As difficult as failing may be there can usually be a positive spin on our failures that we
endure. The expression, “when you have hit rock bottom, you can only go up from here,”
comes to mind for me. Although this may be an extreme for the business world it still
holds truth. Taking your failures that you have experienced while being a leader and
molding them to be a helpful tool will create a successful failure that you can build off of.
Leadership can be gut wrenching, you have stress riding on your shoulders and this applies
to any leader, whether the company is big or small. Whether you are apart of an athletic
team, you may run the accounting department or you may just be apart of the business
world; in general leadership can be stressful, but also extremely rewarding. Its taking those
rewards that you do get and building progress off of them. We succeed with momentum
and building off of that momentum, even from the bottom.
While global sports brands generously sponsor the worlds top athlete and sports teams,
their workers in Asia who make these goods can barely meet their families basic needs and
many of them are unable to form or join unions without being discriminated, dismissed or
involved with violence by joining a union. They are involved with almost everything;
ranging from stocks all the way to athletics. Although those two things do not appear to be
hand in hand they have more in common than you would think. Adi Dassler is known for
his success in failing, he attempted to begin Adidas in 1924 in his mother’s wash kitchen
under the name Gebrüder Dassler Schuhfabrik (Adidas History Group). His goal at that
point was to provide athletes with the best possible equipment. But Adi would soon have
to start all of this again to try and recreate his company. He learned from his failures and
had to begin from where he left off, fixing his flaws with his designs and his business plan.
In 1949, at the age of 49, he registered the “Adi Dassler Adidas Sportschuhfabrik,” and
began working with 47 employees. It was in 1954 when Adidas finally took off after being
represented by the German National football team who competed in the world cup and
won. This brought Adidas so much attention and expansion into other countries. They
began being represented by world-class athletes from all different sports games. Adidas
was growing rapidly and was successfully achieving their goals (Adidas History Group).
For a global organization like Adidas its marketing mix is adjusted to specific markets.
This is known as international marketing as it takes cultural and social differences into
account when planning marketing activity. Sports marketing are a key focus for Adidas’
marketing mix. The growing popularity of sports as entertainment has led to a huge
increase in sports marketing, i.e. the NBA, NFL, APSL, etc. The founder of Adidas was
one of the first people to see the potential of this form of marketing when he sponsored the
FIFA World Cup back in 1978 (“Planning effective marketing strategies for a target
audience”). Sponsorship involves a business paying to be associated with another
organization, event or TV program. Like most new developments, the sports marketing
function has changed dramatically since its introduction. Just consider Sony’s first ever
Walkman in 1979 to today’s iPod. The same dramatic difference is evident in the sports
marketing arena with sponsorship deals now worth tens of millions of dollars. Rather than
simply trying to gain positive associations with particular sports, companies use sports
marketing to drive the brand and increase sales. Going over Adidas SWOT (Strengths,
Weaknesses, Opportunities and Threats) they have prime examples of what a company
needs and what to focus on to be a leading corporation.
Strengths:
Leveraging strong brand portfolio to establish a robust retail footprint
Focus on research and development (R&D) has facilitated continuous development of new
products
Wide geographical footprint with increasing focus on emerging markets
Weaknesses:
Dependence on third party manufacturing
Opportunities:
Acquisition of Adams Golf strengthens market position
Sponsorship agreements of major sports events enhance the company’s visibility growing
online retail channel
Growing global footwear market
Threats:
Increase in counterfeit products may hurt the brand image
Intense competition could hurt the company’s margins
Exposure to foreign markets makes Adidas susceptible to foreign currency fluctuations
(Adidas AG, 2014).
To start lets take a closer look at Adidas weakness’s, their dependence on third party
manufacturing. When you Google Adidas sweatshops sadly more links come up than you
would expect. Adidas outsources almost 100% of their production to third party suppliers,
which are mainly located in Asia, doing this helps them minimize cost (Labor Rights and
Sportswear Production in Asia, 2006). But at what risk is Adidas taking to save cost of
production. Adidas does have a pretty poor record when it comes to respecting workers
rights in their supplier factories that are over seas. In one of Adidas’ supplier factories
almost the entire union leadership was fired after they began striking over wages. In this
and other Adidas supplier factories, workers have to work at high intensity for long periods
and are paid very low wages (Labor Rights and Sportswear Production in Asia, 2006).
Workers require a living wage, one that will allow them to be able to meet the basic needs
of a family after working a full-time workweek, without overtime. Adidas still won’t
commit to a living wage for its workers. But it will commit to paying already high earning
professional athletes millions of dollars to endorse their products (Adidas AG, 2014).
In 2012 Adidas signed Derrick Rose to a $185 million dollar contract for over a
thirteen-year span. Where as a person working in an Adidas sweat shop in Asia makes 60
cents an hour (Inside Adidas’ Indonésien Factories, 2011). Where is the logic in a labor
worker making $1,248 a year and a man who cannot even compete because of an injury
making around 14 million a year? This may be a success for Derrick Rose and Adidas but
morally they are failing with how they are treating their suppliers over seas. The Panarub
Factory, located near Indonesia’s capital Jakarta, has more than 10,000 workers, mostly
women. The factory makes shoes such as the Predator X boots, which were heavily
promoted for the 2010 World Cup. It was in 2005 that 33 workers from the Panarub
factory were fired after they participated in a strike that was completely legal. They wanted
to get better pay for the thousands of workers at that factory. Afterwards those workers
accepted severance pay through economic necessity in 2007, 9,000 emails were sent by
Oxfam supporters to Adidas requesting the dismissed workers were paid monthly hardship
(Inside Adidas’ Indonesian Factories, 2011). Sadly, to this day there are still ongoing
violations at the Panarub factory. As of 2009 the union re-established itself inside the
factory and now there are currently 2,000 members. This union and one other union at the
factory are pushing for better working conditions and better pay (Inside Adidas’ Indonesian
Factories, 2011). Workers at Panarub are asking for an extra 76 Australian cents per day on
top of the current 55 cents daily food allowance. A single small serve of rice and chicken
in that area can cost them around $1.30, which is way to much for workers who are only
earning around $5 a day. So an extra 76 Australian cents per day would help workers with
the rising cost of food (Inside Adidas’ Indonesian Factories, 2011).
In August of 2005 Adidas bought Reebok, for $3.8 billion and not long after in 2006 two
of Reeboks factories shut down, Pt Spotec and Pt Dong. This left 10,500 workers without
jobs, leaving the concern that it was something about Adidas buying practices that was the
cause of these factories closing down (Inside Adidas’ Indonesian Factories, 2011).
Reportedly Adidas/Reebok had not payment to either of these suppliers in over five years.
Around this same time Adidas reported that their 27% profit increase was because of the
Reebok purchase that allowed the company to negotiate cheaper prices with their
suppliers. Adidas alleges that both supplier factories had “huge and unsustainable debts
due to gross financial mismanagement.” However, the trade unions that were involved in
the factories believe that the factories’ debts were partly because of an upgrade in
infrastructure that was carried out on Adidas request and other pressures on the factories as
a result of Adidas’ purchasing practices (Inside Adidas’ Indonesian Factories, 2011). But,
Adidas still has not yet provided evidence that their buying practices did not contribute to
the closure of the two factories; PT Spotec and Dong Joe. In an effort to make the situation
better Adidas informed Oxfam that is response to all of the job losses, they wrote off air
freight costs for shoe products so it would enable factories to settle wages. They also wrote
off the cost of materials removed from workers and they also provided medical assistance
to workers who were laid off (Inside Adidas’ Indonesian Factories, 2011). The unions from
around the world also attempted to get Adidas to help out the workers who lost their jobs
