Analysis Of Adidas In Germany Using Marketing Theories

by David Thompson January 09, 2017
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Question

Each student is required to select an international company which has its head office in one of the following countries; namely, Singapore, Germany, Vietnam, South Korea, or Dubai and identify a key contemporary challenge that the company is facing in the international business environment.
Students are expected to conduct comprehensive research and in-depth analysis on the key contemporary challenges, with the attendant key issues, confronting the international company, and write a report on their findings. Students who need assignment help with this assignment are suggested to follow the business report format for their solution.

Solution

Executive Summary

Adidas is the second largest sportswear and accessory producing company of the world followed by Nike. Albeit the global sales of Adidas is growing globally but growth of its competitors is much slower than its competitors and the gap is huge. As observed by, (Kasudia & Roberts, 2015) the global sales of Nike increased by more than 10% in the year 2014. Global sales of another competitor of Adidas; Under Armour grew by 30% whereas the growth of Adidas was just 2%. The current report aims to understand the reason for the slow growth.

Introduction

Company Profile- Adidas

Adidas was founded by Adolf Dassler in the year 1920 in Germany.  The current CEO of the company is Herbert Hainer. Adidas designs manufactures as well as markets sportswear and accessories around the globe. The holding company named Adidas AG is based in Herzogenaurach, Germany and it owns several sportswear brands like Reebok, Rockport, TaylorMade- Adidas Golf, etc…

PESTLE Analysis

Political- The six biggest cities that Adidas currently aims invest heavily in (Adidas Group, 2015) namely- Los Angeles, New York, London, Paris, Shanghai and Tokyo has stable political environment. Germany, the country of origin of Adidas also has a stable government and promotes the reduction of tax for the organisations and investment in infrastructure. A very big percentage of Adidas footwear is being produced in China making it the largest sourcing country. Issues like riots and unstable political environment are issues of concern for Adidas. (Booton, 2012)…

Economic- Adidas is struggling with respect to currency-neutral growth and is much behind Nike and other emerging competitors like Under Armour, New Balance, etc. As per observation of (Kasudia & Roberts, 2015) the growth actually declined in terms of US Dollars, reason being lack of innovation for which specifically Reebok has been criticised when compared to the innovation edge Nike possesses.

Social- Health, Fitness and sports are promoted globally and Adidas doesn’t face controversy with respect to its image socially. Adidas has a very stringent policy for labour rights. All the laws of the global policy manual of Adidas reflect consistency to the International Labour Organisation and workplace standards are in on conformity with The UN covenants and conventions on Human Rights. Adidas avoids operations in countries where Human Rights Violation prevails. (Adidas Group, 2013)…

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Strategic Group Analysis

Threat of substitutes- As observed by (Borowski, 2011) Adidas suffers from the issue of the flourishing fake goods market in Asia, where the products are available at much cheaper prices but it doesn’t affect the customers who look forward to buy genuine Adidas products. So, the threat from substitutes is not much.

Bargaining power of buyers– Customer bargaining power is high. Although customer loyalty is strong with respect to sportswear brands, the bargaining power of buyers is high because of the presence of several competitors in the market offering high-quality sportswear at almost similar prices, making the switching costs minimal.  (Hitt, et al., 2012)…

SWOT Analysis

Strengths

  • One of the biggest strengths of Adidas in the global market is its strong position in Europe. In the European continent, Adidas is ahead of Nike in terms of customer base. One of the biggest reasons of immense popularity of Adidas in Europe is due to the customer loyalty it has among the people of Europe. (Keller, 2008)
  • Also, the people of Europe find brands like Nike or Under Armour to be expensive and aggressive American brands. One of the brands of Adidas group; Reebok is the  third most popular sportswear brand in Europe followed by Nike in the second place and Adidas in the first place. (Keller, 2008)…

Weaknesses

  • One of the major weaknesses of Adidas is its weak presence in America which is a big thing keeping in view that USA is the most powerful economy of the world. Adidas is lagging behind Nike in The USA because is not focussing towards two of the most popular sports of The USA; Baseball and American Football. (Kasudia & Roberts, 2015)  Even the CEO of Adidas agrees on the point that the investment of Adidas in The United States is not sufficient.
  • Adidas lags behind with respect to innovation from its biggest competitor Nike. (Thomasson, 2015)…

Opportunities

  • As mentioned above, Adidas is less focussed upon the favourite games of The USA which gives it an opportunity to exploit and the untapped market by investing more and investing wisely in USA.
  • Adidas plans for improving the speed of operations by day by day introducing automation in its factories based in Asia, which will support the fast fashion strategy (launching new styles to stores very frequently) Adidas has adopted to improve its growth. (Thomasson, 2015)…

Summary

Adidas is one of the most valuable sports related brands of the world and has a strong presence globally but lately, its growth rate is not good and it lagging much behind its competitors…

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