Internationalization of Adidas: Strategies and Challenges

This report provides a comprehensive overview of Adidas's internationalization strategy, examining the company's expansion into global markets, with a specific focus on its approach to the Asian market. The report begins with an executive summary and table of contents, followed by an introduction to the Adidas brand, its mission, and its strategies for international growth. It delves into the company's strategies, including speed, cities, and open-source approaches, and analyzes Adidas's specific strategies in India, Japan, and China. The report highlights the company's focus on innovation, sustainability, and digital technology, as well as its supply chain management. Furthermore, it discusses the challenges and problems Adidas has faced in the Asian market, including distribution network issues and complex supply chains. The report concludes with recommendations and a conclusion, supported by academic references and practical examples, fulfilling the requirements of a business report format with Harvard referencing.

Running head: INTERNATIONALIZATION OF ADIDAS
INTERNATIONALIZATION OF ADIDAS
Name of the Student
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Author Note

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Executive Summary
This report aims to discuss brief overview of Adidas, a multinational German sports -wear
company. The paper also provides the generic idea about different strategies used by the firm to
expand their business in internal market and problems faced by them while continuing their
business in Asian market.

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Table of Contents
Introduction......................................................................................................................................3
Discussion........................................................................................................................................3
Recommendation...........................................................................................................................10
Conclusion.....................................................................................................................................11
Reference.......................................................................................................................................12

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Introduction
This report aims to introduce a brief overview of the Adidas brand, one of the famous
multinational German company that produce shoes, clothes and other accessories. The firm has
is headquarter in Herzogenaurach, Germany (Forbes.com, 2019). This paper also discusses
Adidas‘s strategies to expand its business internationally. Another goal of this paper is to
examine the different approaches and strategies applied by the company to practice
internalization and focusses on the problems and risk faced by the firm while entering into the
Asian market (Adidas-group, 2019). This organization has the specific mission to become the
largest sportswear brand in the world. For this reason, this firm has framed different strategies to
put their steps forward to different countries. They use to follow strategies based on aspects like
Urbanization, mobility, innovation and collaboration to expand their business. With the purpose
of improving the sale and profit margin of the organization, Adidas use to innovate new
footwear. They use to produce durable products with high quality leather. Adidas has formulated
a unique strategy that would help them to enter in the Asian market, at the beginning, they stated
producing shoes and sports for celebrities, this would help them to expand their target consumers
and make a possible path to expand their business in Asia.
Discussion
Adidas is considered as the famous multinational sportswear company, founded by Adolf
Dassler along with his brother Rudolf in the year 1924. Adidas believes that changes in anyone’s
life can be achieved by the power sports. Keeping this purpose in mind, this organization has
started manufacturing sports shoes, sports apparel and other accessories. The main motive of this
firm is to improve the performance of athletes by providing suitable shoes, clothes and

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accessories, required for the sports. After analyzing different market Adidas has concluded, in
order to increase their target consumers in this competitive global market, they need to
manufacture products as per consumer choices and preferences. Thus, the firm has applied the
strategy of producing products having good quality with the touch of localization. Though,
athletes are the main customer of the firm, Adidas has specialized in producing high quality
sports shoes, particularly for the runners. Adidas has seemed to offer products having the touch
of elegance and uniqueness. They are on the mission of improvising their existing products along
with innovating products comprising new structure and design that would help the athletes to
generate their performance level and also to meet new demand of other buyers.
In order to expand their business across the border, Adidas has applied strategies based
on three aspects discussed below:
 Speed: Here the word “Speed” states that Adidas has undertaken different actions to
improve their delivery services to different markets, that would help the company to
make great brand position among different competitors present in the market (Stemmler,
2018).As per this strategy company should improve their distribution channel,
emphasizes on e-commerce business (Holtbrugge and Schuster, 2017). It discusses that
company has launched few models with different colors that would help the firm to faster
its production process.
 Cities: In this case, company has focused on promoting its business in different major
cities like London, New York, Los Angeles, Shanghai, Paris & Tokyo. This strategy
promotes the concept of urbanization and helps the firm to improve the company’s
market share (Adidas-group.com, 2019). Thus, it helps the company to adopt tastes and
preferences of foreign nations and expand their business in those countries. This would

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benefit the firm to launch its new products and satisfy the emerging choices of today’s
youth. Thus, this strategy helps the company to expand their target market as well as to
extract more profit from the market.
 Open Source: This strategy is based on innovating different products and collaborating
with other big firms. Adidas has formulated strategy to collaborate with different
celebrities and athletes to ensure a big target market and generate the scope of generating
more profit (Malik and Qureshi, 2016).
Adidas Strategies to Run its business India:
After analyzing the entire global market Adidas has identified that India can be the ideal
market for the company because India is considered as the nation full of resources and cultural
diversities. Even resources liked man- power and essential raw materials are available at a low
price. Adidas has identified that cricket is one of the main interest of Indians. For this reason,
Adidas has launched high quality sportswear. Adidas has endorsed their new products by
different famous celebrities related with sports like Sachin Tendulkar, Virendra Sehwag, Zaheer
Khan, and others. Each product has ranged more than Rs 3,000. This strategy has helped them to
make a good brand position among all the major competitors (Nike and Reebok) present in the
Indian market. With different new variations of sportswear, Adidas has launched entirely new
category of sports products called “Master Blaster”. This brand has helped the company to
increase their profit margin in Asian market.In order to achieve public trust and attention Adidas
has started sponsoring in different cricket matches, sports events, football, tennis, and Olympic
events. To generate the business profit rate, Adidas has used the strategy of producing localized
products in India. This will help the firm to satisfy the emerging needs and demands of different
Indians.

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Adidas Strategy in Japan:
With the purpose of setting the business, Adidas has enter into the Japan. The main
strategy developed by the organization is to strengthen their brand and improve its products to
build a good brand position there. The company used the policy of globalization to increase the
profit margin in Japan. Adidas has established a domestic footwear lab named “Adidas Footwear
Lab” in Japan (Japantoday.com, 2019). This lab is established to perform different innovation for
producing different high quality products that will help the athletes to improve their skills related
to sports. This will help the company to gain public attention and help them to achieve their
success in Japan.
International strategies of Adidas in Asian Market:
 Creating The New: The company’s corporate strategy rely on innovations and creation
of new products (Lagnese, 2017).The main mission of Adidas is to serve best services
and products toits customers across the globe.For attaining this company has started
innovating new products and improve their services like quick delivery of products,
proper packaging.
 Focus on Sustainability: This company, has put major focus on producing sustainable
products that would help the brand to enhance long-term profitability. To achieve
business sustainability, company use to collaborate with different big firms that helps the
company to indulge in a partnership business that would help the company achieve
greater efficiency. To create a sustainable market company needs to focus on the
protection of environment. For this purpose, Adidas has started reducing the use of
harmful plastics (Niskanen, 2019). In case of sustainability, company put focus on

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improving product’s quality, creating good supply chain and other similar ones. Thus,
this will help the company to build good brand reputation and sustain in the market.
 Improving Digital Technology: Digital technology plays a vital role in developing any
business because it would help the company to maintain good connectivity and helps in
strengthen company’s distribution channel. Considering this fact in mind, Adidas has
invested huge amount of money to implement new digital technology in expanding their
business Digital technology has helped the mentioned firm to achieve high productivity.
With the help of this digital technology. Adidas has established a connective link to
supervise every action performed by the company. It has bridge the communication gap
between the company and its consumers. In the year 2017, Adidas has developed their e-
commerce business. This has helped the company to generate maximum revenue. Digital
technology has helped the firm to improve their marketing strategies. Online shopping
has increased the firm’s profit margin.
 Creating good supply chain: It is impossible to run a large business in the global market
without a good supply chain. Though, Adidas has the mission of becoming a first true
fast sports, the company has introduced effective supply chain. Adidas has more than 800
suppliers. Among those 296 and 109 are worked for Global operation program and
strategic suppliers respectively. Large number of suppliers of Adidas are present in
Asia,that helps the company to minimize the manufacturing cost because availability of
human labor and raw materials is high. More than 90 percent of production of footwear
of the company performed in Asia.
Adidas Business Strategies In China:

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Asia is considered as the nation enriched with essential raw materials and sources.
Accessibility of man-power and raw materials are easy. In order to reduce the total production
cost,Adidas has entered into Asian market. In China Adidas has established their growth based
on a particular metric (speed). As per the report of 2015, Adidas has more than 400 stores spread
in different parts of China. Adidas has greater market share growth in China including Hong
Kong, Macua and others. Adidas has captured major portion of youth through its new branch
named Adidas NEO (Nothhaft, 2018).
Strategies Applied By Adidas To Expand Business In China:
Adidas has formulated different strategies to expand the business in China. More than
40% of Adidas products are produced in China. The expansion strategies of Adidas in China are
discussed below:
 Adidas has developed processes of increasing both price and product’s quality to expand
their business in lower tier parts of China.
 Adidas has established different sub-brands to increase the sales rate of the firm. Adidas
NEO is the sub- brand of Adidas originals. This sub-division has targeted the teenagers
by offering new innovative products at half the original price of the original brand
(Pereira, 2018). This helps the company to expand their business in the lower tier parts of
China.
 In order to build good brand reputation in China, Adidas has contributed huge amount of
money in different activities related to sports and other fitness activities (Liu et al., 2015)
 Adidas has considered itself as the innovator of new products and technologies. Adidas
has established Adidas NEO as its new division. Under this new brand the company
innovate new products including attractive designs, styles, qualities and colors (Dong and

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Cong, 2017). This product variation strategy helps the firm in increasing the sales and
profit by attracting major portion of youth population of China.
 Technology became the most important aspect for any company to expand its
connectivity and it helps the firm to supervise every action taken by the company. It
provide the scope of analyzing consumer’s actual demands. Considering this fact in mind,
Adidas has introduced e-commerce business strategy. Adidas has provided the online
purchasing facilities to their customers that would help the company to reduce client’s
time. Through online technology, the company has the scope of analyzing the annual
business transaction report of the firm. Thus, this strategy helps the firm to generate the
organizational profit.
Problems and Challenges Faced by Adidas in Asian Market
Adidas is one of the largest brand having long supply chain and complex distribution
network( Mudambi and Puck, 2016).Though, the company has spread its business in almost
every nation, it faced problem of transportation and distribution. The firm has weak distribution
network and this restricts the firm to perform effectively (Ferrarini, Maupin and Hinojales,
2017).Simultaneously, the company has suffered for its long and complex supply chain system in
Asian market (Cheng, Fu and Lai, 2018). Unable to fulfil the growing market demand, the sales
rate of Adidas has faced severe downfall.
Asian countries like Japan, and India others have huge differences in terms of their
culture, religious, education, and background. Specially, India is well- known for its cultural and
religious diversities and that would affect the choices and preference of Indians. Every people
over there has different opinion and preferences. For this reason, Adidas has suffered from

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another major challenge of individualization of demand in the Asian market. This has affected
the company’s production, supply chain and management badly (Germano, 2019).While
continuing its business, the company has struggled due to different changes in the purchasing
power of their Asian customers.
Frequent changes in the consumer’s buying power and individual preferences of product
has raised serious challenge for the company to build effective planning and indirectly affect the
company’s distribution network (Kennedy, 2017). Unable to satisfy the consumer’s growing
demands and requirements, the brand reputation of the company has put on serious risk (Poerner
et al., 2018)This declining brand reputation has refrained the company to create good brand
position in the Asian market.
Lack of effective distribution tools and advanced distribution technique, Adidas has
suffered from major crisis while running their business in Asian countries. With the growing
initiative of trade liberalization and emerging economies in Asian countries like Japan, China
and India. Adidas has faced serious trouble in maintaining a stable supply chain. This hampered
the profit level of the organization. Thus, it can state that instead of having 51 percent of total
production of the company in Asia, Adidas has several barriers that restricted them to extract
major amount of profit from the Asian market.
Recommendation
 Adidas needs to develop new techniques and strategies that will help them to analyze
actual market demand and innovate new products according to different requirements of
customers.

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 Adidas needs to put more focus on its Chinese market and invest some more amount to
improve research and development program to launch new products based on the
customer’s demand.
Conclusion
After discussing all the above mentioned facts, it can conclude that Adidas is one of the
major sports wear brand in global market. After achieving a wide range of success in their home
town (German), Adidas has framed different strategies and policies to expand their business in
international markets. Adidas has produced 409 million pairs of foot -wear and 457 million
pieces of apparel. The company has followed different method and strategies to enter in different
nations. The main aim of this firm to become the largest sports -wear company in the global
market. With the purpose of achieving the mentioned goal, Adidas has framed different
strategies like Speed, Cities and Open Source. Based on these policies the company expands its
business in international market. These strategies are based on market sustainability, innovation
of new products to cater wide range of consumers, maintaining good supply chain and improving
sound digital technology. In China, the company has targeted teenagers with establishing new
sub-brand named Adidas NEO. This has helped the company to extract profit from China. On the
other hand, Adidas has faced many challenges while continuing their business in Asian market.
With the diverse cultural and religious background, Adidas has suffered from the treat of
individualization of choices and preferences of different customers. This has raised difficulties to
develop strategic plans to perform their business. Lastly, as Adidas has spread it business in
almost every countries, has suffered from the problem of weak distribution network and complex
supply chain. These put adverse impact on the profit margin of the mentioned organization.

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