W

.
M
A
I

T
A
H

M
A
I

Team Members
Qaisar S. Khokher
2541
M. Afzal Hashmi
2517
Tehmina Hafeez
1760

Nike
2003

Case-Study Overview

Internal:
Reebok overview, History,
Brands
Reebok Actual & Proposed
Vision and Mission
Economic Performance
Financial History
Strengths and weaknesses
Analysis: IFE
External:
Industry overview
Opportunities and threats
Analysis: EFE
Competitors
Analysis: CPM
Market Share

Analysis

SWOT Matrix
BCG matrix
IE matrix
Grand Strategy Matrix
Space Matrix
QSPM

General Analysis
Recommendations
Decisions
Why our decision?
Strategic implementation

Current Update
References
Questions

Reeboks Overview

Reeboks principal business activity is to design, development

& worldwide marketing of high quality footwear, apparel &
equipment.
Distributed around the world: (Asia, Australia, Canada, Europe,
Latin America, and the United States)
Reebok is 3rd largest seller of athletic footwear and athletic
apparel in the world.
Remain market leader since 1996
Employees: 9,102 only in USA.

History
1890-1930's

Reebok's United Kingdom-based ancestor company for

athletes those wanted to run fast.
1890s, Joseph William Foster made first known running shoes
with spikes.
By 1895, he was in business making shoes by hand for top
runners;
The family-owned business proudly made the running shoes
worn in the 1924 Summer Games by the athletes celebrated in
the film "Chariots of Fire."

History
1950-1980

In 1958, two of the founder's grandsons started a companion

company that came to be known as Reebok, named for an
African gazelle.
In 1979, Paul Fireman, a partner in an outdoor sporting goods
distributorship, spotted Reebok shoes at an international trade
show. He negotiated for the North American distribution
license and introduced three running shoes in the U.S. that
year at price $60, they were the most expensive running shoes
on the market.

History
1980's
By 1981, Reebok's sales exceeded $1.5 million,

In 1982, Reebok introduced the first athletic shoe designed

especially for women; a shoe for new fitness exercise called
aerobic dance & named the shoe Freestyle,
Reebok anticipated and encouraged three major trends that
transformed the athletic footwear industry:
the aerobic exercise movement,
the influx of women into sports
well-designed athletic footwear for adults for street and casual
wear. .
In 1985 Reebok completed initial public offering
In 1986 Reebok acquired the Rockport Company.
Late 80s, Reebok shoes are available in 170 countries.

History
1990's

In 1992, Reebok equally involved in sports by creating several

new footwear and apparel products for football, baseball,
soccer, track and field and other sports.
Reebok began its partnership with golfer Greg Norman,
resulting in the creation of The Greg Norman Collection.
In the late 1990s, Reebok made a strategic commitment to align
its brand with a selected worlds most talented athletes.
Late 90s Reebok and the National Football League announced
an exclusive partnership

Logo Development

Products

Products

Brands
Reebok International
Rock Port
RBK CCM Hockey
(Worlds largest)
Greg Norman
Apparel
Ralph Lauren Brand
The Hockey
Company
Avia
Onfield Apparel

Athletic footwear
DMX2000
3D Ultralite
Ralph Lauren Apparel
line

Reebok Stock (NYSE-RBK)

Information
Stock Symbol: RBK.
Went public in 1985 and is traded on the
New York Stock Exchange.
Share Price
1996
$ 69.62
1997
$ 58.31
1998
$ 56.97
1999
$ 56.53

Vision Statement

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

Proposed Vision
Statement

Continue to bring inspiration to present

and future athletes, while maintaining the
company's standard of quality for its
products.

Mission Statement

At Reebok, we see the world a little differently and throughout

our history have made our mark when weve had the courage
to challenge convention. Reebok creates products and
marketing programs that reflect the brands unlimited creative
potential. ."

Proposed Mission
Statement
To continue to offer quality products with increasing
growth in the industry and expanding globally. Our
mission has always been to provide a competitive edge
by developing the most technological products. Keeping
in mind fair labor practices in all our suppliers factories,
while maintaining a competitive advantage, with the
shareholders interests, and company profits in mind. We
also believe our employees are one of our most
important assets. To increase the responsibility towards
the environment by evaluating the impact of day to day
operation and attempts to change operations that have a
negative impact.

Economic Performance:

Sales by Regions (19971999)

1999

1998

1997

USA

1,609 M

1,858 M

2,000 M

UK

545 M

522 M

661 M

Europe

476 M

585 M

510 M

Other
countries

267 M

258 M

47 M

Economic
Performance(1997-99)
1997
1998
1999

Net Sales**

Net Income

$ 3,641 M
$ 3,223 M
$ 2,897 M

$ 135.12
$ 23.92
$ 11.04

Net sales decrease(1997 to 1999)=

Net Income decrease (1997 to 1999)=
*Sales (Shoes)

72%

*Sales (Apparals)

28%

$743M
$124.08M

Internal
strengths and weaknesses
STRENGTHS:

WEAKNESSES:
Rely on retail stores to sell
Profits increasing
products
Paul B. Fireman, CEO
Issues with foot lockers
Carl J.Yankowski, EVP
Teams more connected to the Poor employment practices
at
their
international
consumer
manufacturing sites
Multi-brand strategy
Dedication to employees
Hydro mover moisture technology
DMX technology.
4 major divisions & 6 SBUs
Advertisement campaign

Heavy

dependency

footwear sales

on

IFE Matrix
Internal strength

Weight
0.0-1.0

Rating
1-4

Weighted Score
(WxR)

Profits increasing

0.05

0.15

Paul B. Fireman CEO

0.10

0.40

Carl J.Yankowski, EVP

0.10

0.40

Teams more connected to the consumer

0.05

0.20

Multi-brand strategy

0.05

0.20

Dedication to employees

0.05

0.15

Hydro mover moisture technology

0.10

0.40

DMX technology

0.10

0.40

4 major divisions & 6 SBUs

0.05

0.15

Advertisement campaign

0.05

0.15

Internal Weakness

Weight

Rating

Weighted Score

Rely on retail stores to sell products

0.05

0.05

Issues with foot lockers

0.05

0.05

Poor employment practices at their international manufacturing sites

0.10

0.20

Heavy dependency on footwear sales

0.10

0.20

Total (including Strengths & Weaknesses)

1.00

3.20

Industry Overview
Athletic footwear manufactures captured nearly one-third of the
total footwear market in the early 1970s.
Over a span of more than 25 years, American consumers spent
$300 billion on 7.5 billion pairs of athletic shoes.
Reebok international Ltd. and Adidas became $ 3.5 Billion
companies, while Nike Inc. became the first ever $ 9.5 Billion
company.
By 1996 the number of establishments had dropped to about 52,
with 12 factories closing since 1995.
China's imports increase by 6 percent to 1.26 billion pairs .
Brazil's share increased 2.3 percent to 83.5 million pairs .
Vietnam's share jumped 91.9 percent to 23.5 million pairs.
The US markets continue to be dominated by imports from
countries with low-cost labor.
From 1997 to 2001, the value of industry shipments declined from $
219.6 million to $106.5 million.
U.S. shoe manufacturing plants declined by 775 between 1967 and
2001.

Business Structure
Operating Segments:
Footwear
Apparel
Equipment

Operating Regions:
US
Europe, Middle
East and Africa
(EMEA)
Asia Pacific
Americas

Manufacturing:
Nationality of Contract Suppliers

External Opportunities and

Threats

OPPORTUNITIES:

Established objectives
Result-oriented culture
Strengthen management team
Contemporize products
Relevant advertising and marketing
campaigns
Grow quality market share
Restructured production creation
teams
Its a Womans World young
women
The Sounds and Rhythm of Sport.
fashion consumers
National Football League campaign
Changed leadership for difficult
brands
Ability to create synergy between
brands
Special Technology

THREATS:
Strong US dollar
Weak department store channel
Foreign market is suffering
Economic decline in key markets
Chinese products
Strong Competition

EFE Matrix
Opportunities

Weight
0.0-1.0

Rating
1-4

Weighted Score
(WxR)

Established objectives

0.15

0.60

Restructured production creation teams

0.05

0.10

Its a Womans World young women

0.10

0.30

The Sounds and Rhythm of Sport. fashion consumers

0.05

0.10

National Football League campaign

0.05

0.10

Changed leadership for difficult brands

0.05

0.05

Ability to create synergy between brands

0.03

0.03

Special Technology

0.10

0.40

Threats

Weight

Rating

Weighted Score

Strong US dollar

0.10

0.20

Weak department store channel

0.03

0.03

Foreign market is suffering

0.05

0.10

Economic decline in key markets

0.05

0.10

Chinese products

0.09

0.18

Strong Competition

0.10

0.10

Total(Opportunities & Threats)

1.00

2.38

Athletic Shoe Market Share

Competitive Profile
Matrix (CPM)

SWOT Analysis
S-O Strategies
Use the expertise and experience of Fireman
and Yankowski to carryout objectives (S2, S3,
O1)
Further increase profits by utilizing the
restructures production creation teams (S1, O7)
Further strengthen the multi-brand strategy with
planned campaigns (S5, O3, O4, O5)
Further strengthen the multi-brand strategy with
changed leadership and synergy to grow quality
market share (S5, O6, O11, O12)

W-O Strategies
Strengthen objectives to curb the effect on heavy
dependent brands (O1, W4)
Utilize the changed leadership to correct difficult
brands (O11, W4)
Strengthen campaigns to correct difficult brands
and lessen the need to rely on department stores
(O3, W1, W4)

S-T strategies
Utilize the teams connection to the consumer to
counteract sales lost because of the strong US
dollar, weak department store channels, and
suffering foreign market (S4, T1, T2, T3)
Utilize multi-brand strategy to find a connection
to foreign markets (S5, T3)
Use the increased profits to research other
profitable markets to strengthen the foreign
market and avoid the negative effects of declining
key markets (S1, T3, T4)

W-T Strategies
Maintain brands to lessen the effect of the US
dollar and foreign markets (W4, T1, T3)
Strengthen brands to be less dependent on
department store channels (W4,W1, T2)
Lessen the reliance on retail stores to avoid the
effects of weak department store channels (W2,
T2)
Promote brands in different markets to lessen
the reliance on suffering key markets (W4, T4)

BCG Matrix
Market Growth Rate

High
Greg Norman
Reebok intl

Rock Port

Athletic footwear
DMX2000
3D Ultralite
Ralph Lauren Apparel
line

Avia

Low
High

Relative Market Share

Low

IE Matrix
IFE 3.20

EFE 2.38

Grand Strategy Matrix

QUADRANT 2 (Proposed Strategies)

Market development
Market penetration
Product Development
Horizontal Integration
Divestiture

SPACE Matrix
SPACE Matrix
Y-Axis
Financial Strength
Environment Stability
X-Axis
Competitive Advantage
Industry Strength

+4
-1==Y Coordinate
-5==X Coordinate
+2

+3
-3

QSPM
Internal strength

US Market
Weight
0.0-1.0

Rating
1-4

Foreign Market

W. Score
(WxR)

Rating

W. Score
(WxR)

Profits increasing

0.03

0.06

0.12

Paul B. Fireman, CEO

0.05

0.15

0.20

Carl J.Yankowski, EVP

0.05

0.15

0.20

Teams more connected to the consumer

0.02

0.06

0.06

Multi-brand strategy

0.03

0.09

0.12

Dedication to employees

0.03

0.06

0.09

Hydro mover moisture technology

0.05

0.20

0.20

DMX technology

0.05

0.20

0.15

4 major divisions & 6 SBUs

0.02

0.04

0.08

Advertisement campaign

0.03

0.06

0.09

Internal Weakness

Weight

Rating

Rely on retail stores to sell products

0.02

0.02

0.02

Issues with foot lockers

0.02

0.02

0.02

Poor employment practices at their international

manufacturing sites

0.05

0.10

0.10

Heavy dependency on footwear sales

0.05

0.10

0.10

Opportunities

Weight

Rating

W. Score

W. Score

Rating

Rating

W. Score

W. Score

QSPM(cont)
Opportunities

US Market
Weight

Rating

W. Score

Foreign Market
Rating

W. Score

Established objectives

0.06

0.24

0.24

Restructured production creation teams

0.03

0.06

0.03

Its a Womans World young women

0.05

0.15

0.15

The Sounds and Rhythm of Sport. fashion

consumers

0.03

0.06

0.09

National Football League campaign

0.03

0.06

0.03

Changed leadership for difficult brands

0.02

0.02

0.04

Ability to create synergy between brands

0.02

0.02

0.06

Special Technology

0.05

0.20

0.20

Threats

Weight

Rating

W. Score

Rating

W. Score

Strong US dollar

0.05

0.10

0.10

Weak department store channel

0.02

0.02

0.02

Foreign market is suffering

0.03

0.06

0.06

Economic decline in key markets

0.02

0.04

0.04

Chinese products

0.04

0.08

0.08

Strong Competition

0.05

0.10

0.10

Total

1.00

2.52

2.79

Conclusions
weakness of Reebok is located in their top
management
Reebok changed advertising agencies
eight times and they earned a reputation
as a difficult client
Never listen the foot lockers

Recommendations
Reebok is basically internally strong organization with lazy
management team However

It develop a more detailed plan grow sales.

Reliance on department store channels
Suffering foreign markets
Find markets that are not in an economic decline
Strengthen the brand name and message of suffering brands
Need strong goals and plan to grow the sales & global
reputation
By changing advertising agencies frequently, Reebok has dug
themselves in a marketing hole. To accomplish their current
goals they need to produce better marketing campaigns.
Change Management

Decisions

Primary: Focus on finding the most promising customers (kids

Alternative:

and women) and introduce more products or improve current

ones to satisfy potential increase in demand
Keep expanding into current and future foreign markets by being
aggressive and the worldwide leader of the footwear industry
Accelerate funding for numerous marketing campaigns in order to get to
specific markets or customer groups
Focus on improving working conditions and human rights at
international manufacturer centers and at the same time increasing their
productivity
Implement product diversification with companys newest technologies
so resulting increased earnings could be reinvested into R&D plans

Why this strategy?

U.S. Women: Prefer fashion, not footwear, they
prefer clothing, we must create a shopping style
based in athletic shopping.
U.S. Kids: E-commerce, influenced by
innovation and design, not only comfort or sports
We need to consolidate US sales compared to
international sales and international competitors
Difficult to expand towards other sports or
population segments

Implementation
Actions:
Women:
Open specific stores specialized only for women
Increase R&D expenses in women products
Increase Marketing expenses by designing a specific campaign
for women using female endorsements
Create a new logo for women market which would be associated
with fashion trends and introduce new products

Kids:
Increase R&D expenses in kids products
Increase Marketing expenses by designing a specific campaign
for kids
Introduce more soccer and basketball products targeting potential
youth market

Research in international market to find out what are the new

trends related with women and kids products (Long-term)

Update: 2006-2007
In 2006 Reebok become a subsidiary of German giant
Addidas (AW)
Fireman become separate from management
President and CEO
Paul Harrington
SVP and Chief Communications Officer
Denise Kaigler
SVP; President and CEO, Onfield Apparel Group
David Baxter

References

http://finance.yahoo.com
Reebok Annual Reports
Reebok Quarterly Reports
Annual ranking of America's largest corporations
www.reebok.com
www.bigcharts.com
www.businessweek.com
www.wikkipedia.org
Strategic Management Concepts and Cases; Fred R. David,
10th Ed.

Thank you!
Questions?
Comments?