strategic analysis of reebok

1. PROJECT REPORT
ON
STRATEGIC ANALYSIS OF REEBOK
Submitted as a part of
CONTINUOUS ASSESSMENT- 1
For the partial fulfillment of award of degree of
Master of Business Administration
Submitted To:- Submitted To:-
Prof. Hemraj Verma Aruna Chauhan :- 1103102173
Gaurav Kumar :- 1103102128
Rajneesh kr. Yadav:- 1103102136
Pragya :-1103102129
Harshit Kansal:- 1103102133
Umang Bajpai:- 1103102125
(Members of Group-3, MBA-Batch3)
School of Business
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2. Oct 2012
Table of Content
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
Competition Analysis
Industry Structure (Using Porter‟s Five forces
5. model)
Competitive Profile Matrix (Based on Key Success
factors)
6. Any additional analysis (Application of BCG tool)
7. Conclusion
Referen ces
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3. Executive Summary
The Company
The Mission at Reebok is to be on the cutting-edge of sport and lifestyle products
built upon a strong heritage in sports(Reebok, 2011). Reebok strives to challenge
convention and lead through creativity and have been doing so for over 100 years(Reebok,
2011). The company was founded on one important value in the 1890‟s, helping athletes
run faster (Reebok, 2011). Since then the main vision has been to help athletes fulfill their
potential (Reebok, 2011). 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, 2011). Reebok is a subsidiary of Adidas Sportswear.
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4. Introduction
Reebok started its operation in INDIA in 1995. Headed by Managing Director Mr. Subhinder
Singh Prem and it has dominated the India 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. It has always challenged and lean through creativity.
It has introduced products in a wide range of sport shoe category from running, walking,
aerobics, lifestyle, and newly introduced Runtone ready, Zigdynamic, Realflex 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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5. Mission And Vision Analysis
Reebok’s 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 "
Reebok’s 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 we‟ve had the courage to challenge convention. Reebok creates products and
marketing programs that reflect the brand‟s unlimited creative potential.”
Nike’s 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.”
Nike’s Mission
” To bring inspiration and innovation to every athlete in the world"
*”If you have a body, you are an athlete.” – Bill Bower
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6. Analysis on the basis of elements of mission
Statement
In In
Son. Elements Reebok numeri Nike numeri
c c
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
Concern for Survival,
5 Yes 1 no 0
Growth & Profitability
6 Self-concept No 0 yes 1
Concept for Public
7 Yes 1 no 0
Image
Concern for
8 No 0 no 0
employees
Total 5 4
Value in percentage 62.5 50
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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7. 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
with key Reebok retail partners.
Re-energize the fitness and sports industry enabling Reebok to recapture its
leadership position.
Successfully integrate the Reebok core business into the overall strategic goals of
Reebok International (Be Reebok) and interactive marketing strategies.
Achieve Reebok EPS should be higher than the EPS during 2011 is 4.29$.
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 that
generated 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 international
markets by tapping the global Reebok University human infrastructure (master
trainers, alliance members etc.
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8. 3) Reebok’s 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.
Reebok‟s goal was to communicate the key benefits to consumers globally. This targeted
approach would 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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9. External Environmental Factors
PESTLE ANALYSIS
1) Political & legal:-
Reebok policy is to control and monitor hazardous substance to protect human
health and 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,
health and 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 the
current 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 by
increasing every year the number of employees.
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 fashion
with special design in any of product.
Focus in people who like sports and athletes, almost everybody can purchase Reebok
products.
Usually men and women from urban sector with an annual income of 1.5 laths are
users of Reebok . Frequent users are those with an annual income of 5 lakhs or
more.
As a crucial component of Reebok‟s Global Corporate Citizenship Platform, the
Reebok Foundation focuses its philanthropy in communities where Reebok‟s offices
are located.
The Foundation strives to promote social and economic equality by funding non-
profit organizations delivering programs aimed at inner-city youth and underserved
groups to empower youth to fulfill their potential – programs that provide youth with
the tools they need to lead healthy, happy and actives lives.
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10. 4) Technical:-
R&D teams at Reebok create footwear, apparel and hardware with the primary focus
on developing products that provide maximum performance, comfort and fit for the
consumer.
Teams are structured along the brand‟s product category focus in addition to certain
cross-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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11. Internal Environmental Factors
SWOT ANALYSIS OF REEBOK
A SWOT analysis is a critical portion of every marketing plan. It outlines the company‟s
Strengths and Weaknesses, and the market‟s 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
Strengths Weaknesses
(1) Brand Equity (1) Reebok owns few official
(2) Reebok-Adidas merger. stores and relies more on
(3) Reebok is one of the top athletic retailers.
shoe companies in U.S. in terms of (2) Reebok doesn‟t own factories
market share. and they depend on producing
Internal (4) Barefoot shoes are scientifically industries in their production.
healthier than any other kind of shoes. (3) Previous reputation of
(5) 76 independent sensors on the releasing faulty products.
bottom of Reebok Realflex barefoot (4) Few sponsors associated with
shoes promote natural movement, Reebok.
flexibility, and comfort.
(6) The price is the average of main
competitors.
(7) Customizing the shoes with the
styles and colors customers prefer.
Opportunities Threats
(1) Expanding current market and reach (1) Many companies produce
current markets with their new products. barefoot shoes and this leads to a
External (2) Marketing towards several age strong competition.
groups to increase profits. (2) Changing trends in footwear
(3) Product development opportunity. technology.
(4) Expanding to market for the product (3) As barefoot shoe is a want
on social media websites. and not a need, some people may
(5) Creating new channels of think twice before purchasing.
communication on social media websites. (4) Poor economy
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12. Industry Analysis of REEBOK
PORTER’S FIVE FORCE MODEL
PORTER’S 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. Today‟s 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 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.
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13. 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,
Reebok‟s expansion of the women‟s 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 competitor‟s 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.
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 buyer‟s 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
adds to their value. For this reason, the suppliers have limited bargaining power, and little
impact on profit potential.
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14. 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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15. COMPETITOR ANALYSIS OF REEBOK
REEBOK NIKE PUMA
KEY SUCCESS FACTOR Weight Rating Wt’d score Rating Wt’d score Rating Wt’d score
0.0 to 1.0 1 to 4 1 to 4 1 to 4
DOMESTIC MARKET 0.1 4 0.4 2 0.2 3 0.3
POSITINING
INTERNATIONAL MARKET 0.1 4 0.4 3 0.3 3 0.3
POSITIONING
CUSTOMER LOYALTY 0.08 3 0.3 3 0.24 3 0.24
0.1 4 0.4 4 0.4 4 0.4
BRAND RECOGNITION
0.09 3 0.27 3 0.27 4 0.36
PRICE COMPETITIVENESS
0.07 4 0.28 4 0.28 3 0.21
PRODUCT QUALITY
RELATIONSHIP WITH 0.07 3 0.21 4 0.28 3 0.21
MANUFACTURERS AND
SUPPLIERS
0.1 4 0.4 3 0.3 3 0.3
PRODUCT R&D
0.1 4 0.4 3 0.3 2 0.2
PRODUCT DIVERSITY
0.07 3 0.21 3 0.21 2 0.14
FINANCIAL POSITION
0.08 4 0.32 4 0.32 3 0.24
MARKETING
0.04 3 0.12 3 0.12 3 0.12
ORGANIZATIONAL
STRUCTURE
1 3.71 3.22 3.02
TOTAL
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16. CONDITION(RATING SCALE)
1 LESS THAN AVERAGE
2 AVERAGE
3 MORE THAN AVERAGE
4 STRONGLY
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.
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17. 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.
.
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