Legal and Strategic Management of Adidas and Under Armour in Operation - Case Study Example

Introduction

A copyright is the type of protection that is given to the innovators of ideas with legal rights created by laws of a country that gives the owner of the copyright preferential rights to do more copies of the copyrighted work and use it for the benefit of the public.

Patent is a type of right that is given by a state to an original inventor for a specific duration that excludes the rest from using, making or offering for sale (Kapitzke, 2006). Adidas filed suit against Under Armour and subsidiary MapMyFitness when they were alleging that the companies infringed mobile fitness products against ten patents sports apparels. Adidas is a German brand that was falling behind the competitor Under Armour. It falls on the third position among sportswear brands in the United States (US).

The combined sales output acquired from apparels and the footwear’s fell to 28% form the previous year to 1.2 billion dollar when their competitor’s sales increased at the almost same period to 1.3 billion dollar. Adidas accepted decline and that they should act after their diminishing returns underscored when the company was hardworking to gain grounds in US as Nike took ground in their own country.

Adidas diminishing returns underscored how the company was struggling for traction in the US even as Nike gained ground in the German company’s core in the European market. They acknowledged that they should act immediately.

Legal and Strategic management of Adidas and Under Armour in operation

The company has sponsorship of many US sports assets and they should improve on how to conduct their marketing. Adidas did not take liability for claims despite of their ground legality that usually arose from connectivity with delays or infringement of information non-performance duties, the infringement of the industry property rights, positivity in violation of the contractual duties or third parties not only if Adidas committed such infringements by gross negligence or even willfully, but even if Adidas infringes contractual obligations by negligence that can be even so slight.

In all scenarios that Adidas is liable because of the stated reasons above, all claims are only restricted to damages that are foreseeable. Compensations for damages that are consequential shall be excluded for example loss of profits. Damages limitations caused by representatives or legal officers legally by intent or negligence shall not be applicable (Lebron, .d.). Any of the liabilities or all in accordance with possibility with the product liability shall not be affected.

The properties are operated and owned by Under Armour and MapMyFitness. Patent contents include but limited to text, photos, videos, designs, trademarks, code, sounds and other properties that are intellectual are all controlled by Under Armour and MapMyFitness.

Its agreed and acknowledged that the services, content that contain proprietary and information that is confidential, necessary software connected with service usage is protected by intellectual property and all the relevant laws.

Except as by authorized by distribute or even applicable law’s permission, or in whole or part of content offered as services, or services work based on creative derivative.

Effects of the case to subsequent strategy of Adidas and Under Armour

Expanding Under Armours presence in the international market, they had a strategy of moving from shop to shop method of approach made it appealing and easy to their stores decision for integration of their product, their share in the foreign market should be increased to compete globally with strong competitors as they depended on North America for sales that were 85% of them.

The most important document for Under Armours continued growth was the investment they made to Research and Development. That was due to the facts that Under Armours quality in design and the powers that they acquired for buying made its current position by the key success factors in the market.

As risks of substitutes and completion is increasing in the industry, Under Armour is required to make large investment in the advertisement of the product and good development of new products. Creation of products that are new is an attitude that makes an admirable future because the industries scope and size is steadily growing and is hoped to remain so forever.

The industry of sports is steadily growing in comparison to other industries with likes of the electronic industry. Sports has become the main activity to many cultures and society which is important to an individual health and happiness

Adidas brands are what connect them to with consumers and therefore success of their brands that define success of Adidas business. Reebok focuses on consumer fitness, Adidas appeals to athletes and Taylor made is for golfers.

Speed is always first for fast sport companies in the internal decision-making and the satisfaction of consumer goods. Adidas identified six major cities that they wanted to increase share of their trends, increase share of their market and to grow their share of mind. In addition required to be an open source to be the first sports company brand with the identification of athletes, consumers and partners to be associated with their products (Lebron, W. n.d.).

Rivalry among competitors became high in the strategy management, Adidas, Under Armour and the rest in footwear have grown steadily in the last three years and all of them have several different choices with much identities due to sporting personalities endorsement from the top, the industry involves rivalry and fierce competition.

Adidas had to merge with Reebok for complementing themselves against Under Armour with much cost efficiency and benefits to both brands with reeboks brand in the US market just for Adidas image and reputation (Heeg, 2015). They acquired a new designer Stella McCartney who became their design collaborator. They partnered with Muhammad Ali who is a boxing legend. The motives and main incentives of those collaborators joining fast and mainly best sports shoe that’s liked largely in the world and widely distributed. The company for increase of consumer’s acceptance and market value objectively uses these celebrities since their favorite stars use them.

Meanwhile Under Armour, that has a small spreading impact in the US than its competitor Adidas but making a steady improvement since it’s strong in athletic apparel that accounts for the best part of its major sales. Under Armour, particularly on basketball was increasing its supply in its footwear business although sporting goods retailers remains limited to its wholesale distribution.

Moreover, in some areas local customer were looking for an urban look in the current lifestyle all Adidas products sold out profitably but in some locations the German company didn’t sell well since they wanted traditional sporting goods type. Under Armour is overtaking Adidas as their sports gear is being promoted steadily by retailers in the larger US market who are always requesting for more styled sport gear.

Under Armour in their next two years vision to prosper have faced many challenges of prosperity and in the achievement of its goals. Nike and Adidas have implicated a major competition threat on the effective management on based on its growth that is rapid. Orders and sell-through have been weaker than anticipated hence been challenging in entry of new products such as footwear.

The brand loyalty in Under Armours has not followed with their line in foot wear while willing customers have been ready to pay a premium price for apparels because of their good reputation of producing performance enhancer products. There are a number of strong upcoming competitors like Saucony that are good specialties in the athlete shoes although they dedicated a good amount of investment to reinvent its footwear line.

In addition, Under Armour is smaller in size in comparison to Nike and Adidas based on its strength financially, their decision to make more fashionable products has become risky has become since it has moved focus from international and domestic expansion to make efforts on its line in footwear.

More over, Under Armour has modified their strategy with the expansion of its portfolio with same products with its competitors risking the dilution of its brand image that is everything made by Under Armour is basically for the consumers comfort.

Additional risk factors are like the intellectual property rights that are in countries that are foreign, manufactures that can affect the sustainability of the firms for long term. Some supplies based products like petroleum used in Under Armours are commodities that are subject to fluctuation

Under Armour distinguishes themselves from competition with expansion of their growth with operation acquiring unprecedented core competence and expertise, expanding its operation, based on its strengths, weaknesses, threat and opportunities hence facing challenges of achieving its goals of double growth in the next three years. Competition is basically from Adidas and Nike rapid growth management effectively, his brand loyalty has not followed with its footwear line.

Effects of the case to the industry structure and dynamics

Both companies had to suffer some effects in the case. Under Armour being sued for its vital information with its description had to be fully published and had to be viewed with the general public in possession of the internet website that included closer rivals like Nike who are a real threat to Adidas and Under Armour.

In addition, both companies currently risk an exclusive patent of twenty years. After the stipulated time passes, other companies or individuals can freely use invention without permission from anyone or royalty payment to the inventor.

Under Armour being with substitute products of different varieties, they became a threat to competitors, they were receiving pressure from the sellers of substitute products since their was an increase in demand for apparels used for performance in sports (Heeg, 2015). Due to increase in demand of footwear, it became difficult to centrally take attention to Nike and Adidas as their main competitors over their rivals considering their past records.

A number participating in sports activities has increased significantly and hence the number of participants proving a good impact to the consumer (Shea-Van Fossen, 2011). The competition gap between hot and cold gear is yet to occur because of replication and their rivals are starting to get closer. This has been the outcome of many threats of substitutes by any of the clothing companies.

Under Armour currently has made major rivals that are Nike and Adidas of which in the market share own a larger portion of the market share universally, their competition is major to high as Nike being the biggest rival holding 75% of the share in the world, Adidas follows with 54% and 40% for Under Armour consecutively in the market.

Under Armour lack of patent receives pressure from the cooling shirt because of easiness in recreation of the product that built the name of the company by its competitors. Other sporting cloths companies are taking advantage with trying to invest with the growing number of customers with the demand of the shirt that is Under Armour.

In North America many retails stores, Under Armours products have made bargaining power and much presence of consumers to be at the middle. Its technology have become new with demand that’s high made by athletes which are justified by Under Armours products presence with significance in many retail outlets that are 30% of Armours share (Shea-Van Fossen, 2011).

The supplying bargaining power is low in different countries Armour manufactures its products and has suppliers that are diverse that provide the company a choice making ability. Adidas has developed a recruitment method that is proactive and they started direct sourcing. They are issuing focused dedicated personnel that is focused with recruitment which is seeking to increase the speed of recruitment by the shared service hub and provide employment that is consistent in employment branding and focus more recruiting partners to hiring managers with Adidas.

Following the heels of puma and Reebok, Adidas has entered the sports new lifestyle market and launched deodorants, eyewear, watches, lotions, aftershaves and perfumes. Besides, Adidas is making jerseys domestic and national cricket, rugby, tennis, and even lacrosse players. For basket ballers, Adidas was the most appreciated for pro Models and Superstar shoes.

Adidas has proved itself as a long serving brand made through reinvention plan, They acquired partnership with various celebrities in basketball and being involved in the world cup heavily, striking of heavy deals that makes young star to capitalize and advertise it to the market place.

• Reference

Heeg, R. (2015). Data and analytics connect Adidas with consumers. Research World, 2015(53), pp.72-77..

Kapitzke, C. (2006). Copyrights and Patents: Issues and Ethics for Education. Policy Futures in Education, 4(4), pp.330-333.

Lebron, W. (n.d.). Adidas CC Regulate. SSRN Electronic Journal.

Shea-Van Fossen, R. (2011). Under Armour: Taking on the Goliaths. The CASE Journal, 7(2), pp.178-197