Reebok 2013 Annual Report Download - page 182

adidas Group
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2013 Annual Report
Group Management Report – Financial Review
178
2013
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03.5
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Risk and Opportunity Report
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Financial Opportunities
Overall, we continue to view the potential impact of organisational
and process improvements as significant. Given that benefits from our
numerous initiatives to improve efficiency and operational excellence
have already been reflected in our targets for 2014 and 2015, we
now regard the likelihood that additional opportunities related to
organisational and process improvements materialise to such an extent
only as possible (2012: likely).
Marketing and communication opportunities
Advances in digital communication offer significant opportunities for our
brands to engage with consumers in a deeper and more meaningful way,
and enhance our potential to build long-lasting relationships and brand
loyalty. The adidas Group constantly monitors the latest developments
and trends in communication technologies. The emergence of social
media and social networks is one such example which is helping our
brands increase their consumer reach. In this regard, we are investing
considerable resources to present the adidas Group’s brands through
a variety of social media platforms, such as Facebook, YouTube or
Twitter
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SEE GLOBAL BRANDS STRATEGY, P. 77. A key advantage of these
tools is that they allow our brands to engage in a direct dialogue with our
consumers. By offering consumers the opportunity to actively participate
in brand campaigns or in the design and creation of new products, we
can generate a far superior brand experience. In 2013, we introduced
Brazuca, the official 2014 FIFA World Cup Brazil match ball, which was
named following a public vote in Brazil involving one million football
fans. Furthermore, as consumer demand for personalised experiences
and continuous access to fresh content increases, we are establishing
global newsrooms, staffed with “brand journalists” in key locations,
starting with Rio de Janeiro, London, Portland and Shanghai, creating
content, providing community management, customer relationship
management and analytics across various time zones
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SEE GLOBAL
BRANDS STRATEGY, P. 77.
Another opportunity for the Group is the activation of promotion
partnerships with individual high-profile athletes as well as global
icons such as Lionel Messi for adidas football or Kanye West for adidas
Originals. Depending on their success and popularity, as well as our
ability to sign new future iconic partnerships, this could generate
additional sales for the Group via signature product lines and design
collaborations as well as increase brand equity. While we believe there
is significant long-term potential for future opportunities in this area,
in the short term, we assess the potential impact of marketing and
communication opportunities as minor (2012: significant). Despite our
strong portfolio of promotion partnerships with world-class athletes in
key sports, we regard the likelihood that those opportunities materialise
to such an extent in the short term only as possible (2012: likely).
Acquisition opportunities
Although the Group’s focus is on organic growth initiatives, we consider
acquisitions of smaller, fast-growing or innovative companies as an
opportunity to generate additional sales and profits. Furthermore,
acquisition opportunities may arise as a result of challenging
macroeconomic and competitive conditions that could lead to financial
distress of companies which, while not as financially healthy as industry
leaders, possess certain assets that could help the adidas Group further
improve its business performance. However, we still regard the potential
impact of acquisition opportunities only as minor and the likelihood that
such opportunities materialise as possible.
Personnel opportunities
Recruiting highly qualified employees, in particular for our own-retail
segment, may help us generate better than expected top- and
bottom-line results. For example, a reduction of the attrition rates in
our own-retail stores could increase conversion rates as well as store
productivity and also lead to lower expenses for recruiting activities.
In addition, successfully establishing a performance culture as well as
developing key talents across the Group may contribute positively to
sales and profitability improvements. As a result, we continue to believe
the potential impact of such opportunities is significant, and we still
assess the likelihood of an impact of such magnitude in the short term
as unlikely.
Financial Opportunities
Favourable financial market changes
Favourable exchange and interest rate developments can potentially
have a positive impact on the Group’s financial results. Our Group
Treasury department closely monitors the financial markets to identify
and exploit opportunities
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SEE TREASURY, P. 135. Translation effects
from the conversion of non-euro-denominated results into our Group’s
functional currency, the euro, might positively impact our Group’s
financial performance. Overall, we believe favourable exchange rate
and interest rate developments could have a major potential impact. We
continue to assess the likelihood of being positively affected to such an
extent as unlikely.