Processing data:
Using information you’ve collected in the previous step (collect data), begin processing the data using appropriate analytical tools.
Prepare appropriate financial ratios (2 marks)
Prepare common-size income statement and balance sheet. (2 marks)
Compare company’s financial ratios and common size statements to key competitors in same industry. (2 marks)
Analyse/interpret the processed data:
Evaluate consolidated financial statements. (2 marks)
Interpret the results generated from previous step (
Processing data
). (2 marks)
Develop and communicate conclusions and recommendations:
Answer questions listed in assignment 1. (1 mark)
Inform client of all possible investment risks and analysis limitations. (1 mark)
Give the client a clear recommendation of investment decision. (1 mark)
Guidelines:
Continue with the same group in assignment 1
Prepare a power point presentation to the client explaining above steps.
Submit power point presentation to Blackboard.
Include any extra content in appendix (not marked).
Plagiarized report will be given a ZERO.
The company ( Adidas )
1. Articulate the purpose and context of the analysis:
1. Statement of the purpose or objective of analysis.
The reason for this analysis is to help the investors in picking best organiza on to
put their cash in, in this paper we talk explicitly about Adidas company and how
they do their business as indicated by value security and liabili es side. What’s
more, our goal is to o er an input with signi cant level of lucidity and
consistency.
The reason for this analysis is to help the investors in picking best organiza on to
put their cash in, in this paper we talk explicitly about Adidas company and how
they do their business as indicated by value security and liabilites side. What’s
more, our goal is to o er an input with signi cant level of lucidity and
consistency.
adidas has its roots in Germany but it’s truly global company. It employ over
59,000 people worldwide. Employees from about 100 countries work at ‘World
of Sports’ global headquarters in Herzogenaurach , Germany. With independent
manufacturing partners worldwide, they manufactured over 1.1 billion sports
and sports lifestyle products in 2019 and created revenue of € 23,640 billion.
These numbers alone can easily suggest that adidas is quite a large and also
mul faceted organiza on. True. But we keep things simple, lean and fast. And we
will use this approach now to give an overview of what our company is all about.
2. Make a list of specific questions to be answered in the analysis
How well an company can sell its resources for meet its present commitments?
Is a company made a pro t or loss in its previous scal year?
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Is the companies have ability to pay its debts as they come due?
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How much earnings is retained by a company to grow its opera ons?
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How the company’s growth over a number of years?
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How can you present common-size balance sheet?
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How can you present common-size income statements?
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How each detail or part in uences the nancial posi on of the company?
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How much cash the company has as a result of its opera ons?
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How well the company can use value equity investments to acquire bene t for
investors ?
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what is the propor on of opera onal expenses to revenue generate?
2. Collect input data:
1. Company’s annual report for 2018/2019.
2. What is the business model of the firm?
The Company’s core customers:
Adidas has a mass market business model, with no major dis nc on between
customers. The company targets its products at any customer who is interested in
sports clothing and shoes.
Value Proposi ons
Adidas put three primary value proposi ons: innova on, customiza on, and brand /
status.
The company places a high emphasis on ingenuity. To direct its vision, it iden ed
ve strategic pillars for its R&D organiza on: Athlete Innova on, Manufacturing
Innova on, Innova on in Digital and Experience, Innova on in Sustainability and
Innova on in Female Athletes. It has partnered with athletes, corpora ons and
colleges to come up with groundbreaks as part of its Athlete Crea vity
impera ve.features in the product development process. Some of these are as
follows:
Boost is a cushioning technology designed to provide athletes with maximum
comfort, reac vity and energy return; it has energy capsules in the midsole.
ClimaChill-A collec on of clothing with ac ve cooling technology featuring a fabric
with 3D aluminum and tanium cooling spheres that t the warmest areas of the
body
ClimaHeat-A range of apparel that o ers power isola on for cold weather training; it
has hollow ber fabrics that allow higher volumes of warm air to be trapped
The company enables customiza on by allowing customers to personalize their
products. Consumers can go on its website and, select their preferred shoe, then
tailor it in the following areas:
Colors
Size
Font type
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Arc type
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Artwork/Graphics
Team Name
Player Name
Number
Applica on Op ons (heat transfer, screen print, tackle twill, embroidery)
The company has established a powerful brand as a result of its success. It is one of
the world’s oldest shoe brands. It is the largest athle c footwear/apparel producer in
Europe and the second biggest in the world (a er Nike). It manufactures over 778
million product units a year. Lastly, it maintains a number of globally popular lines,
including Adidas, TaylorMade, and Reebok.
Channels
Physical retail outlets, which include own-retail and mono-branded franchise stores, are the
main channels for Adidas. Via various eCommerce websites, it also acquires clients. Via its
social media accounts, online / print / TV ads, and sponsorships, the organiza on promotes
its bid.
Customer Rela onship
The customer rela onship with Adidas is primarily self-service in nature. Although having
li le contact with personnel, consumers use its goods. The company’s website provides
answers to ques ons that are o en asked. That said, in the form of phone and e-mail
support, there is a personal assistance component.
Key Ac vates
The business model of Adidas includes designing and crea ng its products for clients.
Key Partners
Adidas outsources almost all of its manufacturing to third-party independent
suppliers, who represent over 1,000 factories, most of which are in Asia. The
business has developed long-term research rela onships with many athletes,
businesses, colleges, and governments in order to gain addi onal exper se as part of
the product design and development process. For example, once it has developed a
prototype for a new shoe, it sends it to athletes for tes ng.
Key Resources
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Adidas’ main resources are its human and physical resources. In order to generate fresh
ideas, it maintains Poten al teams, groups of experts from various elds who study new
materials, scien c analysis, manufacturing processes, and customer insights. They engage
with the content and souring teams of the organiza on in regular contact. The company
maintains a limited number of own produc on / assembly sites in Germany, the United
States , and Canada.
Cost Structure
Adidas has a value-driven structure, aiming to provide a premium proposi on
through frequent product innova on. Sales, a xed cost, is its biggest cost driver.
Other major drivers are in the areas of marke ng and administra on, both xed
expenses.
Revenue Streams
Adidas has two revenue streams:
–
Product Sales – Revenues generated from the sale of sports shoes, clothing,
and accessories
–
License Fees – Revenues generated from the licensing of the right to use the
Adidas, TaylorMade, and Reebok brands to third par es
3. Collect economic data
4. Collect information about industry of company and about
competitors
Early days
Adolf Dassler, founder of Adidas, c. 1915; (right): the ‘Dassler Brothers Shoe Factory’
near Herzogenaurach train sta on in 1928
The company was founded by Adolf “Adi” Dassler who made sports shoes in his
mother’s scullery or laundry room in Herzogenaurach, Germany a er his return from
World War I. In July 1924, his older brother Rudolf joined the business, which
became “Dassler Brothers Shoe Factory” (Gebrüder Dassler Schuhfabrik).The
electricity supply in Herzogenaurach was unreliable, so the brothers some mes had
to use pedal power from a sta onary bicycle to run their equipment.
Dassler assisted in the development of spiked running shoes (spikes) for mul ple
athle c events. To enhance the quality of spiked athle c footwear, he transi oned
from a previous model of heavy metal spikes to u lising canvas and rubber.In 1936,
Dassler persuaded U.S. sprinter Jesse Owens to use his hand made spikes at the 1936
Summer Olympics. Following Owens’ four gold medals, the name and reputa on of
Dassler shoes became known to the world’s sportsmen and their trainers. Business
was successful and the Dasslers were selling 200,000 pairs of shoes every year before
World War II.
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Both Dassler brothers joined the NSDAP in May 1933 and became also members of
the Na onal Socialist Motor Corps.Furthermore, Adolf took the rank of Sportwart in
the Hitler Youth from 1935 un l the end of the war.During the war, the company was
running the last sport shoe factory in the country and predominantly supplied the
Wehrmacht with shoes. In 1943 the shoe produc on was forced to cease opera ons
and the company’s facili es and workforce was used to manufacture an -tank
weapons. From 1942 to 1945 at least nine forced labourers were working at both
sites of the company.
The Dassler factory, used for produc on of an -tank weapons during the Second
World War, was nearly destroyed in 1945 by US forces, but was spared when Adolf
Dassler’s wife convinced the GIs that the company and its employees were only
interested in manufacturing sports shoes. American occupying forces subsequently
became major buyers of the Dassler brothers’ shoes.
Split and rivalry with Puma
The brothers split up in 1947 a er rela ons between them had broken
down,with Rudolf forming a new rm that he called Ruda – from Rudolf Dassler, later
rebranded Puma, and Dassler forming a company formally registered as Adidas AG
from Adi Dassler on 18 August 1949. An urban myth has promulgated the backronym
All Day I Dream About Sports.
Puma SE and Adidas entered into a erce and bi er business rivalry a er the
split. Indeed, the town of Herzogenaurach was divided on the issue, leading to the
nickname “the town of bent necks”â€â€people looked down to see which shoes
strangers wore.Even the town’s two football clubs were divided: ASV
Herzogenaurach club was supported by Adidas, while 1 FC Herzogenaurach endorsed
Rudolf’s footwear. When handymen were called to Rudolf’s home, they would
deliberately wear Adidas shoes. Rudolf would tell them to go to the basement and
pick out a pair of free Pumas.The two brothers never reconciled and although they
are now buried in the same cemetery, they are spaced as far apart as possible.
In 1948, the rst football match a er World War II, several members of the West
German na onal football team wore Puma boots, including the scorer of West
Germany’s rst post-war goal, Herbert Burdenski. Four years later, at the 1952
Summer Olympics, 1500 metres runner Josy Barthel of Luxembourg won Puma’s rst
Olympic gold in Helsinki, Finland.
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At the 1960 Summer Olympics, Puma paid German sprinter Armin Hary to wear
Pumas in the 100 meter sprint nal. Hary had worn Adidas before and asked Adolf
for payment, but Adidas rejected this request. The German won gold in Pumas, but
then laced up Adidas for the medals ceremony, to the shock of the two Dassler
brothers. Hary hoped to cash in from both, but Adi was so enraged he banned the
Olympic champion.
the original trefoil Adidas logo un l 1997, it is now used on the Adidas Originals
heritage line; the current logo, designed in 1990 for the Equipment line, then
adopted as the corporate logo
In 1952, following the 1952 Summer Olympics, Adidas acquired its signature 3-stripe
logo from the Finnish athle c footwear brand Karhu Sports, for two bo les of
whiskey and the equivalent of 1600 euros.
The Trefoil logo was designed in 1971 and launched in 1972, just in me for the 1972
Summer Olympics held in Munich.This logo lasted un l 1997, when the company
introduced the “three bars” logo (that had been designed by then Crea ve Director
Peter Moore), ini ally used on the Equipment range of products.
Tapie a air
Bernard Tapie, a former French businessman who once owned Adidas but has since
relinquished his control over the company due to debt
A er a period of trouble following the death of Adolf Dassler’s son Horst Dassler in
1987, the company was bought in 1989 by French industrialist Bernard Tapie, for â‚£1.6
billion (now €243.9 million), which Tapie borrowed.Tapie was at the me a famous
specialist of rescuing bankrupt companies, an exper se on which he built his fortune.
Tapie decided to move produc on o shore to Asia. He also hired Madonna for
promo on.He sent, from Christchurch, New Zealand, a shoe sales representa ve to
Germany and met Adolf Dassler’s descendants (Amelia Randall Dassler and Bella
Beck Dassler) and was sent back with a few items to promote the company there.
In 1992, unable to pay the loan interest, Tapie mandated the Crédit Lyonnais bank to
sell Adidas, and the bank subsequently converted the outstanding debt owed into
equity of the enterprise, which was unusual as per the prevalent French banking
prac ce. The state-owned bank had tried to get Tapie out of dire nancial straits as a
personal favour to Tapie, it is reported, because Tapie was Minister of Urban A airs
(ministre de la Ville) in the French government at the me.
Robert Louis-Dreyfus, a friend of Bernard Tapie, became the new CEO of the
company in 1994. He was also the president of Olympique de Marseille, a team Tapie
had owned un l 1993.Tapie led for personal bankruptcy in 1994.He was the object
of several lawsuits, notably related to match xing at the football club. During 1997,
he served 6 months of an 18-month prison sentence in La Santé prison in Paris. In
February 2000, Crédit Lyonnais sold Adidas to Louis-Dreyfus for a much higher
amount of money than Tapie owed, 4.485 billion (€683.514 million) francs rather
than 2.85 billion (€434.479 million). They also purposely bankrupted Tapie’s
company that owned Adidas, because only the company had the right to sue them.
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Post-Tapie era
An Adidas shoe, with the company’s three parallel bars
In 1994, combined with FIFA Youth Group, SOS Children’s Villages became the main
bene ciary.
In 1997, Adidas AG acquired the Salomon Group who specialized in ski wear, and its
o cial corporate name was changed to Adidas-Salomon AG. With this acquisi on
Adidas also acquired the Taylormade Golf company and Max i, which allowed them
to compete with Nike Golf.
In 1998, Adidas sued the NCAA over their rules limi ng the size and number of
commercial logos on team uniforms and team clothing. Adidas withdrew the suit,
and the two groups established guidelines as to what three-stripe designs would be
considered uses of the Adidas trademark.
As CEO of Adidas, Louis-Dreyfus quadrupled revenue to 5.84 billion euros ($7.5
billion) from 1993 through 2000.In 2000, he announced he would resign the
following year, due to illness.
In 2003, Adidas led a lawsuit in a Bri sh court challenging Fitness World Trading’s
use of a two-stripe mo f similar to Adidas’s three stripes. The court ruled that
despite the simplicity of the mark, Fitness World ‘s use was infringing because the
public could establish a link between that use and Adidas’s mark.
In September 2004, top English fashion designer Stella McCartney launched a jointventure line with Adidas, establishing a long-term partnership with the corpora on.
This line is a sports performance collec on for women called “Adidas by Stella
McCartney”,and it has been cri cally acclaimed.
Also, on 3 May 2005, Adidas told the public that they sold their partner company
Salomon Group for €485m to Amer Sports of Finland. In August 2005, Adidas
declared its inten on to buy Reebok for $3.8 billion (US$). This takeover was
completed with partnership in January 2006 and meant that the company had
business sales closer to those of Nike in North America. The acquisi on of Reebok
also allowed Adidas to compete with Nike worldwide as the number two athle c
shoemaker in the world.
Adidas has global corporate headquarters in Germany, and many other business
loca ons around the world such as Portland OR, Hong Kong, Toronto, Taiwan,
England, Japan, Australia, and Spain.
Adidas has long been a popular manufacturer of astro turf football shoes – shown
here a recent pair that has been a popular choice
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In 2005, Adidas introduced the Adidas 1, the rst ever produc on shoe to use a
microprocessor. Dubbed by the company “The World’s First Intelligent Shoe”, it
features a microprocessor capable of performing 5 million calcula ons per second
that automa cally adjusts the shoe’s level of cushioning to suit its environment. The
shoe requires a small, user-replaceable ba ery that lasts for approximately 100 hours
of running. On 25 November 2005, Adidas released a new version of the Adidas 1
with an increased range of cushioning, allowing the shoe to become so er or rmer,
and a new motor with 153 percent more torque.
On 11 April 2006, Adidas announced an 11-year deal to become the o cial NBA
clothing provider. The company has been making NBA, NBDL, and WNBA jerseys and
products as well as team-coloured versions of the “Superstar” basketball shoe. This
deal (worth over $400 million) took over the previous Reebok deal that had been put
in place in 2001 for 10 years.
In November 2011, Adidas announced that it would acquire outdoor ac on sport
performance brand Five Ten through a share purchase agreement. The total
purchase price was US$25 million in cash at closing.
By the end of 2012, Adidas was repor ng their highest revenues ever and Chief
Execu ve Herbert Hainer expressed op mism for the year ahead.
In January 2015, Adidas launched the footwear industry’s rst reserva on mobile
app. The Adidas Con rmed app allows consumers to get access to and reserve the
brand’s limited edi on sneakers by using geo targe ng technology.
On 24 March 2015, Adidas and McDonald’s unveiled the 2015 McDonald’s AllAmerican uniforms. For the third year in a row, players will be wearing short-sleeved
jerseys, made with the same lightweight and breathable material as the ones used in
the NBA.
In August 2015, Adidas acquired tness technology rm Runtas c for approximately
$240 million.
In June, 2016 Adidas and kanye west making history with transforma ve new
partnership Adidas + Kanye west, a new brand name was born which is YEEZY
branded en ty crea ng footwear, apparel and accessories for all genders across
street and sport, Yeezy sales are expected to top $1.3 billion this year (2020)
According to The New York Times.
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In May, 2017 Adidas sold TaylorMade golf company (including Ashworth) to KPS
Capital Partners for $425 million.
Adidas AG revenue for the twelve months ending June 30, 2020 was
$22.787B, a 11.2% decline year-over-year
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Adidas AG annual revenue for 2019 was $26.477B, a 2.3% increase
from 2018
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Adidas AG annual revenue for 2018 was $25.882B, a 7.92% increase
from 2017
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Adidas AG annual revenue for 2017 was $23.983B, a 12.34%
increase from 2016.
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Adidas AG revenue for the quarter ending June 30, 2020 was $3.941B,
a 36.36% decline year-over-year
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Adidas AG annual/quarterly revenue history and growth rate from 2006 to
2020.
Revenue can be de ned as the amount of money a company receives from its
customers in exchange for the sales of goods or services. Revenue is the top
line item on an income statement from which all costs and expenses are
subtracted to arrive at net income
“Adidas-Strategy Overview”. Adidas Group. Retrieved 27 September 2017
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“Adidas Golf USA moves to Carlsbad; Adidas faces legal suit”. Sports
Business Daily. 19 August 1998. Retrieved 22 October 2010.
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“Taylor Made Golf Co”. FundingUniverse. Retrieved 22 October 2010.
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Freeman, Mike (19 August 1999). “Taylor, Adidas merge, reshu e : Hiring
of Callaway o cial for key post could trigger lawsuit”. The San Diego
Union-Tribune. p. C.1. Retrieved 22 October 2010.
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Ward, Denise T. (14 May 2001). “Pro le: Mark King, Taylor Made For His
Job”. San Diego Business Journal. Archived from the original on 10 January
2011. Retrieved 22 October 2010.
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Adidas Annual Report h ps://www.adidas-group.com/en/investors/
nancial-reports/
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References
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