Adidas SWOT & PESTLE Analysis
COMPANY PROFILE -Adidas
Business Sector :Sports Goods
Operating Geography :Europe, Germany, Global
About Adidas :
Adidas, founded in 1924, by Adi Dassler, is a German multinational company, specializing in clothing, sports shoes and accessories. The company is headquartered in Herzogenaurach, Bavaria and has around 56,888 employees globally as of 2017. Adidas was born after the split of the Dasler brother shoe factory, a political tension between the two brothers led to formation of two companies Adidas and Puma in the year 1947. Adidas is a brand that operates in one of the most attractive industry- sports, as it is one of the core aspects of society and harnessing sports in every individual will make their lives healthy and happy. Hence the Adidas Group is all set to accomplish its mission by 2020 through its strategy- ‘Creating the New’ focused on changing lives through sports.2018 has been a year of recognition to Adidas, the company has been included in the following: the Dow Jones Sustainability Indices (DJSI), the STOXX Global ESG Leaders indices, the FTSE4 Good Index, the Vigeo Eiris Euronext index Eurozone120. In the “Textiles, Apparel & Luxury Goods Industry”, Adidas was ranked as an industry leader in corporate economic, environmental and social dimensions. Moreover, the company was deemed industry best in seven criteria namely, Innovation Management, Materiality, Supply Chain Management, Human Rights, Environmental Policy and Management Systems, Operational Eco-Efficiency and Social Reporting.
Adidas’s mission is “To be the best sports company in the world” and Adidas brand “To be the best sports brand in the world.” Adidas vision statement reads “To enhance social and environmental performance in the company and the supply chain, thereby improving lives of people making our products.” The Unique Selling Proposition or USP of the company lies in being globally recognized and renowned apparel manufacturer of sporting goods, shoes, clothes and accessories that are appealing to a large group of audiences of varied demographics.
Adidas Revenue :
€21.20bn - (FY ending December 31st 2017)
€19.29bn - (FY ending December 31st 2016)
Ownership / Major shareholders :
As of 2018, the major shareholders of the company are Parametric Portfolio Associates Llc, Thornburg Investment Management Inc. and Private Capital Group.Competitive Analysis of Adidas
Adidas and Reebok are the significant brands of the parent company Adidas Group. Although both the brands operate in the sports industry their target segment is distinct - Adidas is a premium brand who usually target urban upper-class audiences whereas Reebok is a mid-range brand targeting the middle-class section. Apart from serving a wide range of audiences, factors like strong legacy, high brand value, diversified product portfolio, excellent and impactful endorsements, sponsors of renowned sports events (FIFA, Olympics, NBA & UEFA), brand recognition, strong fiscal muscle, distinguished distribution channels, are all some of the greatest strengths of the Adidas Group. These core competencies have helped the Adidas Group attain a competitive advantage over its peers.
Adidas’ major weakness is its premium pricing, due to excessive investment in technology for innovation and in marketing strategies like celebrity endorsements. Adidas' finished product costs are very high. Customer retention is a weakness and a challenge to the company, as the sports industry is highly competitive and customers switching from brand to brand is more likely to follow.
People’s elevated interest towards health and fitness is a great opportunity to the entire sports industry. Improvised lifestyle and generous spending of audiences on branded sportswear is an opportunity of growth for the Adidas Group. Mergers and acquisition, expansion in the product line, developing innovative and stylish products, merging up with the sports team can be some of the great opportunities for the Adidas Group to keep the competition at bay.
Adidas is the second best premium brand after its top competitor Nike, which is the no.1 premium brand. Hence the major threat to the company is stiff competition from not only top brands but local manufacturers too. Another major threat is the counterfeit products that can damage the brand reputation extensively.
The SWOT/TOWS analysis for Adidas is presented below in a SWOT Matrix followed by detailed analysis:
| 1. Healthy financials 2. Constant Innovation and New Products 3. Effective Point-of-Sale Network 4. Strong Presence in European Market | 1. Foreign Exchange and Market Risk 2. Impact on Business due to Competitors Actions 3. Limited financing |
| 1. Rise in Health and Fitness Trend 2. Growth Opportunities in Asia 3. E-commerce to be a major growth driver | 1. Highly dependent on sports segment 2. Intense competition |
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Detailed SWOT Analysis of Adidas
Strength
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Weakness
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Opportunity
1. Rise in Health and Fitness Trend: As health trends increase all over the world, a huge new market is opening up for sports apparel and footwear. From yoga moms to athletes, everyone is trying to keep fit. Sports apparel and footwear sales have climbed 42%, to $270 billion over the last seven years. Prospects for growth are stronger, as sports participation for youths and health and fitness trends for adults and is going global.
2. Growth Opportunities in Asia: Markets in Latin America and Asia, where athletic-wear penetration is low compared to the US, have room to grow and could deliver high gains. China will be a key market to monitor. The Chinese government emphasized support for youth athletic participation, development of sports infrastructure and business. It plans to build 60% more sports facilities by 2025 and encourage 500 million citizens to exercise and play sports regularly. The government wants to integrate soccer or football into school curriculums to develop talent. Sports pastimes, like hiking and skiing, which were unheard of a generation earlier, have become common and easily accessible. Consumers who enjoy such activities, usually have the means to buy the gear and clothes that go with them.
3. E-commerce to be a major growth driver: E-commerce has been a major game changer in retail and fashion industry over the last few years. This is a major opportunity for a global players Adidas has started to leverage the same. The company is closing several of its stores and funnel the investment towards digital initiatives. The company plans to invest around €900million in 2018 in digital operations such as logistics and infrastructure. Further, Adidas sees its online sales going to €4bn in 2020 from €1.6bn in 2017 and is banking big on digital growth.
Threat
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Major Competitors :
- Nike
- Reebok
- New Balance
- Converse
- Puma
- Fila
- K-Swiss
- Asics
- Li-Ning
- Air Jordan
- Callaway Golf Company
Major Brands :
- Adidas Originals
- Adidas Neo
- Reebok
Key Business Segments / Diversification :
Recent Acquisition / Mergers / Alliance / Joint Ventures / Divestitures :
Open Table Preview| TaylorMade | Golf Brand | 2017 | Divestiture | KPS Capital Partners has purchased the TaylorMade brand for $425 million. The purchase also includes the Adams Golf and Ashworth Golf brands. |
| Mitchell & Ness | Sportswear | 2016 | Divestiture | The sale of Mitchell & Ness allowed Adidas to reduce complexity and pursue target consumer more aggressively with the core brands. |
| Runtastic | Digital Fitness App | 2015 | Acquisition | Adidas acquired Runtastic for $240 million to grow a highly engaged athlete user base and to ensure the convergence of sport, digital and data analytics. |
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TABLE OF CONTENTS
DELIVERY AND FORMAT
WHY CHOOSE US?
2. The SWOT analysis report constitutes all the internal strategic factors that represent the major strengths and weaknesses of the Adidas Group.
3. The report confers intelligence on the external analysis, comprising the opportunities which can be incorporated to achieve worldwide growth and expansion. It also talks about some pertinent threats to the Adidas company that threatens to impede growth.
4. The report highlights the core competencies of Adidas and factors that help attain competitive advantage for the company over its rivals and competitors from the sporting goods industry.
5. Pestle analysis of the footwear and apparel industry gives a detailed picture of the external factors and its influences on the industry and largely on Adidas.
6. A detailed interpretation of how influencers like political, economic, social, technological, legal and environmental factors have impacted Adidas' innovative business model.
7. Insights into Adidas's business diversification, extracting its key business segments and highlighting its significant competitors
8. Analysis of the acquisitions, mergers, capital raising, equity transactions, alliances or partnership ventures that Adidas consented along with deal valuations and the business aspirations or aims that were accomplished by them.
9. Insights into Adidas’s business model, along with further breakdown and analysis of key business segments and business case study
10. A brief overview of Adidas founders, its corporate headquarters, owners & stakeholders, and revenue jumps. Additionally overall company analysis to gain acquaintance about company information, company profile, business model, business plans and marketing strategy.
11. Interpretation of Adidas' USP or unique selling proposition, mission statement and vision statement that are a trendsetter in the industry.
12. A glimpse into the Adidas' key performance indicators, success factors, share price, and value proposition
References used in Adidas Analysis Report
1. Adidas Annual Report GB 2018 pdf - https://report.adidas-group.com/fileadmin/user_upload/adidas_Annual_Report_GB-2018-EN.pdf
2. Adidas – Investor Relations - https://www.adidas-group.com/en/investors/overview/
3. Adidas – 2018 - https://www.adidas-group.com/en/investors/financial-reports/2018/
4. Adidas Official Website - https://www.adidas.co.in/
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SWOT & PESTLE.com (2020). Adidas SWOT & PESTLE Analysis - SWOT & PESTLE.com. [online] Available at: https://www.swotandpestle.com/adidas/ [Accessed 05 Apr, 2020].
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Adidas SWOT and PESTLE analysis has been conducted by Merlyn Pereira and reviewed by senior analysts from Barakaat Consulting.
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