SWOT Analysis Of Adidas analyzes the brand based on its strengths weak points, weaknesses, opportunities, and threats. According to Adidas SWOT Analysis, the strengths and weaknesses are internal factors, while threats and opportunities are external aspects.
Did you know? that both Puma and Adidas are part of the Dassler brothers? They split in 1947. broke in two and started their own businesses, which eventually became the largest rivals in the sports clothing business.
SWOT Analysis is an established management tool that allows companies such as Adidas to measure its performance and business as when compared with its competitors. Adidas is among the most popular brands in the retail and lifestyle sector.
The table below outlines what is the Adidas SWOT (Strengths and weaknesses, Opportunities threats) as well as the most prominent Adidas competitors, and also the market it is targeting segmentation, positioning, and the Unique Proposition to Sell Proposition (USP).
Adidas At A Glance – Adidas SWOT Analysis
Company: Adidas Group
Founders: Adolf (Adi) Dassler
Year of establishment: 1924 (as Gebruder Dassler Schuhfabrik), 1949 (as Adidas)
CEO: Kasper Bo Rorsted
Headquarters: Herzogenaurach, Bavaria, Germany
Employees (Dec 2020): 22,000
Ticker Symbol: ADR
Annual Revenue (Dec 2018): EURO€21.9 billion
Profit net income (Dec 2018): EURO€1.7 billion
Products & Services: Sports Apparel | Football Boots | Basketball Shoes | Running Shoes | Sports Bags | Glasses | Hats | Headbands, and Wristbands | Hoodies | Yoga Pants | Shorts, T-Shirts | Jackets
Company Website: www.adidas.com
Competitors: Nike | Puma | Under Armour | Callaway Golf | Fila | Converse | New Balance | ASICS | Lululemon Athletica | VFC | Victoria Secrets
Adidas SWOT Analysis – SWOT Analysis Of Adidas
In the billions of annual revenues, Adidas is no small fish. The sports goods giant is an intense rivalry with Nike which has led to some fascinating business nuances.
Adidas Strengths – Adidas SWOT Analysis
- brand value: Adidas is one of the top brands in the world of sports. In the eyes of Forbes the company is in the the 3rd position (Nike at #1 and ESPN at 2) with a worth in the range of $6.8 billion..
- A cult brand with an Prestigious Heritage: Adidas has nurtured an impressive and highly regarded legacy and tradition throughout its longand illustrious history, influencing and shaping the way people live across the globe.
The company, for instance, had a significant impact on sports in the 70s and helped shape hip-hop scene during the 80s. The brand’s legendary three-striped tracksuit and three-leafed logo turned this brand to a popular cult, especially among urban youth.
- New Products Innovation Since its inception, Adidas has prioritized the high-quality of its products above all else. In the year 2018, EUR 153 million was put into R&D (0.7 percent of its net sales). Quality, modern products are among the main reasons for the ever-growing number of customers.
- A Diversified Portfolio Although it is true that the Adidas brand is limited to the field of sportswear but its offerings are diverse. They offer a range of products made to accommodate the needs of a variety of sports, such as clothing, footwear and hardware accessories.
- Young customers prefer Adidas The constant attention to product quality and customer service has allowed Adidas to cultivate a global as well as long-lasting customer database with a particular focus on teenagers and younger adults between the ages of 16 to 24 in urban regions.
- efficient Supply Chain Management Management of supply chains is essential to the success of international businesses, and is particularly important for Adidas because it outsources the majority parts of their manufacturing. In the company’s Annual Report, Adidas works with important strategic partners to ensure the control of its whole supply chain.
Footwear In the year 2018, 97% of all footwear production was made by the continents of Asia as well as Europe (1 percent) as well as the Americas (2 percent). Vietnam is by far the biggest sourcing country with 42% of the total volume.
Apparel in 2018 91% of the total apparel production came originated from Asia. Europe (3%), Americas (4%), Africa (1%). Cambodia is by far the biggest sourcing country with 24% of volume produced.
Hardware in 2018 around 79% of hardware items (bags or balls) were manufactured within Asia, Europe (19%) and Americas (1 percent). China is the biggest source country (38 percent) then followed by Turkey (18 percent) as well as Pakistan (18 18%).).
- Solid Financial Situation Financial capacity is crucial for ensuring market share as well as the long term profitability as well as long-term sustainability. Adidas is one of the most stable financial businesses in the world and uses its financial strength to beat rivals from other firms like Nike as well as Puma.
Adidas’s revenue that is currency neutral increased by 8 percent up to EUR 21.9 Billion and the net profit was up by 20 percent in the year to EUR 1.7 Billion.
- A Strong & Diversified Distribution Network: Adidas has a variety of distribution networks, including more than 2300 retail stores owned by the company as well as more than 14,000 mono-branded franchise stores, and more than 150,000 co-branded wholesale and retail partners.
Additionally, eCommerce platforms increase sales through a variety of channels that allow them to reach out to markets of interest and direct sell directly to customers in these markets.
- Effective Marketing Strategy: The effectiveness of marketing strategy The success of Adidas originates from its balanced blend of promotion advertising, promotion, and the use of technology in the digital age.
- International sponsorships for branding Sponsorship of international organizations gives you the opportunity to market directly to fans of sports and fans around the world. For instance the marketing campaign that was launched for this year’s FIFA World Cup in Russia,NBA, Olympics.
- The endorsement of famous athletes like David Beckham, Lionel Messi, Sachin Tendulkar, Andy Murray etc. boosts brand recognition.
- Endorsements from celebrities: Adidas has strived to keep and increase its reputation as a young and urban brand with endorsements from famous people. Adidas has been supported by a lengthy list of actors and music gurus like Beyonce as well as Kanye West.
Adidas Weaknesses – Adidas SWOT Analysis
- Supply Chain shortfall Adidas has outsourced the production of many the products it sells to 3rd parties or independent manufacturing providers most often within China, Cambodia, and Vietnam. This has been exposed Adidas itself to the possibility of dependence of foreign supplier.
As per Reuters, the companies aren’t able to meet the rising demand for clothing that is priced mid-range on the North American market, resulting in a decrease in sales growth of 1 to 2 percent in the year 2019.
- Prices for expensive products: Adidas charges a premium or expensive costs for its products which has sparked apathy among low-income customers. Only middle and upper-income consumers can afford 100 dollars for a shoe.
- Limited Product Line Adidas Group includes the sole Adidas label and Reebok brand in its portfolio. This is why the company has been restricted to sporting footwear, sportswear and other accessories. Thus, a decrease in demand for products that are related to sports could be disastrous for Adidas.
Adidas Opportunities – Adidas SWOT Analysis
- Online shopping: In recent years the number of customers shopping online and visit websites for shopping has increased dramatically. Adidas integrated the checkout function of Instagram into its distribution system which resulted in an 40% growth in online sales during the first quarter of the year and suggests that it will be able to duplicate this success on the other platforms for social media, such like Facebook as well as Snapchat.
- The growing market for sportswear: Sports and fitness have gained popularity and there is no indication of slowing and this means that there will be an ongoing rise in demands for sportswear and the variety of.
- investing in smart Materials: Technological advancements have led to the creation of material that is more durable and more effective than conventional materials.
A constant and growing investment in technology development and the creation and use of innovative materials will help Adidas with an advantage over its rivals.
- The culture of Yoga Pants: Increased awareness of health, changes in preferences, and tastes of consumers have prompted a rise in demand for sports-related items. ” Culture of yoga pants” is changing the sports apparel market.
- Growing the demand for sports that are premium: A better economic environment in the developing world has raised purchasing power and increased demand for premium goods. Adidas could benefit from it by expanding to nations like India where the it is predicted that discretionary income will grow by up to 45% in 2025.
- Diversification into sports equipment: Even though Adidas has a diverse portfolio of products, there is an opportunity to expand its product range.
For instance, Adidas can differentiate itself from Puma and Nike by broadening its range of products to include sports-related items like tennis rackets hockey sticks, golf clubs and more.
- Global Expansion: The rapid expansion of emerging markets in Africa, Asia, and South America provides Adidas with huge opportunities to expand. For instance, Adidas has about 12,000 stores in China and in 2019 they will open another 1,000 new stores.
- Innovation in Product Design in Space: 2019 is the year that Adidas has joined forces with the International Space Station National Lab to study new products in the ” Boost midsole creation” process, which is free of gravity.
- Shoe Subscription: in the UK It is estimated that around 300 million pair of runners’ shoes get destroyed each year. Adidas engineers are working to create the whole shoes for runners (midsole foam the outer sole, the knitted upper, insole with laces, a torsion bar, laces) out of the same material (usually the Adidas running shoes are made of more than twelve materials).
When the shoe wears out, it is completely melted before being recycled into new shoes. This is called FutureCraft.Loop. Who knows, this may possibly be transformed into the model of a shoe subscription in the near future?
Adidas Threats – Adidas SWOT Analysis
- Competitiveness: The main threat that is threatening Adidas is the increase in competition because of technological advancements and globalization which have enabled the entry and expansion of medium and small firms. This means that Adidas must fight against major competitors like Nike, Under Armour, Puma as well as fending off newcomers and penetrators.
- Rapid expansion & the Adoption of E-commerce: Companies are adopting rapidly growing electronic commerce at a rapid rate and could be a danger to Adidas in the event that its major rivals like Nike and Puma use e-commerce earlier than they do.
- Supplier Dominance: It is true that Adidas has outsourced the bulk of the production of its products suggests that suppliers have greater bargaining leverage over the business. The unbalanced power balance makes Adidas to the risk of being in the hands of its biggest suppliers.
- Trademark loss: In the year 2019 Adidas was unable to win the trademark with three stripes. trademark case before the General Court of the European Union This exposes the brand to the danger of infringement.
- Technological Developments: The threat posed by competitors grows when they become technologically advanced. This means that a rival like Nike could pose a greater risk if they become more technologically more advanced in comparison to Adidas.
- China-US Trade Tensions: Adidas is a global company and this means it is vulnerable to the rash tit-for-tat imposing of tariffs among nations. Trade wars are particularly risky for Adidas since the US is the second largest market, but the vast majority of its merchandise is produced in China as well as various other Asian countries. In the words of Chief Executive Officer Rosted, currency war and tariffs are a significant risk to Adidas.
- Change Rates: The fluctuation of the major currencies like those of the Euro as well as the US Dollar can negatively affect Adidas’s earnings since it is operating on the international market.
- global economic slowdown: The consequences of slowdowns in economic growth, like less sales, adversely affect Adidas as well as any other company.
- Fake Products: Based on the Chief Executive Officer Rorsted, 10% of Adidas products made in Asia might be counterfeit. The quantity and quality of fake goods for top shoe brands have risen significantly in the recent past, which is an issue for shoe manufacturing companies.
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