Case Study:Reebok Co.
...ties. Duties on footwear products range from 51% to 66%. This might lead a negative impact on Reebok’s finance. European Union (EU) imposes quotas on footwear from China and the antidumping duties against certain textile footwear from China and Indonesia. Environmental Issues Reebok assured that they comply with the Environmental Act for pollution and toxic waste and with the Air Quality Testing Program and has got the certification for ISO 14000 for the environmental issues. Some bodies that concern about the global environmental preservation and recoverage are highlighting global preservation. Technological Factors- Research and Development Reebok spent ½ million in 1999 for product R&D more than in 2000 and 2001. This include the technology of using EcoGrip which helped Reebok save about 288,000 pounds of rubber waste and later 563,000 pounds were saved. They even used the recycled paper for their cartons and inner cartons and tissues to help save the environmental. Competitors The major competitors for Reebok are Adidas, Salomon, New Balance, Fila and Nike. In total revenue, Reebok holds second position behind Nike. Major technological breakthrough or promotional success by any of Reebok’s competitors could adversely affect Reeboks position. At present, Reebok’s business is subject to the changes of economic conditions including the recession, inflation, general weakness in retail market, changes in consumer preferences and purchasing power. Threat and Risk Market risk is an uncertainty. Is the market large and sustained? What's the likelihood of additional competition, e.g., because of ologopolistic reaction? Also, monetary risk and political risk are beyond a firm’s control. The threat of online sales, terrorisms, globalization, piracy and macro economy environment exist to discourage the apparel industry. Political Governmental and Legal Forces Federal, state, local and foreign governments are major regulators, deregulators, subsidizers, employers, and customers of organizations. Therefore, political, governmental, and legal factors therefore can represent key opportunities or threats for both small and large organization like Reebok. Anyway, Reebok does not depend heavily on government contracts or subsidies. INTERNAL ASSESSMENT Organization Structure and Research and Development Every consumer has his or her own taste and opinions. Reebok sees it as an opportunity to grouping to each niche market. The Classic Footwear unit focuses on the casual footwear for everyday life use while Performance Footwear unit creates footwear for the sportsman and outdoor use with additional performance technology such as Freestyle and DMX. The Kid’s Product promote on Reebok footwear for children, Fitness unit responsible for fitness product such as tennis racquet, Global Apparel unit focus on the Reebok product uses worldwide and the Retail Operations unit handle retail store operation and promotional. To be the best in footwear and apparel, Reebok have to identify the POD and POP. The basic of Reebok is the athletic shoes. As the competitor can give the same basic athletic shoes structure, Reebok need to find another solution to be superior to their competitor. The newly DMX technology was being invented for the market to provide cushioning and active airflow system for comfortable. This technology is being included to other brand line as well. Reebok must also make people aware about their existing product on the market. By advertising according to what been mention above, consumer can becoming aware of their services and product. Even thought Reebok enjoys great position in the footwear market, there are some weaknesses that they must cover. The DMX technology should be explains to the public about the usefulness of it by just not simply put DMX at shoes. They should not depend on the DMX technology itself to produce another product but to use new technology to take advantages. Management The born of six business units to suits every consumer needs to reduce congestion of operations. To handle different needs of various consumers, Reebok product is being sold under other three brands with each have its own specialties. The Rockport Company mainly sells footwear for all types of individuals from men to women. It footwear integrated all the Reebok footwear technology. The Ralph Lauren product focuses on the women footwear rather than men. Its wide collection of women shoes range from sport to high heels. The Greg Norman Collection produces men’s apparel and products. Mainly the product is associated with the golfer needs. Marketing On the marketing section, Reebok tries to advertise their product as effective as their can. The main sources of advertisement they use are television, radio, print media, banner, billboards, Internet and others. The name of Reebok itself is simple to pronouns it. Everyone in the world can recognize the Reebok as easy to pronounce and their British logo on the brand. One of the sources of media is the ‘Vogue’ magazine. This strategy is to persuade the female audition about their latest product as this group is more aware about the trends and fashions. Most of the advertisement has their own message for the target group so this target can feels that they belong in the right categories. To make sure the Reebok brand is recognize by the consumer, they try to leverage secondary association. The famous way is the celebrity endorsement where Reebok appointed sport super-star as their spokesperson and walking model such as number one tennis player Venus Williams and Ryan Giggs of Manchester United. This strategy can influence the fans about what their idol wear and a must for copying on how to look like their icon. Another way is the sponsorship of an event such as Club Reebok for the kids, mainly about sport related activities. To strengthen the Reebok company, brand extension strategy are being use to establish new product categories such as Ralph Lauren footwear, Rockport Company and Greg Norman Collection. To control the market, Reebok have three subsidiaries to distribute and sell their brand. The Ralph Lauren mainly for the women footwear, while the Greg Norman Collection includes the footwear, clothes and accessories for men. The Rockport Company sells men and women footwear for all occasion. The establishing shop will make sure consumer enjoy easy purchase of Reebok brand. Each of the subsidiaries operates under the Reebok enjoy the technology and access of wide range of resources. One of the strength of Reebok is that the price is lower and affordable than the competitor has to offer. Mainly this is because the company known the consumer wants high quality footwear at affordable price. Compare to the Ralph Lauren and Greg Norman Collection, the price is more expensive as this brand is targeted for the middle and high income customers,. Finance and Accounting In the finance section, we can see the increase of Reebok sales from 2000 increase to additional $ 127638 millions in 2001. With the increasing sales, the public aware of the profitability they can gain from buying Reebok share. In 1999, the earning per share is $ 0.20 only, but in the year 2000 the share increase to 710%, where lead the public to invest on Reebok Company. In 2001, the share is $1.75 per share, where the investors enjoy great return investment than two years ago. The sales of the apparel still cannot withstand the sales of the footwear. This is because Reebok is greatly known for it credibility in footwear than apparel. The total sales in United States continue to grow well than the other countries, whereas there is a small drop in the sales in United Kingdom. SHORT TERM AND LONG TERM OBJECTIVES As for the short term objectives, Reebok is currently undertaking various global restructuring activities. It is designed to enable Reebok to achieve operating efficiencies, improve logistics, and reduce expenses. In the short term, Reebok could experience difficulties in product delivery or with some of its other logistical operations as a result of its restructuring activities, and it could be subject to increased expenditures and charges due to inefficiencies resulting from such restructuring activities. As for the long term objectives, Reebok is organized into six strategic business units, which include Classic Footwear (focus on lifestyle footwear), Performance Footwear (responsible for football, running, outdoor footwear, tennis, basketball, baseball, golf, cross-training, adventure and outdoor footwear); Global Apparel (responsible for fitness and sports apparel worldwide); Retail Operations (response for retail stores as well as for developing retail merchandise and promotional concepts); Kid’s Products (focusing on children’s products sold under the Reebok and Weebok brands); and Fitness (responsible for men’s and women’s fitness products). Reebok places a strong emphasis on technology and focuses on cushioning, stability, and lightweight features. Its most significant advancement is its DMX technology, which provides superb cushioning by utilizing a heel-to- foot, active airflow system that delivers cushioning when and where it is needed. Reebok’s business is subject to changing economic conditions, including recession, inflation, general weakness in retail markets, and changes in consumer purchasing power and preferences. STRATEGIES Conglomerate Diversification Strategy Conglomerate Diversification Strategy is the strategy that adds new, unrelated products or services to existing market or targeting market. Reebok should add new, unrelated products or services to widen its market segment and increase its market share. Such products and services can be food, infant products, jewelry, music, restaurants, hotel accommodation, ed...