Formulating Business Strategy For Adidas: An Essay.

Read the article http://www.strategy-business.com/article/00352

Based on your understanding of business strategy from the completion of this module, from reading the article, and any of your own research that you have done into the Adidas or chosen organisation you are required to respond to the following tasks:

Assess and analyse how ‘Mission’, ‘Vision’, ‘Objectives’, ‘Goals’ and ‘Core Competencies’, and other factors such as strategic planning systems, have to be considered when formulating strategic plans.  You should provide examples of each of these strategic terms from Adidas in your analysis.

a) Evaluate the effectiveness of two different strategic planning techniques for Adidas or chosen organisation when developing its strategic plans.

Conduct an environmental and organisationalaudit for Adidas or chosen organisation. You should analyse the strategic position of the business and also assess the significance of executing stakeholder analysis when formulating a new strategy.                                                    

Analyse the appropriateness of alternative strategies (e.g. Market entry, limited growth, retrenchment etc) for Adidas and using the results of your analysis suggest an appropriate future strategy for the Adidas or chosen organisation taking care to justify the choice of strategy

Imagine that you are now part of the senior management team of Adidas or chosen organisation and that you have to implement the recommended business strategy from Task 3.

a) Assess and analyse the roles and responsibilities of personnel who are charged with strategy implementation and also estimate resource requirements e.g. HR, time, finance, materials that would be required to implement the future strategy.

b) Identify two appropriate SMART targets that could be used in the implementation process and evaluate why such SMART targets are important to the achievement of the strategy?                 

Task 1: Consideration of Mission, Vision, Objectives, Goals and Core Competencies in the formulation of the Strategic Plan.

Adidas mission is rooted in the sport. The designing of the products and the company culture is confined in meeting the needs of the athletes. To achieve this, the company ensures high quality is maintained. Additionally, uses the aspect of quality to overcome the threats offered by the company competitors and ensure that the company is marinating its market share (Adidas Group, 2016). Adidas mission encompasses identifying the company core purpose, setting up and following it appropriate towards achieving the ideal mission of the company. Its mission is greatly confined on the innovative philosophy of its founder Adi Dassler. This philosophy is relied upon in establishing the organizational culture, standards, and policy of conducting business (Adidas Group, 2016). To ensure that the company achieves its business in line with the company mission, the following key aspects are always observed.

• Provision of quality and variety of products with the core aim of establishing competitive position both in the industry and in the marketing place through appropriate competing techniques.
• Quality products and satisfaction of customer needs ensure long-term customer-company relationship.
• The marketing of the company products takes into consideration quality, price, product service, and customer's geographical range.
• It the process of achieving its strategic business goals the company mission provides for the production process and products that are socially and environmentally responsible. This approach facilitates the mutual relationship between the company and its stakeholders.

The majority of Adidas vision and values are aligned with its strategic plan. For example, Adidas corporate social responsibility vision is enshrined in the core values that comprise of appreciating diversity, integrity, passion, and performance. These values find their roots in the sports, and the sport is the backbone of the Adidas business (Adidas Group, 2015). In fact, the company management believes that without sports Adidas will not exist. To cement on the importance of this vision, the company firmly maintains that it is a sport that connects the company with its past and present. Additionally, the sport is what links the company with the future (Adidas Group, 2015). To achieve its vision with the line with strategic plan of the company, Adidas does this by observing the following values;

• Being innovative and creating leading global products.
• Encouraging diversity to encourage team working and building a global market without ethnic differences perception.
• Being a performer and leader in providing best financial results and investment rewards for the benefit of the company shareholders and employees.  
• Establishing and maintaining the highest level of corporate social responsibility in the communities in the regions where they operate in.

The above approaches help the company to create brands that can win the customers’ trust and at the same satisfy the wealth maximization objective of the clients. On the other side, the company operates responsibly to avoid conflicts with stakeholders by observing the following activities: First, Establishing improved workplace conditions in the company suppliers’ factories. Secondly, Preventing and minimizing environmental destruction by the company operations in its supply chain activities. Thirdly, taking care of the welfare and development of its employees. Fourth, making a notable difference to the communities where their core operations are concentrated.  To ensure the above-stated responsibilities are put into practice, the company makes sure that they are integrated into its daily activities as well as in its strategic plans.

Based on the reading from the article, Adidas main objective is to provide the best quality and satisfactorily meet the needs of its customers. The company quality products have always been maintained through innovativeness.  As illustrated in the article its operations since it commenced business in the 1920s have faced up and downs. However, the core objectives that are always lined with the innovation, quality, and needs of the customers as advocated by its core founder Adi Dassler have seen the company bounce back from continuous losses and threats of bankruptcy to a giant business organization (Ind, et al., 2015). The integration of the company objectives and the business strategic plan is well elaborated by Strasser and Moore, the ex-managers of Nike who were employed to help Adidas overcome the looming competition exposed by Nike as well develop strong marketing strategies. Moore and Strasser were quick to notice that the sidelining of Adi Dassler’s technique functionality objective had made the company lose its long-time existing dominance in the market (Ind, et al., 2015). Since then, Adidas has been integrating its objectives such as rapid growth, global market penetration, open source and accelerated growth and development with the company strategic plan (Hainer, 2015).

Task 2: Conducting an environmental and organisational audit for Adidas or chosen organisation.

Goals of the company define the direction that an organization will take (AnwaR, et al., 2016, p. 102). However, this will be futile if the established strategies are unable to propel the company to meet its set goals (Johnson, et al., 2011). Adidas major goals as depicted by Moore and Strasser comprised of reviving the Dassler’s approach to revert the company to its business track (Hobbs, 2016). The company would do this by establishing a new product. This was meant to help the company link its functionality goal with a new product line as the strategy of achieving the set goal.  

As emphasized by both Moore and Strasser, Adidas innovation was the driver of the company products in the market. Moore and his colleague used this competence attributable to the Adidas to establish Adidas Equipment product line that was meant to offer quality products. Moore ensured that the innovativeness within the company was used to develop products that could outperform major competitors' products such as Nike and Reebok.

This approach was rooted in the Functionality technique. Adi Dassler's functionality is the major factor in the success of Adidas. This was observed by Moore and Strasser and they were influenced to adopt to adopt to the Dassler' strategic plan technique to revitalize the operations of Adidas. This approach laid emphasis on the quality of the product and meeting of the customers’ needs.

Quality Modernization was used to advance this plan. It came with the idea of Moore. Moore observed that some of the past models that had been applied by the company could be modified to suit the modern products in the market. This approach helped in the provision or original and presented Adidas products in the market.

Adidas strives to take a leading position in the global market as the best sports products provider. To realize this goal, Adidas has positioned itself by applying a mixture marketing strategies. However, these techniques seem to suffer from the fierce environment that the company is operating in. For example, its major competitor Nike has a market share of over 34 percent. Additionally, other minor competitors such as Puma operating both in America and Europe are threating the strategic approaches of Adidas. Besides, there is a Ling Ning Company that has claimed a large market share in Asia (LawTeacher, 2013). These companies are becoming a nightmare to Adidas Group as it anticipates to establish its strategic business position of dominating the global market.

Apart from competitors, close substitutes are also a major threat to the Adidas strategic positioning.  Putting into consideration there is the only slight difference in the pricing of Adidas products with those other competitors such as Puma and Nike, it easy for the customers to switch to the competitors’ products. However, given that athletic costumers' values quality irrespective of the price, Adidas has the upper hand in outdoing its competitors when it comes quality of the products. Therefore, the threat of substitutes on the company strategic position has lesser threat when compared to the global competition.

Task 3: Analyzing the appropriateness of alternative strategies for Adidas and suggesting an appropriate future strategy.

Thirdly, it easy to enter the athletic market target. Technology widespread has facilitated to the low cost of production and therefore it easy for other manufacturers to enter the market. This means there are chances of the new entrants selling their products at the reduced prices and discounts. However, given that the world of sports values quality than the price, again Adidas will be able to overcome this challenge through its high-quality products.

Adidas believes its development should go hand in hand with the development of its major stakeholders such as employees, shareholders and members of the communities where they operate in. According to Gnepa & Cordeiro (2011) stakeholders are key determinants of the achievement of the company strategic goals. They accelerate or reduce the progress of the company depending on how they are treated by the organization where their interest lies. Likewise, Adidas has recognized the importance of its stakeholders and therefore makes sure all the interests of each stakeholder are addressed in any business strategy the company undertakes.

To accomplish the above needs of the stakeholders, Adidas uses the 4 Ps approach that is Product, Planet People, and Partnership (Valkiers, et al., 2014). People in this context comprises of the company employees, factory laborers and the communities where the company operations are located. Adidas in its strategic plans focuses on ensuring that the lives of all people it interacts with are positively impacted. According to Davies (2010, p. 22), when people feel that an organization is concerned about their welfare they will always support the company in its activities because they are driven by the notion they will get a rewarded.

Customers are undisputed company stakeholders who cannot be ignored (Davies, 2010, p. 28). On its second pillar of products, Adidas ensure that its products are of high quality and can suit the customers' needs comfortably. This involves applying innovative processes to design products that will psychologically satisfy the consumers. Besides the customers, Adidas also creates environmentally friendly products. To make an environment better place to live, Adidas also participates in pollution reduction and prevention through recycling plastic materials such as bio-based materials and polyester.

On the third pillar of planet, Adidas has adopted this approach to make the world free of hazardous products and discharges. To achieve this, the company has established hazardous management programs to manage poisonous chemical discharges in the manufacturing of their products. Finally, Adidas has learned that it cannot exist without its business partners such as suppliers, government, banks, insurance companies and others. Therefore, it always makes sure that its strategic plans and position will not harm the interests of its partners. This approach grants Adidas the support of its partners in the processing of achieving its target goals.

To achieve its strategic goals, Adidas have adapted both online and offline marketing strategies. The company current online market strategy focuses on "Creating New." Adidas will achieve this by ensuring the fast growth of their market in the next five years. This well enshrined in the company’s communication plan. This market entry strategy will be concentrated on meeting the needs of all its consumers. Adidas aims to enter the market by adopting three main strategies. First, speed. On the aspect of speed, Adidas focuses on ensuring fast consumer satisfaction.

Task 4: Assessing the roles and responsibilities of personnel for strategy implementation and identifying SMART targets for the achievement of the strategy.

Secondly, cities is another strategy that the company has identified as a method to enlarge its market share. Adidas targets market in the major cities, especially in America and China. This strategy will help the company enter the global market with ease (Kenny, 2012, p. 42). Finally, the third strategy involves open source. Open source is meant to create a partnership between the company and the athlete. The company adopts this strategy to make its customers part of the company.

The achievement of the above strategies will be made effective and efficient through the application of online and offline marketing techniques. Online marketing is realized through web marketing, social media, mobile marketing and company website. These are the most E-marketing strategies available today and likely to continue to dominate the market future (Teece, 2010, p. 175). E-marketing is the appropriate method for Adidas given that internet marketing has become common today and people buy and sell the products through the platform often. According to WordPress.com. (2016) the company website is the ideal place where Adidas can advertise its products to the global market    

Apart from online marketing the company applies offline market especially through billboard advertising in the major cities in the world and sponsoring sports events. Findings indicate that using this strategy Adidas realize higher profits than their annual earnings. Adidas marketing team believes that by sponsoring the sports events, the club fans will be attracted to purchase the company products. At the end of the day, the company will end up making more sales that it could do with only online marketing. Therefore, both online and offline marketing strategies will make it easy for the company to enter the new markets (Hobbs, 2016).

To counteract Adidas limited growth, the company will adopt alternative strategies to continue maintaining its competitive advantage in the market. Some of the alternative growth strategies that the company can adapt are as enlisted below;

This approach will involve targeting new market segment and expand geographically. According to Johnson, et al., (2011) the best way for the business to grow is through developing new markets by overlapping the business operations. This approach calls Adidas to advance its technology and plant operations to other markets (kell, 2016). On the other hand, the geographical expansion will entail encroaching new markets in the global arena apart from focusing only on the major cities in the world.

Adidas can again eliminate the challenge of limited growth by concentrating on expanding its current market. Johnson, et al. (2013) argues that expanding the current market is one of the most logical ways for the company to realize growth. Adidas can achieve this by undertaking tactical actions that will comprise of providing customers with high-quality products and focusing on appealing the competitors’ customers to purchase the company products. While using the approach the company will play against its competitors to avoid their retaliation.

The restructuring of the business operations comes with several consequences such as retrenchment and adopting new technology (Lynch, 2013). This happens because the company is unable to accommodate all the employees either because of the high costs or to bring in new skills and knowledge in the company. However, there are alternatives that a company can apply to overcome retrenchment. Similarly, Adidas should seek these alternatives to avoid retrenching its employees. Bearing in mind that Adidas is the company that values its employees it can adopt the following retrenchment alternatives.

• Freeze recruitment for the existing job positions. The company should focus on training the existing company employees to occupy those positions.
• Again, Adidas should focus on identifying employees who should be retrained to fill existing vacant positions.
• Re-deploy employees who are operating under indirect support positions to production operations and sales positions.
• Finally, company should minimize the dependency on consultation services as well as casual labor. Instead, the company will use its employees to execute these functions.

Online marketing will concentrate on the company website, social media, mobile marketing and web marketing. There will be no extra resources needed to execute and implement this strategy. Instead, the company will use its existing resources to ensure that this strategy targets a wider market.

In the above discussion, this paper has found that offline marketing through sponsoring of the sports events is one of the major contributors to the company profits. Therefore, Adidas can advance this to other developing markets such as Asia and Africa. To implement, this the company human resource team needs to train oversea agents and representatives that will promote the products on behalf of the manufacturer. Also, the company can focus on selling the franchise to other businesses.

To promote the company products to the new locations calls for the inclusion of all the company personnel. For example, the human resource team will be responsible for selecting and recruiting new labor force in the foreign country where the country will duplicate its operations. Secondly, the company finance department will be responsible for estimating the costs that will accrue the company for duplicating its operations in another country. Thirdly, the production team will offer advice to the management on the feasibility of company operations on the target country.

Marketing team, production department, and finance department will be responsible for the growth of existing market. The marketing team will be responsible for coming up with new marketing approaches to appeal more customers to purchase customer products. The production team will be responsible for manufacturing quality products that can satisfy the needs of the customers. Finance depart will provide the resources that will facilitate the company modify and improve its products.

This will be solely human resource team responsibility in collaboration with the company top management.

• The human resource team will recruit all employees internally until the problem of high costs of running a business is eliminated.
• The human resource department will adopt training of the company employees in the event where there is a new job vacancy that needs new skills.
• The company will encourage job rotation to make sure that all the company employees can execute a variety of the tasks.

The major goal of any business to carry out its business activities in the foreseeable future (MacLennan, 2011). With this notion in mind, Adidas will be influenced to establish good market entry and growth strategies effectively. This will help the company widen its market share as well expand its operations to other countries.

The major goal of the company to realize higher profits as possible ( Karel, et al., 2013, p. 62). However, the company will be unable to attain this if it lacks effective business strategies (Gnepa & Cordeiro, 2011, p. 16). Therefore, higher profit goal will encourage the company to execute its market growth and market entry strategies effectively.

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