Sunday, June 24, 2012

Adidas teams up with CrossFit


Lohr’s article, "Lessons in Longevity" tells the survival story of I.B.M. and how great companies sooner or later “dominate, they lose it, and then they re-create themselves or not.”

A recent article in the Bloomberg Businessweek by Julie Cruz entitled, “How Adidas is Whipping Reebok into Shape”, discusses shoe giant Adidas’ decline in their Reebok brand and its change in strategy. Rival Nike has taken over the outfitting rights of the National Football League (NFL), which will cost Adidas a $250 million loss in revenue, “It’s really hard to move a company when it’s doing well and not facing a crisis”, said Mr. Yoffie of the Harvard Business School when referring to I.B.M.’s shift from it’s dependence on mainframes to software and services. Similarly, Adidas was maybe too comfortable with their 10-year partnership with the NFL and lacked an alternate strategy. I don’t know about you but before the NFL I couldn’t tell you what Reebok represented.  

Adidas’ is now sponsoring CrossFit, a intensity workout fitness craze, to possibly offset losing the NFL contract or even more importantly help Reebok find its place in the market. Cruz talks about Adidas using CrossFit to “restore Reebok’s intensity.” CrossFit owns 3,000 gyms worldwide and is very well known in social media circles, where people can challenge others via Facebook and Twitter. Adidas likes the intensity behind CrossFit and wants Reebok customers to expect the same in their footwear.

Not sure if I would say this is a long-term strategic plan for Adidas, but I feel there is an untapped market with CrossFit. Reebok is on life support and it must differentiate itself from competitors. What do you feel Adidas’ competitive advantages are over Nike? What barriers of entry are in place to stop Nike and UnderArmour from copying Adidas’ strategy?     


References

1.     Cruz, Julie. “How Adidas is Whipping Reebok into Shape” Bloomberg Businessweek. June 21, 2012.

2.     Lohr, Steve. “Lessons in Longevity, From I.B.M.”

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