Adidas is a German sport-based company founded by Adi Dassler in 1924. (2). Adidas is the most well-known sporting goods company in the world. It is the most prominent athletic clothing firm globally, and the brand is famous to the majority of the population. Brands affiliated with the name include athletics and fashion labels. The brand’s sports shoe sector has expanded tremendously, and it is incredibly competitive with the likes of Nike and Under Armour, who are the leaders in the market. When the Adidas brand is compared to the Nike brand, it is clear that Adidas has excelled the Nike brand. Over the next several years, the worldwide sports shoe market is expected to grow rapidly. Its founders were all-star athletes whose primary goal was to improve the quality of athletic equipment available to them. The company expects to see constant progress in all aspects of their business, starting with the product technology that will assist athletes in performing better in their respective fields. (1).
SWOT Analysis of Adidas
Adidas’ internal strategic aspects, which characterize the organization’s capabilities and issues, are its strengths and weaknesses, respectively. For example, the company’s global activities enable it to benefit from economies of scale, which helps to improve the company’s competitive position. On the other hand, Adidas’ commercial opportunities and threats are external strategic elements that reflect the state of the information technology industry and the marketplaces in which the company competes, rather than internal strategic reasons. Adidas must establish suitable strategies and processes to keep one step ahead of the competition while simultaneously growing and stabilizing the business in line with its capabilities. To ensure long-term development and survival in the face of substantial industry changes, Addidas is critical to address the challenges presented in this Adidas’ SWOT Analysis.
Strengths of Adidas
Famous Brand: According to Forbes, Adidas is the most renowned sports brand with a $6.8 billion brand value. The brand is not just global but also has a great image. The brand’s items are trendy and high-quality. Moreover, Adidas’ formidable brand is part of their strategy to acquire substantial sportswear sales. (1)
Distribution Network: Adidas has created a dependable distribution network over the years, allowing it to reach the vast majority of the company’s potential market. (5). Moreover, Adidas has a robust distribution network that enables them to transport millions of products throughout the globe in a short period. (3).
Innovative New Products: Since its establishment, Adidas has always placed a premium on product quality above all other considerations. (1). It is constantly innovating new items, and these products are a major factor in attracting people to its brand. (4).
Legacy and Heritage: When it comes to establishing a young image, Adidas has been through a lengthy journey. (1). Throughout its lengthy history, Adidas has developed a strong and important tradition. It has had a profound impact on many elements of the world’s culture. (5)
Weaknesses of Adidas
Supply Chain Shortage: In most of its products, Adidas relies on third-party or independent producers in China, Cambodia, and Vietnam for manufacturing. Adidas might become too reliant on global suppliers as a result of this change. (1).
Outsourcing: In most of its products, Adidas relies on third-party or independent producers in China, Cambodia, and Vietnam for manufacturing. Adidas might become too reliant on global suppliers as a result of this change. (5).
Premium Price Range: Adidas’ items are a tad pricey. Because of the brand’s high price range due to revolutionary technology and manufacturing processes, it is only accessible to a small number of buyers, particularly in developing nations. (1).
Limited Product Line: Because the Adidas Group only has two brands in its portfolio which are the Adidas and Reebok brands, the group’s offerings in the areas of sports clothes, sports gear, and accessories are restricted. And along with this, there is always in demand for increased operating expenses. (5).
Opportunities for Adidas
Health and Fitness Trends: As global health improves, a significant new market for sports clothes and footwear opens. People of all ages are attempting to stay fit. Over the previous seven years, sports gear and footwear sales have risen by 42% to 270 billion. Sports involvement for youth and adult health fitness trends are growing globally. (2).
Increasing demand for premium products: There is a 33% increase in demand for premium items in the Indian market alone. This notifies us about the rising market size and potential commercial opportunities in developing economies. (5).
E-Commerce: Recently, internet customers have been rising dramatically. Adidas has integrated Instagram’s checkout feature into its distribution network, increasing online sales by 40%. It can repeat its success on Facebook, Snapchat, and other social media sites. Focusing on internet sales would greatly enhance your sales. (2).
International Expansion: The Asia market is already under the control of Adidas. Then, the growing markets of Africa and South America are seeing rapid growth, which presents a profitable opportunity for companies looking to expand in these regions. (1).
Threats for Adidas
Intense Rivalries: Profitability has been stable over the previous two years, which has resulted in a growth in the number of competitors like Nike in the business putting downward pressure on Adidas on not just profitability but also overall sales. (3).
Imitations: Adidas’s brand image is harmed by fake and fake imitations. Generally, this type of product is found at a very cheap rate, and people may attract to buy it seeing the brand name Adidas. (4). In 2019, the brand lost its trademark dispute against the European Union General Court, exposing it to the prospect of imitation. (1).
Dominant from Suppliers: Adidas is so reliant on external resources for their goods is a major brand danger. It outsources much of its manufacturing to vendors with stronger negotiation power. This distorted power has put the brand in jeopardy from its suppliers. (3).
Trade Pressure: With 35% of items made in China and 93% of manufacturing in Asia, import restrictions, duties, and tariffs are important to the company’s pricing and performance. (1). Because the brand is worldwide, it is exposed to uncontrolled reciprocal tariffs imposed by both governments. Adidas’ second-largest market in the United States and many goods are made in China and other Asian nations. (5).
Recommendations
The Adidas SWOT analysis informs us that the company has to enhance its research and development and localize manufacturing to maintain its present position in the market and become the leading sporting clothing brand. Furthermore, the organization must also focus on cost control in addition to increasing client involvement. Additionally, for sustainable development and exceptional outcomes, the firm has to increase its Asian market penetration. As a result, Adidas should limit the amount of production it outsources and instead makes the items in-house, thereby avoiding negotiation challenges and decreasing the risk of high manufacturing costs.
References
- https://managementglossary.com/swot-analysis-of-adidas/
- https://www.swotandpestle.com/adidas/
- M. E. Porter, Competitive Strategy(New York: Free Press, 1980)
- https://www.mbaskool.com/brandguide/lifestyle-and-retail/2460-adidas.html
- https://www.marketing91.com/adidas-swot-analysis/
