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Reebok International Limited
Sep 14, 2017 in Business
Reebook has been renowned for the production as well as sale of apparel among athletic shows. The company operates in the entire sports equipment industry. It is a subsidiary of a big company, Adidas. The company has been operating under Adidas since the year 2005. It is mostly involved in the production of athletic shoes, accessories as well as apparel. The company has been sponsoring most top athletes as well as sports clubs since 1990s. Most of the deals the company engages with were made during this time and most have continued to date. However, the company has experienced setbacks that have decreased Adida's profits.
One of the causes of decrease in company's profits is that the product development has continually performed poorly. This has led to decreased sales for its products and equipment in the market. This has been caused by some of the producers of similar products who duplicate the counterfeit products from the company. Most are the times that one would find the company's products in the shops but they fail to be original products. This has been a great challenge to Reebok since it has lowered the sales levels of the company, as many customers tend to acquire the counterfeit products at lower prices from the other producers. Moreover, the company has experienced a great problem in its finance area that has continually performed poorly over the last years. The financial problems have been caused by reduced revenues on sales. For instance, India has reported a higher level of inventories as well as provisioning debts that have eroded the entire profitability of Reebok. The net profit between 2009 and 2010 therefore became insignificant and the figures indicated negative. The increase in inventories means that the company does not make enough sales as projected since most producers have embarked in production of similar products from Reebok.
The company should work towards finding solutions to these problems before it makes more losses. It should be keen on the overseas production. The company should be at a position to diversify its products and distribute them to overseas countries to ensure that the customers distinguish their original products from counterfeit products. This will further lower the costs involved in production hence making the products affordable to customers. This is because a reduction in production costs will enable Reebok to lower price of its products in the market hence acquiring a larger market share. Moreover, Reebok should introduce innovative products. It can do this through improving its brands on color, shape among other innovative techniques. This will ensure that its products remain unique in the market and will be recognizable from a distance to be original. The products should be unique as compared to those of other competitors.
Economic analysis can be done through calculating the entire return on investments of the proposal. In this case, if the returns on investments appear to be favorable, then Reebok should go for the alternative. Moreover, a cost benefit analysis can be done to find a better alternative. In this case, if the benefits appear to be more than the costs, then the alternative should be taken and implemented in Reebok.
A simpler way that enables to check whether the entire study should be limited or else broad in terms of scope is through a market research. Market research can be through surveys or focus group. In case most customers offer support to alternatives, then the study can be broad scoped. This will enable the entire company to find out how to embark in production of products that match needs of its customers. Moreover, the company will increase its market share.