(Reebok & Addidas)

8/10/2019 (Reebok & Addidas)

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MANAGEMENT INFORMATION SYSTEM (BPMN6053 GROUP B)

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1.0 Why is business integration important to Reebok?

1.1 Increase supply chain efficiency

1.1.1 Cooperation across the supply chain is being made easier by

the availability of enterprise systems by own acts together internally.

1.1.2 By the way, via business integration across Reebok, it begins to

seem possible to attack the larger issues of the extended supply chain.

Once Reebok have good information on their own sales, inventory, or

production figures, it is much easier to share that with other companies.

For example major systems alike SAP vendors are also making it an

explicit part of their strategy to support Reebok communications in theirproduct package offerings.

1.1.3 Besides that, implementation of business integration allow

Reebok to incorporate its manufacturing partners and customers

around the globe through Internet EDI links as well as ultimately plans

to tie its systems directly to theirs.

1.1.4 Reebok can also utilize this integration platform by offeringcustomers access to enterprise information through its official web

sites. Through these internet sites customers can use to order the

products from their home or just check on availability and pricing. The

Web site helps to advertise their products in a wider scale. It will give

the customers information about the new product release and company

information. This literally helps to increase the brand popularity of the

company among the customers.

1.2 Enhanced customer service and network relationships

1.2.1 The main reason implementing business integration for

construct strong customer service and also key to growing corporate

businesses. Some studies have suggested that the typical

manufacturer stands to cut the time between customer's order and

the arrival of the shipments by 15-40 per cent with well-implemented

business integration software.


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1.2.2 Reebok can use integration data to manage its entire business

better. These are emphasis via System a like SAP, systems software

etc. when everything Reebok know about their customers available at

every touch point across their business and meet the needs throughout

the customer life-cycle.

1.3 Cost-cutting in internal operations

1.3.1 At the most fundamental level, integration systems offer ways to

squeeze costs out of internal supply chain operations. They accomplish

this mainly by cutting across and linking together the traditional

functions of the business, in the same way that good business process

management does. This always refers to replace inventory with

information.

1.3.2 Reebok has all the typical supply chain problems such as

storage of raw materials, stock turn over, product forecast,

procurement etc. Its product line experiences seasonal sales peaks

that make a hard time for product forecasting. So Reebok can use

business integration system to link its forecasts to productionscheduling and ultimately to procurement. Through this it dramatically

can cut inventory levels (liability). By the way, help to translate to

higher warehouse capacity with good projection and planning with the

profit earn.

1.4 Strategic Insight

1.4.1 Integration of all the communication tools, avenues and sources

within a company into seamless business intragroup systems will

maximize the impact on consumer and also minimal cost.

1.4.2 Therefore Reebok can use business integration system to link

all internal group communication in one hub. As result, when

everything is integrated its easier for Reebok employees or even

management to understand how their organization is operating and

ensure processes are as streamlined as possible which indirectlyincrease customer satisfaction.


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2.0 Diagram what information is collected and how s it is used in the new

system at Reeboks. Specify the format of data collected at each point

New system in Reebok:

2.1 Re engineering

Re engineering is the analysis and design of workflows and business process

management within an organization. A business process is a set of logically

related task performed to achieve a defined business outcome. Process

reengineering began on private sector technique to help organization rethink

how their do work in order to improve customer service , cut operational cost

and become world class competitor .Business is basically fundamentalrethinking and radical re design, made to an organization existing resources.

2.2 Private architecture

Reebok installed a privately designed architecture for voice, video, and data.

Reebok communicates not only with its worldwide distribution base but also

with its ad agency and other suppliers. IT currently developed an electronic

image library to enable product shots to be distributed to every country whereReebok does business. The system dropped the new product lead time from

six months to three, and, in some case.

2.3 Passport

To improve this process, Trainer developed a software package called

Passport. Passport rationalizes product codes and shoes size. It does also

give small distributors and subsidiaries access to the system.

2.4 Lotus Notes

Lotus Notes is used to store the catalogues with mail links through cc: Mail

2.5 Electronic data interchange

Electronic data interchange with 10-15 percent of its retailers. This

commitment enables goods to be tracked through shipping companies,

customs, and warehouses.


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2.6 Hoover

A data capture system to information from databases around the world, is

linked to customer database that track what customers have ordered and

what they want.


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3.0 When problems arise with the network, or the software, how can they be

identified and resolved? How do we set up an IS group to solve

problems and help users?

The problem that arise can be identified by the complain that had being make

by the customer. For example compliant regarding the size or colour of the

product. The problem that happens also can be detected by doing a checking

of the product inventories and raw material stocks when retailers and

distributions placed orders. Once it have the order but the inventories are not

being reduce it means have a problem regarding the system that had being

use and the company need to make faster corrective action to make sure the

business can be success. The company see the problem that they facing inthe AFS system so the company taking action by push for new features such

as a Web-based system to handle business-to-business transaction with their

suppliers.

The company learned about the problem almost immediately. It prove went

the company pays VML to run its computer programme Seer to scan Internet

blogs from the comment of their customers. Based on this immediate action

take the company told customer to treat their product before sell it.

Through the information system the company use news media approach such

as Youtube and Second Life to market their product. The company also use

the website to help them emphasizes the benefit of information system to

create flexible supply chain and they use this platform to share information to

produce and ship he right product to each market. Reebok installed Radnet

Inc Webshare groupware system to maintain its website. The system has tool

for email, discussion group and bulletin boards.IT currently developed an

electronic image library to enable product shots to be distribute to very

country where the company do a business and this help a lot to improve the

communication between company and their customer.

Information system (IS) also helps to improve the process in the business.

Reebook itself use passport which is rationalizes product code and shoe size

which means gives small distribution and subsidiariesaccess to the systemthrough the personal computer it will help the customer and make customer


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feel easily doing business with the company. Lotus Notesalso being use to

help to store the catalogues with mail link through cc:Mail

IS also help the company by using hoover to help the company capture

system to suck in information from database around the world and it linked

to customer database that track what customers have orders and what they

want. Use electronic data interchange with 10-15 percent of retailers it will

enables goods to be tracked through shipping companies, customs and

warehouse.


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4.0 How has Reebok been hampered by its information system?

Peter Burrows as chief technology officer (CTO) was counting on the system

to handle the major transactions at Reebok, so he could avoid the necessity

of rewriting the old applications to become Y2K compliant. By May, 1999, the

system was still not fully operational. Among other problems and bugs, the

system was too slow to check product inventories and raw material stocks

when retailers and distributors placed orders Peter Burrows as chief

technology officer (CTO) was counting on the system to handle the major

transactions at Reebok, so he could avoid the necessity of rewriting the old

applications to become Y2K compliant. By May, 1999, the system was still not

fully operational. Among other problems and bugs, the system was too slow tocheck product inventories and raw material stocks when retailers and

distributors placed orders.

In year 1993 assessment identified major problem with Reeboks information

system incompatible databases, system that were old and inflexible and both

costly and time-consuming to change. Many critical business processes were

manual and paper based, such as financial consolidation, factory purchase

order placement, and there was a notable lack of standardization of hardware

and software.

Based on this assessment, Reeboks management was faced with a

challenge. Given a fragmented global technology infrastructure, how would

Reebok international archive a truly transnational configuration leading to the

global efficiencies it sought and yet maintain the local responsiveness

required for its customer.

Reebok management recognizes that in order to archive sustainable

competitive advantage it was necessary to proactively develop on enterprise

information system architecture that would facilitate global efficiencies in

production and distribution.


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5.0 Write a report to management that describes the primary cause of the

problems, a detailed plan to solve them, and show how the plan solves the

problems and describe any other benefits it will provide.

5.1 INTRODUCTION

On August 3, 2005, Adidas-Salomon AG announced its plans to buy all

outstanding shares of Reebok International Ltd.'s stock at $59.00 per share,

for a total of $3.8 billion. Upon announcement, Reebok stock rose 30% while

Adidas climbed 7%. As stated by Herbert Hainer, CEO of Adidas, "This is a

once-in-a-lifetime opportunity to combine two of the most respected and well-

known companies in the worldwide sporting goods industry. Together, we will

expand our geographic reach, particularly in North America, and create a

footwear, apparel and hardware offering that addresses a broader spectrum

of consumers and demographics" (Adidas.com). A primary goal of the

acquisition has been to challenge industry leader Nike for a higher share of

the United States sporting goods market as well as the global sporting goods

market. The acquisition has prompted much discussion as to what the future

holds for the sporting goods industry and its major players.

5.2 MAJOR PROBLEM FACING REEBOK ON 1989 TO 1990

Reebok's share of the athletic shoe market fell to 28% in 1988, and Nike

made serious inroads into Reebok's market share and threatened to regain

the market leader position. By the year-end 1989, Nike had regained the

position. Nike used new technology to design for its new products and the

new casual shoe would be introduced in the spring of 1990. Therefore, this

would be a strong competitor for the company. Not only did the Nike go back

to the No 1 position, but also in 1988, Converse was making efforts to

become competitive in the area of high-tech and women's athletic footwear.

Thus, it gave Reebok lots of pressure on its products development and

market share in the coming years. The problem was not only from outside

competitors, the problem was also within the internal operation. Since the

management styles conflicting was with the those of Fireman, President and

Chief operating officer, Joseph Labonte and Chief Marketing officer, MarkGoldston both resigned from Reebok in 1989. After their resignation, Fireman


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reorganized the company, and this movement may lead to delay the reaction

to competitor's movement. Of operation result side, from 1989 to1990, the net

revenue increases, but the net income slowdown.

5.3 CORE COMPETENCIES & COMPETITVE ADVANTAGE

Competitive advantage is a special edge that allows an organisation to deal

with market and environmental forces better than its competitors. Whereas,

sustainable competitive advantage is one that is difficult for competitors to

imitate. This distinction is essential when evaluating the acquisition and its

effects.

A merger of this scale is inherently complex, dealing with issues such asglobal positioning of companies, corporate cultures, and the allocation of

resources. To better understand the advantages gained from the Adidas-

Reebok merger, it has been examined the following: Through these various

analyses, it has been have discovered that the importance of branding is

paramount for success in this industry. Our research also identifies the

specific danger of competition between Adidas and Reebok.

Our analysis of the Adidas-Reebok merger shows how it will gain a

sustainable competitive advantage that may one day dominate the footwear

industry both domestically and internationally. The fact that Adidas and

Reebok control such different aspects of the shoe industry will help to ensure

their success.

To fully understand how Adidas-Reebok will gain a sustainable competitive

advantage over Nike, the situation must be looked at from several different

points. These include industrial, customer and competitor analyses, as well

as a look at the different marketing strategies and changing marketing trends.


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Cost disadvantages independent of scale are moderate. Many athletic shoe

customers are brand loyal and are reluctant to try a new athletic shoe. Additionally,

previous aggressive marketing campaigns have increased not only brand and

individual product name recognition. Government policy is a low entry barrier, as all

manufacturers in every industry are subject to factory safety laws.

Threat of Retaliation

The threat of retaliation is high in the athletic shoe industry. For example, if a

small new competitor attempts to gain market share by dumping their products, the

much larger computer firms are more capable of absorbing losses associated with

driving the new competitor out of business.

The threat of new entrants to the profit potential of athletic shoe

manufacturers is minimized through high entry barriers, but incumbent

manufacturers must stay aware of other shoe manufactures attempting to enter the

athletic shoe industry.

Rivalry Among Existing Firms

In the athletic shoe industry, corporations are mutually dependent. Acompetitive move by one firm directly effects competitors, forcing retaliation or

counterefforts. For example, Reeboks expansion of the womens walking shoe,

inspired other firms to follow.

The number of competitors is stable, partially due to high entry barriers. This

adds to the rivalry among existing firms. Manufacturers watch each other carefully

and make appropriate countermoves to match a competitorsmove.

The rate of industry growth is stable, but the quest for global market share is

eminent. Nike and Reebok are not as dominant globally, compared to the U.S. This

increases global rivalry. Product characteristics are related to market share. Name

recognition alone sells athletic shoes. The larger the market share, the greater

advertising capabilities and hence increased name recognition.

Athletic shoe manufacturers relentlessly try to minimize fixed costs. Many

shoe manufacturers reduce their costs by assembling athletic shoes abroad where


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labor is less expensive and tax laws are minimal. This increases rivalry, when

manufacturing savings pass to the consumer.

Capacity has minimal impact on rivalry, because most firms have means to

manufacture the demanded amount of athletic shoes. This ability to meet demand

reduces market because most firms overproduce and drive down the selling price.

Low exit barriers and diversity among competitors has minimal impact on

profit potential. If the athletic shoe industry becomes too unprofitable, firms could

switch to other shoe markets. Additionally, diversity among firms is small because

every firm follows one another.

The rivalry among existing firms is high where weak firms are easily acquiredby fierce competitors. This may have a high impact on profit potential.

Bargaining Power of Buyers

Woolworthss shoe chains account for 23% of the U.S. athletic shoe

sales. Their dominant retail market share gives them a large amount of power.

Furthermore, Woolworths dominant market position contributes to concentration of

the buyers industry. Smaller firms have difficulty competing with mighty Woolworthschains and other large shoe retailers.

Woolworths chains pose a moderate to low threat of backward

integration. In the event of backward integration, Woolworths would be subject to

some of the high barriers to entry. Plus, they would have to continue to sell their

competitors products because retail shoe sales are the core competency of their

corporation.

Buyers have high switching costs in regards to opportunity cost. If an

athletic shoe retailer decided to drop one of the popular athletic shoe brands, their

sales would fall due to high consumer brand loyalty. Most buyers have a medium

profit margin so price sensitivity of buyers is moderate. In the athletic shoe industry,

price increases pass to the consumers.

The overall impact from buyers bargaining power to profit potential is

moderate.


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Bargaining Power of Suppliers

Athletic shoes are manufactured primarily from raw materials including rubber,

leather and nylon. These materials could be classified as commodities, where the

manufacturing process adds to their value. For this reason, the suppliers have

limited bargaining power, and little impact on profit potential.

Threat of Substitute Products and Services

Athletic shoes are designed to improve comfort and personal safety during

periods of increased movement. Substitutes for athletic shoes are using other forms

of shoes, or going barefoot. A large population of athletic shoe consumers wear

athletic shoes strictly because they are comfortable. Comfortable dress shoes orsandals are equally interchangeable with minimal switching costs. If the athletic

shoe is used for sports, then there are relatively few substitutes. Given these

reasons, the threat of substitute products is moderate and the impact to profit

potential is moderate to high.

Relative Power of Other Stakeholders

The U. S. government has low power over the athletic shoe industry.Many shoe manufacturers have plants outside the United States, where U.S. laws

are not applicable. To minimize the relative power of other stakeholders

corporations strategically locate their plants throughout the world. Forces driven by

market demand are the only forces that may significantly affect profit potential.

Therefore, the relative power of other stakeholders ability to impact profit potential is

moderate to low.


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5.5 Overall Assessment

The threat of new entrants to the profit potential of athletic shoe

manufacturers is minimized through high entry barriers, but incumbent

manufacturers must stay aware of other shoe manufactures attempting to enter the

athletic shoe industry.

The rivalry among existing firms is high where tender firms are easily

acquired by fierce competitors. This may have a high impact on profit potential.

The overall impact from buyers bargaining power to profit potential is

moderate.

Suppliers have limited bargaining power, and little impact on profit

potential.

The threat of substitute products is moderate and the impact to profit

potential is moderate to high.

The relative power of other stakeholders ability to impact profit potential

is moderate to low.

The overall profitability on the industry is moderate to low level and

could increase with future consolidation. This is because of high rivalry, many

substitute products and a little buyers bargaining power.

5.6 The Integration

Also, by standardizing processes of using information technology implementin Reebok company like SAP, AFS , BW, Retail Inventory Management if having

advance information technologies and processes to meet the changing requirement

to-re-engineering, improve its communication, supply chain system, use electronic

data interchange and improving organizational data and process. This will result in

increased operational efficiency and lowers cost across their power generating

products. This will shift company to meet the world requirement for sport shoes

industry.


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REFERENCES

http://faculty.lebow.drexel.edu/KwakH/lecture/ppt/MKTG634/Web/swot_analysis.htm.

http://www.articlesbase.com/marketing-articles/adidasreebok-merger-1983240.html

http://faculty.lebow.drexel.edu/KwakH/lecture/ppt/MKTG634/Web/swot_analysis.htm.

http://www.articlesbase.com/marketing-articles/adidasreebok-merger-1983240.html

Reebok International, Ltd. (1995): The Nike Challenge - Case Authored By :ThomasL. Wheelen, Moustafa H. Abdelsamad, Shirley E. Fieber, and Judith D. Smith
http://www.articlesbase.com/marketing-articles/adidasreebok-merger-1983240.htmlhttp://www.articlesbase.com/marketing-articles/adidasreebok-merger-1983240.htmlhttp://www.articlesbase.com/marketing-articles/adidasreebok-merger-1983240.html

(Reebok & Addidas)

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