Analysis and Issue Overview of Adidas - Case Study Example

Part A: Analysis and Issue Overview of Adidas Table of Contents 1. Introduction 3 1.1 Scope of Issues 4 1.2 Framework to Address Issues 4 1.3 Contentions with Adidas Communication 4 2. Context and Background 5 2.1 Audience 5 2.2 Platforms 5 2.3 Issues 5 3. Issue 1 5 4. Issue 2 6 5. Issue 3 7 6. Issue 4 8 7. Issue 5 8 8. Conclusion 9 9. Problems and Opportunities Statement 10 10. References 10 1. Introduction Adidas was founded by Adolf Dassler in the year 1920 with a few materials in the manufacturing of the shoes. This brand has its product range for all the sport sectors around the world. The product portfolio of Adidas is composed of shoes, apparel and accessories for sporting activities. In the year 2002, the company introduced its three divisional structure, i.e. the brand was segmented into three divisions and those were performance, style and heritage. The division of performance offered the products related to the sports performance markets and those products can be used inside and outside the playing field. The division of style is a collaboration between the Adidas and Yohji Yamamoto, a Japanese designer. The vision of style division is to develop a sportswear that has radical appeal and a bright future. The heritage division of Adidas covers all the products of the Adidas originals (Adidas, 2015).  Adidas acquired Reebok International Limited in the year 2006 and today the company has 25,000 plus employees around the globe. It has 170 subsidiaries. The headquarter of Adidas is in Herzogenaurach, Germany, where more than 2,000 employees are working as a team of product developers, material technology researchers, designers and experts in biomechanics (Krüger, et al., 2012).  The mission of Adidas is to become a global leader in the industry of the sporting goods with its brands that are formed on the element of desire for sports and sporting lifestyle as well. The company is committed to strengthen its brands and to compete in the competitive market. The company has achieved an excellence in its innovation in the products. It is consumer focused and is a global organization that is dedicated to accomplish exceptional financial results, consistently (Adidas, 2015).  1.1 Scope of Issues The range of issues that will be discussed in this report will be related to the communication gaps between the company and the stakeholders, the company and the supply management and the company and the customers.  1.2 Framework to Address Issues There are three ways in which the company is communicating with the people. The three ways of communication are interpersonal, group and mass communication. All of them are relevant for the purpose of analysis and critique in this report. 1.3 Contentions with Adidas Communication The contentions of this report revolve around the communication gap that is becoming increasing with a passage of time. The company has failed to share its efforts and achievements with its consumers in the form of sustainability reports. There are times when the workers need to communicate with the company directly, instead of interacting with the factory management. Here comes another communication gap between the workers and the company. Similarly, the company has to be connected with its suppliers for the purpose of compliance and other factors. Lastly, the company also lacks in making the most effective decisions and this also determines the communication flaws inside the organization. 2. Context and Background 2.1 Audience Adidas has product range mainly in footwear, so the audience of Adidas are all of the people of the world. Along with the footwear, there are apparels and accessories of sporting activities that are offered by Adidas. 2.2 Platforms The platforms that are used to market the products of Adidas are print media, social media (e.g. Twitter, Facebook, etc.), television, sporting events and celebrity marketing. 2.3 Issues Adidas is facing the communication issues with its customers, stakeholders and suppliers. The following section will discuss these issues with their significance in the previous literature. 3. Issue 1 Sustainability in business is about managing the financial, environmental and social obligations, risks and opportunities. It has an influence on the customers and profits too (Pojasek, 2007). It is also known as corporate sustainability, in which the initial investments are made to gain the long-term profits. It also aids in the enhancement of the public relations and the branding. The first issue that has been observed in the Adidas is its lack of communication with the customers when it comes to share the efforts of the company in becoming more sustainable (Godelnik, 2012). Adidas is working very hard to turn into more sustainable for its stakeholders and the people related to it (Öçalan, 2014). However, it is not sharing its efforts and achievements with its customers, especially on its website. Although, this is not a new problem for the company, but it gives a wrong impression. Adidas is a leading brand in the sports footwear, accessories and apparel and it is capable to involve in the dialogues of sustainability, but it is not choosing this opportunity to progress. This issue is relatable to the contention that has been made above. The wider the gaps in the communication, the higher will are the chances of losing a fine customer base.  4. Issue 2 Conflict management is a concept in which negative aspects of the conflicts are minimized and the positive aspects are maximized to enhance the performance of the organization and to maintain an optimistic environment of an organization (Costantino & Merchant, 1996). The conflicts are usually among the management and the workforce. It brings rise to the personality differences and past rivalries. In the production of units of Adidas, which are located in different continents, there exists conflict management. The communication gap exists between the factory management and the workers (Simanjuntak, 2013). There are a number of reasons through which the conflict crops up, such as changes in the wage system and the standards of the company (Islam, et al., 2014). Conflict management is a communication issue in Adidas because it brings unrest in the labor and it also requires a third party to interfere and to solve the problems. The existence of this conflict will propagate severe future problems for the company. It would be better if the company can have a direct interaction with the workers of the factories, which are situated in other countries. Another way to reduce the conflicts among the workforce and the managements is to practice the conflict management styles, such as accommodating, avoiding, compromising, competing and collaborating managers (Alper, et al., 2000).  5. Issue 3 Managerial communication is a concept in which the managers communicate with each other and with the other employees of the same organization. It helps in the transfer of the information from the sender to the receiver. It assists in the smooth flow of the information among the managers and other employees that leads to the attainment of the goal of the company (Munter, 1992). There are two types of managerial communication inside the organization. First is interpersonal communication and the second is organizational communication. The interpersonal communication takes place when two or more individuals discuss something that is related to the organization. In organizational communication, there is a flow of information at all the structural levels of the organization (Klauss, 1982). The interpersonal communication exists in Adidas at the time of making strategic decisions of the company (Garcia, 2015). However, there are times when the decisions made in this type of communication has not given a fruitful prospect to the company. For example, the competitors are contracting with the sportsmen to endorse their products, but Adidas is mostly making agreements with celebrities, who are not directly associated with the sports. Adidas offers the products mostly for the sportsmen/women, but it is making contracts with the celebrities, who are linked up with the fashion and music industry. So interpersonal communication is relevant to this issue. This type of communication is bringing the performance in the context of sales to a lower level.   6. Issue 4 Customer relationship management is a concept that is about the practices, technologies and strategies, which a company utilizes in order to manage and analyze the customers. The aim of this concept is to enhance the business relationship with the customers because such relationship will lead to retain the customers and will increase the sales (Knox, et al., 2007). With the help of this customer relationship management, the goals and objectives of the company can be achieved by giving satisfaction to its customers (Verhoef, 2007). This relationship is not all about the interaction with the customers, but it is also about forecasting the behaviors, trends and attitudes of the customers, which augment the overall experience of the customer (Chen & Popovich, 2003). At Adidas, there is a need for direct communication of the company with its customers (Worldcrunch, 2014). It has been seen that the sales of Adidas has been falling since the year 2013 and the company has to look at the areas that are not functioning the way they should be. This is another issue that is relevant to the contentions written above.  7. Issue 5 Supplier relationship management is a term that explains the relationship of the company with its suppliers. The goal of this relationship management is to streamline the processes that are between the suppliers and the company, because it gives way in achieving the goal of practicing the customer relationship management (Lamming, 2005). It includes the software and business practices that create a framework to be followed for the effective communication between the two parties. In this way, the processes of manufacturing the materials, producing goods and managing the inventory are enhanced. These processes are performed as per the requirements of the company. Supplier relationship management ensures the compliance of the products with the requirements of the company. However, in Adidas, it has been seen the communication gap between the company and the suppliers and Adidas has terminated its contract with 13 suppliers, who are working in the continent of Asia. The end of a relationship was due to the non-compliance of the suppliers with the standards of Adidas (Donati, 2015). This is another issue that is relevant to the communication and the contentions of this study. The fault and distortion in the communication are the major reasons of winding up the relationship of Asian suppliers with the company.  8. Conclusion There is a significant role of communication in terms of sustainability of the business, customer relationship management, supplier relationship management, conflict management and managerial communication. Adidas is having some problems that relate to these five concepts/theories. The corporate sustainability does not communicate with its stakeholders. The interaction of Adidas with its customers is not satisfactory. The relationship of Adidas with its Asian suppliers has been terminated due to the non-compliance and this is another sign of lack of communication in the organization. The workers are in need to interact with the company directly and the conflict management is not practiced in an appropriate manner. The managerial communication is responsible for the poor decisions that have given lower sales to the company. These issues are hindering the company in achieving its goals and to attain the high growth in sales of its products. 9. Problems and Opportunities Statement Adidas was founded by Adolf Dassler in the year 1920 with a few materials in the manufacturing of the shoes. This brand has its product range for all the sport sectors around the world. There are three ways in which the company is communicating with the people. The problems identified in this report revolve around the communication gap that is becoming increasing with a passage of time. The company has failed to share its efforts and achievements with its consumers in the form of sustainability reports. There are times when the workers need to communicate with the company directly, instead of interacting with the factory management. The interaction of Adidas with its customers is not satisfactory. The relationship of Adidas with its Asian suppliers has been terminated due to the non-compliance and this is another sign of lack of communication in the organization. Lastly, the company also lacks in making the most effective decisions and this also determines the communication flaws inside the organization. The opportunities that Adidas have in these circumstances are listed below: To gain a wider customer base, the company must share its efforts related to its environmental, social and financial areas with its customers. To bring workers in confidence, the company must interact with them directly. To produce the quality and standard products, the company must communicate with its suppliers in an appropriate manner. For the purpose of celebrity marketing, the company must contract with the sportsmen/women. 10. References Adidas, 2015. History. [Online]  Available at: http://careers.adidas-group.com/history.aspx [Accessed 25 October 2015]. Adidas, 2015. Missio, Vision and Values. [Online]  Available at: http://careers.adidas-group.com/mission-and-values.aspx [Accessed 25 October 2015]. Alper, S., Tjosvold, D. & Law., K. S., 2000. Conflict management, efficacy, and performance in organizational teams. Personnel Psychology, 53(3), pp. 625-642. Chen, I. J. & Popovich, K., 2003. Understanding customer relationship management (CRM) People, process and technology. Business process management journal, 9(5), pp. 672-688. Costantino, C. A. & Merchant, C. S., 1996. Designing conflict management systems: A guide to creating productive and healthy organizations. s.l.:Jossey-Bass. Donati, M., 2015. Supply Management. [Online]  Available at: http://www.supplymanagement.com/news/2015/adidas-terminates-deals-with-13-suppliers-in-asia-over-non-compliance [Accessed 26 October 2015]. Garcia, T., 2015. This is Why Adidas Shouldn’t Depend on Kanye to Revive Its Brand. [Online]  Available at: http://www.adweek.com/prnewser/this-is-why-adidas-shouldnt-depend-on-kanye-to-revive-its-brand/114457 [Accessed 26 October 2015]. Godelnik, R., 2012. Triple Pundit. [Online]  Available at: http://www.triplepundit.com/2012/05/adidas-2011-progress-report-shows-achievements-along-problems/ [Accessed 26 October 2015]. Islam, M., Faruk, M., Khatun, R. & Rahman, M., 2014. Conflict Between Workers And Organization In RMG Sector Where Security Of Sustainable Human Resource Development:(A Study On Dhaka City, Bangladesh). International Journal of Business and Management Invention, 3(4), pp. 52-66. Klauss, R., 1982. Interpersonal communication in organizations. s.l.:Academic Press. Knox, S. et al., 2007. Customer relationship management. s.l.:Routledge. Krüger, N., Stieglitz, S. & Potthoff, T., 2012. Brand Communication In Twitter – A Case Study on Adidas. PACIS, Association for Information System. Lamming, R., 2005. Supplier relationship management. Perspektiven des supply management. Springer Berlin Heidelberg, pp. 81-94. Munter, M., 1992. Guide to managerial communication. India: Pearson Education. Öçalan, O., 2014. Adidas Brand Design Study. [Online]  Available at: https://www.behance.net/gallery/16482709/Adidas-Brand-Design-Study [Accessed 26 October 2015]. Pojasek, R. B., 2007. A framework for business sustainability. Environmental Quality Management, 17(2), pp. 81-88. Simanjuntak, A., 2013. WELCOME TO THE ADIDAS GROUP BLOG. [Online] Available at: http://blog.adidas-group.com/2013/05/marking-a-new-milestone-in-the-management-of-our-supply-chain-%E2%80%93-the-sms-worker-hotline-project/ [Accessed 26 October 2015]. Verhoef, P. C., 2007. Understanding the effect of customer relationship management efforts on customer retention and customer share development. Journal of marketing, 67(4), pp. 30-45. Worldcrunch, 2014. Adidas Has Been Getting Smoked By Nike: Now Here's Its Plan For A Comeback. [Online]  Available at: http://www.businessinsider.com/adidas-shows-soccer-is-overrated-2014-8 [Accessed 26 October 2015]. Read More