Adidas-Salomon: Incorporating Risk into Corporate Strategy
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Case Details:
Case Code : BSTA095
Case Length : 08 Pages
Period : 2004
Organization : Adidas-Salomon (adidas)
Pub Date : 2004
Teaching Note :Not Available
Countries : Global, USA
Industry : Apparel
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Please note:
This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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Excerpts
Risk Management
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Risks were a part of business. adidas had attempted to balance risk awareness with the need to identify, create and fully exploit opportunities. adidas approached risk management by: Fully integrating it into day-to-day business functions at all organizational levels...
Marketing Risks
The international sporting goods industry was highly competitive. Success depended on the correct assessment of future trends and challenges. adidas continuously gathered and analyzed business intelligence, including a qualitative assessment of the future business environment, in order to best identify strategies to avoid or lower risk...
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Operations Risks
Independent factories produced the vast majority of adidas products. Inferior quality and/or delivery delays had an impact on the Group’s revenue and reputation. To mitigate this risk, adidas employed more than 100 quality control officers who monitored factory performance...
Social and Environmental Risks
adidas’ Social and Environmental Affairs (SEA) team monitored the factories of adidas suppliers to ensure compliance with social, environmental, health and safety standards, creating and implementing action plans to ensure improvements where necessary...
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Legal Risks
As a global corporation, adidas operated under a wide variety of legal and regulatory frameworks. Finding solutions for various legal matters in numerous countries entailed risk for the Group, especially in the formulation of contracts, the resolution of corporate legal issues and the taking of legal action...
Information Technology Risks
adidas utilized a complex network of communications and applications in its business activities. Natural disaster, criminal mischief or IT mismanagement might result in a severe disruption of its business...
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Financial Risks
Currency Risk
adidas largely outsourced production to the Far East (Southeast Asia and China) where sales were transacted in US dollars. As a result, 70 to 80% of the sourcing volume over the last three years (2000-2002) was incurred in US dollars...
Exhibits
Exhibit I: Financial Highlights
Exhibit II: Segment Information (€ in millions)
Exhibit III: Important Exchange Rates for adidas
Exhibit IV: Interest Rate Hedges (in Millions)
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