Bonfire, ArcTeryx and Clich, was sold to the Finnish Amer Sports Corporation. The company changed its legal name to Adidas AG following shareholder approval at the Annual General Meeting in May 2006.

On January 31, 2006, Adidas-Salomon AG acquired Reebok International Ltd. The closing of the Reebok transaction marked a new chapter in the history of the Adidas Group. By combining two of the most respected and well-known brands in the worldwide sporting goods industry, the new Group benefits from a more competitive worldwide platform, well-defined and complementary brand identities, a wider Information range of products, and a stronger presence across teams, athletes, events and leagues. And in June 2006, the companys name is changed to Adidas AG. The Adidas Group has well over 42,000 employees worldwide, with more than 3,000 working at the companys headquarters in Herzogenaurach. A team of designers, product developers and experts for biomechanics and material technology carries out research in Portland and at Adidas second technology centre in Scheinfeld near Nuremberg. In Scheinfeld models, prototypes and made-to-measure performance products are also manufactured and tested. It is here that adidas maintains the only sports shoe production facility still in existence in Germany. More than 170 subsidiaries guarantee marketplace presence for products of the Adidas Group around the world. Sales and distribution of Adidas products is grouped in four regions worldwide: Europe/Emerging Markets, North America, Asia/Pacific and Latin America. Today, the Adidas Group is Europes biggest supplier of athletic footwear and sports apparel.

The acquisition of Reebok by Adidas:


The European Commission gave German sporting goods maker Adidas the green light on 24th January, 2006 for its $3.8 billion acquisition of U.S. rival Reebok in the biggest sector takeover for years. The takeover merged the worlds number two, Adidas, and the number three, Reebok, creating a serious challenger to market leader Nike. The main issues of the deal include: Adidas planned to buy the outstanding shares of Reebok for $59 apiece in cash, valuing the transaction at $3.8 billion. Reeboks executive board agreed to the deal. Adidas said that it would pay for the deal with a mix of equity and debt. It raised 648 million Euros by selling new shares in November and also secured a 2 billion euro revolving credit agreement, which would help as a back-up. Shares would be bought only after Reebok shareholders would give the go-ahead for the deal, according to Adidas. The deal would create a firm with combined annual sales of around $ 11 billion. Global market leader Nike posted sales of $13.7 billion in its 2004/2005 fiscal year. Adidas expected the deal to boost net income by more than 10 percent in the medium term sales were seen growing at a mid to high single digit rate, while cost-savings were expected to reach 125 million Euros annually by the third year once the deal was done. Reebok became a separate brand under the new group, supplementing the key Adidas and small golf sports units Taylor Made and Maxfli. All brands would report to Adidas executive board in the headquarters near Nuremberg, where Puma the global number four is also based.

The deal was set to enhance Adidas position in the United States, which accounts for 50 percent of the sports footwear market alone.

Reebok had a much better position in the lifestyle fashion market, where Adidas had been struggling to imitate the success of Puma. Reebok is also known for womens wear, aerobic and fitness sportswear.

Reebok would also bring in important sponsoring license contracts with major North American professional leagues.

We are delighted with the closing of the Reebok transaction, which marks a new chapter in the history of our Group, says Adidas-Salomon AG Chairman and CEO Herbert Hainer. By combining two of the most respected and well-known brands in the worldwide sporting goods industry, the new Group will benefit from a more competitive worldwide platform, well-defined and complementary brand identities, a wider range of products, and a stronger presence across teams, athletes, events and leagues.

Reebok- India:
Reebok started its operations in INDIA in 1995. It was headed by Managing Director Mr. Subhinder Singh Prem and has dominated the Indian sports market with 51% market share far ahead of its competitors NIKE, PUMA etc. Reebok India has a PAN India presence with its branch offices in Mumbai, Kolkata, Bangalore, etc. It has always challenged and leans through creativity. It has introduced products in a wide range of sport shoe category from running, walking, aerobics, lifestyle, and newly introduced Run tone ready, Zig dynamic, Real flex etc. It celebrates individuality in sports and lifestyle. Reebok has introduced its internationally acclaimed fitness programs in India, conducted under the banner of Reebok Instructor Alliance, which is dedicated to fitness instructors, personal trainers and health club owners. Reebok has trained and certified more than 800 trainers till now. Reebok India commands a 54% market share in the premium sportswear industry according to the calendar year December 2008. Its revenue has touched 1400 Crores (at retail price) in 2008. It planned to increase the store count from the existing 500 to over 600 before 2007. Reebok reaches out to its target customers through its 500 exclusive Reebok Stores, 200 Shop in the shop outlets & 2500 dealer outlets. Reebok has the single largest store in Hyderabad. Reeboks main advantage has been that it understood the Indian consumer very well and has made an effort to grow alongside him. For instance, when the company came to India, all that the consumers wanted was an international brand of footwear and Reebok gave them that at an affordable rate. One aspect to Reeboks success in India has been its ubiquitous retail chain. By the end of 2005, the company was retailing from 182 franchised stores. It also retails from 2000 multi-brand
7

outlets. Reeboks biggest investment in India has been in the field of marketing infrastructure, creating an international and uniform retail ambience in all their exclusive showrooms. A functional issue that was arguably instrumental in aiding the company establish itself early in the country was the fact that its shoes have a broader forefoot, which suits the Indian consumer. In contrast, the shoes of international rivals have narrower forefeet. It has made efforts to vibe with the customer for its apparel range as well, that contributes 45 percent to the companys turnover. In 2004, the company started treating the womens business initiative as if it were launching a new brand. It started promoting the category by opening womens-only stores, the first outside the US, which would meet the special needs of women customers. On the promotions front as well, the company increased its spending by roping in top sportspersons to push its brand. Reebok tied-up with cricketers like Rahul Dravid, Mohammed Kaif, Yuvraj Singh, Irfan Pathan, MS Dhoni and Harbhajan Singh. In tennis, it sponsors the Davis cup and backs Prakash Amritraj. In the field of motor racing, it has sponsored the fastest Indian Narain Kartikeyan. Reebok was the first among the big three to identify India as a huge emerging market and a sourcing base for global exports. The company uses Bawa Shoes in Jalandhar and Moja in Sonepat to manufacture its low-priced shoes but imports most of its high-end shoes from around the world. Reebok India performed so well that it received the prestigious Subsidiary of the Year award for two consecutive years 2003 and 2004, beating competition from countries like China and Japan to claim the credit.

In order to combine the popularity of its soccer and athletic brand with popularity of football and basketball enjoyed by Reebok, Adidas- Salomon bid $3.8 billion in early August, 2004 to acquire the latter. This deal created a $11 billion sportswear giant and posed a formidable threat to arch rival Nike. Post its acquisition by Adidas, nothing has really changed for the company in India as far as the strategy is concerned. Reebok sponsored sports kits for the great rich Indian Premier League teams, such as the Royal Challengers Bangalore, Kolkata Knight Riders, Rajasthan Royals and Chennai Super Kings in the first edition of the league held in 2008, however for the second edition held in 2009 the sponsorships included (Royal Challengers Bangalore, Kolkata Knight Riders, Chennai Super Kings, Kings XI Punjab) kits. In December 2007, Reebok launched the GOAL Collection of football gear on the release of the Indian football movie Dhan Dhana Dhan Goal.

CHAPTER 2: REEBOKS VISION AND MISSION

REEBOK'S VISION
Fulfilling Potential Reebok is dedicated to providing each and every athlete - from professional athletes to recreational runners to kids on the playground - with the opportunity, the products, and the inspiration to achieve what they are capable of. We all have the potential to do great things. As a brand, Reebok has the unique opportunity to help consumers, athletes and artists, partners and employees fulfill their true potential and reach heights they may have thought un-reachable.

PROPOSED VISION STATEMENT Continue to bring inspiration to present and future athletes, while maintaining the Companys standard of quality for its products.

REEBOK'S MISSION
Always Challenge and Lead through Creativity At Reebok, we see the world a little differently and throughout our history have made our mark when weve had the courage to challenge convention. Reebok creates products and marketing programs that reflect the brands unlimited creative potential.

10

PROPOSED MISSION STATEMENT To continue to offer quality products with increasing growth in the industry and expanding globally. Our mission has always been to provide a competitive edge by developing the most technological products. Keeping in mind fair labor practices in all our suppliers factories, while maintaining a competitive advantage, with the shareholders interests, and company profits in mind. We also believe our employees are one of our most important assets. To increase the responsibility towards the environment by evaluating the impact of day to day operation and attempts to change operations that have a negative impact.

REEBOK'S POSITIONING
Celebrate Individuality in Sport and Life Reebok understands that people are, above all, unique. Reeboks positioning reflects this; celebrating the distinct qualities that make people who they are - their unique points of view, their individual style and their remarkable talents and accomplishments. Reebok celebrates their individuality, their authenticity and the courage it takes to forge their own path to greatness. While some may call them crazy or eccentric, Reebok calls them visionary and original.

REEBOK'S PURPOSE
To Empower Global Youth to Fulfill their Potential Commitment to Corporate Responsibility is an important legacy and hallmark of the Reebok brand. For two decades, Human Rights, through the Reebok Human Rights program, was the primary focus of this effort. Reebok has expanded on what had been built and created a Global

11

Corporate Citizenship platform with a purpose for the brand that will help underprivileged, underserved youth around the world fulfill their potential and live healthy, active lives.

REEBOK'S BRAND TERRITORY


Having Fun Staying in Shape Having Fun Staying in Shape comes to life through a fun, bold, provocative manner expressed through fresh, eye catching imagery signed off with a unique 'Reeword.' The tone and manner allows the consumer to look at sport and lifestyle through our lens of Ree.'

REEBOK Brands include:


Reebok International Rock Port RBK CCM Hockey (Worlds largest) Greg Norman Apparel Ralph Lauren Brand The Hockey Company Avia Onfield Apparel Athletic footwear DMX2000 3D Ultralite Ralph Lauren Apparel line

12

CHAPTER 3: ENVIRONMENTAL ANALYSIS OF REEBOK


Basically, it means those aspects of the surroundings of business which affect its operation and determine its effectiveness. It is mixture of complex, dynamic and uncontrollable factors within which a business is to be operated. And these are those factors which affect the business for taking the managerial decision by the top-level management of the company. These are divided in two part internal and external environment of company.

Internal Environmental Factors:Internal Environmental factors are those which are within the control of the company. The company can control these factors as and when the need arises by making adjustments suitable for the same. Some factors are given below: 1) Company objective: For the core board initiative included: Maximize the incremental footwear and apparel sell in and sell through opportunity with key Reebok retail partners. Re-energize the fitness and sports industry enabling Reebok to recapture its leadership position. Successfully integrate the Reebok core business into the overall strategic goals of Reebok International (Be Reebok) and interactive marketing strategies. Achieve Reebok EPS should be higher than the EPS during 2011 is 4.29$. Generate a Reebok positive ROI in 24 months. Capture maximal mass market sales volume of core boards and videos

13

2) Marketing strategies: Create, produce and deliver a breakthrough Reebok core training video series that generated excitement around the Reebok core training phenomena. Reebok merge with aides. Execute an integrated Reebok marketing asset strategy to launch and deliver Reebok core training to the fitness and sport training market. Maximize the penetration of Reebok core training into the US and key international markets by tapping the global Reebok University human infrastructure (master trainers, alliance members etc.

3) Reeboks Fitness Culture and Positioning: Reebok created Reebok core training and the Reebok core board based on a breakthrough training technology and consumer market research. By synthesizing the intrinsic human need for self improvement and feeling good with the functional needs of improved strength and performance for an active lifestyle, Reebok endeavored to redefine sports and fitness. Reeboks goal was to communicate the key benefits to consumers globally. This targeted approach would ensure deep penetration and allow Reebok to create the necessary forest fires to successfully drive Reebok core training nationally and globally.

14

4) Reebok Core Board Product Development Strategy: Reebok decided to externalize most of the product development, manufacturing and distribution value chain activities. Reebok would utilize the strength of strategic alliance partners to develop product and support club and retail distribution as well as the sales and some trade marketing for the Reebok core boards and programming. Reebok would focus internal resources on the marketing activities related to health clubs and consumer retail that would allow it to strategically align with footwear and apparel marketing goals and enable it to leverage existing fitness assets.

5) Core Training Program: Build program to emphasize strength training as key element for a total body workout Offer short (15 -30 minute) executions of Core Training classes to induce trial and Appeal to men Train instructors to incorporate strength training into Core Board use

15

External Environmental Factors


External Environmental factors are those factors that are beyond the control of the company and management. PESTLE ANALYSIS 1) Political & legal: Reebok policy is to control and monitor hazardous substance to protect human health and environment one of those is to eliminate PVC making progress in finding substitutes like polyurethane, ethyl vinyl, silicones thermoplastic rubber. Reebok also provide training sessions on employment standards and HR systems, health and safety is important for the company. Establishing teams to manage and monitor SARS in Asia factory, washing stations, disinfectant units. Finally Reebok protects and supports the rights of its employees by following all the current employment laws. Excise and customs duty for sports shoes raw materials has decreased providing a relief.

2) Economic: As a multinational company Reebok helps countries to decrease unemployment by increasing every year the number of employees. Labor salary is high in Germany and France but not so expensive in China (Suzhou). This is the reason that most of factories located in Asia.

16

3) Social: Reebok products declare in any race, age, religion, and lifestyle, always in fashion with special design in any of product. Focus in people who like sports and athletes, almost everybody can purchase Reebok products. Usually men and women from urban sector with an annual income of 1.5 lakhs are users of Reebok. Frequent users are those with an annual income of 5 lakhs or more. As a crucial component of Reeboks Global Corporate Citizenship Platform, the Reebok Foundation focuses its philanthropy in communities where Reeboks offices are located. The Foundation strives to promote social and economic equality by funding non-profit organizations delivering programs aimed at inner-city youth and underserved groups to empower youth to fulfill their potential programs that provide youth with the tools they need to lead healthy, happy and actives lives.

4) Technical: R&D teams at Reebok create footwear, apparel and hardware with the primary focus on developing products that provide maximum performance, comfort and fit for the consumer. Teams are structured along the brands product category focus in addition to certain cross-category groups such as the Reebok Advanced Concepts (RAC) team. Activities are primarily located in Canton/Massachusetts, USA to facilitate close collaboration with the respective product marketing teams.

17

CHAPTER 4: SWOT ANALYSIS OF REEBOK


A SWOT analysis is a critical portion of every marketing plan. It outlines the companys Strengths and Weaknesses, and the markets Opportunities and Threats that pertain to the product. The Strengths and weaknesses are internal environmental factors and are within the control of the company. Whereas, the opportunities and threats are external environmental factors and are beyond the control of the company. The SWOT analysis is an important step in planning as it outlines whether the information will assist the company in completing its objectives or if there will be an obstacle that must be moved first. Strength and opportunities are the favorable aspects of the company whereas weaknesses and threats are the unfavorable aspect of company. So, the SWOT analysis of Reebok is given below:

Strengths:
Brand Equity Reebok-Adidas merger. Reebok is one of the top athletic shoe companies in U.S. in terms of market share. Barefoot shoes are scientifically healthier than any other kind of shoes. 76 independent sensors on the bottom of Reebok Real flex barefoot shoes promote natural movement, flexibility, and comfort.

The price is the average of main competitors. Customizing the shoes with the styles and colors customers prefer. Increasing profits

18

Teams more connected to the consumer Multi-brand strategy Dedication to employees Hydro mover moisture technology DMX technology. 4 major divisions & 6 SBUs Advertisement campaign

Weaknesses:

Rely on retail stores to sell products Issues with Foot lockers Poor employment practices at their international manufacturing sites Heavy dependency on footwear sales Reebok owns few official stores and relies more on retailers. Reebok doesnt own factories and they depend on producing industries in their production.

Previous reputation of releasing faulty products. Few sponsors associated with Reebok.

19

Opportunities:
Established objectives Result-oriented culture Strengthen management team Contemporize products Relevant advertising and marketing campaigns Grow quality market share Restructured production creation teams Its a Womans World young women The Sounds and Rhythm of Sport. fashion consumers National Football League campaign Changed leadership for difficult brands Ability to create synergy between brands Special Technology Expanding current markets and reach current markets with new products Marketing towards several age groups to increase profits Product development opportunity Expanding the markets for the products on social media websites Creating new channels of communication on social media websites.

20

Threats:
US Dollar becoming stronger Weak departmental store channel Home currency becoming weaker Problems in foreign markets Economic decline in key markets Chinese products Strong cut-throat competition Changing trends in footwear technology Change in consumer tastes and preferences Introduction of new products by competitors Poor economy Duplicate and inferior quality products Decline in purchasing power of consumers Availability of substitutes.

21

Tows Matrix
The TOWS (is another way of saying SWOT) matrix illustrates how the external threats and opportunities facing a particular corporation can be matched with the companys internal strengths and weaknesses so that 4 sets of possible strategic alternatives emerge: SO= Strengths- Opportunities strategies ST= Strengths- Threats strategies WO= Weaknesses- Opportunities strategies WT= Weaknesses- Threats strategies

S-O strategies Use the expertise and experience of Fireman and Yankowski to carryout objectives. Further increase profits by utilizing the restructures production creation teams. Further strengthen the multi-brand strategy with planned campaigns. Further strengthen the multi-brand strategy with changed leadership and synergy to grow quality market share.

S-T strategies Utilize the teams connection to the consumer to counteract sales lost because of the strong US dollar, weak department store channels, and suffering foreign market. Utilize multi-brand strategy to find a connection to foreign markets. Use the increased profits to research other profitable markets to strengthen the foreign market and avoid the negative effects of declining key markets.

22

W-O strategies Strengthen objectives to curb the effect on heavy dependent brands. Utilize the changed leadership to correct difficult brands. Strengthen campaigns to correct difficult brands and lessen the need to rely on department stores.

W-T strategies Maintain brands to lessen the effect of the US dollar and foreign markets. Strengthen brands to be less dependent on department store channels. Lessen the reliance on retail stores to avoid the effects of weak department store channels. Promote brands in different markets to lessen the reliance on suffering key markets.

23

CHAPTER 5: PORTERS FIVE FORCE MODEL


A firm is a part of the industry, and therefore, its working is influenced by he industry in which it operates. The Porters Five Force Model was given by Michael Porter. Through this model, a structural analysis of industry can be made so that a firm would be in a better position to identify strengths and weaknesses. Porter proposed a model consisting of five competitive forces- threat of new entrants, rivalry among competitors, bargaining power of suppliers, bargaining power of buyers and threat of substitute products- that determine the intensity of industry competition and profitability.

PORTERS FIVE FORCE MODEL S.NO.


1)

PARTICULAR Threat Of New Entrants Rivalry Amongst Existing Firms Bargaining Power Of Buyers Bargaining Power Of Suppliers Threat Of Substitutes

DEGREE Low High Moderate Moderate High

2)

3)

4)

5)

24

Detail explanation of the above is given as follows:

THREAT OF NEW ENTRANTS: There are many barriers to entry preventing new entrants from capturing significant market share. Todays athletic shoes are highly technical. An extremely large capital investment is required for new firms to open athletic shoe factories and conduct research and design to create a popular athletic shoe. The aggressive marketing campaigns turn their products into household names making it arduous for new firms to compete. Athletic shoe manufacturers greatly attempt to differentiate their products from all shoe manufacturers.

If they are a startup firm, it is extremely difficult to get shelf space at major shoe retailers. If the firm is currently in the dress shoe industry, and is entering the athletic shoe industry, they may use their existing connections to easily access athletic shoe distribution channels. Switching costs are very low for the athletic shoe industry.

RIVALRY AMONGST EXISTING FIRMS:

In the athletic shoe industry, corporations are mutually dependent. A competitive move by one firm directly affects competitors, forcing retaliation or counter efforts. For example, Reeboks expansion of the womens walking shoe inspired other firms to follow.

25

The number of competitors is stable, partially due to high entry barriers. This adds to the rivalry among existing firms. Manufacturers watch each other carefully and make appropriate countermoves to match a competitors move.

The rate of industry growth is stable, but the quest for global market share is eminent. This increases global rivalry. Product characteristics are related to market share. Name recognition alone sells athletic shoes. The larger the market share, the greater advertising capabilities and hence increased name recognition.

Capacity has minimal impact on rivalry, because most firms have means to manufacture the demanded amount of athletic shoes. This ability to meet demand reduces market because most firms overproduce and drive down the selling price.

Low exit barriers and diversity among competitors has minimal impact on profit potential. If the athletic shoe industry becomes too unprofitable, firms could switch to other shoe markets. Additionally, diversity among firms is small because every firm follows one another. The rivalry among existing firms is high where weak firms are easily acquired by fierce competitors. This may have a high impact on profit potential.

BARGAINING POWER OF BUYERS:

Buyers have high switching costs in regards to opportunity cost. If an athletic shoe retailer decided to drop one of the popular athletic shoe brands, their sales would fall due to high consumer brand loyalty. Most buyers have a medium profit margin so price sensitivity of buyers

26

is moderate. In the athletic shoe industry, price increases pass to the consumers. The overall impact from buyers bargaining power to profit potential is moderate.

BARGAINING POWER OF SUPPLIERS:

Athletic shoes are manufactured primarily from raw materials including rubber, leather and nylon. These materials could be classified as commodities, where the manufacturing process adds to their value. For this reason, the suppliers have limited bargaining power, and little impact on profit potential.

THREAT OF SUBSTITUTES:

Athletic shoes are designed to improve comfort and personal safety during periods of increased movement. Substitutes for athletic shoes are using other forms of shoes, or going barefoot(rural areas). A large population of athletic shoe consumers wears athletic shoes strictly because they are comfortable. Comfortable dress shoes or sandals are equally interchangeable with minimal switching costs. If the athletic shoe is used for sports, then there are relatively few substitutes. Given these reasons, the threat of substitute products is moderate and the impact to profit potential is moderate to high.

27

CHAPTER 6: COMPETITIVE PROFILE MATRIX


The Competitive Profile Matrix (CPM) is developed to identify the firms major competitors and their strengths and weaknesses in relation to that of their firm. The factors in a CPM include both internal and external ones: and the ratings refer to strengths and weaknesses. The critical success factors in CPM are broader and they do not include specific or factual data and may even emphasize on internal factors. The critical success factors are not grouped into opportunities and threats. In a CPM, the ratings and total weighted scores for rival firms can be compared to the firm under study. Such comparison provides important internal strategic information.

KEY SUCCESS FACTORS

REEBOK

NIKE

PUMA

Weight 0.0 to 1.0

Rating 1 to 4

Weighted score

Rating 1 to 4

Weighted score

Rating 1 to 4

Weighted score

Domestic Market 0.1 Positioning International Market Positioning Customer Loyalty 0.08 0.1

0.4

0.2

0.3

0.4

0.3

0.3

0.3

0.24

0.24

28

0.1 Brand Recognition 0.09 Price Competitiveness 0.07 Product Quality Relationship With Manufacturers And Suppliers 0.1 Product R&D 0.1 Product Diversity 0.07 Financial Position 0.08 Marketing 0.07

0.4

0.4

0.4

0.27

0.27

0.36

0.28

0.28

0.21

0.21

0.28

0.21

0.4

0.3

0.3

0.4

0.3

0.2

0.21

0.21

0.14

0.32

0.32

0.24

29

0.04 Organizational Structure

0.12

0.12

0.12

1 TOTAL

3.71

3.22

3.02

CONDITION SCALE) 1

(RATING

less than average 2 average 3 more than average 4 strongly

INTERPRETATION After competitive analysis of Reebok, Nike and Puma, we conclude that Reebok faces fierce competition from all sides. The athletic shoe industry is quite large and very competitive. Reebok receives most of its competition from Nike. Which is clearly shown in above table, that Reebok is having better market then Nike & other competitors in the shoes industries. And Reebok has been capturing 4.5% market more than that of Nike. The EPS of Reebok in FY2011 is $ 4.26, which is higher than the FY2010 that is $ 3.5.
30

CHAPTER 7: BCG MATRIX

BCG Matrix, developed by Boston consulting Group, USA is one of the most popular techniques of corporate portfolio analysis. According to this technique, businesses or products are classified as low or high performers depending upon their market growth rate and relative market share. The BCG Matrix can be used for resource allocation. In a BCG Matrix, product or business units are identified as question marks, stars, cash cows and dogs.

The question marks are also called as wildcats are new products with the potential for success, but they need a lot of cash for development. If such a product is to gain enough market shares to become a market leader and thus a star, money must be taken from more mature products and spent on a question mark.

The stars are market leaders and are usually able to generate enough cash to maintain their high market share. When their market growth rate slows, stars become cash cows.

The cash cows bring in far more money than is needed to maintain their market share. In their declining life cycle, the money of cash cows is invested in new question marks.

The dogs have low market share and do not have the potential to bring in much cash. According to the BCG Matrix, dogs should be either sold off or managed carefully for the small amount of cash they can generate.

31

BCG Matrix of Reebok products: High

I N D U S T R Y

QUESTION MARKS Athletic footwear DMX2000 3D Ultralite Ralph Lauren Apparel line

STARS Greg Norman Reebok Apparel

G R O W T H Low Low

DOGS Avia

CASH COWS Rock Port

MARKET SHARE

High

32

CHAPTER 8: GRAND STRATEGY MATRIX


The GS Matrix has four strategy quadrants. All organizations can be positioned in one of the GS Matrixs four strategy quadrants. Likewise, firms divisions can be also positioned in one of the GS Matrix four quadrants. The GS Matrix is based on two evaluative dimensions: Competitive position Market growth

Rapid Market Growth

Quadrant 1 Strong Competitive Position Quadrant 4

Quadrant 2

REEBOK

Weak Competitive Position

Quadrant 3

Slow Market Growth

REEBOK is located in Quadrant 2 of the GS Matrix since it is in a growing industry. It does not enjoy a competitive advantage as it does not have a loyal customer base in the market. It needs to evaluate its current market strategy and make changes to improve its competitiveness. It can adopt strategies like: 1. Market development, 2. Market penetration, 3. Product development or 4. Horizontal integration.

33

RECOMMENDATIONS

Reebok should drastically improve its relation with its largest distributor Footlocker. Then evaluate its manufacturing situation in the Far East, to see if the benefits outweigh the costs of a lowered reputation. The firms ROI has decreased and they need to manage their new assets better. A brief turnaround strategy is recommended. Contraction would include increasing their accounts receivable turnover to increase profits by collecting their accounts sooner and divesting in unprofitable divisions that dont follow their marketing strategy like the health and fitness clubs. Then in the Consolidation phase they can measure their success by aiming for increases in their fixed asset turnover and ROI ratios. Reebok also needs to focus on promoting their apparels and other line of products that have potential to yield a good amount of revenue for the company. They need to come up with new marketing strategies to face their competitors Nike, Puma, etc. They should try to enter into new markets with favorable economic conditions and expand their business. For this they should do a proper study of the markets and the consumers buying habits and their taste and preferences. This will help them make products that would suit the needs of the consumers and provide customized products. Lastly, and most importantly, Reebok needs to improve their top management environment and utilize the skill that they are paying for. Ignoring delegation duties in the top management will not reduce the management turnover and will limit managements progress.

34

Reebok has a strong name and even stronger campaign plans. However, the company has a few areas that need to be analyzed and corrected. The areas include: Reliance on department store channels Suffering foreign markets Find markets that are not in an economic decline Strengthen the brand name and message of suffering brands Need strong goals and plan to grow the sales & global reputation By changing advertising agencies frequently, Reebok has dug itself in a marketing hole. To accomplish their current goals they need to produce better marketing campaigns Change Management

35

DECISIONS

Primary: Focus on finding the most promising customers (kids and women) and introduce more products or improve current ones to satisfy potential increase in demand

Alternatives: Keep expanding into current and future foreign markets by being aggressive and the worldwide leader of the footwear industry Accelerate funding for numerous marketing campaigns in order to get to specific markets or customer groups Focus on improving working conditions and human rights at international manufacturer centers and at the same time increasing their productivity Implement product diversification with companys newest technologies so resulting increased earnings could be reinvested into R&D plans.

Why This Strategy? Women: Prefer fashion, not footwear, they prefer clothing; they must create a shopping style based in athletic shopping. Kids: E-commerce, influenced by innovation and design, not only comforts or sports Reebok need to consolidate US sales compared to international sales and international competitors Difficult to expand towards other sports or population segments

36

Implementations (Actions):

Women: Open specific stores specialized only for women Increase R&D expenses by in women products Increase Marketing expenses by designing a specific campaign for women using female endorsements Create a new logo for women market which would be associated with fashion trends and introduce new products

Kids: Increase R&D expenses in kids products Increase Marketing expenses by designing a specific campaign for kids Introduce more soccer and basketball products targeting potential youth market Research in international market to find out what are the new trends related with women and kids products (Long-term)

37

CONCLUSION
From the above-study, I was able to conclude that people buy Reebok products mostly because of comfort and they mostly go for the quality & brand value of the product. Reebok is positioning to be a high-end athletic footwear brand and a leader in its industry. The after-sales service provided also acts as a factor for the purchase decision. The product quality & comfort along with style & promotional strategies of using sports celebrities as their endorser has helped Reebok gain the significant market share. And according to the above study Reebok is the leading company in comparison to Nike in the shoe industry due to its product durability. Reebok has to still create a market and loyal customer base for its apparel and accessories and other line of products. A major weakness of Reebok is located in their top management. They lack top management depth and face high management turnover. This is attributed to the CEO, Paul Firemans inability to delegate efficiently. Key employees and top management were sometimes left out of the "loop". Additionally, the board of directors felt Firemans salary was too high. In advertising, Reebok had difficulty positioning itself. Reebok changed advertising agencies eight times and they earned a reputation as a difficult client. Reebok aimed to differentiate its shoe and apparel lines and hired Shaquille ONeal as a superstar endorser. Then Reebok changed advertising agencies and Shaqs new role was contradictory to the old. Reeboks largest customer is Footlocker, yet they established poor relations with them, when they ignored their request to manufacture a specialty line exclusively for Footlocker. Reebok was a poor listener to Footlocker, which has a good ear to consumer wants and needs.

38

APPENDIX:

REFERENCES
http://finance.yahoo.com Reebok Annual Reports Reebok Quarterly Reports Annual ranking of America's largest corporations www.reebok.com www.bigcharts.com www.businessweek.com www.wikkipedia.org Strategic Management Concepts and Cases; Fred R. David, 10th Ed

39