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
1

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

5.

Competition Analysis
Industry Structure (Using Porters Five forces
model)
Competitive Profile Matrix (Based on Key Success
factors)

6.

Any additional analysis (Application of BCG tool)

7.

Conclusion
Referen ces

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 1890s, 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.

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.

Mission And Vision Analysis

4

Fulfilling Potential

Reeboks Vision

"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 "

Reeboks 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 weve had the courage to challenge convention. Reebok creates products and
marketing programs that reflect the brands unlimited creative potential.

Nikes 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.

Nikes Mission
To bring inspiration and innovation to every athlete in the world"
*If you have a body, you are an athlete. Bill Bower

Analysis on the basis of elements of mission

5

Statement
Son.

Elements

Reebok

Customers
Product or Services
Market
Technology
Concern for Survival,
Growth & Profitability
Self-concept
Concept for Public
Image
Concern for
employees
Total
Value in percentage

Yes
Yes
No
Yes

In
numeri
c
1
1
0
1

Yes

2
3
4
5
6
7
8

yes
yes
no
yes

In
numeri
c
1
1
0
1

no

No

yes

Yes

no

No

no

Nike

62.5

50

Interpretation of mission statement:After analysis the mission statement of Reebok & Nike is: On the basis of various parameters like customers, product or services, market, technology, growth & profitability, selfconcept, 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.

ENVIRONMENTAL ANALYSIS OF REEBOK

6

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.

3) Reeboks 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.
Reeboks 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.

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 Reeboks Global Corporate Citizenship Platform, the
Reebok Foundation focuses its philanthropy in communities where Reeboks 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.

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 brands 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.

10

Internal Environmental Factors

SWOT ANALYSIS OF REEBOK
A SWOT analysis is a critical portion of every marketing plan. It outlines the companys
Strengths and Weaknesses, and the markets 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

Internal

External

Unfavorable

Strengths

Weaknesses

(1) Brand Equity

(2) Reebok-Adidas merger.
(3) Reebok is one of the top athletic
shoe companies in U.S. in terms of
market share.
(4) Barefoot shoes are scientifically
healthier than any other kind of shoes.
(5) 76 independent sensors on the
bottom of Reebok Realflex barefoot
shoes promote natural movement,
flexibility, and comfort.
(6) The price is the average of main
competitors.
(7) Customizing the shoes with the
styles and colors customers prefer.

(1) Reebok owns few official

stores and relies more on
retailers.
(2) Reebok doesnt own factories
and they depend on producing
industries in their production.
(3) Previous reputation of
releasing faulty products.
(4) Few sponsors associated with
Reebok.

Opportunities

Threats

(1) Expanding current market and reach

current markets with their new products.
(2) Marketing towards several age
groups to increase profits.
(3) Product development opportunity.
(4) Expanding to market for the product
on social media websites.
(5) Creating new channels of
communication on social media websites.

11

(1) Many companies produce

barefoot shoes and this leads to a
strong competition.
(2) Changing trends in footwear
technology.
(3) As barefoot shoe is a want
and not a need, some people may
think twice before purchasing.

(4) Poor economy

Industry Analysis of REEBOK

PORTERS FIVE FORCE MODEL
PORTERS FIVE FORCE MODEL
SNO
.

PARTICULAR

1)

THREAT OF NEW ENTRANTS

LOW

2)

RIVALRY AMONGST EXISTING FIRMS

HIGH

3)

BARGAINING POWER OF BUYERS -

DEGREE

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. Todays 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.

12

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,
Reeboks expansion of the womens 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 competitors 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 buyers 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.

13

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.

14

COMPETITOR ANALYSIS OF REEBOK

NIKE

REEBOK
KEY SUCCESS
FACTOR
DOMESTIC MARKET
POSITINING
INTERNATIONAL
MARKET
POSITIONING
CUSTOMER
LOYALTY

Weigh
t
0.0 to
1.0
0.1

Rati
ng
1 to
4
4

Wtd
score

Wtd
score

0.4

Rati
ng
1 to
4
2

0.1

0.4

0.08

0.1

PUMA
Wtd
score

0.2

Rati
ng
1 to
4
3

0.3

0.3

0.3

0.24

0.24

0.4

0.4

0.4

0.09

0.27

0.27

0.36

0.07

0.28

0.28

0.21

0.07

0.21

0.28

0.21

0.1

0.4

0.3

0.3

0.1

0.4

0.3

0.2

0.07

0.21

0.21

0.14

0.08

0.32

0.32

0.24

0.04

0.12

0.12

0.12

0.3

BRAND
RECOGNITION
PRICE
COMPETITIVENESS
PRODUCT QUALITY
RELATIONSHIP
WITH
MANUFACTURERS
AND SUPPLIERS
PRODUCT R&D
PRODUCT
DIVERSITY
FINANCIAL
POSITION
MARKETING
ORGANIZATIONAL
STRUCTURE

15

3.71

3.22

3.02

TOTAL

CONDITION(RATING
SCALE)

1
2
3

LESS THAN AVERAGE

STRONGLY

AVERAGE
MORE THAN
AVERAGE

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.

16

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.
.

17

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