INSTITUTE OF SOUTHREN PANJAB

Adidas Post Tapie Era

Submitted By # Ali Hassan
Submitted To # Mam Lala Rukh
Roll No# BBA-023R18-17
Rao
11/3/2018

In this assignment I discussed the adidas's Post Tapiee Era " After a period of serious trouble following the death of Adolf
Dassler’s son Horst Dassler in 1987, the company was bought in 1990 by French industrialist Bernard Tapie, for 1.6 Billion
Francs (now €243.918 million), which Tapie borrowed. Tapie was at the time a famous specialist of rescuing bankrupt
companies, a business on which he built his fortune".
Post-Tapie era the company after the Era of Adolf Dassler

Adi Dassler died shortly after he introduced his landmark soccer shoe in 1978. He had run the company and its predecessor
for about 60 years and built it into the unmitigated giant of the world shoe industry. His death marked the end of an era at
the company. Indeed, adidas s suffered a string of defeats in the late 1970s and 1980s that severely diminished its role in
the world sports shoe industry. The company's loss of dominance was not solely attributable to Dassler's death, however.
In fact, the athletic shoe industry became intensely competitive following his death, primarily as a result of aggressive U.S.
entrants. The increased competition actually began after the 1972 Olympics in Munich, when a mob of companies decided
to hop into the lucrative business. After having the industry mostly to themselves for years, adidas and Puma suddenly
found themselves under attack from shoe man facture's worldwide.
Dassler had carefully arranged a management succession before his death. Family members remained in key management
positions, but several professional managers were also brought in to take over key functions including marketing,
production, and public relations. Unfortunately, the effort failed to keep the company vibrant. adidas retained its lead in
the global athletic shoe market for several years and remained dominant in its core European market into the 1990s.
Importantly, though, it was soundly thrashed in the North American market by emerging athletic shoe contenders Nike and
Reebok. Those companies launched an almost militant marketing offensive on the North American sports shoe market
during the 1980s that caught adidas completely off guard.
adidas, not used to such fierce competition, effectively ceded dominance of that important region. Incredibly, adidas's U.S.
sales shrank to a mere $200 million by the end of the decade, while Nike's grew to more than $2.4 billion. By that time,
Reebok and Nike together claimed more than 50 percent of the U.S. athletic shoe market, compared to about 3 percent for
adidas. The adidas brand name had become a fading memory in the minds of many aging baby boomers, and many
younger U.S. buyers were virtually unaware of the brand. "This is a brand that has taken about five bullets to the head,"
said one observer in Business Journal-Portland in February 1993.
adidas managed to maintain its lead in the soccer shoe market and eve n to keep a healthy 26 percent of the European
market for its product s. However, the North American market became the core of the global athletic shoe industry, and
adidas found itself scrambling to maintain respect worldwide. Moreover, besides increased competition, adidas suffered
during the 1980s and early 1990s from relatively weak management. To make matters worse, members of the Dassler
family and relatives that still owned adidas began fighting over control of the company. Amid increased competition and
family squabbling, adidas's bottom line began to sag. The organization lost about $77 million in 1989 before the family sold
the entire organization for only $289 million the following year. The buyer was Frenchman Bernard Tapie, a 47- year-old
entrepreneur and politician.

Post-Tapie era

After a period of serious trouble following the death of Adolf Dassler’s son Horst Dassler in 1987, the company was bought
in 1990 by French industrialist Bernard Tapie, for 1.6 Billion Francs (now €243.918 million), which Tapie borrowed. Tapie
was at the time a famous specialist of rescuing bankrupt companies, a business on which he built his fortune.

Tapie decided to move production offshore to Asia. He also hired Madonna for promotion. He sent Walter Head, from
Christchurch, New Zealand, a shoe sales representative, to Germany and met Adolf Dassler’s descendants (Amelia Randall
Dassler and Bella Beck Dassler) and was sent back with a few items to promote the company there.

From the beginning, analysts doubted Tapie's ability to turn the ailing company around. A perpetual showman, Tapie
purchased the company partly for the attention he would get from the French people for securing ownership of a
renowned German institution. Tapie had already gained notoriety as an entrepreneur and as a parliamentary head of the
ruling Socialist Party. Tapie's promotional skills did little for adidas. The company continued to lag and Tapie himself
became embroiled in political and business scandals. Tapie stepped aside as chief of the company in 1992 and handed the
reins to Gilbert Beaux. Tapie also started searching for a buyer for adidas.

In 1992, Tapie was unable to pay the interest from his loan. He mandated the Credit Lyonnais Bank to sell Adidas, and the
bank subsequently converted the outstanding debt owed into equity of the enterprise, which was unusual for then-current
French banking practice. Apparently, the state-owned bank had tried to get Tapie out of dire financial straits as a personal

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favour to Tapie, reportedly because Tapie was a minister of Urban Affairs (ministre de la Ville) in the French government at
the time.

In February 1993, Crédit Lyonnais sold Adidas to Robert Louis-Dreyfus, a friend of Bernard Tapie (and cousin of Julia Louis-
Dreyfus from the Seinfeld TV series), for a much higher amount of money than what Tapie owed, 4.485 billion (€683.514
million) francs rather than 2.85 billion (€434.479 million). Tapie later sued the bank, because he felt “spoiled” by the
indirect sale.

Under new management, adidas looked as though it was beginning to turn the corner going into the mid-1990s. Of import
was the company's 1993 purchase of U.S.-based Sports Inc., an enterprise that had been founded by Rob Strasser. Strasser
was credited as the marketing genius that had helped to make Nike into the leading U.S. athletic shoe comp any. Strasser
quit Nike in 1987 to form Sports Inc. When adidas bough t out his 50-person marketing venture, it named Strasser head of
the newly formed adidas America subsidiary. Strasser brought with him another former Nike executive, Peter Moore, with
whom he hoped to regain some of adidas's lost glory. "We'll compete from day one," he said in the Business Journal-
Portlandin 1993, "but it won't happen overnight." Tapie finally found a buyer for adidas in 1993. The company was
purchased by a group of European investors for $371 million. Unfortunately, Strasser died late in 1993. Moore took over as
head of the U.S. subsidiary. adidas expected Moore to lead the company's turnaround on that continent and to help it
eventually attain the kind of strength adidas International still exerted in Europe and some other parts of the world.
In 1993 the new owners of adidas hired Robert Louis-Dreyfus, a French businessman, to run the company. Though Louis-
Dreyfus was unfamiliar with the athletic shoe business, he had a reputation for revitalizing failing companies; in fact, Louis-
Dreyfus was credited with saving London advertising agency Saatchi and Saatchi. After joining adidas, Louis-Dreyfus
implemented severe cost-cutting and reorganization strategies and moved production to Asia. He also increased the
marketing budget, from 6 percent of sales to 11 percent, to increase brand visibility.

Robert Louis-Dreyfus became the new CEO of the company. He is also the president of the Olympique de Marseille football
team, a team Tapie owned until 1993. Tapie filed for personal bankruptcy in 1994. He was the object of several lawsuits,
notably related to match-fixing at the soccer club. He spent 6 months in La Santé prison in Paris in 1997 after being
sentenced to 18.

In 1997, Adidas AG acquired the Salomon Group who specialised in ski wear, and its official corporate name was changed
to Adidas-Salomon AG. With this acquisition Adidas also acquired the Taylor made Golf Company and Maxfli which allowed
them to compete with Nike Golf.

In 1998, Adidas sued the NCAA over their rules limiting the size and number of commercial logos on team uniforms and
apparel. Adidas withdrew the suit, and the two groups established guidelines as to what three-stripe designs would be
considered uses of the Adidas trademark.

In 2003, Adidas filed a lawsuit in British court challenging Fitness World Trading’s use of a two-stripe motif similar to
Adidas’s three stripes. The court ruled that despite the simplicity of the mark, Fitness World’s use was infringing because
the public could establish a link between that use and Adidas’s mark.

In September 2004, top English fashion designer Stella McCartney launched a joint-venture line with Adidas, establishing a
long-term partnership with the corporation. This line is a sports performance collection for women called “Adidas by Stella
McCartney” , and it has been critically acclaimed.

Also in 2005, on May 3, Adidas told the public that they sold their partner company Salomon Group for €485m to
Amer Sports of Finland.

In August 2005, Adidas declared its intention to buy British rival Reebok for $3.8 billion (US). This takeover was completed
in January 2006 and meant that the company will have business sales closer to those of Nike in North America. The
acquisition of Reebok will also allow Adidas to compete with Nike worldwide as the number two athletic shoemaker in the
world.

In 2005, French courts awarded Tapie €135 million compensation (about 886 million francs).

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In 2005, Adidas introduced the Adidas 1, the first ever production shoe to utilize a microprocessor. Dubbed by the
company “The World’s First Intelligent Shoe” it features a microprocessor capable of performing 5 million calculations per
second that automatically adjusts the shoe’s level of cushioning to suit its environment. The shoe requires a small, user
replaceable battery that lasts for approximately 100 hours of running. It currently retails for $250 (USD). On November 25,
2005, Adidas released a new version of the Adidas 1. There is an increased range of cushioning, meaning the shoe can
become even softer or firmer and a new motor with 153 percent more torque.

On Aprill 11, 2006, Adidas announced an 11-year deal to become the official NBA apparel provider. They will make NBA,
NBDL, and WNBA jerseys and products as well as team-colored versions of the “Superstar” basketball shoe. This deal
(worth over $400 million) takes the place of the previous 10-year Reebok deal that was put in place in 2001. When Reebok
was acquired by Adidas, the NBA was allowed to find a new apparel provider, which turned out to be Adidas.

Principal Subsidiaries:adidas America Inc.; adidas-Salomon North America Inc.; adidas-Salomon USA, Inc.; Taylor Made
Golf USA; adidas (Canada) Ltd.; Erima Sportbekleidungs GmbH; Salomon GmbH; GEV Grund stuck sge sells chaft
Herzogenaurach mbH & Co. KG (90%); adidas Sarragan France S.a.r.l.; adidas Espana SA (Spain); adidas Por tugal Lda;
adidas Sport GmbH (Switzerland); Salomon SA (France); adidas Austria AG; adidas Benelux B.V. (The Netherlands); adidas
Belgium N.V.; adidas Budapest Kft. (Hungary); adidas (U.K.) Ltd.; adidas (Ire land) Ltd.; adidas Norge A/S (Norway); adidas
Sverige AB (Sweden); ad idas Poland Sp.z.o.o.; adidas Ltd. (Russia); adidas de Mexico S.A. de C.V.; adidas do Brasil Ltda.
(Brazil); adidas Latin America S.A. (Pa nama); adidas Corporation de Venezuela, S.A.; adidas Japan K.K.; adid as Hong Kong
Ltd.; adidas Singapore Pte Ltd.; adidas Asia/Pacific Ltd . (Hong Kong); adidas (Thailand) Co., Ltd.; adidas Australia Pty Ltd. ;
adidas New Zealand Pty Ltd.; adidas (South Africa) Pty Ltd.
Principal Competitors:Nike Inc.; Fila Holding S.p.A.; New Bal ance Corporation; Fortune Brands Inc.; Brunswick Corp.;
PUMA AG; Amer Sports Oyj.

Chronology
 Key Dates:
 1926:Dassler family builds a factory to make athletic shoes.
 1936:American runner Jesse Owens, wearing Dassler shoes, wins a gold medal in the 1936 Olympic Games.
 1948:The Dassler brothers part ways, and Adi Dassler starts h is own shoe company.
 1949:adidas is registered as a company.
 1957:adidas introduces a pioneering soccer shoe.
 1978:Adi Dassler dies, and control of his company is handed t o his family.
 1990:French entrepreneur Bernard Tapie buys adidas.
 1993:adidas acquires Sports Inc., a U.S. company; Tapie sells adidas to a group of European investors, and Robert
Louis-Dreyfus jo ins adidas as CEO.
 1995:adidas goes public.
 1997:adidas acquires Salomon Worldwide and is renamed adidas- Salomon AG.
 2000:The company restructures in an effort to boost its image as a "lifestyle" brand.
 2001:First adidas Originals retail stores open in Berlin and Tokyo.
 2002:The company acquires Arc'Teryx, a high-end equipment and apparel group based in Vancouver; opens first
adidas Originals store in United States.
 2003:Cycling division Mavic-adidas Cycling is formed; company fails in attempt to acquire golf ball manufacturer
Top Flite.
 2005:The company agrees to sell Salomon to Amer Sports in Fin land; announces acquisition of Reebok
International, to be completed in 2006.

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Additional Details
 Public Company
 Incorporated:1949
 Employees:14,254
 Sales:EUR 6.48 billion (2004)
 Stock Exchanges:Frankfurt
 Ticker Symbol:ADDDY
 NAIC:315211 Men's and Boys' Cut and Sew Apparel Contractors; 315212 Women's, Girls', and Infants' Cut and
Sew Apparel Contractors; 315299 All Other Cut and Sew Apparel Manufacturing; 339920 Sporting and Athletic
Goods Manufacturing; 316211 Rubber and Plastics Footwear Manufacturing; 316219 Other Footwear
Manufacturing

Further Reference
 Bates, Tom, "Adidas Names Moore to Replace Strasser,"Port land Oregonian,November 10, 1993.
 Buckley, Chris, "Let the Competition Begin,"New York Times, January 25, 2005, p. C6.
 Carofano, Jennifer, and Eric Newman, "Adidas Advances with Reebok Plans,"Footwear News, October 17, 2005,
p. 6.
 Carofano, Jennifer, "A Perfect Union?"Footwear News, Sept ember 12, 2005, p. 8.
 Carrel, Paul, "Adidas Shares Soar on Revamp Plan,"Reuters Eng lish News Service,January 27, 2000.
 Carter, Donna, "Mutombo's Shoes Take Off Worldwide,"Denver Po st,December 18, 1992, p. C1.
 Colodny, Mark M., "Beaux Knows Adidas,"Fortune,December 31, 1990, p. 111.
 "Dreyfus Launches Adidas into Foot Race with Nike,"Financial Post,September 17, 1997, p. 13.
 Fallon, James, "Adidas Sold for $370.48 Million,"Footwear News,February 22, 1993, p. 39.
 Feitelberg, Rosemary, "Wynne to Exit Adidas,"WWD,January 13, 2000, p. 16.
 Francis, Mike, "Strasser Headed for Top of Adidas? One of the Fou nders of Sports Inc. May Become Head of
adidas U.S.A.,"Portland O regonian,February 3, 1993.
 Harnischfeger, Uta, "Flagging Golf Brand Hits Adidas Profits,"Financial Times London,April 13, 1999, p. 28.
 Holmes, Stanley, "The Machine of a New Sole,"Business Week, March 14, 2005, p. 99.
 "How Adidas Ran Faster,"Management Today,December 1979, pp. 58-61.
 "If the Shoe Fits ...,"Business Week Online, August 8, 20 05.
 Jung, Helen, "Adidas-Salomon AG Said Monday It Will Sell Its Salo mon Group of Ski and Equipment Businesses
for About $624 Million, "Oregonian, May 3, 2005.
 Manning, Jeff, "Adidas Slows Impressive Pace As Flat Sales Expect ed for 1999,"Portland Oregonian,May 21, 1999.
 "Adidas, Sports Inc. Join Forces, Strasser Heads U.S. Operation,"Business Journal-Portland,February 8, 1993, p. 1.
 Mitchener, Brandon, and Amy Barrett, "Adidas and Salomon Play by New Rules in $1.4 Billion Deal,"Wall Street
Journal Europe,September 17, 1997, p. 1.
 Mulligan, Thomas S., "Adidas to Put U.S. Market in Hands of Ex-Ni ke Whiz,"Los Angeles Times,February 5, 1993,
p. D2.
 Silverman, Edward R., "Foothold in Sneaker War,"New York News day,July 8, 1992, p. 31.
 Strasser, J.B., and Laurie Becklund,Swoosh: The Unauthorized Story of Nike and the Men Who Played There,New
York: Harcourt Br ace Jovanovich, 1991.
 Wallace, Charles P., "Adidas Back in the Game,"Fortune,A ugust 18, 1997, pp. 176+.
 Waxman, Sharon, "Tapie: The Flashy Frenchman Behind the Adidas Ac quisition,"Washington Post,July 22, 1990,
p. H1.

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