Kulkarni_Hemant_Adidas

ADIDAS REPORT

Hemant Kulkarni

Introduction

Every industry has certain corporations, which are at leading positions and the customers trust

and can relate to their products. Adidas group is a German multinational corporation, which

started its journey long time ago and has becom e key player and competitor in the field.

Adidas is the largest sports company in Europe and second largest in the world, after Nike.

The Adidas Group portfolio consists of some major brands like Reebok , TaylorMade golf

company, Runtasti c, etc.

The Adidas slogan changed with its strategy : From “Impossible is

nothing” to “Adidas creating the new ” in 2015 (Wikipedia , 2019 ). Erich Stamminger, member

of Adidas ‘ Executive Board, describes “”Impossible is Noth ing”” as the idea behind Adidas

“”Forever Sport”” brand positioning, which communicates the enthusiasm for sport obviously

and emotionally. The articles mentioned in the reference section have been useful in getting

mo re information related to the Adidas Group.

Ethical and sustainable approach positive and negative:

From humble beginnings in 1949 in Bavaria, Germany, founded by Adolf Dassler (the brother

of Rudolf Dassler, founder of Puma) Adidas is now a household na me, known and loved for

its iconic Stan Smith sneakers, logo sweaters, tees and sportswear, worn by athletes all over

the world. Adidas ethic and sustainability priorities are divided into two parts namely Product

and People.

Through their products, they p lan to save water, use of innovative materials and processes and

conserve energy. Adidas is step ahead of many other big sportswear brands when it comes to

sustainability. They have committed to set targets through their product priorities as part of

susta inability process that recognizes local water impacts and efforts in water -stressed basins.

The use of recycled material from the waste from the sea including plastic bottles in their

range of products is another initiative taken together with ocean conser vation group Parley for

the Oceans. They have also set a number of goals to reduce carbon footprint as part of their

sustainability strategy. They plan to reduce their production waste, energy consumption and

water use by 20% by 2020.

Adidas labour rating is quite good in comparison to many other firms. Through their ethical

and sustainability approach the group plans to empower people, improve their health and

inspire the action. The brand gets top score in its supplier code of conduct. According to their

financial reports, they claim that they can trace and audit most of their supply chain, and also

publicly list most of their suppliers. Although they take many positive steps, they still have

few worker empowerment initiatives planned. Comp ared to the amo unt spent on sponsorships

to the stars and other marketing activities, the amount paid to the worker in the supply chain is

very low. They are also are working towards ensuring workers in its supply chain are paid a

living wage. However, Adidas need to im prove their ratings in terms of animal welfare.

Although they do not use cashmere or any other exotic animal skins or hair, they do use

leather, wool and down feather without specification of the sources. Thus reducing

transparency in terms of the welfare of the workers and animals.

Adidas is making progress in terms of sustainability and labour rights, but since it is still part

of fast growing fashion industry, which produces huge quantity of garments, which are not

necessarily made from sustainable mater ials, it still has bad effects on environments and the

workers working long hours for very little pay. As part of people priority for 2020, Adidas

aims to enable people around the world to participate in sports and educate them on physical

and mental healt h as well as fitness and nutrition. They also wish to reward the employees for

their commitment and contributions and other activities to involve its employees more .

SWOT analysis

Strength : Adi das sportswear can be recognized in every corner of the world. Their brand

image is very positive and have widespread awareness. Their products are not only

fashionable but also of relatively h igh quality. By the use of sport stars and other prominent

people in their advertisements, they were able to attract people of all ages. They have a very

well developed distribution network. Their shipping times across the globe are quite

reasonable. The customer can choose how and where to buy their products be it online or

other larger -scale sportswear retailers or Adidas branded stores.

Weakness : Adidas out sources its production to most of the Eastern countries. By outsourcing

their manufacturing, they lose some control over their product manufacturing and they fail to

ensure that all of its products meet the same rigorous quality standards. The long working

hours of workers and their working conditions can also not be controlled. On one hand,

Adidas has diverse products in different price on the other their range still have not opted to

diversify its product line. They have major focus on footwear compared to other sportswear

products w hich their competitors have already focusing on. Product endorsing through

celebrities although part of both Adidas and Nike, Adidas has invested very little in securing

celebrity endorsements, which can hamper its growth. Endorsements not only increase b rand

value but also drive direct sales.

Opportunities : People in general have become very health conscious hence health and fitness .

Thus increasing the need for appropriate sportswear due to increased demand . Adidas is

trying to use smart materials like use of plastic bottles from the ocean clean . Adidas

continually invest in their development and manufacture of new materials that will make thei r

products of superior quality compared to others. Adidas could invest in developing new

materials meeting the needs of people in modern days like use of fabric, which is cooler and

comfortable for during hot summer days, or thin but warm fabric in cooler days.

Threats : The competition of Adidas with Nike is well known . There is no major difference in

their product lines or qualities. That makes it even more important for Adidas to focus on its

brand image and use of proper channels to promote its products. They could use celebrity

endorsements more as discussed previously. The market is filled with counterfeit products .

Adidas has encouraged its consumers to buy the real thing but in case of any fallout with its

overseas supplier, there is risk of a huge influx of counterf eit products entering market.

PESTEL Analysis

Political : Potential trade war due to political differences, wavering trade policies, minimum

wage policies, etc. are some factors, which regulate production and supply of products.

Economical : Accor ding to the balance sheet of Adidas, they have seen notable growth in their

revenue in 2017. The economic factors like lack of domestic demands, impact of currency

fluctuation, customer -procuring rate etc. can affect the company extensively in long run.

So cial : Sports has become important aspect of all cultures and society. There is increase in

trends amongst millennials to buy the branded products from sports companies like Adidas

Technological : Popularity of devices like digital watch and fitness gears h as increased. The

digitalization and increasing consciousness about health is driving force for companies like

Adidas to make more tech based fitness gadgets.

Legal : Implementation of technology solutions for regulatory compliance

Environmental : Adidas has been showing increased awareness towards the environment by

developing sports gears made out of sustainable materials

Strategy diamond

Arena : Adidas group has many brands like Reebok and the products are sold through different

channels. They sell their products online through their websites as well as in wholesale market

or its own retail shops all over the world. Their customer profile is ranging from sports

enthusiast to a normal person who wears Adidas trendy sportswea r for regular use. Adidas

continue to invent new products, which are more appealing to masses.

Vehicles : Adidas use various technologies to make their products and they tie up with various

firms to make their products like the special shoe cushioning mate rial created with BASF.

Differentiators : Adidas has a good brand image and hence its products have a competitive

advantage. They do their marketing in various ways like use of famous athletes like Lionel

Messi , etc. They also sponsor variou s national teams and they have been one of the official

sponsors for biggest events like NBA League and UEFA champions. They also have

superstars like Kanye W est etc. promoting th eir products . They also have unique style in their

three -stripe design.

Economic logic : Adidas group strategy includes both economies of scale and economies of

scope. Adidas uses same materials to produce many models of a particular product and in

large quantity. Like the use of cushioning m aterials that can be used in various products by

just changing designs of the product. Their products are of various price range from

affordable to premium category. Thus making it available to a bigger market and increasing

profit. They have been profitable over the years and continue to grow.

Staging : Adidas group w as formed in Germany in 1924 and its mission as of today is to

provide best possible equipment for the athletes. The brand registered its unique three stripes

style, which they purchased from the finish footwear brand K arhu sports. The victory of

German te am against Hungarians in English football match in 1945 created an awareness

about the brand. They went on acquiring Solomon group in 1997 as well as the rivals Reebok

in 2005. Adidas plans of using recyclable material makes the brand more ethical and

sustainable.

Conclusion

Strategy is essential to any organizations success and sustainability, helping organizations

know their key capacities, identifying and addressing weaknesses, mitigating hazards, and

understanding trends that will affect their business and industry, and how they will react to

them. Hence, the organizat ion’s success or failure relies on the tactics that follow. Adidas

ability to create a wider product range and consumer centricity in the fierce competitive

environment has created a very good image of the company along with increased trust and

desirabili ty from the consumers . T hey have planned three strategic choices for 2020 : cities,

open source and speed to move towards “creating the new ” and create the product of desire.

From collaborating with people like Kanye West and Pharrell Williams to the brands best

practices of utilizing innovative technology have all been effective towards increasing their

sales and creating a brand image. In addition, the use of plastic from the ocean in their foot

wear, as well as sustainable and bio -degradable material , they were able to create products

which are considered remarkable achievement in terms of sustainability. They also plan to

concentrate on Adidas and Reebok and core competencies of making footwear and apparel.

Adidas must continue on their distinctive and innovative path in ord er to be more competitive

and surpass Nike as marker leader. They should stick to their ethical and strategic plans to be

successful on the front of supply chain. To perf orm at similar levels as Nike Adidas should

maintain its innovative streak and keep hold on to its partnerships with the stars like Pharrell

Williams. It would certainly need to hold on to every partner in its supply chain to remain

stable and increase profitability .

References

Van den Ende, J., Kennedy, S., & Whiteman, G. (n.d.). Radical Innovation for Sustainability:

The Power of Strategy and Open Innovation. Retrieved from

16/j.lrp.2016.05.004

Robertson, L. (2019, February 07). How Ethical Is Adidas? Retrieved from

-ethical/

General Approach. (n.d.). Retrieved from –

group.com/en/sustainabilit y/managing -sustainability/general -approach/#/product -priorities –

for -2020/

Adidas. (2019, June 25). Retrieved from

Adidas and Kanye West Make History with Transformative New Partners hip adidas KANYE

WEST. (2016, June 29). Retrieved March 09, 2017, from

-and -kanye -west -make -history -with –

transformative -new -partnership -adidas — kanye -west/s/14a8b807 -795b -43a7 -8626 –

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Kulkarni_Hemant_Adidas. (2019, Dec 08). Retrieved from https://paperap.com/kulkarni-hemant-adidas-best-essay/

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