Adidas Group History

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adidas Group History

1949

The foundation

18 August - adidas is registered as a company, named after its founder: 'Adi' from Adolf and'Das' from Dassler.

50s

The 'Miracle of Bern'

1954 - The 'Miracle of Bern' Germany battle Hungary with a competitive advantage. They arewearing adidas soccer boots which for the first time feature removable studs.


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60s

Higher

Driven by a desire to help all athletes committed to performance, adidas manufactures equipmentfor what some consider "fringe sports". Unconventional high jumper Dick Fosbury launcheshimself up and over in adidas footwear.

70s

The "adidas" team wins

Crowning moment: Franz Beckenbauer, the "Kaiser", raising the World Cup in victory salute.Germany had just beaten Holland 2-1 in the 1974 final.

80s

The transition

After Adi Dassler's death, Adi's wife Kthe, his son Horst, and his daughters carry on thebusiness.


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90s

With a new management

Under the CEO Robert Louis-Dreyfus, adidas is moving from being a manufacturing and salesbased company to a marketing company.

1995

adidas goes public

Flotation of the company on the Frankfurt and Paris Stock Exchange.

1996

A splendid year

The "three-stripes company" equips 6,000 Olympic athletes from 33 countries. adidas athleteswin 220 medals, including 70 gold. Apparel sales increase 50%.


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1997

adidas-Salomon AG

adidas AG acquires the Salomon Group with the brands Salomon, TaylorMade, Mavic andBonfire in December 1997. The new company is named adidas-Salomon AG.

1999

The new brands

The integration of the new brands is gaining momentum. The new TaylorMade FireSole clubsboost sales. Salomon in-line skates take off with high double-digit growth during the first half of1999.

2000

New management

Following personnel changes, the new management initiates an ambitious Growth and EfficiencyProgram. Major sports events such as the European Soccer Championship EURO 2000 and theOlympic Summer Games, where swimmer Ian Thorpe takes three gold medals, contribute to thecompanys success.


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2005

Sale of Salomon

The Salomon Group (including Salomon, Mavic, Bonfire, Clich and ArcTeryx) is being sold toAmer Sports in October 2005. The new adidas Group is focusing even more on its core strengthin the athletic footwear and apparel market as well as the growing golf category. The legal nameof the company will change to adidas AG in May/June 2006.

2006

adidas-Salomon AG acquires Reebok

The closing of the Reebok transaction on January 31, 2006 marks a new chapter in the history ofthe adidas Group. By combining two of the most respected and well-known brands in theworldwide sporting goods industry, the new Group will benefit from a more competitiveworldwide platform, well-defined and complementary brand identities, a wider range ofproducts, and a stronger presence across teams, athletes, events and leagues.

What We Do

For over 80 years the adidas Group has been part of the world of sports on every level, deliveringstate-of-the-art sports footwear, apparel and accessories. Today, the adidas Group is a global

leader in the sporting goods industry and offers a broad portfolio of products. Products from theadidas Group are available in virtually every country of the world. Our strategy is simple:continuously strengthen our brands and products to improve our competitive position andfinancial performance.

adidasFootwear, apparel, accessories


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ReebokFootwear, apparel and accessories

TaylorMade-adidasGolfGolf Equipment: metalwoods, irons putters, golf balls, footwear, apparel and accessories

RockportDress, casual and outdoor footwear, apparel and accessories

CCM-HockeyHockey equipment and apparel

Activities of the company and its around 170 subsidiaries are directed from the Group'sheadquarters in Herzogenaurach, Germany. It is also home to the adidas brand. ReebokHeadquarters are located in Canton, Massachusetts. TaylorMade-adidas Golf is based inCalifornia. The company also operates creation centres and development departments at other

locations around the world, corresponding to the related business activity.

adidas Sourcing Ltd., a fully-owned subsidiary headquartered in Hong Kong, is the worldwidesourcing agent for the adidas Group.Effective December 31, 2010, the adidas Group employed 42,541 people.

Our Mission

The adidas Group strives to be the global leader in the sporting goods industry with brands builton a passion for sports and a sporting lifestyle.

We are committed to continuously strengthening our brands and products to improve ourcompetitive position.

We are innovation and design leaders who seek to help athletes of all skill levels achieve peakperformance with every product we bring to market.

We are consumer focused and therefore we continuously improve the quality, look, feel andimage of our products and our organisational structures to match and exceed consumerexpectations and to provide them with the highest value.

We are a global organisation that is socially and environmentally responsible, that embracescreativity and diversity and is financially rewarding for our employees and shareholders.

We are dedicated to consistently delivering outstanding financial results.

Strategy


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Our goal as a Group is to lead the sporting goods industry with brands built upon a passion forsports and a sporting lifestyle. Inspired by our heritage, we know that a profound understandingof the consumer and customer is essential to achieving this goal. To anticipate and respond totheir needs, we continuously strive to create a culture of innovation, challenging ourselves tobreak with convention and embrace change. By harnessing this culture, we push the boundaries

of products, services and processes to strengthen our competitiveness and maximise the Groupsoperational and financial performance. This, in turn, will drive long-term value creation for ourshareholders.

Creating shareholder valueCreating value for our shareholders through significant cash flow generation drives our overalldecision-making process. Therefore, we are focused on rigorously managing those factors underour control, making strategic choices that will drive sustainable revenue and earnings growth,and ultimately cash flow. For each of our segments, we pursue the avenues for growth which weexpect to be most value-enhancing, with particular emphasis on improving profitability. Inaddition, rigorously managing working capital and optimising our capital structure remain key

priorities for us. As always, we are committed to increasing returns to shareholders with above-industry-average share price performance and dividends.

Presentation ofRoute 2015In November 2010, the Group unveiled its 2015 strategic business plan named "Route 2015".This plan is the most comprehensive the adidas Group has ever prepared, incorporating allbrands, sales channels and Group functions globally.Based on our strong brands, premium products, extensive global presence and our commitmentto innovation and the consumer, we aspire to outperform total market growth (both GDP andsporting goods market) and to grow our bottom line faster than our top line. In addition, theGroup plans to lay the foundation for leadership in the sporting goods industry by outgrowingour major competitor over the next five years. The plan aims at growing the revenues of theadidas Group by 45% to 50% currency-neutral from 2010 to 2015. In addition, the Group targetsa compounded annual earnings growth rate of 15% and aims to reach an operating margin of11% sustainably by 2015 at the latest.

Diversebrand portfolioConsumers want choice. Whether it is the athlete looking for the best possible equipment, or thecasual consumer searching for the next fashion trend, we are inspired to develop and createexperiences that engage consumers in long-lasting relationships with our brands. To maximiseour consumer reach, we have embraced a multi-brand strategy.This approach allows us to tackle opportunities from several perspectives, as both a mass and aniche player, providing distinct and relevant products to a wide spectrum of consumers. In thisway, each brand is able to keep a unique identity and focus on its core competencies, whilesimultaneously providing our Group with a broad product offering, increasing our leverage in themarketplace.

Investments focused on highest-potential markets and channelsAs a Group, we target leading market positions in all markets where we compete. However, wehave prioritised our investments based on those markets which offer the best medium- to long-


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term growth and profitability opportunities. In this respect, we continue to place a considerableemphasis on expanding our activities in the emerging markets, particularly China and Russia, aswell as building market share in underpenetrated markets such as the United States.No matter in which market we operate, we recognise that consumer buying behaviour and theretail landscape are unique. Therefore, to fully exploit market opportunities, we tailor our

distribution strategy to present our brands to the consumer in the most impactful way. This isachieved by following a distinctive but coordinated channel approach. To this end, we strive toprovide our customers with superior service to secure prime shelf space for our brands, whilecontinuing our commitment to building a strategic competency in own retail and e-commerce.

Creating a flexible supply chainSpeed and agility are key to outpacing the competition. We are committed to meeting the fullrange of customer and consumer needs by ensuring product availability in the correct size andcolour, providing game-changing technical innovations and also the latest high-end fashionproduct to the highest quality standards. A key strategic priority is to shorten creation andproduction lead times by continuously improving our infrastructure, processes and systems. By

sharing information from point of sale to source and vice versa, we strive to connect and moreclosely integrate the various elements of our supply chain, to enable quick reaction to changingconsumer trends. To this end, we focus on building maximum flexibility. While leveraging theefficiency of common infrastructure and processes, the Group strives to provide tailoredsolutions for all our business models, be it the wholesale or retail channels, or the performance-oriented or style-oriented businesses.

Leading through innovationEveryone in the adidas Group is responsible for driving innovation. Therefore, we foster aculture of challenging convention and embracing change, and require all areas of the Group togenerate at least one new meaningful innovative improvement per year. In particular, we believethat technological evolution and cutting-edge design in our products are essential to achievingsustainable leadership in our industry. Beyond this, enhancing services for our customers andimplementing more efficient and effective internal processes are other areas where ourorganisation strives to innovate.

Develop a team grounded in our heritageOur culture is continuously shaped by influences from the past and the present as well as ourfuture aspirations. We perpetuate our founders commitment to the athlete/consumer, pride inwhat we do, quality and love of sport. We win as a team through open communication,collaboration and our shared values found in sport. Therefore, we foster a corporate culture ofperformance, passion, integrity and diversity by creating a work environment that stimulatesinnovation, team spirit, and achievement based on strong leadership and employee engagement.

Becoming a sustainable companyLike any global business, the adidas Group must manage wide-ranging commercial andcompetitive pressure to deliver increased financial returns and growth. At the same time, we areaccountable for our employees and have a responsibility towards the workers in our suppliersfactories and also for the environment. We are committed to striking the balance betweenshareholder interests and the needs and concerns of employees and workers and the environment,


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or, in short, to becoming a sustainable company. We report publicly on the steps we take to havea more positive impact on society and the planet.

Supervisory Board

The Supervisory Board of adidas AG - in accordance with the German Co-Determination Act(Mitbestimmungsgesetz - MitBestG) is composed of twelve members, of which six members areelected by the Annual General Meeting and six members are elected by the employees.

The core functions of the Supervisory Board include the appointment and dismissal of ExecutiveBoard members, the supervision and consultancy of the Executive Board, the approval of thefinancial statements as well as the authorisation of important operative planning and corporatedecisions.

The term in office of all members of the Supervisory Board started with the end of the Annual

General Meeting of adidas AG on May 7, 2009. By rotation, the next Supervisory Boardelections will be held in 2014.

For further information on the Supervisory Board members, please see our overview below.

MEMBERS OF THE SUPERVISORY BOARD

Igor Landau

Chairman

Born:

1944

Nationality:

French

Exercised Profession:


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Former Chief Executive Officer of Aventis S.A., Paris, France

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Sabine Bauer*

Deputy Chairwoman

Born:

1963

Nationality:

German


Chairwoman of the Central Works Council,

adidas AG


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Willi Schwerdtle

Deputy Chairman

Born:

1953

Nationality:

German


Management Consultant, Hofheim am Taunus, Germany

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Dieter Hauenstein*

Born:

1957


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Nationality:

German


Member of the Works Council Herzogenaurach, adidas AG

Dr. Wolfgang Jger*

Born:

1954

Nationality:

German


Managing Director, Hans-Bckler-Stiftung, Dsseldorf, Germany


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Dr. Stefan Jentzsch

Born:

1960

Nationality:

German


Partner, Perella Weinberg Partners UK LLP, London, Great Britain

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Herbert Kauffmann

Born:

1951


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Nationality:

German


Management Consultant, Stuttgart, Germany

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Roland Nosko*

Born:

1958

Nationality:

German


Trade Union Official, IG BCE, Headquarters Nuremberg, Nuremberg, Germany

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Alexander Popov

Born:

1971

Nationality:

Russian


Chairman, RFSO "Lokomotiv", Moscow, Russia

Hans Ruprecht*

Born:

1954

Nationality:


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German


Sales Director Customer Service, Central, adidas AG

Heidi Thaler-Veh*

Born:

1962

Nationality:

German


Member of the Central Works Council, adidas AG

Christian Tourres

Born:


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1938

Nationality:

French


Former Member of the Executive Board of

adidas AG

*Employee representative

ur Executive Board is composed of four members who reflect the diversity and internationalityof the Group. Each member is responsible for a major business area within the Group.

Herbert Hainer - CEOBorn:1954 in Dingolfing (Bavaria),Germany

Nationality:German

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Glenn BennettBorn:1963 in New Hampshire, U.S.A.

Nationality:American

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Robin J. StalkerBorn:1958 in Palmerston North,

New Zealand

Nationality:New Zealand

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Erich StammingerBorn:1957 in Rosenberg/Rgland, Germany

Nationality:


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German

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How adidas Was Created From Waste Materials To Worlds No.1 Sports Shoes

Manufacturer

How adidas Was Created From Waste Materials To Worlds No.1 Sports Shoes

Manufacturer

The success story of adidas is an amazing grass to grace story. From practically scavenging forraw materials and turning them into valuable footwear, the Dassler family, led by Adi, from thelaundry of their house, created and turned adidas into worlds largest maker of sports goods.

Its a story that will fire you up as entrepreneur, or business manager, knowing that with quality

ideas, focus, perseverance, and determination to succeed, nothing can stand on your way tosuccess.

The creation of adidas can be traced to the early 1900s when Adi Dassler started a little shoe-making business at the back of his mothers wash kitchen in Herzogenaurach, Bavaria, Germany,

after returning from World War I. Though a trained baker, his baking skill however offered himlittle chance of getting a job at the time. Therefore, turning to his innate exceptionalcraftsmanship, he began making shoes.

Because the country was just coming out from war, shoe-making materials were practicallyunavailable. To keep his business going therefore, he resorted to using materials from old tires,helmets, army tents, tank materials, and rucksacks, which he could scavenge. Also, to keep his


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business going in the face of poor electricity supply at the time, the innovative and creative Adibuilt a shoe trimmer and other equipment powered by a stationary bicycle.

His first shoes were bedroom slippers that had soles made from used tires. However, for his deeplove for sports, he later converted the slippers into distinctive lightweight gymnastics and soccer

shoes with nailed-on cleats. Demands for the shoes rose astronomically, reaching 100 pairs a dayin 1926. With the huge demand, the company was able to build a factory, and Adis brother,Rudi, and his father quit their jobs to join him, and the business became known as the DasslerBrothers Shoe Factory.

Adi wasnt only an expert shoe-maker; he was also a master marketer, whose goal was not onlyto sell his shoes in Germany or Europe, but the whole world. And his major strategy to achievingthis goal was to expose his shoes at the Olympics by persuading athletes to wear them for freeand to observe improvement in their performance.

This was a new marketing strategy which Adi was bringing to the industry, and which shot up

his companys sales after the German team to the 1928 Olympics wore his shoes. In thefollowing Olympics in Los Angelis, athletes who wore Dassler shoes all won metals, anobservation that brought the Dassler brand name to be synonymous with victory in the minds ofathletes.

Then came the 1936 Olympics, an opportunity Adi would never miss to once again show hisshoes to the world and intensify the association with winning that his shoes were impressing onthe minds of athletes worldwide.

When the Games started, Adi drove to the Olympic village with a suitcase full of spikes andconvinced Jesse Owens, U.S. sprinter, to use Dassler shoes in the competition. With Owens

winning four gold medals running on Dassler shoes, which the world saw, demands fromnational teams, trainers, and individual athletes from all over the world for Dassler shoesskyrocketed. The companys sales drove to 200,000 pairs yearly before World War II broke out.

The companys factory was commandeered by German forces to produce boots for its soldiersduring the war. When the war ended, Adi and his brother were again to start scavenging formaterials to use in rebuilding their shoe making business. They cleverly made use of materialsfrom old American tank as soles and army tents as canvas.

Not long after, a bitter quarrel broke out between Adi and Rudi, which led to their separation in1948, with Rudi going ahead to set up a competing shoe-making business, Puma, which he

initially called Ruda. With the brothers agreeing that neither of them should use the Dasslerbrand name, Adi initially named his Addas before changing it to adidas.

Both companies prospered to become global businesses, however under the leadership of thebrilliant, innovative, creative, and marketing genius Adi, adidas grew in the mid 1900s tobecome the worlds largest and fastest selling sports shoes manufacturer.


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Adidas led the global industry for two principal reasons: Adis ability to continually create highquality and innovative shoes that kept its competitors far behind, and his profound marketingsavvy.

Some of his landmark inventions included, the first shoes designed for ice, and the first multi-

studded shoes; his improvement on soccer boot. For decades before 1957, the design of soccerboots was such that they had metal studs mounted in leather. This made them heavy, especiallywhen they are wet. But Adi changed that. His design used nylon sole and molded rubber studs,which resulted in light, and durable shoes, which was launched in 1957. Not long, rival shoemanufacturer, including Puma began copying the innovation.

Another remarkable innovation Adi brought to the industry that took adidas to the worldsnumber one position was the launch of its screw-studded soccer shoe, which enabled players tochange worn out cleats or replace cleats with longer or shorter types depending on the nature ofthe pitch they are playing. This helped the German national football team to defeat the morefavored Hungarian side by 3-2 on a wet, muddy pitch, at the World Soccer Championship in

Bern, Switzerland in 1954.

Following this triumph that was facilitated by the innovative soccer boot, the demand for itsoared about 2000 pairs were demanded daily.

Then came the invention Adi declared was his best contribution to the game of soccer. At 77years in 1978, Adi, recognizing that players spend about 90 percent of their time on the pitchrunning, rather than kicking the ball, invented an ultralight soccer boot with sole like sprint shoe.The boot also had orthopedic footbed, and wider positioning of the studs to enable bettertraction. Since the FIFA World Cup was holding in Argentina that year, the boot was alsodesigned to counter the weight-increasing effects of the humid Argentine climate. At that World

Cup where it was first used, almost all the participating teams wore it.

Adi is also credited for been the first to introduce the practice of selling branded sports bags andclothing, which is now a common practice with athletic shoe manufacturers.

The companys excellent marketing strategies well complemented its innovative productcreation. Following its strategy of using the Olympic Games to expose its shoes to globalaudience, adidas, in the 1956 Olympic Games gave away its shoes to competing athletes for free,and at the end of the Games, athletes who wore adidas shoes won a massive 72 medals and broke33 records. Seeing this, sports teams from all over the world wanted to wear adidas.

At the 1964 Olympics in Tokyo, athletes who wore adidas-shod cleared 80 percent of the totalmedal. With athletes wearing adidas shoes winning medals upon medals at the Olympics, andother major world Games and sports, adidas became and remained number one throughout the1950s, 60s, and 70s the world over.

The brand entered and took over the leadership of the U.S. athletic shoe market in the 1950s; andexpanded globally in the 1960s and 70s. As the 1970s closes, adidas was selling about 200,000pairs of its shoes per day in over 150 countries, with 24 factories in 17 countries. The companys


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other product lines, including jerseys, track suits, balls, shorts, and athletic bags were equallyleaders in their niches.

However, with Adis death later in 1978, shortly after his ultralight soccer shoe invention, thefortunes of adidas started nose-diving, no thanks to the weak management team that took over

the rein of the company. Adidas management team, which consisted mainly of Adis relations,did not have the creativity, innovativeness, marketing skill, and determination to continueleading the industry. And with the strong and aggressive marketing strategies from competitors,such as Nike Inc. and Reebok Inc. mounting, the company found itself lagging behind.

To compound adidass problem, family members started fighting over control of the company,causing it to lose more grounds to its competitors, as well as recording financial losses beforethey sold it for just $289 million in 1989 to a French businessman and politician Bernard Tapie.Tapie sold the company in 1993 to a group of European investors for $371 million. The newowners implemented a number of severe cost-cutting and reorganization strategies, includingmoving production to Asia, and increasing marketing budget to 11 percent from 6 to increase

brand visibility.

The changes produced positive result for adidas, with profit gradually climbing back from DM117.3 million in 1994 to DM 244.9 million in 1995. From there, adidas began bouncing back tocatch up on lost grounds. The company equipped 6,000 athletes from 33 countries to the 1996Olympics. And at the end of the Games athletes who used adidas won 70 gold and a total of 220medals.

By sponsoring certain world sports tournaments, including the 1998 Soccer World Cup, and theWomens World Cup in 1999, adidas achieved high global visibility, which it will equally getlater this year as the official apparel sponsor of the 2010 FIFA World Cup in South Africa. And

by making certain strategic acquisitions, such as the purchase of the Salomon Group in 1997, andReebok in 2006, adidas was set to compete favorably and regain its number one position in theyears to come.

adidas Business Strategies

The success story of adidas throws up valuable strategies and keys to business success forbusiness managers and entrepreneurs to use for their business.

Here they are:

StartingB

usinessW

ith

L

ittle

Or Noth

ing

With knowledge of what to do, the right attitude, focus, determination to succeed and creativity,you can start a business with little or no money. You will be able to discover free or almost freeresources you never thought existed.


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Adi didnt have the needed materials to make shoes from, or the electricity to produce hisproducts, but he never allowed that challenge to stop him. With the right attitude he scavengedfor materials and creatively made footwear of high value from them.

Marketing Skill Is Needed

To succeed in business does not stop at knowing how to create high quality products, knowinghow to sell them is equally important, if not more. Without the ability to sell, your income isstunted, and your business suffers you need good cash flow to your business for it to bevibrant. To ensure this, you should learn marketing, and continue to find effective strategies tomarket and sell your products.

Adis success in taking adidas to the top of the industry globally is attributed in no small measureto his marketing genius, which enabled him to create innovative marketing campaignsrepeatedly.

Continuing ToBe

Creativ

eAnd

Innovativ

e

To be able to beat the competition and remain top in your industry, you cannot afford not to keepbeen creative and innovative in your business. With such character, you will always be ahead ofthe competition.

adidas domination of the global sports shoes industry in the 1950s, 60s, and 70s, was the highcreativity and innovation in product creation and marketing that it continually churned out.

Market Penetration Strategy

To get into a market newly, an effective strategy you can use is to give out your product for freeto some of your target customers for them to sample or test it. This allows you to prove to themwhat you believe your product will do for its users, and for them to compare it with what isobtainable in the industry and see which is better. This strategy is cheaper and more effectivethan trying to force your product down their throat using advertising.

This was the strategy that Adi employed, and which worked like magic. Seeing Jesse Owens runand clinch four gold medals at the 1936 Olympic Games on adidas shoes was enough to makeevery athlete the world over want to wear it too.

Establish Solid Succession

If you are the owner of your business, you should begin to lay a solid foundation for the businessto continue running even after you are no longer there as soon as the business takes shape. It isnot wise to put family members who are unqualified and unmotivated in management positions;they will definitely ruin the business. Instead, employ qualified and result-oriented professionalmanagers to run it. With a management system in place, you can be rest assured that the businesswill continue running after you may have gone to the great beyond.


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adidas fell from its glory in the 1980s after the death of its founder, Adi, as a result of his familymembers in management positions fighting over the control of the business. Perhaps the businesswould have since died also if it hadnt been sold and managed by professional managers.

Cutting Costs

To be able to compete effectively, especially in an industry where competition is high, you reallyneed to watch and find ways to cut your costs. If your competitors are selling at lower price andstill keep their quality than you because they have found a way to produce at lower cost, you willbe losing your market share in no time.

Cutting your costs does not only enable you to sell at competitive price, it also allows you tomake good profit, and be healthy.

Part of the strategies that brought adidas out of the woods was its new managements cost cuttingprogram, which included moving their production to Asia where costs were less.

Documents

Adidas Group History