Strategic Mgmt- Reebok

7/30/2019 Strategic Mgmt- Reebok

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S. No. Chapters

Executive Summary

1 Introduction to the company

2. Analysis of Vision, Mission & Core values

3. The External Environment Analysis

4. The Internal Environment Analysis

5.

Competition Analysis

Industry Structure (Using Porters Five forces model) Competitive Profile Matrix (Based on Key Success factors)

6. Any additional analysis (Application of BCG tool)

7. Conclusion

References


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Executive Summary

The Mission at Reebok is to be on the cutting-edge of sport and lifestyle products built upon a

strong heritage in sports. Reebok strives to challenge convention and lead through creativity and

have been doing so for over 100 years. The company was founded on one important value in the

1890s, helping athletes run faster. Since then the main vision has been to help athletes fulfill

their potential. Reebok is an American- inspired global brand, which celebrates individuality of

the athlete while also helping the athlete to obtain goals they once thought unattainable. Reebok

is a subsidiary of Adidas Sportswear.


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Introduction

Reebok started its operation in INDIA in 1995. Headed by Managing Director Mr. Subhinder

Singh Prem and it 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, Bengaluru, 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 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 then 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 plans 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.


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Mission And Vision Analysis

Reeboks 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 "

Reeboks 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.


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Nikes Vision

To carry on his legacy of innovative thinking, whether to develop products that help athletes of

every level of ability reach their potential or to create business opportunities that set Nike apart

from the competition and provide value for our shareholders.

Nikes Mission

To bring inspiration and innovation to every athlete in the wo rld"

*If you have a body, you are an athlete. Bill Bower


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Analysis on the basis of elements of mission

Statement

Son. Elements Reebok In numeric Nike In numeric

1 Customers Yes 1 yes 1

2 Product or Services Yes 1 yes 1

3 Market No 0 no 0

4 Technology Yes 1 yes 1

5Concern for Survival, Growth &

ProfitabilityYes 1 no 0

6 Self-concept No 0 yes 1

7 Concept for Public Image Yes 1 no 0

8 Concern for employees No 0 no 0

Total 5 4

Value in percentage 62.5 50


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Interpretation of mission statement:-

After analysis the mission statement of Reebok & Nike is: On the basis of various para-meters

like customers, product or services, market, technology, growth & profitability, self-concept,

concern for employees etc. We find that overall percentile/value of statement of REEBOK is

much better than the NIKE. Which is clearly shown in above table that Reebok is having overall

62.5 avg. percentile and nice is having 50 avg. percentile which is 12.5% greater than nice. So, it

means that reebok's mission statement is much better than the nice.

For analysis the mission statement firstly, we convert the data into numeric form for getting the

output in percentage form.


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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:-

These are those factors which are controllable by the company. .

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 withkey Reebok retail partners.

Re-energize the fitness and sports industry enabling Reebok to recapture its leadershipposition.

Successfully integrate the Reebok core business into the overall strategic goals of ReebokInternational (Be Reebok) and interactive marketing strategies.

Achieve Reebok EPS should be higher than the EPS during 2011 is 4.29$.


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Generate a Reebok positive ROI in 24 months. Capture maximal mass market sales volume of core boards and videos

2)Marketing strategies:

Create, produce and deliver a breakthrough Reebok core training video series thatgenerated 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 internationalmarkets 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


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ensure deep penetration and allow Reebok to create the necessary forest fires to successfully

drive Reebok core training nationally and globally.

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

These are the above mention some internal factors which are controllable by the company.


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External Environmental Factors

PESTLE ANALYSIS

1) Political & legal:-

Reebok policy is to control and monitor hazardous substance to protect human healthand 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, healthand 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 thecurrent 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 byincreasing every year the number of employees.


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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.

3) Social:-

Reebok products declare in any raise, age, religion, and lifestyle, always in fashionwith special design in any of product.

Focus in people who like sports and athletes, almost everybody can purchase Reebokproducts.

Usually men and women from urban sector with an annual income of 1.5 laths are usersof 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 ReebokFoundation focuses its philanthropy in communities where Reeboks offices are located.

The Foundation strives to promote social and economic equality by funding non-profitorganizations delivering programs aimed at inner-city youth and underserved groups to

empower youth to fulfill their potentialprograms 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 ondeveloping products that provide maximum performance, comfort and fit for the

consumer.


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Teams are structured along the brands product category focus in addition to certaincross-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.


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Internal Environmental Factors

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 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 weakness are the favorable aspects of the company and

Opportunities, threat are the unfavorable aspect of company. So, the swot analysis of reebok is

given below:-

Favorable Unfavorable

Internal

Strengths

(1) Brand Equity

(2) Reebok-Adidas merger.

(3) Reebok is one of the top athletic shoe

companies in U.S. in terms of market

share.

(4) Barefoot shoes are scientifically

healthier than any other kind of shoes.

Weaknesses

(1) Reebok owns few official stores

and relies more on retailers.

(2) Reebok doesnt own factories

and they depend on producing

industries in their production.

(3) Previous reputation of releasing

faulty products.

(4) Few sponsors associated with


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(5) 76 independent sensors on the bottom

of Reebok Realflex barefoot shoes promote

natural movement, flexibility, and comfort.

(6) The price is the average of main

competitors.

(7) Customizing the shoes with the styles

and colors customers prefer.

Reebok.

External

Opportunities

(1) Expanding current market and reach

current markets with their new products.

(2) Marketing towards several age groups

to increase profits.

(3) Product development opportunity.

(4) Expanding to market for the product on

social media websites.

(5) Creating new channels of

communication on social media websites.

Threats

(1) Many companies produce

barefoot shoes and this leads to a

strong competition.

(2) Changing trends in footwear

technology.

(3) As barefoot shoe is a want and

not a need, some people may think

twice before purchasing.

(4) Poor economy


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Industry Analysis of REEBOK

PORTERS FIVE FORCE MODEL

PORTERS FIVE FORCE MODEL

SNO. PARTICULAR DEGREE

1) THREAT OF NEW ENTRANTS LOW

2) RIVALRY AMONGST EXISTING FIRMS HIGH

3) BARGAINING POWER OF BUYERS - MODERATE

4) BARGAINING POWER OF SUPPLIERS MODERATE

5) THREAT OF SUBSTITUTES HIGH

In detail given below:-

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


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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 effects competitors, forcing retaliation or counter efforts. For example, Reeboks

expansion of the womens walking shoe, inspired other firms to follow.

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.


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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

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


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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 wear 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.


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COMPETITOR ANALYSIS OF REEBOK

REEBOK NIKE PUMA

KEY SUCCESS

FACTOR

Weight

0.0 to

1.0

Ratin

g

1 to 4

Wtd score Ratin

g

1 to 4

Wtd score Ratin

g

1 to 4

Wtd score

DOMESTIC MARKET

POSITINING

0.1 4 0.4 2 0.2 3 0.3

INTERNATIONAL

MARKET

POSITIONING

0.1 4 0.4 3 0.3 3 0.3

CUSTOMER LOYALTY 0.08 3 0.3 3 0.24 3 0.24

BRAND RECOGNITION

0.1 4 0.4 4 0.4 4 0.4

PRICE

COMPETITIVENESS

0.09 3 0.27 3 0.27 4 0.36

PRODUCT QUALITY

0.07 4 0.28 4 0.28 3 0.21


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RELATIONSHIP WITH

MANUFACTURERS

AND SUPPLIERS

0.07 3 0.21 4 0.28 3 0.21

PRODUCT R&D

0.1 4 0.4 3 0.3 3 0.3

PRODUCT DIVERSITY

0.1 4 0.4 3 0.3 2 0.2

FINANCIAL POSITION

0.07 3 0.21 3 0.21 2 0.14

MARKETING

0.08 4 0.32 4 0.32 3 0.24

ORGANIZATIONAL

STRUCTURE

0.04 3 0.12 3 0.12 3 0.12

TOTAL

1 3.71 3.22 3.02


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INTERPRETATION

After competitive analysis of Reebok & nike, we conclude that the 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.

CONDITION(RATING

SCALE)

1 LESS THAN

AVERAGE

2 AVERAGE

3 MORE THAN

AVERAGE

4 STRONGLY


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CONCLUSION

From the above-study, we were able to conclude that people buy Reebok products mostly

because of comfort and they mostly go for the quality & brand value of the product. And the

Reebok is positioning to be a high-endathletic 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 compare to nike in the shoe industry due to its product durability.

.

Documents

Strategic Mgmt- Reebok