Business Operations of Nike and Adidas - Case Study Example

?Compare and Contrast Nike vs. Adidas' Business Operations Table of Contents 0.Brief Background of the Companies 3 1.Adidas 3 2.Nike 4 2.0.Sales & Supply Chain Management 5 2.1.Sales & Supply Chain of Adidas 5 2.2.Sales & Supply Chain of Nike 6 3.0.Production & Management Process of Adidas and Nike 6 4.0.Quantity vs. Quality Management in Adidas and Nike 7 5.0.Technology Involvement in Adidas and Nike 8 6.0.Inventory Management in Adidas and Nike 9 7.0.Summary 11 References 12 1.0. Brief Background of the Companies 1.1. Adidas Adidas is quite a renowned name in the sports industry. The founder of the company, Adi Dassler intended to offer superior quality equipments to every single athlete. The product offerings of Adidas ranges from apparel to footwear to accessories related to every kind of various sports. However, the company designs products that are mainly associated with football, training, running and basketball. The brand was acquired by Salmon group in the year 1997 and the company came to be known as Adidas-Salmon AG. In the year 2006, the group acquired Reebok which was perceived to be highly advantageous for Adidas. Reebok was also a well known name in the sports industry. With the combination of two such reputed brands, the new group was expected to attain a higher degree of competitive advantage in the industry. The group was expected to cater with an increased variety of products accompanied with a strong existence across athletes, leagues, teams and events. The Adidas group engages above 42,000 employees across the globe. The group also has above 170 subsidiaries which assures the availability of its products across the world. The group’s sales along with distribution of products have been categorized in four global regions which are North America, Latin America, Europe/Emerging markets and Asia/Pacific. The group deals in sportswear and footwear as well and is known to be amongst the biggest suppliers of Europe. The group is also observed to dominate quite a number of sports events being reputed as the ‘Olympic brand’ in Sydney. The sale of the group was stated to reach a record high in the year 2000 (Adidas Group, “At a Glance the Story of the Adidas Group”). 1.2. Nike Nike Corporation deals with developing, designing and global marketing of products ranging from apparels and accessories to footwear and sport equipments. The company is known to cater about 18,000 retail stores with its products across the United States. It also makes available its products in about 200 different countries with the combination of independent licensees, distributors and subsidiaries. The athletic footwear range of Nike is particularly designed for the use of athletes; however, few of the products from this range are used for leisure as well as informal purposes. The company designs its products for all age group of women, men and children. The popular group of products that has the highest sales is basketball, cross-training, running, women’s and children’s shoes. The company also designs and markets footwear that are required for outdoor actions like golf, baseball, bicycling, wrestling, aquatic activities, other recreational and athletic uses, tennis, soccer, football, volleyball, cheerleading and hiking among others. Nike is also involved with selling sports related equipments which entails majority of the mentioned groups, lifestyle wear that are athletically enthused and others. The competitive advantage of the company is stated to be its constant innovations in the field of apparels, footwear and equipments as well. The company attains this competitive edge with the help of its Research and Development team which is technologically quite advanced (Dermesropian & Et. Al. “NIKE”). 2.0. Sales & Supply Chain Management 2.1. Sales & Supply Chain of Adidas The suppliers of Adidas are trained in a way so that they comprehend the significance of setting up and synchronizing the organizational system of management along with ways and methods of proper communication. The easy and transparent system of communication is maintained with the people associated with the way they carry out their business functions including the local communities, government officials or even the laborers employed. The company gives enough importance to the specifications and to the code of conduct of the suppliers. The suppliers associated with the company are required to carry out their operations according to the specifications provided by Adidas and the industry at large. The company also has its own team of auditors who are responsible for keeping a check that whether the operations of the suppliers are in accordance with the company’s specifications. The group also encourages screening of their operations by other third parties as Adidas believes that the process of screening their supply chain operations facilitates in enhancing their way of working as well as adding credibility. The suppliers catering to the company or the group are rated according to their compliance with their specifications. The rating process and results helps the company in taking decisions regarding selecting the suppliers (Adidas Group, “How We Work with Suppliers”). The group is known to entail two sales channel and they are wholesale as well as retail (Adidas Group, “Global Sales Strategy”). 2.2. Sales & Supply Chain of Nike Nike is quite efficient in identifying the requirement of a properly synchronized and effectual supply chain for the reason of gaining efficiency in its business and industry. The supply chain entails numerous fields, such as raw materials, production, shipping, and retail among others. Therefore, the company engages guidelines in the processes of its supply chain that ensures the delivery of competent and money-making products in a proper manner. The company puts in enough endeavours that are focused on making certain of a competent system of transport, safety and security for the products. The policies of the company are developed to make certain that the operations of its supply chain that is from the factories to the end users are carried out in a way which takes into concern the people as well as the environment. This helps the company to manufacture products with quality assurance (Nike Inc., “Supply Chain”). The sales channel of the company also involves direct sales channel as well as retail channels (Stanford Graduate School of Business, “NIKE-Channel Conflict”). 3.0. Production & Management Process of Adidas and Nike Both the companies are known to outsource their manufacturing activities in different countries. Nike is not recognized as a manufacturing company and thus almost all the products served by the company are manufactured in different countries, especially in Korea, Taiwan and Asian regions which are again outsourced by these country suppliers in other countries. However, the products of the company are initially developed and designed at its head office which is in Beaverton (Enderle & Et. Al., “Strategic Analysis of Nike, Inc.”; Rozand & Et. Al., “Adidas: A Global Brand?”). Adidas is also known to outsource most of its manufacturing or production activities. Adidas was also observed to have adopted a similar approach to that adopted by Nike. The designs and the development activities are virtually managed in Germany and the manufacturing or production activities are outsourced to mainly Asian countries. Therefore, the production activities of the both the companies are managed in different countries while the development, design and marketing activities are managed under direct supervision (Enderle & Et. Al., “Strategic Analysis of Nike, Inc.”; Rozand & Et. Al., “Adidas: A Global Brand?”). 4.0. Quantity vs. Quality Management in Adidas and Nike Both the companies, i.e. Adidas and Nike, have been noticed to outsource their production activities in other countries basically including Asia and Korea. The quantity of the products marketed by these companies is ascertained in accordance with the requirement of the sales channel. The sales channel comprises of the retail and wholesale channels for Adidas. In the similar context, for Nike the sales channel comprises basically of its retail channels. The quantity of Nike is also determined according to the demand of the customers as it is observed to practice direct marketing assisting the company officials to monitor market trends. Quality is given immense importance by both the companies. Adidas ensures that the process of its supply chain is in accordance with the company’s and the industry’s specifications. Proper screening of the activities related to supply chain is screened by the auditors of Adidas which guarantees the quality of the products. Nike is also known to adopt proper standards in the process of its supply chain and every attempt is made by the company to ensure the efficiency of its supply chain so that products are delivered with quality assurance. Nike is also takes into concern the environmental as well the labour welfare related aspects in its supply chain. An effectual process of supply chain makes certain of the proper quality for the Nike products along with taking effective measures regarding the quantity aspects (Enderle & Et. Al., “Strategic Analysis of Nike, Inc.”; Rozand & Et. Al., “Adidas: A Global Brand?”). 5.0. Technology Involvement in Adidas and Nike Both Adidas and Nike believe in innovation. Nike is known to have a strong team of Research and Development which constantly works on innovating products with the engagement of latest and upgraded technology. Adidas also believes in innovation and thus has an enthusiastic team engaged in developing and designing the products. Adidas is also known to develop superior quality products by employing latest and advanced technologies in their production processes. Both the companies are known to excel in their fields quite well. Adidas has the brand name of Reebok associated with it which is obviously advantageous for the company (Rozand & Et. Al., “Adidas: A Global Brand?”). In its organisational operations, Nike provides with a significant emphasis on its research and development team which facilitates the company in performing its vision towards innovation to a large extent. Therefore, it can be stated that both the companies are parallel and perfectly competent with each other. With due concentration to the aspect of production, both the companies outsource their processes from Asian countries to a large extent. It is worth mentioning that, with the virtue of technology, Nike has a wide range of products which helps the company to remain successful. Nike has also started developing footwear that are low priced and already enjoys a huge popularity in the global market (Enderle & Et. Al., “Strategic Analysis of Nike, Inc.”). 6.0. Inventory Management in Adidas and Nike Both the companies, i.e. Adidas and Nike, have been found to use certain inventory software to ascertain the need and forecasting of their inventory levels. These companies forecast their level of inventory according to the size of their stores scattered worldwide. Nike focuses on direct marketing that assists the company in forecasting its inventories according to the market demand. On the other hand, Adidas do not focus on direct marketing to a large extent in most of its markets and thus requires depending on requirements of the retailers (Hayes, K, & Kuchinskas, S., “Going mobile: building the real-time enterprise with mobile applications that work”; Henderson & Et. Al., “Nike Considered: Getting Traction on Sustainability”). 7.0. Summary From the above discussion, it can be understood that both the companies employ more or less the similar processes of production and technologies. Both the companies compete closely and so, they employ systems that are quite similar to each other. However, there are certain differences n the managerial concerns related to a few significant areas that differentiate them. Adidas acquired the well established brand Reebok which added greatly to its competitive advantage. Similarly, Nike is also acquired strong brands although it concentrates in maintaining its competitive edge with the virtues served by its wide range of products along with its capabilities of innovation. The production process of both the companies is outsourced to different countries mainly in Asia. Both of these companies give much attention to the compliance of specifications in its supply chains which ensure the quality of products for both of them. Therefore, it can be stated that both the companies compete each other perfectly to a large extent. References Adidas Group, “Global Sales Strategy”. December 11, 2011. Every Product Tells A Story, 2010. Adidas Group, “At a Glance the Story of the Adidas Group”. December 11, 2011. Information, 2006. Adidas Group, “How We Work With Suppliers”. December 11, 2011. Sustainability, 2011. Dermesropian, Rudy. & Et. Al., “NIKE”. December 11, 2011. St. John’s University, 2011. Enderle, Kim. & Et. Al., “Strategic Analysis of Nike, Inc.”. December 11, 2011. DePaul University, 2000. Henderson, Rebecca. & Et. Al., “Nike Considered: Getting Traction on Sustainability”. December 11, 2011. MIT Sloan Management, 2009. Nike Inc, “Supply Chain”. December 11, 2011. Public policy and Advocacy, 2011. Rozand, Emilie. & Et. Al., “ADIDAS: A GLOBAL BRAND?” December 11, 2011. Global Finance, 2011. Stanford Graduate School of Business, “NIKE-Channel Conflict”. December 11, 2011. Stanford University, 2000. Read More