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Written Assignment Unit 1: Adidas SWOT Analysis

Mukasa Joseph

Masters of Business Administration, University of the People

BUS 5116-01 Operations Management

The 13th September 2023

Introduction

Adidas grew progressively during the 1950s as association football (soccer) players

switched to the company’s shoes, which were light in weight and featured screw-in cleats. The

company then developed a line of sporting goods, introducing soccer footballs in 1963. Four

years later Adidas started to generate apparel. For many years Adidas was the biggest name in

athletic shoes, but competition augmented during the 1970s, notably from newer firms such as

Nike. (Lewis R., 2023).

The strengths of Adidas company are countless as per its strong experience in the

industry and world market. These strengths are notably Brand Value, An Iconic Brand with a

Prestigious Legacy, New Products Innovation, Diversified Portfolio, Young Customers prefer

Adidas, Effective Supply Chain Management, Strong Financial Position, Strong & Diversified

Distribution Network, Effective Marketing Strategy, Branding through international

sponsorships, Sponsorship of high-profile athletes and Celebrity Endorsements as well (Business

Strategy Hub, 2023)

The key strengths that enable Adidas to survive in a fast changing environment are New

Products Innovation and Strong & Diversified Distribution Network.

 New products innovation

Since its founding, Adidas has prioritized the quality of its products over everything else. In

2021, EUR 130 million was invested in R&D (0.6% of its annual net sales) and EUR 115 million

in 2020. High-quality, innovative products are one of the driving forces behind its ever-growing

customer base.

For instance: Paul Smith, Senior Director - Sustainability Concepts - Footwear and Apparel -

Adidas Innovation said: “We’re continuously revolutionizing and emerging our abilities along

with world class partners to embrace more and more choices to enable product creation with

indirectness in mind for both apparel and footwear. Relentless innovation generates incessant

challenges, but our passion for problem solving endures to evolve as we strive for circularity.

Rethinking the materials we use and redesigning our processes are just some of our imperatives”

(Business Strategy Hub, 2023)

Adidas by Stella Mccartney sportswear tracksuit viscose (gender neutral)

A first of its kind, the new adidas by Stella McCartney sportswear garment made using viscose

will be FW22’s pioneering piece. The tracksuit has been produced through the New Cotton

Project, an EU Consortium of 12 key players united to demonstrate the potential of circular

garment production.

Tanja Karila, Chief Marketing Officer at Infinited Fiber Company said: “Partnering with adidas

and the New Cotton Project on the materialization of this sportswear means an innovation-first

mindset has been precarious from the start. Having the right collection, sorting, and
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technological processes in place to produce a garment suitable for the globular process, is an

significant footstep frontward for the fashion industry” (Business Strategy Hub, 2023).

The most significant weaknesses of Adidas are Supply Chain Shortage, Expensive

Products, Limited Product Line, Links to Forced Labor, Patent Legal Battle, Allegation of

Racism and Laxity in Home Market.

 Allegation of Racism

Adidas has absorbed on building a brand that transcends racial lines. This reputation was

contaminated by allegations that Karen Parkin, the head of human resources, abused cases of

racism at the company. She was forced to phase out-down to overlay way for investigation. The

head of human resources at Adidas ADSGn.DE has stridden down after a crowd of personnel

called for an examination over her treatment of racism at the company, which she had labelled

last year as "noise" only debated in America. Adidas rebuffed criticism from a collection of staffs

that requested the supervisory board to examine Parkin’s method to racial issues, noting that

Parkin had apologised and was working on the variety issue (Reuters, 2020).

 Supply Chain Shortage

Adidas subcontracts the manufacture of maximum of its products to 3rd party or independent

manufacturing suppliers, primarily in China, Cambodia, and Vietnam. It has set Adidas to the

risk of overdependence on foreign suppliers. These suppliers are powerless to keep up with the

growing demand for mid-priced apparel in the North American market, subsequent to a reduction

in sales growth by 1-2% in 2019 (Reuters, 2020).

Adidas opportunities are mainly E-commerce, Growing Sportswear Industry, Investing

in Smart Materials, Culture of Yoga Pants, Increasing Demand for Premium Sports Products,

Diversification into sporting equipments, Global Expansion, First Store in Singapore, Product

Development in Space, Shoe Subscription, Gender-Neutral Collection, Expand through Strategic

Partnerships and as well Augmented Reality (AR) Tech Company Teams Up with Adidas

(Business Strategy Hub, 2023)

The potential opportunities are the following:

 E-commerce

In contemporary ages, the number of consumers who buy online or apply e-commerce sites has

augmented meaningfully. Adidas unified numerous e-commerce such as Instagram’s checkout

feature into its distribution network, leading to over all 19% in online sales (€ 3.9 Billion) in the

fiscal year 2021. Adidas can reproduce this success in other social media platforms such as

Facebook and Snapchat. Its e-commerce is probable to twofold to €8 billion by 2025 (Business

Strategy Hub, 2023).

 Increasing Demand for Premium Sports Products

Upgraded economic situation in developing countries has amplified purchasing power and

demand for premium products. Adidas can get the most out of escalating into countries such as

India, where unrestricted income is expected to upsurge by 45% by 2025 (Business Strategy

Hub, 2023).

The threats are also countless such as Competition, Rapid Expansion and Adoption of

Ecommerce, Supplier Dominancy, Loss of Trademark, Technological Advancements, US-China

Trade Tensions, Exchange Rates, Global Economic Uncertainty, Fake Products, Loses

Popularity in China and Lawsuit Against Adidas (Business Strategy Hub, 2023).

The most threat to the Adidas company is Fake Products. According to CEO Rorsted, 10% of

Adidas products in Asia could be fake. The number and quality of fake products for premium

shoe brands have augmented considerably in the recent past, which stances a threat to shoe-

manufacturing companies. Subsequent to that the company is inducted into lawsuit too (Business

Strategy Hub, 2023).

Reference

Adidas, (2023). Adidas SWOT Analysis

https://news.adidas.com/running/adidas-lifts-the-curtain-on-its-latest-made-to-be-remade-

product-innovations-at-design-london-exhibi/s/b8249508-e940-41c9-824b-

40d447922a7e#:~:text=MADE%20TO%20BE%20REMADE%20%E2%80%93%20THE,QR%

20code%20on%20the%20product.

Lewis R., (2023). Adidas, Germany Company

https://www.britannica.com/topic/Adidas-AG

Reuters, (2020). Adidas human resources head steps down after race row

https://www.reuters.com/article/us-adidas-race/adidas-human-resources-head-steps-down-after-

race-row-idUSKBN241332