Brand Contraction: Li Ning Co'S Policy Of Declining Performance

Although Lining called himself "not a standard businessman", but when the enterprise achieved a certain degree, it should be "keep the job and not abandon it", and never give up the dominant strategy, especially in the aggressive situation of competitors, otherwise it is irresponsible.

At the end of March 2012, the intensity of the Li Ning Co's layoffs seemed to be beyond expectations. It is reported that the large force of layoffs has left the original director of human resources under the impression that she can feel pressure from both personal feelings and practical operational level. After a heated argument with the board of directors, the Board met on the same night and announced its termination on the second day. Within two months, the general manager of Li Ning Co's human resources, information technology, strategic development and international market has left office. This shows the company's determination to focus on core business and brand contraction.

The 2011 Annual report shows that the net profits of Anta, XTEP, 31st degree, PEAK and Lining of the five local sporting goods companies are 1 billion 730 million, 966 million, 1 billion 133 million, 780 million and 386 million respectively, and Lining is at the bottom. Ding Shizhong, chairman of the board of directors of Anta, once said, "I did not regard Lining as our competitor, and we will not progress if we take him as a competitor." Anta's revenue in 2011 was 8 billion 904 million, only 25 million less than that of Lining, but Anta's revenue and net profit increased by 20.2% and 11.50% respectively, while Lining dropped 5.8% and 65.20% respectively.

The company's inventory at the end of 2011 increased by 200 million yuan over the same period last year, and it will also buy 300 million of the inventory from the dealer.

What happened to the former champion?

Strategic misjudgement

Since 1994, Li Ning Co has maintained the largest share of China's sporting goods market for a long time, and its turnover exceeded 1 billion in 2004. However, its growth rate has been left behind by Nike and Adidas. The two big international brands have taken advantage of the first tier markets such as Beijing and Shanghai, showing the ambition of Lining's two or three line market. Here, the grass-roots enterprises in Jinjiang, represented by Anta, are rapidly rising.

Under the attack of both sides, Lining, the former gymnast prince, has already known the difference between market competition and gymnastics competition: in gymnastics competition, "where others go is not related to you, the most important thing is how you face difficulties"; "doing business, you are always guessing what other people want to do." In fact, Lining is only half right. No matter what other people do, it is most important to do their job well. Market competition and gymnastic competition should be consistent on this point. It reflects the accumulation of ability and persistence in direction. The Li Ning Co is just uncertain about its strategic choice. We seize opportunities everywhere. We must take a step today and take a step tomorrow, so we can't beat others.

In the long run of ambiguities when focusing on localization or internationalization, Li Ning Co launched a huge strategic spanformation 3 years ago. At that time, it benefited from the marketing offensive of the Beijing Olympic Games. It showed a good upward trend, and the domestic sales exceeded Adidas for a while. But at that time, the Li Ning Co made a mistake in judging, emphasizing the benefits brought by the sports spirit and champion effect, avoiding the basketball game and football game with larger base and wider extension, and taking badminton as the core. In June 2010, the strategy of the company was more radical, turning the target consumer group to the "post-90s" (and 50% of the consumers surveyed were 35 to 40 years old). The slogan changed from "anything is possible" to "making changes", and decided to launch a battle against the opponent's base and the European and American markets. Now it seems that this reshaping of the brand is a great failure. Contrasting with this, PEAK has been recognized by international top event organizations such as NBA after years of insistence on being an international sports brand almost at the same time as Li Ning Co.

Mismanagement

According to some commentaries, from the strange phenomenon of Li Ning Co, it is hard to believe that those low-level mistakes will happen to a private listed company that is completely "self reliant" and will think that it has passed through time to a state-owned enterprise in 1980s.

According to Li Ning Co CEO Zhang Zhiyong, "the aircraft that is constantly being repaired in flight is facing unprecedented challenges". All kinds of management chaos are no longer belong to the moderation and moderation of management style.

Extensive management. Li Ning Co's first marketing manager disclosed to the media after the departure: the company's growth rate slowed down its internal causes, "in terms of cost control and operational efficiency is not very good." Although Li Ning Co's revenue declined in 2011, the overall cost, including distribution costs and administrative expenses, increased year on year. Lining himself admits, "I am not sensitive to spanactions and costs." With such a soft rib, there is a slight lack of confidence in making strategic decisions; in turn, it reflects the executive level and inevitably leads to extensive management.

Between departments, no one thinks he is important and no one has his own clear ideas. From their own standpoints, they think they are the leading departments. The former often judges whether the products are selling well according to the sales experience, while the latter thinks that the good products they have designed are not pushed to the market in time. However, it is difficult for management at all levels to act according to their abilities and direct decisions. Employees describe their roles as "mouthpiece" - they spend a lot of time in meetings and can not form a spontaneous management idea.

Insufficient resources and resource sink. Too dispersed fronts have differentiated the market input of Li Ning Co, which has increased operation cost and the executive layer always feels lack of people, resources and funds. However, even if "very low level people can manipulate many resources" in the key link, they can decide the spanaction after getting the rebate. Not long ago, a staff member of the brand department who was not very high was investigated internally for receiving the kickbacks until he was prosecuted by the company.

Absence of soul

At present, strong competitors seem to be away from the strategic adjustment of Li Ning Co, and similar words such as withdrawal and withdrawal have been lingering with Lining in recent years.

As a matter of fact, fading out of the daily management of a company should be more conducive to thinking about strategic issues, or even better than walking in idle places. That is to say, Lining's "retreat" is either a self confidence strategy or a strategic choice. Although Lining called himself "not a standard businessman", but when the enterprise achieved a certain degree, it should be "keep the job and not abandon it", and never give up the dominant strategy, especially in the aggressive situation of competitors, otherwise it is irresponsible.

In the eastern culture atmosphere, the execution of strategy is of personality significance. Who put forward the strategy is in the leading position, who is the soul of strategy implementation; and the soul of the company should be the advocate of strategy, which is different from being good at employing people. Only when the strategy is decided, can we be good at using talented people to have an evaluable standard. Contrary to the fact that Li Ning Co did not actually solve the strategic problem, it tried to "construct a powerful organization to lead and run the enterprise" and solve the strategic problem by the people it used. Even if the person used should bear the responsibility for strategic mistakes, the soul of the company must bear the final consequences if it fails to correct it in time. And the strategic execution at this time seems to have lost the soul, and the consequences are more dangerous than the strategic deviation. In this way, it is not surprising that the Li Ning Co is being surpassed or pushed by its rivals.

In contrast with Lining's gentleness and freedom, Zhang Zhiyong is sitting on a crater. He confesses in a letter to his staff that he has been trying to find a solution to a series of problems in the short term, constantly trying on tactics, hoping to turn quickly and quickly, but the result is not optimistic. Tactical adjustment certainly can not solve the strategic problem.

Follow the general purpose?

Lining made a decision a year ago: we must stop swinging between professional sports and sports fashion, focus on sports, and collect resources from all kinds of brands, focusing on the core brand of Lining. However, the fact that the company's revenues and gross margins both declined last year seem to indicate that it is not enough to take internal redundancies, cut costs and play a ruthless role. Mergers and acquisitions should be an option.

Of course, in mergers and acquisitions, Li Ning Co also has the possibility of mergers and acquisitions. If mergers and acquisitions can lead to Lining's complete retreat, Lining seems not to be able to enjoy it. Because he had such a bottom line: "not because I destroyed the enterprise, nor because the enterprise destroyed me." Inventor Edison founded the Edison Ge Corp, in 1892 merged with Thomsen Houston electric company, renamed "Ge Corp", that is, GE. Addison's name has been removed from the company's name, but its pioneering career has so far been brilliant. Its sales revenue has been among the top two in the world in the past 4 years. After Addison left GE, he devoted his beloved invention career to his whole life. Edison's choice can be a reference for Lining.