University: Adidas's Strategy for International Business Performance

This report, prepared from the perspective of an international manager at Adidas, identifies the issue of increased global competition, particularly from Nike, as a significant threat to Adidas's future growth and market performance. The report analyzes the current market scenario, highlighting Nike's competitive advantages in advertising, endorsement deals, and co-branding strategies. It then discusses various communication marketing and advertising strategies, evaluating their advantages and disadvantages in the context of international business. The report recommends that Adidas adopt a pull strategy of marketing communication mix, focusing on standard advertising to gain maximum economic benefits. Furthermore, the report suggests localizing some advertising campaigns to be more people-based, especially in the North American market. The conclusion emphasizes the importance of a well-articulated communication mix and cultural sensitivity in international business strategy formulation.

Running Head: PRINCIPLES OF INTERNATIONAL BUSINESS
Topic- Strategy development for understanding and application of international business
fundamentals from the perspectives of an International manager at Adidas
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University name
Author notes

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Identification of the issue that could influence Adidas’s future growth and market performance
One of the aftereffects of Globalization is expansion of business in international markets.
Since the demand for rich indulgenced and demand for rich products existed the International
Business has started in full swing (Cavusgil et al. 2014). In this context, the German
multinational corporation, Adidas is considered here. Adidas is the largest sports shoes
manufacturer in Europe and is second-largest in the world after Nike (Mahdi et al. 2015). In
recent times the business environment of Adidas is in trouble. Increased global competition has
caused its business difficulties to be more prominent in recent times. Considering the North
American business areas, sales have been falling sharply for the last three years and as a result
shares have also fallen drastically (Mahdi et al. 2015). Once Adidas was Nike’s biggest
competitor in US market, but the recent business trouble has pushed Adidas down the list of top
sportswear companies round the world and Adidas is trying hard to manage all issues
comprehensibly (Barker 2013). In regard to international business scenario in Adidas, the issue
of robust advertising and promotion by its competitor, Nike is considered. Based on the problem
areas best strategy will be recommended that could help Adidas deal with recent issues and have
long term business sustainability in international markets.
Strategy development
International business marketing is based on four main pillars namely communication
strategy, pricing strategy, segmentation and product attributes (Fill and Turnbull 2016).
Globalization has narrowed down world market of different products and thus localizing
marketing mixes have become less prominent (Shenkar, Luo & Chi 2014). Many argues in this
field that economic and cultural differences are still responsible for influencing customers’ tastes
and preferences globally (Gilaninia, Taleghani and Azizi 2013). In this regard the

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communication channel strategy support will be considered for Adidas to support its long-term
market sustainability. Here the current issues faced by Adidas is considered which is, its
advertising and promotion issue in comparison to its competitor Nike. Nike is far ahead in its
promotional campaigns than Adidas.
Introduction to the issue
The ineffective communication advertisement and promotion has caused Adidas lose its
market share considerably and its close competitor Nike is having the competitive gain in a more
comprehensive manner (Helm and Gritsch 2014). So, the main issue here is issue of competitive
gain by Nike and the paper will try to devise strategic solutions best fit for Adidas in this regard.
Discussion of the issue
In order to understand the issue, the present market scenario of its competitor Nike need
to be understood. Nike has more endorsement deals in comparison to Adidas. It can be put in the
other way around; Adidas lost its major endorsement deals to Nike (Mahdi et al. 2015). The deal
with Michael Jordon is bringing Nike billions of dollars till now, which was once rejected by
Adidas. Also, Nike endorses increased number of American athletes than Adidas. Moreover,
Nike’s co-branding strategy with Apple is a hit in the market and power technology driven
workout become very popular among athletes (Mahdi et al. 2015). Nike+ is thus, a genuine co-
branding initiative that has helped customers’ in experiencing better result delivery. Its recent co-
branding with Amazon has also increased its online sales opportunities manifold (Naeem, Bilal
and Naz 2013). In environmental sustainability upfront as well, Nike is gaining competitive
advantage where it has started a GreenXchange web platform and has established a group called
Business for Innovative Climate and Energy Policy to catalyst green development (Seimiene and

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Kamarauskaite 2014). Keeping all these aspects of Nike in mind sustainable competitive
strategies for Adidas will be developed. Analyzing the root cause of competition, it is found that
Adidas need to focus more on its communication and advertising strategies in regard to
international marketing.
Advantages and disadvantages of various approaches
In this section various communication marketing and advertising strategies will be
discussed and after evaluation of all strategies the most suitable strategy will be recommended
for Adidas. Communicating the attributes of products and services to end customers is the most
difficult and crucial role of the marketing mix and is based on the choice of channel for
advertisement and promotion (Todorova 2015). There are mainly four communication channels
available in marketing namely direct selling, sales promotion, direct marketing and advertising.
However, for international marketing the communication mix faces higher level of difficulties in
terms of cultural barriers, level of noise and effect of source and country of origin effect
(Gilaninia, Taleghani and Azizi 2013). Also, there are push and pull strategies. Push strategy
emphasize on direct selling and pull strategy emphasize on mass media advertising. Strategic
choice-making is highly influenced by product type and consumer sophistication level, length of
channels and availability of media. In consideration to channel length in push strategy, direct
selling can be expensive as the number of channels in distribution channels are higher thus
increasing the cost (Fill and Turnbull 2016). In this regard, pull strategy can be optimal as it tries
to pull products by the use of mass advertisement and thereby creates huge consumer demands.
Considering media availability, a pull strategy is mostly reliable on access of advertising media.
Whereas, push strategy is best suited when there is limited access to mass media. In
consideration to push-pull mix strategy push strategies emphasize on industrial products and

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more complex new products for both sophisticated and demanding buyers (Helm and Gritsch
2014). It is apt also when distribution channels are short and limited electronic media are
available. On the other hand, the pull strategies emphasize mainly on consumer goods and
products. They are best for long distribution channels and when there are sufficient electronic
media availability for promoting the marketing message to the end customers (Helm and Gritsch
2014).
Recommended strategy
Keeping the above evaluation in mind it is recommended that Adidas should adopt pull
strategy of marketing communication mix. As Adidas is a global name and has strong brand
value it does not need to promote itself to be known. Instead it should play safe to gain
competitive advantage in the market. It also manufactures consumer goods like shoes, apparels
and other consumer durables. In this regard standard advertising will be more advantageous in
gaining maximum economic benefits (Naeem, Bilal and Naz 2013). The North American
businesses are facing higher level of difficulties in their operations and in this context, Adidas
should focus on the cultural and legal environment of the nation and should localize some of its
advertising campaigns to be more people-based.
Conclusion
Thus, to conclude, it could be said that IB is not restricted to only cross-country trade but
also includes e-commerce trade relations. In this regard, the communication mix need to be well
articulated so that international business does not get hampered easily and cultural influx should
be the base of the strategy formulation. Being choosy and precise in this matter will cause
nothing but business failure.

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