Adidas Business Model Analysis

This assignment delves into a comprehensive analysis of Adidas's business model. It examines the company's core value propositions, including innovation, customization, and branding, highlighting their focus on athlete-centric strategies. The analysis explores Adidas' distribution channels, resource allocation, cost drivers, and revenue streams. Furthermore, it applies the CAGE framework to assess the distance between Germany (Adidas's origin) and the USA, considering cultural, administrative, geographical, and economic factors influencing its international operations.

Running head: COMPETITIVE STRATEGY
Zara and Adidas competitive strategies
Name of the Student
Name of the University
Author Note

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COMPETITIVE STRATEGY
ZARA
Zara is a brand that is of Spanish clothes and accessories. Amancio Ortega and
Rosalia Mera founded Zara with its headquarters in La Coruna, Spain in 1974. Zara was
initially a little store in Spain but now it is the world’s largest retailer. The reason behind
choosing this particular brand is that it gradually enlarged its business from the town in Spain
to the other parts of the country and then succeeding in Portugal. However, by 1990 it
enlarged its stores in United States, France and maximum of Europe. Currently, Zara has
almost 6500 stores covering 88 countries all over the world (Vu and Medina 2014).
Zara’s business strategy is very understandable which is that the brand should be
placed among the customers in such a way that the customers actually gets scared that they
will be getting or not the selected product till they visit the store another time and so they buy
it instantly (Reeves, Love and Tillmanns 2012). Zara has strategies for both production and
supply as well as for the brand positioning. Zara owned few of its factories and has an
extensive range of outside vendors who helps this brand to create a model and to get it ready
for trading in its stores globally. On the other hand, its business model expends nearly zero
amounts for its digital marketing. They routinely do advertising posts of one of their designs
for a minimum duration until assembling viral bunch of people who will further spread the
promotion (Gamboa and Gonçalves 2014). Its strategy comprises of fast fashion that states
having an international fashion spotter feedback structure which starts from the lower
employees who need to quickly enhance upon its prevailing clothing lines. The new designs
are then dispatched to the makers of Asia and Europe who will receive this feedback onto a
new line of clothes that are ready to vend within a week. Zara has also strategized for a
supply chain, as it never outsources anything to Chinese manufacturers. With the help of
approachability of inexpensive Spanish, Asian and Middle Eastern labor Zara can actually

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put up its new products in store that to within a week. Zara mainly centers on fast fashion
goods being manufactured in and throughout Spain and outsourcing additional shelf life
commodity to inexpensive labor markets (Petett 2013). Lastly, its strategy for Store Fronts is
where Zara actually invests money for renting high values for setting up stores beside luxury
clothing brand. The business model is flawless in terms of the design to vent the planning
which leads to the enormous cost saving and also in terms of positioning their brand as a
premium one actually helps them profit outstanding traction with the middle class buyers
from the mall of the country. Moreover, Zara using the CAGE frameworks would be a waste
as Zara has its head office in every country that they work in. Zara uses the ‘oil spill’
approach where they put a head office in every country and then branch out to open new
stores. Thus, the transportation costs are also cheaper and so they grow a sense where they
bring out what the customers are looking for (Collis 2015).
Adidas
In 1949, Adolf Dassler founded a shoe factory along with his brothers. However, later
he parted away from his brothers and enlarged this company alone. The company’s
headquarters is situated in Herzogenaurach, Germany. The reason behind choosing this
particular brand is that Adidas has placed itself as a leader in the global market with more
than 92 fresh companies and being the 61st ranked brand amid the world’s most costly brands.
It is famous globally for its products that are mainly related to sports. It has ultimately led to
a powerful battle with Puma that was evolved by Adolf’s brother (Subotnick 2017).
The business strategy of Adidas until 2020 is called ‘Creating the New’. At the
middle of creating, the new there is also an aspiration in addition to increase growth by
remarkably enlarging desirability of the brand. Therefore, this strategy concentrates on the
brands as they associates and engages with the customers. Adidas has a customer-centric

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approach, which is already operating significant advancements in the appeal of the brand and
has increased their applicability with customers around the universe (Lagnese 2017). They
are reaching market shares in those categorizations, cities and markets that are identified by
Adidas as their future growth driving the company. Business model of Adidas comprises of
its customer segments, value proposition, channels, customer relationships, key activities, key
partners, key resources, cost structure and its revenue streams (Sempels and Hoffmann 2013).
Adidas however has a majority of market business model, with no such important
differentiation among customers. Adidas mainly targets its contributions at any customers
who are curious about sports clothes and shoes. It provides three main value propositions,
which are innovation, customization and branding. The company however, has its highest
preference for innovation (Uggla 2015). Therefore, it entrenched five pillars of strategies that
are athlete, manufacturing, digital and experienced, sustainability and female athlete
innovations. Its main Channels are the physical retail outlets that involves own retail and
mono-branded authorized stores. It also obtains customers via many e-commerce websites.
Good part is the Adidas official website provides replies to repeated questions asked. Its
business model demands designing and evolving their products for their customers. It
outsources almost all of their manufacturing to a moderator who is an individual supplier
representing over 1,000 factories mostly in Asia. Adidas main resources comprises of its
human and physical resources. It continues future teams that actually comprises of a group of
experts from different directions to study the fresh materials, scientific investigations,
processes of productions and rights of the consumers in direction to invent new ideas. It
maintains a value-driven structure. The main cost driver is sales and fixed cost; other
remaining drivers are in the marketing and administrative area. Finally, it has two revenue
streams those are product sales and license fees. The concept of CAGE analysis lies when it
measures the distance between the two countries as for Adidas we can say Germany and

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U.S.A. Adidas innovations depends on the cultural differences which needs teamwork and
studies have pointed that Americans can work in teams. However, the currency is not same
but still they maintain good political and economical relationships. As the climate of the two
countries is same so it does not affect the raw materials and lastly, income of both countries
are almost similar and the viability of the resources are equal in both countries (Novy 2013).

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References
Collis, D.J., 2015. The Value of Breadth and the Importance of Differences. In Emerging
Economies and Multinational Enterprises (pp. 29-33). Emerald Group Publishing Limited.
Gamboa, A.M. and Gonçalves, H.M., 2014. Customer loyalty through social networks:
Lessons from Zara on Facebook. Business Horizons, 57(6), pp.709-717.
Lagnese, M., 2017. How the adidas Group's Corporate Strategy Has Resulted In Growth and
Increased Profitability Within the Sportswear Industry.
Novy, D., 2013. Gravity redux: measuring international trade costs with panel
data. Economic inquiry, 51(1), pp.101-121.
Petett, T.K.S., 2013. Fast fashion meets luxe: A case study of the brand strategy and
consumer perceptions of forever 21. University of Southern California.
Reeves, M., Love, C. and Tillmanns, P., 2012. Your strategy needs a strategy. Harvard
Business Review, 90(9), pp.76-83.
Sempels, C. and Hoffmann, J., 2013. Sustainable innovation strategy: creating value in a
world of finite resources. Springer.
Subotnick, S.I., 2017. Evolution of athletic footwear. In Athletic Footwear and Orthoses in
Sports Medicine (pp. 3-17). Springer International Publishing.
Uggla, H., 2015. Aligning brand portfolio strategy with business strategy. IUP Journal of
Brand Management, 12(3), p.7.
Vu, T. and Medina, S., 2014. Storytelling marketing and its impact on developing company
brand identity, case company Zara.