Masters Programmes Assignment Cover Sheet: Accounting and Finance Management

Question: “You are required to submit an answer for i) Case A: Analysis of Adidas v
Puma AND ii) ONE of the two alternative Cases B1 (Riverton Inc.) OR B2 (SafeCo
plc.).”
“I declare that this work is entirely my own in accordance with the University's Regulation 11
and the WBS guidelines on plagiarism and collusion. All external references and sources are
clearly acknowledged and identified within the contents.
No substantial part(s) of the work submitted here has also been submitted by me in other
assessments for accredited courses of study, and I acknowledge that if this has been done it
may result in me being reported for self-plagiarism and an appropriate reduction in marks
may be made when marking this piece of work.”
Warwick Student ID: 1767645 / Accounting and Finance Management / June 2018
i) Case A: Analysis of Adidas v Puma
Case A: Comparison of Adidas v Puma
The scenario is intended to be realistic and the date is June 2018 though the
storyline is
fictitious
Freshly armed with your new Warwick MBA, you have recently joined an executive recruitment
firm that specialises in advising and placing senior managers in the sportswear industry. One of
your clients is currently considering an offer of a senior post at Adidas when a similar post
comes up at Puma (the companies have a long history of competition and rivalry).
Your client has some time to respond to Adidas so is interested to learn more about both
companies. She has commissioned you to write a report advising her on the financial position
and financial strength of Puma in comparison to Adidas. Your client is particularly interested in
how the two companies compare in terms of past and potential performance, financial stability
and rewards. Both posts offer the likelihood of a significant reward package that includes stock
options., so commentary on the stock market performance needs to be included.
Required
Write the requested report comparing the financial performance and position of both
companies as well as commenting on the attractiveness or otherwise of the share options
package which, on the face of it, appear to be broadly similar.
Ensure that you make clear recommendations.
Note that your client is a busy executive but with limited experience of accounting. She will
expect a clear and concise report (not exceeding 2,700 words excluding appendices). Some
general guidance on acceptable report style follows:
Notes on general report style.
 Use the accounts of Adidas and Puma for the financial period up
to the end of 2017.
 Give your report a title & provide an Executive Summary,
 Give a brief introduction to cover the issues to be analysed and
the approach you will consider.
 Remember a CORE approach is expected.
 Within CORE, don't just show lots of calculations, explain what
you infer from the numbers and ratios and how they support your
conclusions and recommendations.
 Define any non-standard ratios used but demote detailed
calculations, etc. to an appendix.
 Cite references, state assumptions made, mention other
information that might be useful or further investigations you
would have liked to conduct. Fully consider both financial and
non-financial factors.
 Reach a conclusion and give clear advice. Make your report "as
concise as is consistent with clarity".
 Make use of supportive diagrams - especially those that
emphasise the comparisons between companies.
Warwick Student ID: 1767645 / Accounting and Finance Management / June 2018
Title: Adidas vs Puma – a study in financial position and strengths
Executive Summary
Introduction
This report analysis and compares the two sports goods retail giants Adidas and Puma using the
Context, Overview, Ratio and Evaluation (CORE) approach. Various financial and management
accounting ratios categorised in profitability, efficiency, liquidity, gearing and investment are
calculated and analysed the financial position and strengths to make an investment
recommendation. A SWOT analysis has also been performed to compare the two companies
qualitatively.
Context – External
PUMA is one of the world’s leading sports brands, designing, developing, selling and marketing
footwear, apparel and accessories. PUMA is known for the most innovative products and owns the
brands PUMA and COBRA Golf as well the subsidiary Dobotex. PUMA distributes its products in
more than 120 countries and employs more than 13,000 people worldwide.
Adidas AG is a multinational corporation whose product portfolio comprises footwear, apparels and
hardware such as shoes, bags and balls. It markets products under Adidas and Reebok brands. The
major footwear franchises of the company include NMD, Stan Smith, Gazelle, UltraBOOST,
PureBOOST X, Superstar, EQT and Alphabounce.
Both companies have a long history of rivalry and sells their products through retail stores,
franchisees, department stores and online retailers while competing in Europe, the Middle East and
Africa (EMEA), the Americas and Asia Pacific and are both headquartered in Herzogenaurach,
Germany. Adidas and Puma’s revenue stands at €21.22 billion and €4.14 billion respectively. Both
of these companies are in direct competition with Nike which leads the market with a revenue of
€30.57 billion as shown in Table 1. Since 2010, all three companies have shown steady growth
apart from 2013 where both Adidas and Puma saw a small dip in revenue. This is an indication of
the positive growth in market demand. However, both companies face challenges due to the
changes in the retail industry in terms of customer preferences, customers demand high quality
personalised goods for their own branding on social media. Changing formats: On-demand
shopping and fulfilment of the modern customer and the innovative retailing to enhance interactions
3
Warwick Student ID: 1767645 / Accounting and Finance Management / June 2018
with customers through artificial intelligence, robotics, sensors, and virtual reality could play a key
role in market share in the future (Global power of retailing by Delloite, 2017).