Strategic Analysis Report: Adidas Business Overview and Insights

This strategic analysis report provides a comprehensive overview of Adidas, examining its business environment and competitive landscape. The report begins with an introduction to Adidas, highlighting its position in the sportswear industry and its competitive rivalry with brands like Nike. It then delves into an external analysis, identifying opportunities such as athleisure trends, emerging markets, and digital marketing, while also addressing threats like competitive pressure, market fluctuations, and regulatory issues. The report further employs Porter's Five Forces analysis to evaluate Adidas's bargaining power of suppliers and buyers, the threat of substitutes and new entrants, and the intensity of competitive rivalry within the sports fashion industry. The analysis emphasizes Adidas's strengths in product quality, marketing efforts, and supply chain management, providing valuable insights into the brand's strategic positioning and future prospects. The report concludes by emphasizing the importance of adapting to changing consumer demands and market dynamics to ensure continued success.

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Strategic Analysis Report
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Strategic Analysis Report
Introduction
The company selected for this strategic business report is Adidas. This report helps in
gaining complete insight into the business environment of the Adidas. Adidas is incorporated in
the topmost apparel and has sports items as well. The industry of Sportwear is progressing
enhancing along with competitors such as Nike (Fill, and Roper, 2012). If the performance of
leading brands is compared in the present era, then it is seen that Adidas set to outperform for
other brands. In between Nike, and Adidas, the competition is rising with the passage of time.
The global sportswear Industry is anticipated to cultivate at a vigorous rate over the subsequent 5
years. Adidas has invested a huge amount in development and the research & is ambitious to
attain greater market share. It is seen the last years was the money-making year for the company.
The company’s focus is on increasing the sustainability and innovation of the product to meet the
fluctuating consumer demands (Mahdi, et.al, 2015, pp.167-177). The North American market is
the leading focus of the brand & the major metropolitan cities as well where the majority of its
consumers are present. Multiple products are also released by the brand in order to attain greater
sales by means of the e-commerce podium. The impressive growth is seen by the Adidas
business though some challenges are also faced by the brand. The complete external & internal
analysis along with the core competencies of the Adidas.

Discussion
External Analysis of The Business Environment
Opportunities
Athleisure trends
It has been seen that sales of apparel and sportswear aids in increasing sales. The sales in
both the section of men and women's sport wear increased. As the athlete used to wear
sportswear, then normal people gain inspiration from them (Fill, and Roper, 2012). Customers
wanted to buy those apparel and sportswear which are both comfortable & stylish. People like to
wear casual fashion. A very good opportunity is provided by the augmented athleisure trends for
the sportswear brands. Adidas is looking for doing more investment within the product
innovation in order to promote the latest designs to the market (Mahdi, et.al, 2015, pp.167-177).
This will aid in enhancing the more revenue.
Demand in Asian markets
Emerging market especially within the Asian market, there is the presence of high growth
opportunity for sportswear brands. The Growing distributor network & stores within these
markets will aid the brand in finding a quicker rate of growth. Other Asian markets, Apart from
China such as Singapore, India & Malaysia and Singapore comprises a huge growth opportunity
(Choi, et.al, 2015, pp.233-242).
Customer engagement & Digital marketing
Propagation of digital technology has transported striking opportunities related to
marketing for sports & fashion brands, who have the tendency of consumer attraction & increase

their sales by mean utilizing some tactics like customer engagement & digital marketing.
Digitalization has now become the major focus of the Adidas (Mahdi, et.al, 2015, pp.167-177).
Though, it should utilize both channels of video marketing & content marketing to enhance the
consumers' involvement & develop better customer relationships.
Backward Integration
The Adidas operating costs can be decreased by means of the Backward integration.
Presently, the brands used to contract out its manufacture to external partners virtually.
Backward integration will permit the brand to lessen times require for the production & add
modern designs within the market quicker (Aaker, and Joachimsthaler, 2012). Innovation within
the products can be augmented by means of backward integration.
Ecommerce
Through e-commerce channels, the sales of Adidas are increasing. Adidas' international
e-commerce channel in last year fall under the rapidly growing channels. The e-commerce sales
were enhanced by 36 percent. Though, to figure out the rapid progress, the brand must also
utilize other e-commerce brands counting local & global sites of e-commerce (Frederick, and
Patil, 2010). Association with e-commerce brands such as Alibaba, Amazon & Flipkart may aid
the company to raise its sales throughout the world.

Threats
Competitive pressure
Within the sportswear industry, Competitive pressure is enhancing. Along with the
Adidas, the competitive brands are also investing the high amount for the marketing of the brand
and the development & research to enhance the revenue & sales. The increased competitive
pressure also generates pressure on the bottom-line by endorsing the high operating expenses
(Mahdi, et.al, 2015, pp.167-177). In the market there are Multiple opponents of Adidas are
present counting Under Armour, Nike, Fila, Puma, New Balance etc.
Market fluctuations
The oscillations within the economy of key regions where the sales of Adidas are high
such as China, North America & Asia Pacific can also decrease the brand sales & may cause
revenue decline (Fill, and Roper, 2012). Deterioration in economic-related activity in any of
these areas may decrease the brands' profits & revenue. Fluctuations in currency exchange rates
can also cause losses for the brand. A stronger dollar is already hurting the profits of sports shoe
brands.
Regulatory pressures
Regulatory pressures may also aid in increasing the issues experienced by sportswear.
The high pressures are experienced by these corporations associated with compliance &
expansion (Mahdi, et.al, 2015, pp.167-177). Besides then laws and taxes employed in the sphere
of product quality, labour, & environment. Multiple laws need compliance. Mounting
compliance pressure also adds to the international brand's compliance costs.

Increasing labour & raw materials cost
The costs of the factor of production are also rising every year & causing the greater
operating cost of sportswear. Furthermore, Adidas sources just those raw materials which are of
high quality for making superior quality products only (Frederick, and Patil, 2010). During the
present era, the product’s focus on made from recycled & sustainable raw materials.
Five Forces Analysis of Adidas
Adidas 5 forces analysis enlightens the forces that are both in the favour and non-favour
for the company & how that influences its capability to overcome competitive forces.
Supplier’s Bargaining power
Besides the fact the Adidas supplier plays a prominent role within the business, the
purchasing power is quite less due to the reason that Adidas’s supply chain has a greater
supplier. The brand has a tendency to shift to new suppliers. The Adidas supplier is distributed
throughout the world and no pressure is exerted by the supplier on the Adidas. Production is
mostly outsourced (Piller, Lindgens, and Steiner, 2012). Within the 63 states, the work is
distributed to about a thousand independent factories. The supply chain of the Adidas is multi-
layered and spread throughout the world with multiple kinds of suppliers within the chain. Some
incorporated the direct contractors. As a consequence of this, strategic approaches are used by
Adidas incorporating product quality standards & labour. For ensuring that standards are fulfilled
by the suppliers, enforcement process & multilevel monitoring is maintained by Adidas. In this
manner, it is noticeable that the brand has a greater control level over its suppliers.

Buyer’s Bargaining power
Adidas have comparatively low to moderate bargaining power & whereas the single
purchaser doesn’t grasp any momentous blow, as a cluster they have a prominent effect. Nike is
a prominent competitor & besides Nike other small & large competitors such as Puma & Under
Armor (Dutta, and Pullig, 2011, pp.1281-1287). Multiple global and local brands contending for
market share within this sphere. For consumers, switching costs are less. Though, this aspect to a
greater degree gets toned-down by the marketing & product quality of Adidas. The performance,
design & product quality has stressed by the Adidas & due to this reason the brand is capable to
make the top-notch buyer loyalty (Aaker, and Joachimsthaler, 2012). In this manner consumers,
bargaining power gets abridged & becomes low to moderate.
Substitutes Threat
There is a low to moderate Substitutes Threat for Adidas. Its competitors’ number isn’t
very high & yet not so minor either. There so many competitor’s categories like global &
regional, large and small which gives a wide range of products at different prices. Some fit on
the requirement of the high-end customer while the regional competitors deliver substitutes at
reduced prices (Dutta, and Pullig, 2011, pp.1281-1287). The threat from the alternative products
is vapid by the product's quality & Adidas marketing efforts. For the further threat moderation,
the Adidas has emphasized on marketing in the markets of metropolitan since a huge part of its
consumer base exists there.

New entrants Threat
For Adidas, the new entrant threat is low to moderate. Whereas a brand local scale, small
size or a larger scale brand requires investment. The need for the new entrants can be
understanding from the supply chain & production size. Multiple factors needing huge
investment such as skilled human resources, technology, advertising, marketing, etc.
Competitive rivalry level in the sports fashion industry
The competitive rivalry level in the sports fashion industry is high. Besides major
opponents such as Under Armour, Nike & Puma there are numerous other small competitors as
well which aids in bringing competition within the industry. Whereas saturation level in the
industry has fully-fledged, the current players are also involved in a strong clash for market
share. So many brands are putting high investment.

References
Aaker, D.A. and Joachimsthaler, E., 2012. Brand leadership. Simon and Schuster.
Choi, H., Ko, E., Kim, E.Y. and Mattila, P., 2015. The role of fashion brand authenticity in
product management: A holistic marketing approach. Journal of Product Innovation
Management, 32(2), pp.233-242.
Dutta, S. and Pullig, C., 2011. Effectiveness of corporate responses to brand crises: The role of
crisis type and response strategies. Journal of Business Research, 64(12), pp.1281-1287.
Fill, C. and Roper, S., 2012. Corporate reputation: brand and communication. Harlow: Pearson.
Frederick, H. and Patil, S., 2010. The dynamics of brand equity, co-branding and sponsorship in
professional sports. International Journal of Sport Management and Marketing, 7(1),
p.44.
Mahdi, H.A.A., Abbas, M., Mazar, T.I. and George, S., 2015. A Comparative Analysis of
Strategies and Business Models of Nike, Inc. and Adidas Group with special reference to
Competitive Advantage in the context of a Dynamic and Competitive
Environment. International Journal of Business Management and Economic
Research, 6(3), pp.167-177.
Piller, F.T., Lindgens, E. and Steiner, F., 2012. Mass customization at Adidas: Three strategic
capabilities to implement mass customization. Available at SSRN 1994981.