Adidas: Macro Environment Analysis and Competitive Landscape

This report provides an analysis of Adidas' macro environment, specifically focusing on its operations within the UK market and the international sportswear industry. It examines the political, economic, social, technological, environmental, and legal (PESTEL) factors impacting Adidas, with a particular emphasis on the uncertainties arising from Brexit and the UK government's policies. The report also delves into the economic considerations influencing Adidas' expansion strategies, including per capita income, inflation, and taxation. Furthermore, it explores the company's adaptation to technological advancements, its commitment to sustainability, and its adherence to legal jurisdictions. The competitive landscape is assessed using Porter's Five Forces, highlighting the threat of new entrants, competitive rivalry, and the power of customers and suppliers. The report concludes that the sportswear industry is highly competitive and that Adidas should focus on innovation in both products and business processes to maintain its competitive advantage.

As a multinational company Adidas has its operations around the world the Analysis of the macro
environment is based on the UK market and international sportswear industry.
The company has been operating the UK market for long, the political conditions of the UK government
has been an area of concerns for European organisations because of the decision of the UK government
to leave the European Union. Until most of the decisions of change is initiated and implemented there
are many uncertainties in the process (Report.adidas-group 2018). The governments of UK have come
up with plans to boost the business environment and encourage trade in the economy. On an
international level, the company has to comply with the agreements and the policies of each of the
government where Adidas has operations and distribution. The company operates in politically stable
areas factors like war, terrorism; expropriation and nationalization etc impact the operations of the
business (Adidas-group 2018).
The company has seen growth in the revenue of the business, the economic condition of the areas of
operation and distribution is essential for the company. Adidas focuses on expansion in areas in the
international market where the economy has the potential to improve (Laluyan et al. 2017). Some of the
important aspects that are taken in consideration while developing the expansion decisions are based
on the economic capability of the country. Factors such as per capita income, inflation, unemployment,
and inflation and taxation are some of the economic aspects that effects on the profit or generated
revenue of company. Stock market will face instability only if the interest rate fluctuates or growth rate
is affected (Laluyan et al. 2017).
Sportswear is a genre of the garment industry that has emerged out of the importance of sports in the
society. The company has over the years created an image of being associated with sports and the
societies love for sports (Gupta 2013). The company takes inspiration from the society and develops
products to suite the customers. The society also encourages the promotion strategy of the company.
Adidas has been focusing on the development of the sport industry by sponsoring events and
encouraging youngsters to be associated with sports.
With advancement of technology Adidas has also implemented technology in the process of business.
The company has advanced manufacturing units and has also come up with e-commerce portal to keep
up with the changing trends of the industry (Mahdi et al. 2015). The logistics and supply chain of the
company is also heavily dependent on technology. The company has focused on producing a number of
promotional tactics based on technology as well. Adidas has a well established website which gives out
all the information for the stakeholders (Adidas-group 2018).
The company adheres to all the environmental regulations of the country of operation or distribution.
Apart from that Adidas has international CSR activities which indicates that the organisation is aware of
the duties and responsibility the company owe towards the people and the planet (Report.adidas-group
2018). One of the aims of the organisation is to develop sustainable products with innovation (Laluyan
et al. 2017).
The company has to adhere with the legal jurisdiction of UK and every other country where it operates
or has distribution (Ho 2014). There are a number of aspects that the management of Adidas has to

keep in mind before running operations for example: company law of the country, business jurisdiction
and commerce regulations in the area of operation, import and export regulations of the country etc are
important (Report.adidas-group 2018). Not only that the company has to also adhere with the
intellectual rights which might impact the organisation. The labour law of every country is also different
and thus Adidas has to adhere to each of these jurisdictions in order to legally operate in the country
(Adidas-group 2018).
Adidas: 9
Innovation -2 -1 0 1 2
Sustainability -2 -1 0 1 2
Technological adaptability -2 -1 0 1 2
Position in the international
market
-2 -1 0 1 2
Branding -2 -1 0 1 2
Resource and capability -2 -1 0 1 2
Nike : 10
Innovation -2 -1 0 1 2
Sustainability -2 -1 0 1 2
Technological adaptability -2 -1 0 1 2
Position in the international
market
-2 -1 0 1 2
Branding -2 -1 0 1 2
Resource and capability -2 -1 0 1 2
PUMA: 8
Innovation -2 -1 0 1 2
Sustainability -2 -1 0 1 2
Technological adaptability -2 -1 0 1 2
Position in the international
market
-2 -1 0 1 2
Branding -2 -1 0 1 2
Resource and capability -2 -1 0 1 2

Fila: 7
Innovation -2 -1 0 1 2
Sustainability -2 -1 0 1 2
Technological adaptability -2 -1 0 1 2
Position in the international
market
-2 -1 0 1 2
Branding -2 -1 0 1 2
Resource and capability -2 -1 0 1 2
Converse: 5
Innovation -2 -1 0 1 2
Sustainability -2 -1 0 1 2
Technological adaptability -2 -1 0 1 2
Position in the international
market
-2 -1 0 1 2
Branding -2 -1 0 1 2
Resource and capability -2 -1 0 1 2
Porter’s Five Forces:
The threat of new entrants is high as the products are garments and it is easy to invest in garment
industry.
In the international market there high intensity of competition, some of the direct competitors are:
Nike, PUMA, Fila and Converse etc.
The company specializes in sports garments and there are hardly any substitutes of the products
(Report.adidas-group 2018). However, other types of garments can be a substitute hence the threat is
medium .
Switching power of the customers is high due to the intensity of competition in the market.

For a supplier to be able to become associated with a brand like Adidas is important, however, there are
also other important competitors in the industry making the switching cost medium in this case (E.
Dobbs 2014).
Conclusion
From the above analysis it can be said that the sportswear industry is intensely crowded with a
number of international competitors. All the direct competitors that have been discussed above have
their market in the UK as well. The PESTEL analysis shows that the company has scope in the
international market with the help of innovation and development of product strategy. The intensity of
competition is one of the major issue that the company faces and in order to maintain a competitive
advantage the company should focus on the innovation not only of the products but also in the business
process.