Adidas's Attempts to Lower Product Prices

This article discusses Adidas's efforts to lower the prices of their products and increase their market share. It explores the strategic changes implemented by Adidas's administration and the role of the Profitability Management department. The article also highlights the collaboration with suppliers and the focus on competitive pricing strategies.

QUESTIONS

TABLE OF CONTENTS
QUESTION 1..................................................................................................................................3
Adidas niche market different from other competitors................................................................3
QUESTION 2..................................................................................................................................6
Adidas’s attempts to lower the price of their products................................................................6
QUESTION 3..................................................................................................................................9
Success or failure of Adidas supply chain management strategies.............................................9
REFERENCES..............................................................................................................................14

QUESTION 1
Adidas niche market different from other competitors
Addidas is multinational company headquartered in Germany manufacturing designs and
sport shoes , clothing and accessories and is the biggest sportswear manufacturer in world
offering high quality standard products and services to all customers around the world. The
barnd has long attained goodwill which has been successfully implemented as legacy among
consumers around the world, with functioning spread in more than 20 countries within Europe.
Adidas has expansion into various countries around the world and leading the continent s when it
comes to profitability margins and revenue scales. The supervisory board advices and supervises
executive board in various matters where mission and vision of company is formulated. The
board regulations is highly focused towards bringing efficiency and large scale development with
innovation in all products and services, through which it has created niche market in comparison
to other competitors (Darwish, Mahd and Dhiab,2020).The manufacturing department is
entrusted with the responsibilities and is managed with strong leadership in all teams where
advanced machinery and highly equipped technology standards enhance the production range
with large profitability factors. Company has successfully created various horizons among
products by accelerating the growth with high innovation and productivity. It has brought
excellent growth in revenue scales within all products when it comes to offer customers with
high quality standards, accessories, exercise clothes and various other products under its
portfolio. Adidas company has attained high goodwill and brand value among global companies,
as the determinants it has accomplished with large scale flexible business operations has helped
it create niche in global position in comparison with other companies. The expansion into
various countries sports market has helped adidas to accrete large market share goodwill among
customers and sustained use of innovative technology standards has helped brand to promote its
business services through online stores and networking platforms also. Strengths of ADIDAS
which has enabled it to become successful business company can be analyzed through various
reasons which are as follows (Anagnostopoulos,2020).
 Strong management team and good corporate strategy for diversification nad expansion into
overseas market with the vision to create strong barnd image and recognition on global

platforms is one of the biggest internal strength of company. Company operates its functions
with high innovation integrated business model where dynamic situations are controlled with
high efficiency by all top management leaders who have strong experience and research
breakthrough of the necessary steps to be taken at all steps. The internal workforce is trained
and component on all aspects of production, marketing and innovation of all models operations
through which the revenue scales are targeted with high criterias.
 The reputation and variety of production offered on web in forms of footwear, apparels, sporting
equipments enable customers to enable customers to choose from large pool of variety on web
services. Brand recognition of Adidas has leveraged high growth in production scale and
customers goodwill due to internal strength, creativity is highly focused to be integrated in all
models which differentiates kit from other brands around goodwill. There is large competiton
in the market share where puma, Nike and other sport shoes brands gives tough relativity to
customers to choose from but the large variety in form of sport players equipments and various
other goods enable customers to choose from. Management focuses in bringing latest
fashionable clothes and all goods pertaining to facilities of people to choose from and there is
high focus in building quality standards pertaining with the industry growth. Adida has large
production units where massive scale clothing and other products are prepared with cost
effective use of resources, through which it has successfully created global brand image and
functionally become effective in gaining huge profit scale revenues (O'haire and Yip,
Adidas,2020).
 Adidas has huge partnerships with various companies and brands around the world which makes
its availability factor strong for consumers and also there is strong focus in opening new stores
upto untapped country markets. The brand targets new segments of customers in the potential
market by bringing in strong competitive pricing strategies, large customer based services and
fluently being active on networking websites and shopping portals. Customers around the
world have likely grown variably in numerous numbers in choosing adidas products and there
has been rapid demand in company products and services which explains how competitively it
has ruled the sport industry. Players around the world have been choosing adidas shoes and
apparel equipments as their first choose while matches and tournaments due to comfort ability
factor.

 Adidas has built various promotion parameters throughout globe as it uses latest technology
machinery and web services to target the potential customers,in all countries and maintains
high quality customer satisfaction services which has helped the company to grow manifold.
The company has partnerships with various websites and advertising agencies which has
helped it to reach high end customers around world spread in many countries and regions.
Management aims to be strong in promotional scenario as there is immense competition
globally which is also relevant to bring customers close with the company services. The
promotional services are determined to grow rapidly in all scales of world to reach new
segments of customers and have keenly become largely active in solving customers feedback
and grievances who shop from websites and shopping portals (Carr, 2019).
 Adidas has large trained workforce as an internal strength of company where there is large focus
on using resources cost effectively, and also leaders are highly motivating towards employees
production scenario which has determined an increase in sale revenues. Trained employees in
all sectors and departments acts as boon for brand as they are the real face of company serving
customers at stores and in websites. Production is diversified and efficient when resources are
used in output completion by trained staff when quality is kept under strict control and
functional operations are highly focused by leaders and other department heads. The company
heads of all departments are innovatively motivated towards all employees as it helps to
develop their skills and also motivate them to perform better with technical knowledge and
large scale development. Turnover of employees factor is lowest as ethical working conditions
and extrinsic motivators provide them with high positive synergy of growth and dynamic
working culture.
Key scenarios of growth and productivity:
 Adidas planning system: The PLS acts as one of the biggest strength of inner management
of company which has enabled its growth and diversification into customization of products
and high scale integration of various products and services. Adidas uses latest technology and
machinery to record all data collections, leverage more profitability revenues and build
paradigms of human mind which are the internal management assets. Adidas consumer base
records and the various revenue scale targets are operated with high equipped technology
usage which enables customers to come in direct contact with management. The advance
planning system has assisted company to leverage high growth factors with innovative

technology and customize supply factors with high demand completion. Strong planning
and building barriers of high potential creativity and innovation stops negative
impact from other companies and brand to affect its revenues (Bilbao-Terol,
Arenas-Parra and Cañal-Fernández,2019).
 Adidas offers high quality sport shoes and equipments to players around world:
Athletes and players around world have been highly using Adidas products and sport
equipments due to strong comfort impact and flexible range of choices which is different from
other global sport brands. Adidas has attained long legacy among customers and players
around world by biegf their first preference in sport accessories and exercise pants, clothes
and other range of products. The company has successfully created high goodwill and long
term profitable revenues which has helped in keenly becoming reproductive in all areas of
business sectors. Adidas has been one of the biggest brand in history and in present world
scenario where it has dominantly become one of the biggest preferences of customers.
 Adidas uses innovative business models: The company business management and
services are constructed with innovative parameters of technology usage, where the internal
strengths are highly reproductive to use machinery with high efficiency and leveraging long
term profits and revenues. Brand has maintained strong legal standards and ethical business
practices maintenance where creativity plays an integral role to be responsible towards
business practices. Adidas financial reports can be anlaysed to understand how it is
functionally strong which acts as high capital Investment Company for further diversification
and bringing in more worth full outputs from resources. Adidas uses dynamic business models
to be efficient in operations at times of crisis or changing business scenario which cultivates
the enriching quest to be productive in bringing latest fashionable apparels and equipments
(Yang,Basile and Letourneau,2020).
QUESTION 2
Adidas’s attempts to lower the price of their products
Adidas being a global sportswear business organisation, operates in various countries
around the globe and services customers from various distinct cultures, races, genders, groups
and ethnicities. But on thing that was common for most of its customers before 2008 was that

they belonged to the upper or middle-upper classes of society due to the high prices charged by
Adidas for their goods and products up until that point. Seeing this trendemerge and the far
greater opportunities available to Adidasby expanding their customer base beyond these societal
classes, Adidas’s administration decided to implement changes to its operational processes with
the intention to drive the prices of their products and goods lower in order to service the middle
classes of society which far outnumber the upper and middle upper classes respectively. This
would effectively increase Adidas’s operational productivity and profitability in the markets
while also increasing their total customer base (Kienzler and Kowalkowski, 2017). To perform
such a task, Adidas’s administration and leadership strategically planned and outlined various
distinct operational changes, which would allow the business organisation to effectively reduce
the prices of their goods and products available in the consumer markets. Only after sufficient
planning and analysis of the markets and their own operations, did Adidas’s administration come
up with a strategical plan to lower the prices of their goods and products and increase their
market share. The first process in accomplishing such a behemoth task, was to create a separate
dedicated department within the existing operational structure of Adidas’s chain of command
called Profitability Management. This department was tasked with performing all the necessary
market analysis which could impact Adidas’s overall operations, productivity and profitability in
the consumer markets. The Profitability Management department conducted market analysis of
all the external macro environmental factors which could influence Adidas’s operations and
functions (Liu, Zhai and Chen, 2019). Through this they were able to assess the various political,
economical, social, technological, environmental and legal factors which could affect Adidas’s
operations and profitability in the coming years. After outlining all the potential factors, the
profitability management department within Adidas was tasked with predicting the level of their
actual impact on Adidas’s operations, profitability, the costs Adidas incurs while resourcing its
raw materials from suppliers. This allowed Adidas’s administration to gauge how external
factors influence their efforts to increase productivity and profitability and drive their product
prices lower. After the profitability management department had predicted the impact of such
external factors on their products and supplier costs, it was tasked with creating a supply chain
profitability strategy which would allow Adidas to effectively lower the prices of its products in
the consumer markets while maintaining profits for the organisation.

In addition to the prior steps, Adidas’s administration also had their development
department contribute towards helping them lower the prices of their products in the consumer
markets. The development department’s new operational strategy for the future included a
stronger focus on decreasing the price of Adidas goods and products which would allow the
organisation to effectively increase their customer base in the market. To further decrease the
price of their products in consumer markets, Adidas’s administration held long and fruitful
discussions with their suppliers. The primary aim of these discussions was to increase the ability
of Adidas’s administration to predict the prices of raw materials resourced from suppliers in
advance and to make the interactions with their suppliers more transparent for both parties
involved. Predicting the fluctuations in prices of raw materials sourced from suppliers would
allow Adidas’s administration and leadership to betterset the prices of their products at
competitive costs, without being in fear of supplier’s cost rising dramatically in the future and to
avoid the business unnecessarily incurring losses (Kung and Zhong, 2017). Though their
discussions with suppliers, the administration of Adidas was able to closely track the prices of
raw materials dynamically and formulate a strategy which involved Adidas purchasing raw
materials from suppliers in bulk quantities in order to make up for the fluctuations in prices of
raw materials resourced from suppliers. This strategy was negotiated and agreed by both parties
as it proved to be profitable for both the suppliers and Adidas in the long run.
Adidas corporate marketing strategies are highly focused to build competitive price strategies,
with high quality product standards and moderate price factor which will help company on long
term sustainability implementation. Adidas has partnerships with various regional companies and
brands which has helped to enable affordable price range to all customers around world and the
various attractive features has helped to captivate high market share. There have been various
steps taken by management which has helped it to become competitive brand in globe and
dynamically constructed the price strategies. Company uses metrics and data to analyse
preferences of customers of price ranges and other company’s prices operating in same industry.
These graphics plays an important role in functionally becoming active towards concerns of
customers to have affordable price factors and being the market leaders. Adidas has been
functionally active in researching the various trends of customers and fixing price percentages
and the profitability revenues, as to satisfy customer goodwill is main objective. The goal of
company is to maintain equal percentage of growth in revenue and high scaled profitability

factors along with focus to offer customers the best price in sport wear industry (Kozak,2018).
Adidas pricing decisions are structured with elaborate analysis on paradigms which outcast its
values and performance based on how much public worldwide are operating the brand products.
These factors explain how Adidas has maintained low price factor efficiently in comparison with
other brands in same industry.
QUESTION 3
Success or failure of Adidas supply chain management strategies
The supply chain of Adidas is considered as one of the reason for the organisational long
term success. The profitability management department of the organisation ensures that supply
chain cost and operations are successfully managed with desired time and cost. One of the key
strategy used by Adidas to improve its supply chain is that it emphasis on brining transparency in
supply chain operations so that its functional goals can be achieved. Organisation also tries to
build healthy relationships with its suppliers so that on the basis of strong supplier relations
quality services can be provided to its customers. This is one of the reasons that Adidas always
succeed in timely delivery of services to its consumers.
Along with the positive and long term relationships with suppliers Adidas also emphasis
on shipping costs and other management cost related to its supply chain network. Adidas also
have a well implemented code of conduct for the employees of its supply chain. Professional
standards along with safe environment in terms of health and occupational safety are key element
assisting organisation to improve the quality of supply chain operations (Supply chain approach,
2020). Organisation has multi level monitoring along with innovative rating systems so that it
can take effective decisions. However with the online marketing and digitalisation of the
business activities it is essential for the organisation that it must regularly add value to its supply
chain network.
For instance at present when technological changes are rapidly gaining popularity and
importance it is required that Adidas must also digitise its supply chain. It will help organisation
to gain competitive advantage by quick updates of the records and better management of the
information of its suppliers. The digital technology can also be used by organisation to enhance

the monitoring of its suppliers. Along with the effective monitoring processes organisation also
have random and independent assessment of suppliers by third party. Such kind of strict focus on
monitoring of the supply chain process is the essential element which makes Adidas a successful
organisation on behalf of highly productive and managed supply chain. Another factor
responsible for Adidas success is that its supply chain consists of various business partners and
manufacturers all around the world (Abner, Setyawan and Sin, 2018). It helps to understand the
customer’s needs of Adidas from different corners of the world. Thus company is able to
effectively establish itself in different market environments.
The marketing team of company should properly complete its market research task,
because it is necessary to maintain an effective supply chain. Improper market research always
promotes an ineffective supply chain. There is market research always help to company for
analysing actual demand of people in the market. Once when company has understood actual
demand of customers, then it will able to supply their products and services according to this
market demand. That’s why market research plays great role to the company for making their
supply chain management more productive.
The company need to select an appropriate mode of transport, like; air, land and sea to
distribute their products and services within different market segments (Castillo and et.al., 2018).
Currently sea or ship transport is playing great role to this company to maintain its supply chain
stronger. Most of the manufactures also gives priority to this mode of transport only, because this
is most favourable way to deliver their products and services from one place to another.
Currently Adidas has very strong distribution channel worldwide. Nowadays it uses self-owned
cargo ships to transport their designable shoes, accessories and clothes from manufacturing plant
to authorised stores.
Currently Adidas has 460 stores in the 55 different countries. In this case, top-level
management’s first priority is to always be filled their authorised stores with latest and trendy
clothes, shoes, bags and accessories etc. Management always try to be available its each product
in its each store. In this practice of existing management, strong supply chain plays very great
role, because without supply chain management not able make available its each product in
every store. The company has a very effective team which specially work for managing each task
which has related to its supply chain. Top-level management of company has given specific

orders to their HRM (human resource management) for hiring only those candidates for supply
chain management team, who has some extra-ordinary skills and talent of supply chain
management (De Angelis, Howard and Miemczyk, 2018). This step of top-level management is
positively influencing its supply chain management.
Many times the company faces many difficulties and challenges also in their supply chain
management. For example; sometimes some conflicts raise between employees of supply chain
management. Many times it not successfully delivers its products and services on time because
of unfavourable climate. Supply chain manager of company is always make a special plan for
dealing with rainy and snow season, because these seasons always build many barriers for the
supply chain. Many times company is not able deliver its products and services on time because
of high rain. When company supply their goods through road transport, then it mostly uses trucks
for deliver their products from manufacturing plant to authorised stores. Distributor of the
company is always avoiding to choose that driver for their delivery truck who has very bad habit
of drunk and drive. Reason is, many times company has faced some cases where it was not
succeeding in properly deliver their products in stores due to truck accidents. Upper management
of company has given a specific guideline to supply chain manager for choosing most
appropriate strategies to makes supply chain management more and more effective.
The company uses different productive strategies like JIT (just in time) and TQM (total
quality management) to run each operation of their supply chain management on progressive
path (Singh and Trivedi, 2016). These strategies are too productive to make their all activities
within supply chain more effective and productive. Firstly, JIT strategy is help to a store
manager of company to order only those products in store which are highly required to daily
sale. On the other hand, TQM helps to company for maintaining work quality of their supply
chain management. Supply chain manager is able to improve work quality of their employees to
gain effective results from the all supply chain operations. The management of company has
completely understood that, strategies of supply chain management plays great role to a business
or company. That’s why it has highly succeeded in gain huge advantages from its supply chain.
Maintain an effective supply chain is necessary task to the company for proving their
products and services to customers 24*7. A customer never like those stores which says product
which you want is not available in this time. This really a big issue of many companies and

businesses, because many times a company not able to be available each product in their stores.
In this situation, proper supply chain management plays great role, because with the support of
strong supply chain management a company always able to fulfil each need or demand of a
customer. Of course, activities which has related to supply chain management are always
conducted by supply chain manager, but there is supervision of top-level management is also too
necessary.
Currently top-level management of Adidas is properly supervising each movement of
their supply chain management. That’s why currently company has very powerful supply or
distribution channel. Nowadays it is starting to open its new manufacturing unit or plant in
different countries to make its supply chain operations more effective. This step is too necessary
of management to run their all operations of supply chain in systematic manner. If company not
supervise each operation of its supply chain, then its business become failure, because supply
also plays a specific role in the company’s business environment (Tokar and Swink, 2019). Each
employee within supply chain management need to put their huge efforts in daily operations of
this chain, because currently major competitors of Adidas are also doing same thing. Currently
Puma, Nike are major competitors of Adidas which giving very tough competition to this
company. These competitors also have very strong distribution and supply channels, so it is
necessary task to the management to make won supply channel also too strong.
Many new entrants are continually coming in fashion retail industry, so they can give
very tough competition to Adidas in this industry. In this case, the company need to boost
operation of their supply chain. Currently Adidas is the largest sportswear manufacturer in
Europe, and the second largest in all around the world after Nike, because Nike is the biggest
manufacturer of sports shoes, clothes and accessories in the world. Currently Adidas holds the
second position in the world, which is also too excellent. It has succeeded in gaining this
reputation in international fashion industry because of its effective product quality, marketing
and supply chain. From establishment to date, supply or distribution chain management
strategies has played very great role to the company. It has gained very large customer base
worldwide with the support of its strong supply chain management.
The top-level management of Adidas still need to develop or improve strategies of their
supply chain management. It is necessary task to management for gaining huge competitive

advantage in the fashion retail industry. Existing supply chain strategies are also too good, but if
management more improve them, then it will get opportunity to gain large market share in the
international market (Beske-Janssen, Schaltegger and Liedke, 2019). Many it faces various errors
within operations of its supply chain, so upper management should take some productive steps to
remove such errors and barriers from the supply chain. These all factors will make supply chain
management of Adidas stronger and effective.

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Online
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<https://www.adidas-group.com/en/sustainability/managing-sustainability/human-rights/
supply-chain-approach/>.