Adidas

JESSE JOSHUA 15500411 ANTHONY E. ONYEAMA 15500032

ELVIN HASANOV 145392 NURSULTAN ESHBEKOV 145009

Introduction• Adidas is a German multinational corporation founded by

Adolf "Adi" Dassler that designs and manufactures sports shoes, clothing and accessories headquartered in Herzogenaurach, Bavaria. It is the largest sport ware manufacturer in Europe and the second biggest in the world.

VISION AND MISSION STATEMENT

• Vision statement: The Adidas Group strives to be the global leader in the sporting goods industry with brands built on a passion for sports and a sporting lifestyle.

• To become the best sports brand in the world. To that end, we will never equate quality to quantity. Our founder Adi Dassler was passionate about sports. For Adi, the athlete came first. He gave those on the field, the court and the track the unexpected and the little differences that made them more comfortable and improved performance. This is our legacy. This is what the brand stands for. This will never change.”

ADIDAS EXTERNAL ENVIROMENT (PESTEL)

EXTERNAL FACTORS CONTINUES

• Apparently, the POLITICAL factors of the company deals with areas of government regulations which includes tariffs in the forms of tax barriers or price and exchange controls, work schedule laws, labor unions etc. Furthermore, giving instances with Germany as a stable political country which is governed by Christlich Demokratische union (CDU), by the first female chancellor, Angela Merkel with massive achievements like; reductions in organization tax, investment in the areas of research and development (R&D), additional investments on infrastructure as well as trying to balance the political and multinational needs with the general population, to mention but a few.

• ECONOMIC: Economically, Adidas profitability is affected in the areas of inflation, taxation, unemployment as well as per capita income. However, there exists unstable stock market caused by some fluctuations of interest’s rates leading to the growth rate fluctuations too. So with a nominal GDP of 3.316 trillion US Dollar and has approximately an unemployment rate of 7.4% in 2010 and has presented her the fourth largest economy in EU with no. 1 in terms of purchasing power. The country is highly dominated in motor vehicles, machinery, chemicals etc. Imports and exports of Germany is rated 2nd in world largest trader 2011.

• SOCIAL CULTURAL: As one of the leading countries of the world, Germany has various social-cultural factors which affects its innovation. It therefore means that Adidas should take into consideration these factors which includes culture itself, religion, gender, language, race, buying habits, life style in order to have a successful implementation of its strategies across regions by verifying the obtainable cultures of the land and be able to adapt to the culture of the environment. The net migration of the country is 0.54 migrants /1.000 population with two major religions as Roman Catholic and Protestant with 68% faithful members, and with a below poverty line of about 15.5% www.cia.gov, 2011.

• TECHNOLOGY: As the application of science in industry and engineering for the invention of new things and or solving of problems, Adidas employed technology in the making of the first world smart shoe by putting a microchip and wireless mp3 player inside the shoe and it was very appealing to the customers. More so, the company uses a heat-activated adhesives in their packaging suitable for long distance, humid conditions and extreme temperature changes. And to this effect, Adidas is highly committed to research and developments investments.

• LEGAL: As an authorized company, Adidas is well aware and is fully utilizing all legal procedures as ethically demanded and with due respect to legal constraints to trade description act , sales and supply of goods acts (SSG), advertising standard authority (ASA), independent television commission (ITC), import and export, and is plagiarized from a third party trademark. Additionally, it considers laws regarding health, employment, financial regulations, product safety, to mention but a few.

• ENVIROMENTAL: In the light of environmental proceeds, Adidas aimed to a courageous use of sustainable products and compromise to products quality and functional performance. Consequently, the CO2 emission at its production and manufacturing plants processes were reduced with regard to climate changes and nuclear face-out and at the same time, the products quality is maintained with less pollution to the environment.

ADIDAS FIVE (5) FORCES MODEL: Obviously, Adidas five forces model is highly competitive especially with competitors like NIKE and UNDER ARMOUR. Notwithstanding, the five forces model ranges from Company Rivalry, Threat of New Entrants, Threat of Substitutes, Suppliers power and Buyers power

• THE COMPANY’S RIVALRY: This has to do with the all competitors in the sports industry which includes Nike and UA. Competition here resides precisely on quality, price. This means that all efforts are focused towards maintaining a good quality as well as affordable price by the customers.

• THREATS OF NEW ENTRANTS: It is a true fact that no person will trust to put money into a new business where strong competitors abounds unless it has access to the resource fields with a strong brand name trusted by customers especially from other companies, otherwise it stands losing the investments. Furthermore, with dominant players like Nike, UA and Adidas, it will always be a difficult competition to invest a start up with enough capital, for R&D, Marketing and advertising and in-house or outsourcing bargaining of contracts.

• THREATS OF SUBSTITUTES: A substitute product is one that can serve exactly or partly what an intended product can serve. In this case there are other industries which can produce non-sport wears, like shoes, suits or accessories which can serve same purpose as products from Adidas, Nike and UA and are consumer friendly and at the same time threats to these companies.

• SUPLIER BARGAINING POWER: It is very wise here to measure and know the suppliers bargaining power in the current economic climate over Adidas because it helps to know if Adidas has a higher bargaining influence over the supplier as to be on the gaining side or at the losing side. Obviously over-all suppliers bargaining power of Adidas is low.

FIVE FORCES MODEL• BUYER BARGAINING POWER: For the

fact that ‘’the customer is the king’’. The sensitivity of price and the rate of new product inventions or innovations by competitors especially in this high economic climate has always change the weather in favor of the buyers thereby increasing the switching costs for substitute products with a high bargaining power to the buyer.

Develop critical success factors for Adidas• Adidas key success factors inclusive effective advertising, innovation and new

design, cutting edge technology, a flexible supply chain, focusing on sustainability and strong retail network.

• Adidas innovates for the 2014 football world cup, used some of the cool tests, machines and how come up with the next greatest football product.

• Athletes when they go and pick Adidas Jerseys up and they realize it is 50% lighter.

Value Chain analysis• Primary activities – Adidas used heavy marketing advertising

techniques to grow its market share in the United Stated.• Supportive activities – Adidas was the first to modify and create what

is now the modern track and soccer cleat. The new policy is each of its three units is responsible for at least one new innovation per year.

Adidas is a brand name which is one of the strongest in the world. We know Adidas as a famous manufacturer for its shoes, clothing and accessories. We develop the SWOT, Space Matrix, BCG Matrix, IE Matrix, QSPM

Impossible is Nothing

SO-strategies WO-StrategiesExpansion strategy will allow for Adidas to grow as long as its strong brand name. (S1,O3)Effective distribution of Adidas company will be affect positively for its expansion strategy. (S6, O3)Strong financial resource will help to increase amount of production due to increasing demand in developing countries. (S3,O2)

Increasing demand in developing countries would be affected for limitation of premium products for customers because of high technology and production methods by high technology.(O2,W2)Adidas has 2 strong brand names under one but integration backward strategy will give more power. (W1,O1)

ST-Strategies WT-StrategiesAdidas is very strong but there is Nike is N1. (T2,S,1) Even Adidas is very strong in diversification products its competitors are also competing.

It can negatively affect Adidas position that Adidas has only 2 brand names and weaker than the Nike. (W1,T2) Adidas produces 93 % of the products outside of the country which is make for suppliers have more bargaining power.(T1,W3)

As we know Space Matrix also consists of two dimensions such as Internal- Financial Strengths ,Competitive Advantage and External- Environmental Stability and Industrial Strengths

Impossible is Nothing

This is the evaluation of BCG (Boston Consulting Group ) for Adidas Group of companies

Impossible is Nothing

Adidas company holds four types of strategy 　 -Diversification strategy - Adidas is a well-known company with its multiple

product and also very successful brand name.

　 -Backward integration- The company is outsourcing in foreign countries specially in Asia. The percentage of outsourcing is 93 % and it is very high. In this condition the suppliers have high bargaining power

　 -Market Development- Entering to a new market will be successful due to there is a high level of competition within the market, so in the purpose of company development the company consider to growth

　 -Product development- Adidas company believe that the development in the product line will give benefits and will differentiate from those in the market

Impossible is Nothing

Adidas is a first sportswear company in Europe but in the world Nike is leading with the percentage of 39.2 % . Then Adidas with 15,1 %, Reebok 10,9 %, New Balance 9,4 % and others

Impossible is Nothing

Conclusion• .....We are living in a fast-changing world. Only what is new is

relevant to the consumer. Therefore, we have to relentlessly focus on ‘creating the new’ for our consumers. And we have to constantly re-invent ourselves as an organisation to lead the change in our industry. Going forward, speed will be a key competitive advantage for us as we transform the adidas Group into the first true fast sports company

HERBERT HAINER, ADIDAS GROUP CEO

MAKING IT SUCCESSFUL WILL BE A TRUE TEAM EFFORT.

WE ARE HERE TO WIN!

Impossible is Nothing