9. PUMA’s business revival strategy: the knowledge outsourcing

Since 1986, Puma had suffered a continuous deficit for 8 years. Eventually in 1993, Puma was driven out to the bankrupt. At the time back then, the last option they had was a 30-year-old young CEO, Jochen Zeitz. By the time he started to work as a CEO of Puma, the company in the deficit of 36,900,000 euros. In addition, their position was far behind the popularity and fame of Nike, Adidas and Ribok.

However, Puma turned to be in the black figures in 1994 after he got into office as a CEO of Puma. Since then, Puma has become substantially profitable company. Even it grew to be the world sports brand with net income of 26.9 million euros.

What made PUMA to be turned over to a most successful company?

Zeitz tried to come up with the idea about what necessary knowledge is required to sports equipment. What he came up was the sports equipment as a fashion brand. However, there were many limitations inside the company. It did not seem to be able to implement the turnover of sports equipment to fashion stuff. He instead looked outside, and assigned the 21st century skateboarder, Antonio Bertone as a manager of the new department ‘Sports lifestyle’. It was attempt to breath the fashion-oriented knowledge and thoughts into all over the company. Soon after this, Puma began to adopt the knowledge outside more fully. The firm collaborated with the germen outstanding designer, Jil Sander so that Puma can apply his fashion knowledge and sense into its products.

Even further, Zeitz switchover PUMA to open-source design company. Accordingly, they also work in collaboration with a French designer, Xuly Bet, Japanese designer, Yasuhiro Mihara. As a result of PUMA’s forefront attempt of outsourcing greatly influenced sports equipment industry in which they are in.

The outcome of this was unsurprisingly really successful. Many Fashionistas who is leading the trend with an exceptional fashion and an aesthetic sense amongst public. Based on this success of conversion, PUMA totally changed sports equipment brands to fashion brands. The company has been still growing so much and leading the industry as the top seller company.

The influence of PUMA’s case across the industries

PUMA’s successful case can be explained that it has absolutely been benefited from the knowledge integration of its internal manufacturing and external designing knowledge. From this, the knowledge outsourcing is getting more attention as a tool to strengthen the competitive power of companies. Like PUMA, other competitor companies also have walked the same way. Vans, for instance, they are working up with Marc Jacobs and Converse is in collaborative relationship with John Barbatos. Similarly, Adidas is proceeding the expansion of the alliance of its fashion brand ‘Stella’ named after its designer Stella McCartney until 2010. Looking at other industries such as Audio stereo company ‘B&O’, they are famous for their unique R&D process; they first determine the design and then attach the technology on it. Their idea shows unlimited use of external knowledge outside the strict office. This trend is internationally spreading across the industry. This is why; we also can find the domestic cases outsourcing knowledge in production. LG Prada phone, Samsung Armani Phone and TV are the latest examples. More prior example may be the Samsung electric home appliance line tied up with a most famous Korean designer Andre Kim.

The knowledge outsourcing era

Here the new era comes that companies need not to be omnipotent like doing everything excellently in their projects. Yet, there are more necessities for companies to manage their competitive power effectively by outsourcing the knowledge. This is really what is happening when companies lack the up-to-date ideas to keep up with trend or lead the market. In order to innovate the products, companies nowadays can collaborate with other experts from outside. Collaboration used to be considered that companies might be poor at some parts so it directly was linked to the capability of the company. However, it is no longer shameful thing to work up with somebody out there but proudly promote its collaboration with them.

* Further article text is availabe on this website: http://news.mk.co.kr/outside/view.php?year=2008&no=289342

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