Market Environment Analysis of Adidas in Dubai

This report provides an in-depth analysis of the market environment of Adidas in Dubai. It discusses the targeted customer segment, competitive external business environment, internal business environment, Porter's generic strategies, competitive advantages, and critical analysis of SWOT.

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Table of Contents
1. Introduction............................................................................................................................2
2. Discussion..............................................................................................................................2
2.2. Targeted customer segment.............................................................................................2
2.3. Competitive External business environment...................................................................3
2.3.1. PEST analysis...........................................................................................................3
2.3.2. Porter’s Five Forces.................................................................................................4
2.4. Internal business environment.........................................................................................5
2.4.1. SWOT analysis.........................................................................................................5
2.5. Porter’s Generic Strategies..............................................................................................6
2.6. Competitive advantages for the business idea................................................................7
2.7. Critical analysis of SWOT..............................................................................................7
3. Conclusion..............................................................................................................................8
References:.................................................................................................................................9

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1. Introduction
For any business to operate successfully in the business environment, having an in-
depth understanding of the internal and external market is very necessary. This report is
going to elaborate to discussing the market environment of Adidas of Dubai. Being second
largest company in the sport wear industry, Adidas is globally known for its extensive and
high quality products and services (Epstein, 2018). It is mainly engaged with the sport
industry and is offering the customers with huge range of sport equipment. Adidas has always
aimed at providing a better quality and comfortable products to its customers. This report is
going to shed light on the customer segment that it targets within UAE and its competitive
internal and external business environment. For assessing its external business environment,
Porter’s Five Forces and Ansoff Matrix too would be used. With the same, for an in-depth
analysis of its internal business environment, the report shall present a SWOT of Adidas
within Dubai region. Moreover, competitive advantages of the business idea of Adidas over
its competitors shall also be assessed briefly. Lastly, an in-depth critical analysis of SWOT
matrix shall be presented as well.
2. Discussion
2.2. Targeted customer segment
Adidas mainly targets the young customers in between the age range of 14 to 40 years
of age. However, it is also to mention that the brand equity of Adidas is not only confined to
its customer segment in Dubai. In fact, it is also quite popular among the other customer
segments like the ones who belong from the age range of 40 to 65.

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2.3. Competitive External business environment
2.3.1. PEST analysis
Political: Adidas enjoys its presence in the entire Saudi Arabian market and it post its
acquisition of the Reebok in the year 2006 that has created paths for it in different
international boundaries as well. Elections are held in UAE every five years and it does not
influence the business of Adidas as it is no way affected by any of the ruling parties (Ghanem
2018). However, Adidas need to adhere to minimum wages and hygienic working conditions
in the factories along with stipulated working hours every week.
Economic: The economic condition of UAE has significant impact on the sales and
operations of Adidas. The buying power of the customers, the rate of inflation and the
consolidation greatly influence the revenues. With the same, the stability of currency in UAE,
the import and the export duties as well as the special economic subsides are critical factors
that influence Adidas’ business operations.
Social: Race, culture, religion and the various social groups influence the way people live in
a society and therefore, the marketers need to pick up all the cues in sensible manner for
operating business in that environment. It is to mention that Adidas has very wisely used this
knowledge. Adidas gets gelled up with the modern youths and because of this spirit of
Adidas, it gets associated with the customers perfectly. Moreover, as technology has rapidly
advanced in today’s era and so is has the use of internet, the buying behaviour of the
customers are rapidly changing (Caro and Martinez-de-Albeniz 2015). Therefore, Adidas has
started selling its products through different online stores and make promotions providing
high discounts.

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Technological: Innovation and technology goes hand in hand in this industry. Adidas has
implemented technology solutions for its regulatory compliance. The technology used in
Geox claims that it allows the shows to breath and thus, overcomes the issue of sweaty feet.
2.3.2. Porter’s Five Forces
Bargaining power of the buyers- The bargaining power of the buyers in the footwear
industry is moderate to high. The cost of switching is very low for the buyers because there
are endless options to choose from, cases where brand loyalty is extremely high are
exceptional. They also have very easy access to shop online.
Barriers to entry- The barriers to entry is high to moderate in the footwear industry. Brand
loyalty is also very high and the economies of scope and scale (costs of marketing,
advertising and the spent R&D) are two of the significant factors that restrict the entry for the
small players (Melero, Sese and Verhoef 2016). This is due to the fact that this industry is
very easily dominated by some big players who reap high benefits from the supply chain
integration.
Bargaining power of the suppliers- The bargaining power of the suppliers is extremely low.
The raw materials that are used in the footwear industry are mainly cotton, foam and rubber.
The big giants within this industry are Adidas and Nike and they lay stringiest rules that the
suppliers need to comply with for meaning product quality. With the same, it is also to note
that switching in between the suppliers is high in this industry as their power is very low.
They are mainly governed by the big players within the industry.
Threats of substitutes- The threats of substitutes is also very low in the footwear industry.
This is due to the fact that it is nearly impossible for the sneakers to get replaced by high
heeled shoes in any way. Also, no replacement can be done in between running and tennis
shoes.

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Industry rivalry- The industry rivalry is high. There is great sense of competition in between
the different firms within this industry. With the same, they are mostly non-price. Every
companies lives and dies by the identity of their brand that they create in the market. It is also
to note that there is a very fierce sense of competition in between Adidas and Nike in UAE.
The speciality shoes such as the Ecko, Geox and Rockport greatly compete in the niche
segments.
2.4. Internal business environment
2.4.1. SWOT analysis
Strengths Weaknesses Opportunities Threats
 It has significant
brand image of high
performance and
quality products for
the customers who
seek for technology
over style
 It is widely known
for its continuous
innovation.
 Strong online
presence
 Strong international
operations and
distribution chain in
UAE
 Though it
has huge
product
portfolio, it
has great
dependency
on the soccer
shoes
 Over priced
products
 The online
customer
service of
Adidas is not
that helpful
 Changes in the
lifestyles of the
customers of UAE
 Expanding the
customers base
 Increasing in the love
for Soccer among the
customers where
Adidas has always
been regarded as the
official brand leader
(Ind and Horlings
2016).
 Market diversification
 Expanding the product
 Changes in
the
lifestyles
and
preferences
of the
customers
of UAE
 Availability
of the cheap
replicas in
the market
 Price wars
in between
the

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and service lines
 Merger and acquisition
 Entering into the new
international markets
 Innovations and
technological
developments in the
products
competitors
 Increasing
in
competition
from the
online
stores.
2.5. Porter’s Generic Strategies
The Porter’s generic strategies are Differentiation, Cost Leadership and Focus. It is to
note that the main strategy that Adidas makes use of is that of Focus and Differentiation
Strategy.
a) Focus Strategy- Adidas mainly focuses on a particular target groups and they are as
follows:
a. The people belonging from the age group of 20 to 29 years
b. The teenagers or the high school athletes belonging from the age range of 14
to 19 years
c. The target customers who play sports or loves sports
d. They primary focus of Adidas is on:
i. Football
ii. Soccer
iii. Basketball
iv. Training
v. Running
vi. Other outdoor activities

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b) Differentiation Strategy- The commitment of Adidas towards its product and service
innovation as well as its rich heritage differentiates this brand from its other competitors. Its
Sports Performance- the “Play to Win” is also a type of strategy that is used by Adidas for
telling its customers that if they are playing then they would win and therefore, they should
use the products of Adidas for better performance. It is also to mention that this company has
a very long history of connectedness with sports and this is stronger than its other
competitors. Its differentiation product strategy helps the company in gaining a competitive
edge over these competitors in the business market. It is also to include that the Adidas Sport
Performance strategy focus on the interactive products such as the AdidasmiCoach. This is
the first personalised training service in the world that is web based. It is something that
combines the state of the art training with the personalised web service.
2.6. Competitive advantages for the business idea
One of the very few competitive advantages of Adidas in the UAE region is that it had
its effective network of distribution along with high quality products and brand equity.
Internationally, Adidas has about 2400 stores that comprise of about 4.3 billion dollars
business. Moreover, for associating itself with the other communities, Adidas have sponsored
several world sport events like the NBA, FIFA, Olympics and Cricket as well (Zhang et al.
2018). With the same, it is also to mention that over the passage of time, Adidas has been
highly known for giving the best products in the market that are always comfortable beyond
the normal and the long lasting. Furthermore, it also has a very strong relationship with the
big organisations like the International Finance Corporation, International Labour
Organisations etc. This has provided Adidas a competitive edge over its competitors for a
very sustainable business.

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2.7. Critical analysis of SWOT
SWOT stands for Strengths, Weaknesses, Opportunities and Threats. The SWOT
analysis refers to a strategic planning tool that is used for evaluating these fours elements
present inside/for a company in regards to its business operations. According to Fliesher and
Babette (2015), this tool identifies both the internal and the external factors that are in favour
or not in favour for the very business to operate in its business market. Vuorinen et al. (2018)
in this context have defined SWOT analysis as a technique for mapping the companies’
strengths and weaknesses and identifying the threats and opportunities present for them. The
first two elements, i.e., the strengths and weaknesses are internal to an organisation, while the
last two, i.e. the threats and opportunities are mainly from an industry oriented perspective.
3. Conclusion
From the above analysis it is clear that the sportswear industry relies heavily on
marketing, innovation, variety and endorsement of the professional athletes. Near about every
brand incorporate similar strategies with very few variations. However, Adidas have started
off with the best of the intentions for answering the requirements and needs of the sports
lovers and professional athletes. It has come a very long way over several decades and is now
at present positioned as the second largest and the most popular player in the footwear or the
sportswear industry. However, it is suggested that it would be wise for Adidas to focus on its
core strengths and competencies as well as to engage into some really aggressive branding
and marketing in UAE region in order to have a long term survival.

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References:
Caro, F. and Martínez-de-Albéniz, V., 2015. Fast fashion: business model overview and
research opportunities. In Retail supply chain management (pp. 237-264). Springer, Boston,
MA.
Epstein, M.J., 2018. Making sustainability work: Best practices in managing and measuring
corporate social, environmental and economic impacts. Routledge.
Fleisher, C.S. and Bensoussan, B.E., 2015. Business and competitive analysis: effective
application of new and classic methods. FT Press.
Ghanem, H., 2018. The Arab Spring Five Years Later Volume One: Toward Greater
Inclusiveness. Brookings Institution Press.
Ind, N. and Horlings, S. eds., 2016. Brands with a Conscience: How to Build a Successful
and Responsible Brand. Kogan Page Publishers.

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Melero, I., Sese, F.J. and Verhoef, P.C., 2016. Recasting the customer experience in today’s
omni-channel environment. Universia Business Review, (50).
Vuorinen, T., Hakala, H., Kohtamäki, M. and Uusitalo, K., 2018. Mapping the landscape of
strategy tools: A review on strategy tools published in leading journals within the past 25
years. Long Range Planning, 51(4), pp.586-605.
Zhang, J.J., Kim, E., Marstromartino, B., Qian, T.Y. and Nauright, J., 2018. The sport
industry in growing economies: critical issues and challenges. International Journal of Sports
Marketing and Sponsorship, 19(2), pp.110-126.