Nike Vs Adidas Essay: A Fierce Competition Between Two Iconic Brands.

In today’s world the Customers are in charge. It has become a lot easier for Customers to switch their choice of brands in order to shop. This has made the customer relationship management a lot worthwhile than ever before. In view of this, Customer Relationship Management has become a Company’s most cherished asset. This has been true even in business firms like NIKE and ADIDAS. Both the brands are becoming more and more customer-focussed which is one of their top most business strategies. These strategies are supported by the implementation of information technology. This notion has motivated the world famous brands like NIKE and ADIDAS to implement CRM – Customer Relationship Management model as part of their business strategy and information systems. This move would improve their chances for major success in today’s competitive world.

These strategies are supported by the implementation of information technology. This notion has motivated the world famous brands like NIKE and ADIDAS to implement CRM – Customer Relationship Management model as part of their business strategy and information systems. This move would improve their chances for major success in today’s competitive world.

The World famous recognised brands like Nike and Adidas drive the World’s sports market with their product originality as their main focus. Adidas in particular has built its brand on passion for sport where they have taken sole pride on their ethics and strong international roots with their active management who have strived for building their brand (Nike 2016). The brands have been fighting back to pre – eminence in order to establish their product excellence.

Nike and Adidas have grown exponentially from small firms to multi – billion dollar global sports brands.

Nike was operating with i2 demand application initially and its supply chain plans have used various business rules to configure it and have also used different formats to save the data which was difficult for them to integrate their different applications in use. The i2 software which was in use crashed frequently owing to the heavy customisation which was required in their legacy systems. Nike had to develop a lot of work arounds in order to download the required data on a timely basis and they had to reload the supply chain data manually by deploying the required resources and quality departmental professionals whenever the application was required. Consultants were deployed on work frequently to construct and enable the bridges to work with the i2 demand supply planner software (Koch 2004).

With the use of such applications there was a large damage which was done to their sales and inventory. At this juncture SAP R/3 system was adapted by all the major brands to bring in a revolution in their technological systems and they have decided to move out of the i2 demand supply planner application.

Both the brands have chosen to integrate their respective operations onto a single platform using the ERP – SAP system. The main objective of Nike was integrate ERP, Supply Chain Management and CRM functions onto a single platform in the entire US, Middle East, Europe and Africa. Nike made a stronger decision to adapt and implement the risky strategy of SAP ERP System for every Employee. All the employees had to agree on the business practices of the software. Nike chose to implement this strategy especially in the CRM and Supply Chain and they have decided to implement the SAP R/3 software. They have also collaborated with the i2 supply demand and collaboration planner software applications into the overall system using middleware STC (Koch 2004).

The SAP system roll out has taken a larger amount of time and has taken the consensus of all the employees to agree to conduct their business using this system.

The implementation of the technological platforms in ADIDAS has happened on a different shift where the brand has focussed on building stronger relationships with its retailers in order to maximise on the cost advantages in managing their sales. The brand has separated its customer base of its retailers through which it operates its business into three different groups like major accounts, larger retailers and small to middle retailers (Adidas – Salomon 2003).

ADIDAS has also managed its ROI rundown by motivating their Service Sales force to use SAP CRM System to make their product sales to their Customers. The individual contributions have resulted in the growth of their revenues from GBP 257000 SINCE 2002 – 2003.

In order to address and solve any of their internal issues related to any service they have created a Compact Service Group which maintains and provides service for all their product requirements.

ADIDAS has implemented SAP CRM system since 2000 in order to enhance their compact service and has been the first amongst the Sports brand to implement and rollout SAP within their Compact Service Group.

ADIDAS has a stronger implementation of the technology than NIKE as they had a major focus on building a stronger relation with all their retailers and have focussed on catering to the needs of all their third parties who even felt neglected by the Compact Service Group (Mahdi, Abbas and Mazar 2015). They came up with a unique strategy to ramp up their relationship building abilities designing an exclusive customer data base application which could maintain product purchase history and service information using the SAP R/3 System. NIKE could have implemented the technological revolution a simpler format than opting for a massive customisation with the i2 demand system.

The Technological transformations chosen by ADIDAS have helped them to establish a Customer Interaction Centre to solve all the issues related to the product and sales categories which were supported by the SAP CRM System. They could build more profitable relationships with all their retailers using the SAP CRM System. Their main strength was the integration which they could achieve using their existing SAP R/3 System, Data Warehouse and CTI Technologies which could provide the required support to their Compact Service Agents. The Pilot implementation of SAP R/3 Systems could   generate over 1 million GBP for the ADIDAS brand. The choice of implementing the SAP R/3 System could avoid all the issues related to their Customers and they could integrate all their orders to their Customer profiles. NIKE and ADIDAS have seen a growth in the workflow which was enabled by the SAP R/3 System.

Adidas and Nike have been the biggest sports brands which were in a high – end competition since their inception. The brands have similar products in the sports category like shoes, clothing, sports products like equipment and athletic products. The brands are very popular and they have a large customer base where they compete with each other to make their profits and to outperform each other in their revenues. The only difference in the brands is that Nike has made its strong hold in the US markets and ADIDAS has its hold in Europe (Chronicle 2015).

There are times when the brands suffer to maintain their revenues against each other and that is a point where they come up with different strategies to outperform and maintain their standard in the markets. For example ADIDAS has suffered some sales losses in the recent years where they have decided to maintain and keep up their standards by reviving their inventory management. In the year 2014 ADIDAS has seen a slump of 25 – 29% in their sales during their last quarter than NIKE which has outperformed them.

As per the previous system, the retail partners of NIKE placed their orders 6 months prior to their requirement and they used to forward their orders to the other manufacturing units in the world.

ADIDAS has come up with a new strategy where they have decided to maintain their stocks to an optimum level where they could increase their inventory management. By adapting and implementing this strategy the brand has decided to keep surplus stock to make up for their losses. This is on a contrary side to the strategy of NIKE where they don’t stock on excessive products as this strategy might cause losses whenever newer products are released in a specific category like Golf.

In a general context Golf Products are very expensive and maintaining surplus products in this category alone might attract losses to the brand. When ADIDAS has incurred losses they have focussed on reducing their inventory than increasing their sales in order to ensure that they can make up for their losses (Bizjournals 2015).  By doing this ADIDAS will be able to better cope with issues related to inventory management than coping with the product categories.

ADIDAS was confident that by maintaining their inventory management they will be able to increase their sales and their margins. ADIDAS being a major competitor to NIKE should not slow down on their sales and in turn should take major moves to revive their sales in all aspects (Hanrahan 2003).  If possible they should not leave any product or any aspect of business unexplored in terms of competing with the bigger brands like NIKE (Wall street daily 2014). By having a stronger hold on the inventory management, ADIDAS will be able to have a stronger hold on their cost centre where they could reduce their costs on maintaining their resources and improve their financial health.

ADIDAS will be able to perform better if they would implement the 3 As strategy in their inventory management which can enable them to adapt themselves to more newer trends, aligning themselves to the newer product categories and being agile to the newer environment.

The secondary aspect which can prove more profitable in maintaining the inventory is to address the issues in the inventory management like procuring and maintaining the inventory which also includes minimising the cost of investment in inventory which could lead to smoother production which can in turn increase the profitability and margins (Baden-Fuller& Morgan 2010).

In the case of NIKE they have strategized in terms of maintaining an effective inventory control system in 1999 when they have suffered losses in 1998. They have increased their efficiency in cost control and inventory management which has given them a sales growth of 13% in 1999 though it was a lesser marginal increase than their whopping increase of 43% in 1997.

The main challenges which ADIDAS and NIKE faced were to maintain operational and financial initiatives. The brands should maintain their inventory costs at a lower level which can allow them to adapt to the changing market trends. In a financial perspective they should be adapt conservative methods to their cost structures and they should also cut their operational costs. For example NIKE reduced their operational costs by almost $200 million than all its competitors (Teece 2010). Their main objective was to increase their margins in the financially stronger markets like the Asia Pacific region where customers are financially stronger and can invest in their product category. Also NIKE has sponsored the 2000 Olympics in Australia and 2002 Cup in Japan and in Korea which had a new start for a lot of sports into the global markets. This type of a diverse exposure has given an additional opportunity to NIKE to introduce new types of apparel and sports products in their product list which could attract more and more newer customers towards their brand.

In addition to the above strengths NIKE was also strong in their communication where they could prove to be strong in using the technology media in communicating their efforts to their Customers worldwide. They have invested in upgrading their technological platforms to the newest product category which enabled them to be more sophisticated in maintaining their Communication and in monitoring their inventory data on a real time basis (News Nike nd).

This has also enabled them to be more efficient in maintaining their sales, credit authorization, electronic systems and their processing efficiency.

Inventory Management is an essential method of reviving their sales for ADIDAS than NIKE however implementing this strategy alone will not have a direct influence on the margins of the products and might have a major influence on their sales. 

For example if ADIDAS had maintained any unpopular products in their stock they would have an opportunity to reduce the products in order to minimise their potential losses of those products which might remain in their stock (Powers & Hahn 2004).

Being above their other competitors in the market has given a winning edge for NIKE where they could convert all their products or their assets into cash whenever they required. They had lesser obligations than their competitors in the market (Nikeresponsibility2014). The same trend could be adapted and implemented by ADIDAS where they could maintain lesser inventory and could also convert their product base into cash whenever required (Wall street daily 2014).

The Product based companies should adapt and implement various policies and strategies including the Corporate Responsibility Policy where they could strategize and implement policies which could be in alignment with the acceptable working standards for their employees. This would ensure that the Employees would work in a better way to improve the quality of their products and services which could improve the revenue of the Company.

The brands should be open to competition at all levels and should create a niche market for their products. The brands ADIDAS and NIKE should strengthen themselves in the areas of research and development which could give them more opportunities to prove their products in the market. They should also make the most of the technology which could enable them to reach out to more and more Customers in order to establish themselves in the market.

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