How Global Brand Adidas Slipped in India

Summary

          For a company that sells running shoes, German  sporting goods and apparel powerhouse Adidas has long perferred to tiptope in the indian market. Many global retail giants believe that this is a market where pots of money can be made (Prabhakar 2012).

          But for a market on the backburner, adidas devoted considerable time and emphasis on india while announcing its first-quarter results earlier this month (Prabhakar 2012). Adidas global boss Herbert Hainer said "commercial irregularities" as its Reebok unit in India had wiped out e125 million from its global profits. The problems limited to india, could lead to further charges around 70 million (Prabhakar 2012). These are indeed big numbers but it is not for nothing that Adidas is the worlds second biggest sporting goods company (Prabhakar 2012).

         What could be worrying Adidas is the nature of the losses, Reebok has been a constant underachiever in many global markets since Adidas brought its smaller US rival for $3.8 billion in August 2005 (Prabhakar 2012).  A month before it lifted the lid on the irregularities, Adidas sacked Subhinder Prem (Prabhakar 2012). Prem is credited with Reebok's breakneck expansion in India, Runau and prem did not reply to questions from ET on Sunday on the controversy (Prabhakar 2012)

          Prem has however denied wrongdoing, he responded to the "defamation and termination of services" by launching legal action against the company for its part, and also Adidas has replaced the management at Reebok India (Prabhakar 2012). The situation in India, although unfortunate, will allow us to now accelerate plans to improve a specific under performing part of our business, which was said by Hainer in a statement (Prabhakar 2012).

          To understand the Reebok mess, you must first turn to how Adidas and Reebok were run in India (Prabhakar 2012). Adidas bought Reebok in 2005, but the process of melding the two indian offshoots begam only in May 2011 when Prem was made the heard of the combined entity (Prabahakar 2012). However the Reebok story in India is replete with instances of strategic blunders, corporate mismanagement and financial mischief, according to three people with knowledge of the matter (Prabhakar 2012). Rather than an under-performing asset. Reebok India problems are much bigger.

Opinion

             In my opinion i think this whole deal is for money because in as said in the article there are many market where pots of money can be made, for the simple fact that the global boss Herbert Hainer wiped out e125 million from global profits.

          As many people know Adidas bought U.S rivals Reebok for $3.8 billion, and sales have dropped dramatically, and has been a constant underachiever since being bought out i feel that Adidas hasnt done anything new and exciting for Reebok for example there has been no new merchandise designs or commercials.

      However i do think Prem has wrong doing in this case and was only trying to save himself when he denied that he had wrong doing because he did credit with Reebok's breakneck expansion. Also i completely agree with the statement that the company is not telling the truth, i personally think Adidas is under performing there assets.

Feedback

1. Do you think Adidas is under performing there assets?

2. Do you think Adidas is letting Reebok's reputation fall?

References

Binoy Prabhakar & Chaitali Chakravarty (May 13 2012)/How Global brand Adidas slipped in India/The Economic Times