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2. PART I. Management.Units 1-8..doc
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V. Read the text and point out the main ideas which are discussed in it. Text II. Adidas Earns Fashionable Stripes

For decades sportswear companies such as Adidas and Nike have prospered by linking their brands to athletes and sports stars such as Michael Jordan and David Beckham.

But in what is a fairly radical move for an industry averse to moving from tried and tested formulae, Adidas has enlisted a star from the fashion world to help it sell more sports clothing and footwear. Recently, the German group has unveiled a new collection from its collaboration with Stella McCartney, the fashion designer it has enlisted to produce a range of women's sportswear that could change the way sports goods are sold and marketed.

The new range is the latest example of how Adidas has tried to differentiate itself from its rivals by organising itself into three divisions - each with its own branding and its own version of the group's iconic three-stripe logo. The divisions comprise a performance sport business, a sports fashion division and a retro division, to capitalise on continued interest in so-called "old school" Adidas trainers and clothing, as worn by hip-hop artists.

The strategy appears to be paying off, with the group yesterday reporting better-than-expected first-quarter results. Operating profits were up by 27 per cent to €179m ($230m) and the group said it expected full-year earnings growth to be at the upper end of its previous 10-15 per cent range.

Unlike its previous campaigns, the company is not using famous sports stars to publicise the McCartney collection, relying instead on the strength of the McCartney brand to attract fashion-conscious women who also like to keep fit.

Adidas has worked with fashion creators before - notably Yohji Yamamoto, the Japanese designer, on its Y3 range, which was aimed at modish consumers rather than active sportsmen and women. The McCartney range is, however, designed with sport in mind and belongs to the group's "sports performance" division. Taking fabrics normally used in Adidas' sportswear, Ms McCartney has created a fashion line targeted at women who want to look good while they are exercising.

"Stella felt women's sportswear was not stylish enough," says Bill Sweeney, head of global apparel at Adidas' sports performance division. "Women are becoming a lot more vocal about what they buy - previously they had put up with whatever was out there. But as a consumer purchasing group they are a lot more discerning these days. We thought there was a gap in the market."

Ms McCartney was given access to the group's "performance fabric library" which includes fabrics designed to feel like cotton but which dry more quickly. "It's dry-release fabric and uses what we call 'moisture whicking' to make sure the athlete stays dry," says Mr Sweeney.

Adidas originally believed that limiting a designer used to working with natural fabrics to high-tech, man-made materials would be "more of a limitation than it was", he says. In fact, he says Ms McCartney made the group think about its materials in a different way.

Adidas is hopeful the latest collection will be as successful as an earlier spring-summer range, which was initially launched in the US and Japan with limited availability in Europe. At Bloomingdales in New York the range sold out in one day. "We're starting to think about it as the best launch in the history of the company," says Mr Sweeney.

The collection is more expensive than other Adidas women's products and, although womenswear is a relatively small part of the group's portfolio, the company sees it as a fast growing market. "It's still relatively small when compared with the core business," says Mr Sweeney. "But having said that, we could have sold four times the amount of product [of the first collection] than we did. We don't want to overexpose it."

The group is also limiting the range to specific outlets, which Michael Michalsky, Adidas' global creative director, says will protect the brand. "We have to take into account where the consumers we want to attract are shopping," he says.

In marketing terms, the company is in uncharted territory, introducing sporting products to an audience more likely to read Vogue than Runner's World. At the same time, linking its credibility as a sports brand to a fashion designer could arguably lose it some kudos among athletes and keep-fit fanatics. "Stella McCartney is an innovative choice," says Karen Earl, managing director of Karen Earl Sponsorship, the sports marketing consultancy. "She has credibility in the fashion world but I'm not sure how much she has in sport."

Yet Ms Earl says the deal is taking Adidas in the right direction. "It would seem that Adidas has realised that to broaden their reach they are going to have to add to the technical credibility that they have always relied on."

Mr Sweeney says he is confident that the "brand can stretch. We can get into a conversation with a buyer at Selfridges or Isetan [in Tokyo] and they want to carry a range that bears the Adidas logo."

Its rivals take a slightly different approach. Reebok, for instance, has enlisted hip-hop artists such as 50 Cent to wear its shoes and appear in its television commercials. Nike, however, continues to stress its sports credentials - although the latest interactive campaign on its website features unknown footballers performing a bewildering array of tricks in a street setting.

Adidas and Nike are vying to be the number one sports brand and are in a permanent race to sign up the hottest young sporting talents. The latest Adidas television commercial for its F50 football boot has Chelsea's Arjen Robben and Arsenal's Ashley Cole chasing a ball through a park. Nike's campaign for its new "Free" shoe stars tennis champion Roger Federer, Manchester United's Wayne Rooney and the Kenyan marathon team.

Adidas has recognised the need to keep refreshing its sporting credentials and has created innovative commercials. Last week the group won a prize for best television sports commercial at the annual Sports Industry awards for "Laila", which showed boxing legend Muhammad Ali sparring with his daughter Laila. Previous commercials have shown Ali training with the likes of David Beckham and Zinedine Zidane, who are also sponsored by Adidas.

Ms Earl says Adidas has got its marketing message right. "When I first came into this industry, which was years ago, Adidas was the leading sports brand. Hörst Dassler [the son of the group's founder, Adi] was the first one to get Adidas boots worn by football teams at the World Cup.

"When he died, though, the company took a bit of a dive and other brands like Nike began to catch up. But in the last five or 10 years it has gained a lot of credibility and the McCartney deal is obviously a step in the right direction."