Adidas: PESTLE and Competitive Analysis for UK Market

This report presents a comprehensive analysis of Adidas's business environment within the United Kingdom, focusing on key external factors and competitive dynamics. The analysis employs the PESTLE framework, examining the political, economic, social, technological, legal, and ecological factors influencing Adidas's operations and market position. The report assesses the political landscape, including government policies and international agreements. It evaluates the economic conditions, such as GDP, average salaries, and economic growth. The social aspects, including consumer behavior and purchasing power, are also considered. Furthermore, the report analyzes technological advancements, environmental regulations, and legal jurisdictions impacting the company. A key component of the report is the competitive analysis, evaluating the intensity of competition, the bargaining power of customers and suppliers, the threat of new entrants, and the threat of substitute products. The report concludes by summarizing the key findings and offering recommendations for Adidas to maintain a competitive advantage, emphasizing innovation in both products and business processes within the intensely competitive sportswear industry.

Political
• The political conditions of the UK government has been an area of concerns for European
organisations
• The government of UK has come up with plans to boost the business environment and encourage
trade in the economy.
• On an international level, the company has to comply with the agreements and the policies of each of
the government
• The company operates in politically stable areas factors like war, terrorism; expropriation
Economic
• The company has seen growth in the revenue of the business, the economic condition of the areas of
operation and distribution is essential for the company.
• Adidas focuses on expansion in areas in the international market where the economy has the
potential to improve.
• GDP of the UK reached $2.808 trillion and GDP rank of the UK is 5th. Average gross salary of the UK
people is £51 per week.
• Some of the important aspects that are taken in consideration while developing the expansion
decisions are based on the economic capability of the country.
Social
• Sportswear is a genre of the garment industry that has emerged out of the importance of sports in
the society.
• The company has over the years created an image of being associated with sports and the societies
love for sports.
• Median household disposable income of the UK people is £1,600 which is higher than pre-downturn
level as the purchasing power of the UK people is high.
• Adidas has been focusing on the development of the sport industry by sponsoring events and
encouraging youngsters to be associated with sports.
Technology
• With advancement of technology Adidas has also implemented technology in the process of business.
• The company has advanced manufacturing units and has also come up with e-commerce portal to
keep up with the changing trends of the industry.
• The logistics and supply chain of the company is also heavily dependent on technology.
• The company has focused on producing a number of promotional tactics based on technology as well.
Ecological
• The company adheres to all the environmental regulations of the country of operation or distribution.
• Apart from that Adidas has international CSR activities which indicates that the organisation is aware
of the duties and responsibility the company owe towards the people and the planet.
• One of the aims of the organisation is to develop sustainable products with innovation.
Legal
• The company has to adhere with the legal jurisdiction of UK and every other country where it
operates or has distribution.
• There are a number of aspects that the management of Adidas has to keep in mind before running
operations for example: company law of the country, business jurisdiction and commerce regulations
in the area of operation, import and export regulations of the country etc are important.
• The labour law of every country is also different and thus Adidas has to adhere to each of these
jurisdictions in order to legally operate in the country.
Competitors analysis
LOW
MEDIUM
HIGH
THREAT OF
NEW
ENTRANTS
THREAT OF
SUBSTITUT
E
BARGAININ
G POWE R
OF THE
CUSTOMER
S BARGAININ
G POWE R
OF THE
SUPPLIERS
INTENSITY
OF
COMPETITI
ON
Competitor Analysis
Innovation 2 1 0 1 2
Sustainability 2 1 0 1 2
Technological adaptability 2 1 0 1 2
Position in the international market 2 1 0 1 2
Branding 2 1 0 1 2
Resource and capability 2 1 0 1 2
The threat of new entrants is high as the products are garments and it is easy to
invest in garment industry.
In the international market there high intensity of competition, some of the direct
competitors are: Nike, PUMA, Fila and Converse etc.
The company specializes in sports garments and there are hardly any substitutes of
the products. However, other types of garments can be a substitute hence the threat
is medium.
Switching power of the customers is high due to the intensity of competition in the
market.
For a supplier to be able to become associated with a brand like Adidas is important,
however, there are also other important competitors in the industry making the
switching cost medium in this case.
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Conclusion
From the above analysis it can be said that the sportswear industry is intensely crowded with a number of
international competitors. All the direct competitors that have been discussed above have their market in the UK
as well. The intensity of competition is one of the major issue that the company faces and in order to maintain a
competitive advantage the company should focus on the innovation not only of the products but also in the
business process.