Market Structure Analysis of Adidas: Monopolistic Competition

This report analyses the market structure of Adidas and its current functioning in the monopolistic competition market. It also discusses the characteristics of different market structures and whether the company operates in different market structures.

Adidas

Table of Contents
INTRODUCTION ..........................................................................................................................3
MAIN BODY...................................................................................................................................3
TASK ..............................................................................................................................................3
Description of company ..................................................................................................................3
Analysation of market ................................................................................................................4
Different market structure...........................................................................................................7
Did the company operates in different market structure.............................................................9
CONCLUSION .............................................................................................................................10
REFERNCES:................................................................................................................................11
Books and Journals:..................................................................................................................11

INTRODUCTION
The report aims to analyse the market structure in which the company is operating.
Market structure varies from company to company and the size, number of employees of the
organisation. It impact on the organisation functioning in which market it operates and how it
will be beneficial for the company. These market shares will shows the level of competition
among varied firms. This classification helps the organisation to understand the nature of goods,
buyers, competition and price differentiation in the industry. It helps the business to analyse the
principles and key concern behind these different market of business. Therefore, the report will
showcase the history and current market functioning of Adidas. The company was founded in
1924 and established its headquarters in Germany. The company is a global manufactures of
shoes, accessories, clothing in sportswear. It has established largest position in Europe and has
develop a reputed brand name in all over the world. The report is going to analyse the market
structure of company whether it is operating in monopoly, oligopoly or others. Also, it will be
defined through their characteristics which helps in analysing market transformation. Along with
this, the report will present the nature of industry and significance of government intervention
MAIN BODY
TASK
Description of company
Adidas AG is a German multinational company that is designing and manufacturing clothing,
shoes as well as accessories. It is one of largest brand of sportswear in Europe and providing its
products and service worldwide. It was introduced in the year 1949 by Adolf Dassler in the
Germany (Altin ,Uysal and Schwartz, 2018). It is offering different types of products and
service to their customers like footwear, Apparel, toiletries, sports equipment, sportswear. It is
one of large organisation as it has around 57016 employees who are working towards attainment
of goals and objectives of company. It is an organisation which has its own history as in 1900s
Adolf started working with their mother's laundry room and scullery. After that in the year 1924,
Adi Dassler registered Gebruder Dassler Schuhfabrik and aiming at their mission for providing
best equipment to athlete. The company get reward in form of Gold medals in Amsterdam as
well as Berlin. After that they get growth and expand their operation.

Adidas is offering different range of products and service in market as it is offering apparel,
sportswear, accessories and other sports equipment. Adidas is setting different range of clothing
item from men to women including hoodies, leggings, jackets, t-shirts and other things. It is also
offering sportswear like association football in which main focus on company is on football kits,
association equipment (Anderson, Asche and Garlock, 2019) Adidas is one of major company at
global level in term of supply of team kits for football teams as well as clubs. It is also offering
baseball equipment and also sponsoring different players. It is also offering clothing to
basketball, cricket and golf, gymnastics and other sportswear. It is also offering different types of
shoes like running shoes, skateboarding shoes, tennis shoes and other things. It is also providing
different types of accessories to their customers like baseball caps, socks, mobile accessories,
style sandals, eye wear and other things.
Analysation of market
Market can be described as place where different sellers and buyers can meet in order to
ensure exchange and transaction of goods and service. In this, both buyers and sellers are taking
participation in this transaction with an intent of generation of higher profitability in market.
Different types of market structure are taking place in business in order to fulfilment of needs
and requirement of customers and also for developing a brand image of company in market.
Adidas is operating in market which they have selected on basis of market research of their
products that are fulfilling demand of their target customers.
This organisation has founded that around more than 50% of people of population are
between 18 to 30 years and taking active participation in athletic whereas rest population are
engaged in different sports like cricket, baseball, rugby, football and other sports (Bedrii, 2020).
Other group of population which is around 20% is of age group 30 to 40 years who are
interested in physical activities like morning walk, footing and other things whereas rest 10%
people of age group 41 to 50 years who require walking shoes for walking in order to be fit.
It is an organisation which is taking individual with certain goods that allow them to
develop good brand image and also allow them to contribute for purpose of welfare and good
for people of society. It also allow them to develop a brand image for purpose of developing
higher profitability and growth in market.
Types of market structure:

It can be defined as types of market which is divided on basis of competition, behaviour, selling
and nature that create impact of numbers of buyers (Crutchfield, 2019). It assist them for purpose
meeting demand of customers who are present in target segment which allow company to
formulate strategy which is suitable in specific market. Different types of structure of market is
mentioned below:
Perfect competition market: It is one of market in which there are large numbers of buyers as
well as seller who are providing their goods and service in market and no single seller has
influence over market which results in firm does not set price. All these seller are price taker and
providing homogeneous products and service to their customers. Main aim of this market is to
gain hie profitability for business. There is no restriction of entry and exit of firm and these seller
are working on basis of their own principles. There is no preference of consumers due to which
there is no barrier over buyers and sellers as buyer can choose products on basis of needs and
wants.
Monopoly market: It is another types of market structure in which there is single seller who is
providing unique products and service in market (Frey, 2018). In this, seller can set
discrimination price for their products as they are single seller in market who is providing their
products and service in market. In this, consumer does not have choice in market as there is no
substitute products is available in market. There is no competition in market as seller is offering
unique product in market.

Monopolistic market: Monopolistic market is one which is operating in more realistic scenario
as there are large number of buyers and seller but these are not offering homogeneous products.
In this market structure, products are similar but slightly differentiated and consumer has number
of choice available at time of purchase of customers. Seller can charge higher prices on basis of
differentiation (Gray-Hawkins and Lăzăroiu, 2020). Adidas is working in this type of structure of
market where numbers of competitors are available in market but company is offering slightly
differentiated products and for which they are setting prices accordingly.
Oligopoly market: it is one of market structure in which there are few seller available in market
and market is dominated by these smaller group of seller as there is various barrier on entry in
this market (Hyers and Kovacova, 2018). In this market, company is having interdependency and

competitors cannot complete on basis of prices as reduction in process by one player results in
response of competitors on that price.
Different market structure
At the foremost development of Adidas, the company was established as a small venture
like others. It was running by two brothers and they started the shoes manufacturing business
from their home. So basically, it was first home grown business which was first named as
Dassler brothers shoes factory in 1924. They have made some changes and innovation in
producing shoes which are of great quality and focused on comfort. The main purpose of their
shoes is for various athletes events such as sports championship, camps and other to support
layers by providing them high quality shoes which is made up of using canvas and rubber. The
two brothers eliminate the use of heavy metal spikes which does not give comfort and creates
unnecessary weighting (Jin and McKelvey, 2019). Therefore, these spikes shoes goes handmade
is U.S. For summer Olympics which has shown in 1936. the company has gain much important
and relevance into market as their shoes are being most desirable for not only athletes but for
general public also. The two brothers has separated their partnership in which one has
established brand Adidas and others launched Puma. Both of these firms gives tough
competition to each other which show that they are being operating in perfect competition into
market. As per this market structure, there are various number of buyers, sellers and
homogeneity into products. The main motive of these firms is to enable growth of business in

order to satisfy the needs and wants of the market by giving quality and comfort in products. In
this market structure, competition is the key concern due to having complex and dynamic
business environment.
In the time of established new brand at initial level. The Adidas has faced many number
of suppliers of shoes and large number of buyers also. This market structure shows similarly in
product, price and promotions which give rise to competition. As, in this retail structure, there
are not restriction for entry and exit and sellers have exclusive knowledge about the market. But
the industry is the price maker and sellers are price taker which impact on the profitability of
business. Hence, there are characteristics of previous market structure of Adidas which is defined
below:
Homogeneity of the product: the perfect competition market is mainly known for the
homogeneity in the products. It shows that the number of sellers are selling same goods and
services with slight modification in designs, size, quantity and colour. These goods are ease to
have substitute into market due to this characteristics of market (Marsh, 2018). The buyers
should change their demand for next best alternative and buyers has power to exploit market.
Price is one of the key concern which give rise to competitive rivalries. Adidas was facing
competition of same products As there were large number of sellers providing more superior
quality which affects the market position of company
Large number of buyer and seller: it is the most common and vital feature of the
perfect competition. The market has large number of buyers and sellers which are competing
with each other in terms of goods, service and price (Witiw, Smieliauskas and Fehlings, 2018).
No sellers has its individual control over the market due to having wide number of players in the
same area. In which, buyers could exploit market by choosing their purchase through most least
price product. Hence. Every seller try to be unique and innovative grow as a market leader.
Free Entry and Exit of firms: as per this feature, the perfect competitive market is free
from and entry and exit regulation. Which means that, firms are easily welcome to operate in
market and leave any time. Therefore, it is termed as perfectly competitive market as the sellers
are free to come which give rise to competition in products and services. Every player is keen to
be market leaders by building a unique and creative idea to attract large number of buyers. Thus,
Adidas had faced this competition due to having another players who are selling more quality

shoes so the company has took innovation In making more quality goods with unique designs
and comfort.
Perfect Knowledge of market: as per this feature, the perfect competitive players have
perfect knowledge of the market such as trends, number of players and buyers, marketing
strategy and price prevailing into market (Paoloni and Lombardi, 2018). All these knowledge
helps the Adidas to take appropriate decision to run business effectively.
Perfect mobility of the factors of production and goods: the main factors of product
are the man, material, machine and labour. Therefore, the seller in perfect competitive have great
mobility to shift these elements as per the market needs. It shows that, these sellers are free to
take actions for shifting labours to other sites, hire employees by analysing market trends and
engage in key business practice according to the customer wants and needs.
Independent relationship between buyers and sellers: it is also one of the key feature
of the perfect competition. The buyers are not depended on the others decision so the sellers also.
As there could be change in the demand and needs of customer which may influence the brands
to diversify their products as per their potential.
Did the company operates in different market structure
The Adidas is working in the monopolistic competitive market which shows that sellers
and buyers are present in large number but has differentiated goods and services across market. It
makes the competition of product and its price that force the customers to make effective choice
of products as per their needs. In this type of market, the Adidas is competing in attracting large
number of buyers through providing great quality goods (Solozhentsev, 2018). But customer
may shift their demand to the other substitutes also by seeing less prices of other brands. Adidas
has great market cost and technological innovation which already consist large cost in
production, promotion into market. So that, in order to shift in different market structure such as
monopoly or oligopoly. The company is into eligible to enter into the monopoly market due to
having requirement of large production cost and unique product portfolio. Also, in order to be
perfect competition market,. The Adidas need to be perfectly analysed by the changing demand
of customer and needs to bring frequent innovation in the market. As the fashion and sports
industry is consisting much trend in new designs and product comfort in reasonable price.
Adidas is become a brand which large monopolistic price into market and now the company
could not work by being price taker in the perfect competition.

From the discussion, it has analysed that Adidas need not top change their market
structure as monopolistic competition is effectuate for the company. It has reputed brand name
and the company is working realistic good for the customers so that, there is no need to take
further risk.
Government regulations are obligation and provisions which are being imposed over the
company. These regulation are required to be follow in order to work for the betterment of
society (Spulber, 2019). It is necessary to keep the good image of company in the eyes of law. It
is essential for the society welfare as business will not exploit the market and take advantage of
buyers purchasing power by charging high prices, producing low quality goods. Therefore, the
government put regulation in terms of taxes and subsidies to support business for producing good
quality goods. This will impact positively on the society by eliminating price discrimination and
work hard for fulfilling consumer needs into society.
CONCLUSION
The report has concluded that different market structure has its different significance for
the varied businesses. Every business differs in their size, structure and purpose which makes
them classified as per number of customers, sellers and price leader into market. The report has
shown various characteristics of different market structure such as perfect competition,
oligopoly, monopolistic competition and monopoly. The company changes its structure as per
their growth and potential brand name into market. Therefore, the report has suggested that, the
company does not need to change their market structure as it would take huge finances which
may impact on existing growth.

REFERNCES:
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