The Adidas Group is a German company which belongs to the sport equipment manufacturing market.
In 2005, the turnover of the worldwide market of apparel and sport equipment was about 25.2 billion dollars, which corresponded to an 11.5% growth when compared to the previous year.
This market can be divided into three parts which are:
-sport footwear, whose sales shares represent 47% of the activities
-clothing, whose sales shares represent 33% of the activities
-equipment, whose sales shares represent 20% of the activities
The growth in this market is homogeneous between these sectors.
All these sectors are profitable, even if some of them (like sports footwear) are dominated by a few brands. Actually, the demand, which is increased by sport events, is still huge in the United States and in Europe. Currently, the American group Nike is the leader of this market with a turnover of 16.3 billion dollars in 2007, but the Adidas Group is not far behind with a 10.3 billion dollars turnover for the same year.
The other companies are:
-Puma, with a turnover of 1.8 billion dollars in 2005
-Quicksilver, with a turnover of 1.4 billion dollars in 2005
-Amer Sport, with a turnover of 1.4 billion dollars in 2005
-Asics, with a turnover of 1.3 billion dollars in 2005
-Shimano, with a turnover of 1.2 billion dollars in 2005
-Mizuno, with a turnover of 1.1 billion dollars in 2005
Nike and Adidas both represent about 70% of the activity among the twelve most important groups of the market.
These two groups are leaders in this global market but they are not leader in each and every sector. They lead the apparel market and with Puma they lead the sports footwear one. The equipment sector is the most competitive one, because Adidas and Nike are not the leaders. Shimano and Amer Sport Groups lead this sector. Even if this sector is small, it has been a very interesting sector to study in the last few years, because it has growth prospects.
In this market, which is an oligopoly, the competition is tough because the market is extremely concentrated, and despite the dynamism, all these groups can fear a buyout attempt made even by a modest rival. In 2005, there were a lot of mergers in the sport equipment manufacturing market:
Adidas and Reebok
Quicksilver and Rossignol
Amer Sport and Salomon
Merging is a good way to become a leader in one sector, to be the number one in the market and to keep a two figures annual growth and increase its profitability if the fusion is a success. The main reason of these mergers is the complementarity produced by them.
There are new companies in this market like, for example, the French brand Dia. But to compete with Adidas or Nike, these companies must have abilities to innovate and also have a lot of means.
Beijing Olympic Games in 2008 allowed some Chinese sport equipment manufacturers to come up.
Tags: Adidas Group,German company, sport footwear, clothing, equipment, Nike, Beijing Olympic Games
[...] At the direction of the Adidas Group, Reebok has undergone only a few changes since the merger: - Adidas Group Chairman Herbert Hainer has always done everything with best intentions for the company. He was appointed to this position in 2001. - The president of the Adidas brand is Erich Stamminger. - The CEO of Reebok before the merger was Paul Fireman, but in late January 2006 he announced his intention to leave the brand to pursue other activities. He was succeeded by Paul Harrington who seemed best qualified for this position. [...]
[...] As the main goal of Adidas is to overtake Nike, Reebok and 55% of its total sales in the United States will allow Adidas to change the situation and fulfill its "American dream" (sales in the US represent 37% against 23% at Nike for Adidas). The takeover opened the US market for Adidas and helped it to be in a more competitive position against the American brand Nike. The redemption of the world's number three will allow Adidas to more than double its sales in North America and become stronger in basketball and fashion sportswear. [...]
[...] B.The objectives of the merger The Adidas Group has set many goals while deciding to buy Reebok to make the merger beneficial and profitable as quickly as possible. Nike remains the main objective of this merger. It became the market leader in the world sport as football is the dream of Adidas. Communication: Work on their brand image, giving much of the advertising budget Win the media battle (Adidas VS Nike) Take full advantage of major sporting events scheduled Using a sporting event allows the brands to gain proximity. [...]
[...] It authorized the acquisition of the American company Reebok and sporting goods manufacturer Adidas of Germany on Tuesday, Jan By the EC Merger Regulation, the Council promoted the birth of a large group of sporting goods. With this acquisition, Adidas leader wants to compete with rival Nike. C. The decisions of directors of both companies. Adidas Group after the agreements of the European and the US Commissions expected that the shareholders of Reebok join with the shareholders of Adidas. Reebok In making its decision, Reebok decided to hold a special meeting of its shareholders. [...]
[...] Adidas Group has further reduced the average payment period granted to customers.The acquisition of Reebok seems to cause a rather urgent need for liquidity to meet the objectives of the group. The gearing has increased in 2006 with the integration of the American group, but has since fallen sharply. We observe that the share of bank overdrafts with respect to BFR decreased sharply between 2006 and 2007, despite growth by merger. The company has recovered a good financial autonomy. The Adidas Group is therefore not always dependent towards banks in the short term. [...]
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