Nike vs Adidas Essay

My area of study for this project would be more on comparing the performances for Nike and Adidas for the past 5 years. In this project I would explain the performance such as growth in profits, revenues, market share, the company employers and employees, size of the market share, steps for increasing the social performance, products performance, dividends per share, assets and the company investment. Nike and Adidas and have been the top two leading sport companies in the sport industry over the past few decades. These two companies sell and offer wide range of products for the customers and their products offered is mainly on sports wear for men and women and caters to consumers from different age groups. Their products consist on clothing such as jerseys, shirts, t-shirts, shorts and pants. These companies also provide the customers varieties of footwear such as sports shoes, casual shoes, boots, sandals and stockings. Besides that, fashion accessories are also offered from these three companies such as bags, watch, bracelets, wallets and purse. And lastly they also offer a wide range of sport gears for their customers. Nike and Adidas have also been the top sponsors in the sport industry. Sponsoring their products is important for the companies to get brand recognition, building their brand image and to promote their latest products. Nike and Adidas have been sponsoring equipments, clothing and accessories for athletes and coaches in sport tournaments and events. For instance, these three companies sponsor their products for football, soccer, basketball, baseball and many more. These companies also include slogan and motto for their company. Nike’s motto is â€Å"Just Do It’ which is the signature of the brand which makes their products and the company recognizable to consumers. As for Adidas, their current motto is â€Å"Impossible is Nothing† which serves as an encouragement to athletes for their sports. Origins and History of Nike and Adidas Nike, originally known as Blue Ribbon Sports was founded by University of Oregeon track athlete Philip Knight and his coach Bill Bowerman in January 1964. The company initially operated as a distributor for Japanese shoe maker Onitsuka Tiger, making most sales at track meets out of Knight’s automobile. The company’s profits grew quickly, and in 1966, Blue Ribbon Sports opened its first retail store, located on Pico Boulevard in Santa Monica, California. By 1971, the relationship between Blue Ribbon Sports and Onitsuka Tiger was nearing an end. BRS prepared to launch its own line of footwear, which would bear the newly designed Swoosh by Carolyn Davidson. The Swoosh was first used by Nike in June 1971, and was registered with the U. S. Patent and Trademark Office on January 22, 1974. Adidas was founded in 1948 by Adolf â€Å"Adi† Dassler, following the split of Gebruder Dassler Schuhfabrik between him and his older brother, Rudolf. Rudolf would later establish Puma, which was the early rival of Adidas. Registered in 1949, Adidas is currently based in Herzogenaurach, Germany. The company’s clothing and shoe designs typically feature three parallel bars, and the same motif is incorporated into Adidas’s current official logo. The â€Å"Three Stripes† were bought from the Finnish sport company Karhu Sports in the 1950s. Objective The objective of the project is to measure and compare the marketing strategies of the top two sport fashion companies which are Nike and Adidas. So this project would be mainly conducted to resolute the similarities and differences of the two sport companies marketing strategies. Besides that, this project will compare on the performance of Nike and Adidas which include the company’s growth in revenues, profits or net income, dividends per share, size of company in the market, performances of employees, steps for increasing the social responsibility performance, products performance, stock performance and the company performances in investment. Problem Statement Firstly, the sport industry is becoming ever more competitive, with new brands competing for a share of consumers for the products in the market. Building a relationship with customers is a challenge facing for Nike and Adidas. This is because the companies need to be followed up with new trends and styles in the industry for their customers in order for them to build their products brand and image. Secondly, there was a case happened in China where a local Chinese domestic sports goods manufacturer company called Li Ning opened 6917 stores in mainland China by December 31,2008 aking it 1241 more than the year of 2007. During the year 2008, Li Ning has published its financial report which states that due to the Beijing Olympic Games, the company made total revenues of CNY 669(million) a year on-year-increase of 53. 8% compared to the year 2007. Not only that, Li Ning made an overall entry into the market of Southeast Asia. Now they have stores in Singapore, Malaysia, Indonesia and other Southeast Asia countries. This became a problem for Nike and Adidas where the two international giants see recession in their performance in China. According to the financial report of Adidas, the company’s net profit decreased by 95% to â‚ ¬ 130 million in the first half of the year. As for the sales revenue, it decreased by 2% to â‚ ¬ 5. 03 billion. As for Nike numbers of distributors were reduced in the year 2008 due with the bad performance. Thirdly, the problem that attracted me to do this project is because I would like to know why Nike had low growth in revenue in the year of 2009. Nike had only increased 3% of its revenue to $ 19176. (million), with net income falling 21% to $ 1486. 7(million). As for Adidas, they also had the same problem. But the problem for Adidas was worst compared to Nike because at the year of 2009, the company net income is â‚ ¬ 10381(million) which decreased compared to the year 2008 which is â‚ ¬ 10799(million). These two companies had their difficulties is the year of 2009. So I would eager to find out about the problems they faced during that year. Significance of Study The importance of doing this project would be very important to other parties and companies. In this case, small and medium enterprise (SME) would get the advantages and benefits because they would know how the bigger companies such as Nike and Adidas operates their businesses, how they sell their products and services to their customers, what kind of marketing strategies they use, how the companies measure their performances and the most important reason is how Nike and Adidas continues to become a big market player in the sports industry. As part of that, this project will comprise mainly of small to medium-sized companies to engage in a diversity of activities which includes manufacturing of sport goods, sport tourism, media, and construction of venues. For example, small and medium enterprise (SME) in Malaysia can take the opportunity to get involved with sport products, services, sponsorships, hosting up international sport tournaments and events. And not to forget, the involvement of (SME) would also helps our country in the tourism sector because many athletes and participants will get to travel and visit our country and this will relatively build the countries economic performances. Corporate social responsibilities (CSR) also play a role for every sport companies in responsibility to act in a way that positively contributes to their stakeholders and the communities in which they exist. In this case, it is increasingly important for the social and economic issues such as rapid technological change, a diverse and aging population, environmental changes and mounting concerns regarding the country’s growing social divide have resulted in focusing on the responsibility of firms to the communities in which they operate. (Margolis & Walsh 2003; Sagawa & Segal 2000) Justification The reason I chose this topic is because the project is interesting as sports is an important part of today’s society and plays a large role in many people’s lives. From a social standpoint, sport plays a positive role in uniting people from different social backgrounds. This can aid people’s understanding and tolerance of each other. As far as education is concerned, sport is an important part of every child’s schooling, as it plays a big role in both their physical and mental development. It teaches children how to work as a part of a team and cooperate with others, while at the same time improving physical condition. The second reason I chose sports industry because this industry is growing rapidly in Malaysia. There are continuous demands from customers, sports athletes, and models for these sport products. The Malaysian sport industry is considered as a young industry comprising of small and medium-sized businesses. The Malaysian sports industry comprises of companies engaging in a diversity of activities, from the manufacturing of sport goods, sport tourism, media, to the construction of sport facilities. The third why I chose these two companies is because Nike and Adidas has been the biggest market share player in the sports industry. Nike controls 31% of athletic sportswear which is the highest market share compared to other sport companies in the year 2007. As for Adidas, they control the second highest share of athletic sportswear which is 16% of the market in 2007. As for other companies Puma controls 7%, Reebok 6%, New Balance 6%, and Converse 4%. Expected Outcomes The expected outcome which I can conclude is Nike would have the better performance for this year 2010 because their net income/profit for the past few years have been stable. Ever since the year of 2006, Nike’s net income/profit stands at $ 1392. (million). As for the year 2007, it increased to $ 1491. 5(million). At the year 2008, Nike’s net income/profit increased with huge and outstanding amount of $ 1883. 4(million). But by the year of 2009, their company had a decreased in their net income/profit which is $ 1486. 7(million). As for Adidas, the company would not have a better performance compared to Nike because in the year 2009, their net income was only â‚ ¬ 245(million). Their net income decreased with a huge margin compared to the year 2008 which is â‚ ¬ 642(million). So the key impact from the financial statement of year 2009. The net income of Adidas reduced more than 60% in 2009. But Nike was capable of stabilizing the results with a minor reduction of only 20% in 2009. As for the performance of dividend development, Nike has shown increases in its number. For the year 2006, Nike’s dividends declared per common share stands at $ 0. 59. Their company dividend increased to $ 0. 98 in the year 2009. But as for Adidas, they showed a decline from the year 2006 to 2009. In the year 2006, Adidas dividends declared per common share stands at â‚ ¬ 0. 42. While in the year 2009, Adidas dividends declared per common share felt to â‚ ¬ 0. 5. As for the expected outcome for the year 2010, Nike would be expected to increase their dividends successfully because their dividend declared per common share has been rising steadily. As for the company’s asset assessment, I can expect that Nike would do better in the assets performance in the year 2010 because their total assets have been increasing from the year 2006-2009. The total of assets that Nike had in the year 2006 was $ 9,869(million), in the year of 2007, Nike’s assets increased to $ 10,688. 3(million). Last year, Nike had a total of assets of $ 13,250(million). This shows that Nike’s assets have been increasing and it is expected to rise in the year 2010. As for Adidas, their company’s total asset is not stable from the year shown in 2006-2009. In 2006, Adidas totals assets stands at â‚ ¬ 8379(million). It decreased on the following year to 8325(million). As for the year 2008, their total assets were increased to â‚ ¬ 9533(million). As for 2009, their total assets decreased to a total of â‚ ¬ 8875(million). Ever since Adidas total of assets is not stable, I can expect that Nike would do better in the assets performance. References http://condor.depaul.edu/~aalmaney/StrategicAnalysisofNike.htm http://www.lotsofessays.com/viewpaper/1693768.html http://en.wikipedia.org/wiki/Nike,_Inc http://en.wikipedia.org/wiki/Adidas http://en.wikipedia.org/wiki/Reebok