In of experience abroad, exports were initially

March 15, 2019 Marketing

In 1997, scientists Johanson and Vahlne developed the Uppsala Model, a framework that represents the internationalization process in four different stages (Johnanson and Vahlne, 1997). Comparing the model of the authors with the international operations of Adidas, one could get the impression that the strategic orientation resembles a prototypical approach. In the course of the internationalisation process, Adidas has gradually intensified its foreign activities and acquired specific knowledge, particularly in relation to the foreign markets it serves. Due to the low risk and the lack of experience abroad, exports were initially made from the domestic location to Canada, Scandinavia and Switzerland (Devinney et al., 2010). With increasing experience and a broader knowledge base, Adidas sought to deepen its commitment in foreign markets. Only five years later, in 1955, Adidas was exporting to 40 different countries (Holtbrügge & Hausmann, 2017).
The Uppsale model was complemented by the concept of psychological distance. The idea is, that the internationalisation strategy of companies is initially focused on markets that are very similar in cultural, political or linguistic terms in regards to their home country (Hodicová, 2007). Taking into account the psychic distance, it becomes clear that Adidas internationalization differs from the prototypical approach that the scientists represent in their model. In order to establish itself on the global market, Adidas has exported directly to distant markets instead of following the traditional path of the Uppsala model.

In the following years, the company focuses on the acquisition of foreign subsidiaries in Canada (1958), France (1959) and South Africa (1972) (Devinney et al., 2010). With the growth of the emerging markets, Adidas changed its strategic direction and additionally focused on new sales markets (Hartmann, 2011). This led Adidas to establish various joint ventures and subsidiaries in South America, Middle East, Asia Pacific etc. in the 1990s (Holtbrügge and Hausmann, 2017). To improve the management of the international operations, the company opened additional distribution management units in Hong Kong, China, America, Panama and The Netherlands (Adidas, 2018 a). Furthermore, in order to reduce production costs, the group has relocated – as part of their internationalization – its manufacturing to foreign subcontractors (Dransfield et al., 2004). Besides the complete textile production, 96% of the footwear production was outsourced to Asia (Andreff, 2009). The Adidas Group has paid attention to opening production facilities in various countries in order to minimize political and economic risk. Should the need arise to leave any manufacturer country because of political unrest, the company would still have other politically more stable production manufactories in which the production could continue (Winstanley et al., 2002).
The strategy framework of Bartlett and Beamish (2014), “Global Integration vs. National Responsivness” will be used to shed more light on the general strategic orientation of Adidas. The strategy is evaluated on the basis of the force for national responsiveness and the force for global integration.
At the beginning of the internationalisation of Adidas, the processes were coordinated and controlled by the HQ in Germany (Holtbrügge and Hausmann, 2017). In product development, attention was paid to developing standardized products on a global scale in order to sell them internationally. Adidas has managed to create a unique standard of product quality that is known around the world and meets converging consumer needs (Morschett et al., 2011). Taking these points into account, Adidas has therefore initially pursued a global strategy that constitutes a strong international integration of the product as well as a low national responsiveness. This strategy is characterised by a dominant HQ that controls the most important decisions. Subsidiaries usually serve as delivery channels, or are initially limited to sales and service functions (Bartlett and Beamish, 2014).
In the course of time, however, the strategic orientation has continued to develop. Value-adding activities, which are in direct contact with customers, were increasingly carried out locally in the national markets with the respective adjustments. In particular, the customer relevant areas, such as marketing and the various distribution channels, are managed by Adidas on a market-specific basis. Other areas such as R&D will continue to be decentralised at Adidas where the relevant framework conditions are best (XX). Bartlett and Beamish (2014) also show in their graphic “Organizational Design: Decisions by type of Activity” that the areas of sales & service and marketing require the greatest need for local responsiveness. An example of this is Adidas’ sponsoring partnership with the New Zealand rugby team (Jackson et al. 2001) and Adidas’ current cooperation with the Chinese education ministry (Hofer & Scheuer, 2017). In addition, a representative office and two exclusive Adidas shops were opened in China to better control the growing Chinese market. The state cooperation as well as the acquisition of national sponsorships helps Adidas to achieve national competitive advantages over its competitors.
Therefore Adidas must increasingly face up to a “transnational challenge”. According to Meckl (2014), the transnational strategy represents the most difficult challenge for the internationalisation of a company. MNCs need to build an integrated global network that is partially managed centrally and partially decentralized. According to Meckl (2014), the aim of the transnational strategy should be to achieve flexibility in local adaptation and at the same time global efficiency through the integration of value creation activities.

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