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 over 59,000 employees globally as of early 2020. 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. This German sportswear manufacturer is 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. As of early 2023, Adidas employed over 62,000 people.
The Unique Selling Proposition or USP of Adidas 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’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.”
Highly dependent on sourcing from few Asian countries.
Opportunity
Threat
Rise in Health and Fitness Trend
Growth Opportunities in Asia
E-commerce to be a major growth driver.
Highly dependent on sports segment
Intense competition in sports and apparel segment.
Detailed SWOT Analysis of Adidas
The detailed SWOT analysis for Adidas is presented below:
Strength
Consistently strong financials over a decade: The revenues and gross profit of the Company have consistently increased over the last ten years (2012-2021) from €14.8 billion to €21.23 billion, with no dips and only ascents (excluding the pandemic year, i.e., 2020). The equity ratio has been consistent, which shows that the investors have faith in the Company. Operating margins have also climbed from 5.3% in 2012 to 9.4% in 2021. The interest coverage ratio shows that the company risk is low and the operations are producing enough cash. The gross margin of this year was 50.7% which indicates high profitability of the company.
Development of new products and solutions through continuous innovation: The adidas brand has developed a truly unique and comprehensive sports offering, driven by a relentless pursuit of innovation and decades of accumulating sports science expertise. Adidas' innovation approach is heavily based on its Open-Source mindset, in keeping with its vision of creative collaboration. The Adizero Adios Pro made its debut in 2020 and quickly became a hit with road runners. They've broken seven world records with the shoe since its release, including two during their 'Road to Records' event in 2021 on their own Herzogenaurach company campus. Two layers of resculpted Lightstrike Pro midsole and the iconic carbon-infused Energy Rods are featured in the Adizero Adios Pro 2 for 2021. The upper is made of ultra-lightweight, partially recycled polyester. Adidas is accelerating sustainable innovation in the apparel industry with Fashion for Good, a global cross-brand initiative to make all fashion sustainable.
Weakness
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Opportunity
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Threat
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PESTLE
PESTLE Matrix for Adidas
Political
Economic
Potential trade war due to political differences.
Lack in domestic demand in Europe
Impact of pandemic on economy and business.
Social
Technological
Increase in trends such as body fitness and yoga amongst millennials
Usage of socially responsible materials in apparel
Launch of period-proof products for girls.
Digital transformation accelerating the development of direct relationships with consumers
Leveraging analytics for insight-driven decision-making
Digital innovation and automated solutions to redefine manufacturing
Leveraging technology to provide premium retail experiences
Technological innovation in its products.
Legal
ENVIRONMENTAL
Impact of legislative and regulatory changes
Implementation of technology solutions for regulatory compliance.
Managing environmental impact of operations
Focus on developing sustainable products
Collaborations for accelerating sustainable innovation.
Detailed PESTLE Analysis of Adidas
The detailed PESTLE analysis for Adidas is presented below:
POLITICAL
Potential trade war due to political differences: Adidas Group faces risks arising from sudden increase of import restrictions. The Trump administration in the United States has increasingly shown a restrictive stance on global trade. Trump in his political campaign has advocated for local employment which may impact imports. The United States and Chinese political and economic relations have been on the boil since 2020 and Adidas which has major suppliers based out of China may face import issues if the crisis deteriorates. Germany is also a major exporter to United States and any imposition of trade taxes may impact the German economy and Adidas.
ECONOMIC
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SOCIAL
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TECHNOLOGICAL
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LEGAL
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ENVIRONMENTAL
Managing environmental impact of operations: Adidas as a responsible organization needs to manage the environmental impact of its operations globally. The company as part of its sustainable strategy has set ambitious targets to optimize the environmental impact of the operations across the supply chain. Eliminating coal-fired boilers from all Tier 1 and Tier 2 direct supplier facilities will have a proportionally large positive environmental impact. Adidas has committed to not installing any new coal-fired boilers, heaters, or power generation from 2022 onwards, as well as phasing out existing on-site coal-fired equipment at all Tier 1 and Tier 2 direct suppliers by 2025 at the earliest. The company has employed environmentally friendly technologies in its operations which include ‘Low Waste’, ‘DryDye’ and sourcing ‘Sustainable Cotton’. Adidas is also a founding member of the Sustainable Apparel Coalition (SAC) and Business for Innovative Climate and Energy Policy (BICEP).
More Info
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
Table of Contents
Company Overview
1.1 About the Company
1.2 Business Sector
1.3 Operating Geography
1.4 Revenue
SWOT Analysis
2.1 SWOT Table/ SWOT Matrix
2.2 SWOT Overview
2.3 Detailed SWOT Analysis
2.4 Strength, Weakness, Opportunity and Threat
PESTLE Analysis
3.1 PESTLE Table/ PESTLE Matrix
3.2 PESTLE Overview
3.3 Detailed PESTLE Analysis
3.4 Political, Economic, Social, Technological, Legal and Environmental
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Global Sports Apparel Market Report 2022-2026: Increase in Gen Z Income & Penetration of E-Commerce Fueling Growth - ResearchAndMarkets.com - https://www.businesswire.com/news/home/20220721005543/en/Global-Sports-Apparel-Market-Report-2022-2026-Increase-in-Gen-Z-Income-Penetration-of-E-Commerce-Fueling-Growth---ResearchAndMarkets.com
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Adidas SWOT and PESTLE analysis has been conducted and reviewed by senior analysts from Barakaat Consulting.
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