Birmingham City University - Adidas E-Business Report: BUS6061

This report provides a comprehensive analysis of Adidas's e-business model, focusing on its strategies for online business and its efforts to become a leading company in the industry. It begins with an overview of Adidas's online and offline activities, followed by an analysis of how digital technology has impacted the business, including the application of the McKinsey 7S model, PESTEL factors, and Porter's Five Forces. The report then evaluates the concepts of disintermediation and reintermediation in the context of Adidas's e-business. It also examines the application of intermediaries for promoting services through advertising and discusses the impact of these strategies. Finally, the report offers recommendations regarding the application of social media for achieving Adidas's business objectives, providing a well-rounded evaluation of its e-business operations and future directions.

Running head: E-BUSINESS OF ADIDAS
E-BUSINESS OF ADIDAS
Name of student
Name of university
Author’s note:

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Table of Contents
1.0 Introduction..........................................................................................................................2
1.1 Overview of the selected firm – with respect to their online/offline activities................3
2.0 An analysis of how the impact of digital technology has impacted business of Adidas.....4
The McKinsey 7S model:.......................................................................................................5
PESTL:...................................................................................................................................7
Porter’s 5 Forces:...................................................................................................................9
3.0 An evaluation of the concepts of disintermediation and reintermediation........................11
Reintermediation and disintermediation..............................................................................11
Application of intermediaries for promoting services through advertising.........................11
Impact of disintermediation and reintermediation strategy.................................................12
4.0 Recommendations & Discussion.......................................................................................13
References:...............................................................................................................................15

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1.0 Introduction
Purpose of the report
The purpose of the report is to analyses e-commerce business model of adidas along with
description of its strategies for its online business to establish itself as the leading company in
the industry.
Brief insight/overview of topic area
E-commerce is right now the most famous business model in the world. Even companies
which has established its brand reputation through their offline business model are now
considering investing in online business model, known as e-commerce business process.
Companies are now realizing that in order to remain relevant in the market defined by
increasing competition needs to look beyond traditional business strategies and apply
technology and digitalization to drive their business in modern day market. Therefore,
multinational companies like adidas is not investing in establishing e-commerce business, but
they are also designing strategies to enhance this business model for establishing itself as the
leading brand as well.
Structure of report
The report first provides an overview about adidas as an organization and it includes
description of its business model along with type of e-commerce model that it considers for
its e-business. Then its business strategies are analysed. Then it provides analysis regarding
impact of digital technology on business of adidas. Then some key concepts of
reintermediation and disintermediation are analysed in this context. Then the report describes
about application of intermediaries for promoting services through advertising along with
impact of disintermediation and reintermediation strategy on e-business as well. The report

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then provides recommendations regarding application of social media for obtaining business
objectives of adidas as well.
1.1 Overview of the selected firm – with respect to their online/offline activities
Analysis of the firm’s business model
The business model of adidas is best described by its preference for innovation and putting
consumers first that anything that they do. The main focus of adidas is to design products that
is not only innovative but of superior quality as well. They ensures that the innovation is
integrated with product design in such a way that it meets consumer demand as well. One of
the main features of adidas business model is that they invest less in endorsing products, but
prefer demonstrating its values through their products. Their products ensure quality and high
performance while identifying what athletes and consumers need, therefore integrating those
requirements with product design as well. This business model has provided adidas an
advantage in market against its competitors as well.
B2C or B2B e-commerce:
Adidas for many years has been in online e-commerce business and the type of e-business
that they deploys is best defined by B2B marketing. However, in recent years like many other
leading brand in this industry that is adopting e-commerce business model is considering
D2C e-commerce model which means direct to customer where products are directly
delivered to consumers (Akbari 2016). Adidas is also shifting its focus to this particular e-
commerce business model over its B2B business model which according to CEO of adidas is
less effective in today’s market, where consumers want online shopping that is easy, quick
and efficient as well (Wright 2019).
Generic Business Strategy of adidas

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Adidas aims to establish itself as the leading sport brand in the world and therefore, they want
to deliver products to its consumers that are not only innovative, but also superior in terms of
quality. Some of the main aspects of adidas business strategies are the followings (Li and
Alexander 2017):
 Corporate Strategy – innovate and design something new
 promote Sustainability
 Investment in Digital
 Marketing for ensuring higher impact on consumers and industry
 ensure innovation in the supply chain and ensure market demand
 explore urban markets that are significant for business
2.0 An analysis of how the impact of digital technology has impacted business of Adidas
Description of the different elements of macro-environment of adidas and its impact on e-
business and e-marketing strategy is provided in this context.
Micro-
environment
 Demand for digital services from
customers
 Understanding the barriers and enablers
to consumer adoption
The McKinsey 7S
model is considered
Macro-
environment
 Impact of legal, privacy and ethical
constraints or opportunities on a
company
PESTL factors are
reviewed in this
context
Competitors Identification of competitors and their
impact on business of adidas
Porter’s 5 Forces is
analysed

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The McKinsey 7S model:
The 7S Framework is considered for internally analysing companies. The 7’s are strategy,
structure, system, shared values, style, staff, and skills. The strategy, a company considers
refers to the plan that is devised for ensuring competitive advantage that is required for the
competition. The model is based on the theory that, if an organization wants to perform well,
these seven elements are not only important, but it needs to be ensured that these seven
elements are aligned and also mutually reinforcing as well (Ravanfar 2015). The model is
also efficient to help organization to identify elements that are required to be realigned to for
enhancing performance and ensure that organizational excellence is obtained as well.
Strategy: adidas considers famous sport persons and athletes for promoting their products.
They design products so that they appeal to many customer according to their requirements.
Their products ensure quality and high performance while identifying what athletes and
consumers need, therefore integrating those requirements with product design as well
(Channon and Caldart 2015). Even though there are many competitors in the market for
adidas for example Nike, Puma and New Balance, adidas strategy of integrating consumers
with design and customization of products makes it different from other competitors and also
provides them a competitive advantage as well (Shaqrah 2018).
Structure:
Adidas is a global company and in order to offer online shopping facility to consumers
worldwide, they ensure a proper organizational structure and also follows a proper hierarchy.
However, one of the most important aspects of their organizational structure is that research
and development team is provided priority to ensure innovation in their product design and
integrate consumers’ requirements with product design. Along with this, another important

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feature of organizational structure is that the CEO and director of operations works closely
with each of the departments including designer and development team which ensures
innovation and quality in product design.
Shared values:
Adidas not only design and deliver products to consumers, they identify consumer
requirements, their passion for sport and athletics and integrate those values into product
design. This helps adidas ensuing relationship with consumers and deliver them values
through products.
Skills:
Adidas works closely with athletes and they are expert in designing products that is not only
competes with its competitors, they employs designers who are exceptionally talented and it
is evident in their product design and quality as well. Adidas has integrated technology and
digitalization and it has therefore provided a context to enhance skills of its designers by
making design and manufacturers effective and efficient as well.
Staff:
From CEO to employees including designers everyone motivated and they recognize mission
and vision of the company and this is what makes adidas an excellent company where not
only employees are valued, they ensure dedication for making adidas world leading sport
manufacturing company and this has been one of the significant strengths of adidas.
Systems:
The most important systems for driving success of adidas are research and development and
advertising campaigns. It ensures that products are not only innovative and of superior

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quality, but they are promoted to the consumers which is an important aspect for ensuing
success of the products as well.
Style:
Adidas has always recognized how important employees are for success of the company and
therefore they provide facilities to employees for ensuing that employees are satisfied to work
at the company. Profit in the business implies that their leadership is excellent, but adidas has
incorporated sports into workplace which provides context for implementing competitive
attitude into workplace. Excellent leadership along with effective workplace has helped
adidas to become leading sport manufacturing company in the world.
PESTL:
PESTEL is best described as a tool to analyse business environment of a company for
designing strategies that helps them to ensure success in an environment that the business is
implemented. PESTEL refers to P for Political, E for Economic, S for Social, T for
Technological, L for Legal and E for Environmental as well (Li and Alexander 2017).
POLITICAL FACTORS
Adidas operates globally and therefore they need to comply with required rules and
regulations of respective countries as well.
Along with taxation rules, some other rules that adidas need to comply with are the
followings:
 International trade agreements
 Product safety laws
 Labor laws

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 Consumer safety product regulations
ECONOMIC FACTORS
The industry of sport goods is significantly competitive. Almost 70% of total revenue
generated in the industry is contributed by the 50 largest companies. The type of products that
adidas creates is not necessary items but regarded as leisure items. Sales depend on trends of
sport buyers and their preferences. These products from different categories competes with
each other while sport products need to compete with gaming industry along with music
industry. Adidas need to ensure that they not consider global economy fluctuations, but it has
proper strategies for accommodating this. Therefore, it needs to ensure that proper research is
done for identifying where to sell and distribute products for ensuing growth of the company
and finding opportunities as well.
SOCIAL FACTORS
Adidas design their products according to the requirements of the consumers and these
products are available for consumers of any gender, age or lifestyle. However, the main focus
group are buyers who are health conscious and sport lovers. They need to analyse health
trends and preferences for providing products to their consumers as well.
TECHNOLOGICAL FACTORS
Adidas servers its products to athletes and sport persons along with general consumers and
therefore they need to ensure that these products optimize performance for coaches and
professionals. In this context they might consider fitness technologies like Fitbit which is
quite popular among health communities for enhancing their business as well.
LEGAL FACTORS

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Adidas owns various intellectual properties and IP systems. Along with this they also have
trademark for their products and it provides them legal support in designing and distributing
products. Adidas has well connection to the sport industry and it allows to them to sponsor
celebrity endorsement for promoting their products while complying with national and local
laws as well.
Porter’s 5 Forces:
Porter’s 5 Forces is a popular framework for analysing business environment of a company.
It helps in designing strategies for ensuing success in an environment that the business is
implemented. It identifies and analyses five competitive forces that is capable of influencing
every industry and also helps in determining weaknesses and strengths of an industry as well
(Porter Analysis. 2019).
Porter's five forces are:
 Competition in the industry
 Potential of new entrants into the industry
 Power of suppliers
 Power of customers
 Threat of substitute products
Competition in the industry
Innovation and quality has helped adidas to manage competition in the market, but it is still
not the leading company with its most significant competitors being Nike. In order to
outperform Nike adidas is investing significantly in R&D, developing new markets, and
advertising while increasing cost and extending product lines. However, they should closely

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analyse other competitors in the market for example New Balance and Puma as these
competitors might also affect their business as well.
Potential of new entrants into the industry
Adidas and its main competitor Nike has established such a dominance in this industry, it is
not possible for new entrants to enter this market and affect their market dominance. Some of
the main issues of new entrants to enter this market are the followings:
 Significant barrier in market
 Huge investment cost for R&D
 Investment in marketing and celebrity endorsement
 Lack of connection with sport industry and sport persons
 Lack of resources for product design and delivery to consumers
Therefore, threat from new entrants in the market is significantly low in this context.
Power of suppliers
Adidas has established such a huge business that sourcing suppliers for their business is not
an issue and threat from suppliers who provide raw materials is significantly less which is an
advantage for their business as well. Availability of raw materials makes suppliers less in the
supply chain of the company. However, adidas is still dependent on their suppliers as
manufacturing cost of raw materials is expensive than purchasing cost.
Power of customers
Consumers in this industry looks for standard products and they do not have much knowledge
about the products. Therefore, they are not capable of making decision. Therefore, power of
customer is significantly lower as well.

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Threat of substitute products
There are few reputed sport brand who provides quality sportswear apparel and accessories
which provides adidas advantage in the market. Therefore, threat of consumer switching to
other sport brands is less, especially for adidas which has established itself as one of the
leading and most liked sport manufacturing brand as well.
3.0 An evaluation of the concepts of disintermediation and reintermediation
Points that are analysed in this context are the followings:
Reintermediation and disintermediation
Some key concepts of reintermediation and disintermediation are analysed in this context.
According to the theory of reintermediation, in order to enhance efficiency of the supply
chain and ensures that it is consistent with business requirements, it is also required to include
some components in the supply chain as well (Balyuk and Davydenko 2019). This is known
as reintermediation.
Therefore, the main aspect of reintermediation is to include some components in the supply
chain for enhancing its efficiency.
However, sometime in order to enhance efficiency of supply chain, some of the elements are
removed from the supply chain and the supply chain is redesigned as well. This is specified
as disintermediation as well.
Application of intermediaries for promoting services through advertising
It analyses whether existing players, in the industry are making use of the new intermediaries
to promote their services through advertising or not.
Nike, the principal competitor of adidas is now going for in-house social media advertising
where the marketing and advertisement will be managed by the marketing experts of the