SWOT ANALYSIS

STRENGTHS WEAKNESSES
1. Celebrity Endorsements: Adidas has strived to maintain and enhance its recognition 1. Supply Chain Shortage: Adidas outsources the production of most of its products to
as a youthful and urban brand through endorsements from celebrities. Adidas has been 3rd party or independent manufacturing suppliers, mainly in China, Cambodia, and
endorsed by a long list of movie stars and music hit-makers such as Beyoncé and Vietnam. It has exposed Adidas to the risk of overdependence on foreign suppliers.
Kanye West. 2. Expensive Products: Adidas charges a premium or high prices for its products, which
has alienated low-income consumers. Only upper- and middle-income group customers
2. Brand Value: Adidas is one of the most valuable brands in sports. According to can afford over a $100 shoe.
Forbes, it is ranked at #3 position with a brand value of $6.8 Billion. 3. Limited Product Line: Adidas Group has only Adidas brand and Reebok brand under
3. New Products Innovation: Adidas has prioritized the quality of its products over its portfolio, which has restricted the company within sports footwear, sports apparel,
everything else. In 2018, EUR 153 million was invested in R&D (0.7% of its annual and accessories. Therefore, a decline in demand for sports-related products can be
net sales). High-quality, innovative products are one of the driving forces behind its disastrous to Adidas.
ever-growing customer base. 4. Growing Operating Expenditure: With growing prices of raw material and labor, the
4. Diversified Portfolio: Even though the Adidas brand is restricted within the operating expenses of Adidas have also kept growing. The revenue of Adidas has
sportswear industry, the company’s products are diversified. It offers multiple products increased but so have its operating expenses. The company has grown its investment in
that are designed to cater to a wide range of sports, including footwear, apparel, and marketing and it reflected in the form of higher other operating expenses. Other
hardware accessories. operating expenses of the brand grew past €9 billion in 2018 and were more than €350
5. Young Customers prefer Adidas: The consistent focus on product quality and million higher than the previous year. Growing operating expenses can shrink profit
customer experience has enabled Adidas to nurture a global and loyal customer base, margins and affect net income adversely.
particularly teens and young adults between 16 and 24 years in urban areas. 5. Overdependence on External Supplies: Adidas depends entirely on external partners
for the production of the products it sells. It has outsourced nearly all of its production
6. Effective Supply Chain Management: Supply chain management is vital in the to external suppliers located in Asia and other parts of the world. On the one hand,
success of global companies, particularly for Adidas, since it outsources most of its while it allows Adidas to focus on other aspects of business, on the other it adds to
manufacturing. According to its annual report, Adidas works with key strategic operating costs. Adidas could bring costs down through backward integration.
partners to ensure control of the entire supply chain. 6. Adidas Endorsement Deals: Nike endorsements with athletes are very high in number
7. Strong Financial Position: Financial capability is critical in protecting market share than Adidas, Under Armour or any other brand. In 1980, Adidas was passed on a
and long-term profitability and sustainability. Adidas is among the most financially potential endorsement with American basketball player Michael Jordan. But Nike was
stable companies globally and utilizes its financial superiority to fend-off competition able to snag Jordan endorsement deal and even today the brand is generating billions of
from other global companies such as Nike and Puma. dollars revenue for one of the leading brand Nike.
8. Strong & Diversified Distribution Network: Adidas has several distribution 7. Adidas Product Turn Around is Very Slow: Adidas turnaround time is about 18
networks, including over 2300 company-owned retail stores, over 14,000 mono- months from design to store which is an alarming weakness of Adidas. This turnaround
branded franchise stores, and over 150,000 co-branded, retail partners and wholesale is very slow and the company is unable to capitalize on emerging trends in the market.
stores. 8. Absence of Brand Loyalty: Unlike its competitors like Nike and Underarmour,
9. Effective Marketing Strategy: The strength of the marketing strategy used by Adidas Adidas has failed to create loyalty among its customers. Launching the Yeezie brand
stems from its perfectly balanced mix of promotion, advertisements, and the use of was a good attempt by Adidas to create brand loyalty but it still has miles to go to reach
digital technology. where Nike is.
10. Branding through international sponsorships: Sponsoring global organizations
provides an opportunity to advertise directly to sports lovers and fanatics globally.

OPPORTUNITIES THREATS
1. E-commerce: In recent years, the number of consumers who shop online or use e- 1. Competition: The main threat facing Adidas is increased competition due to
 commerce sites has increased significantly. Adidas incorporated Instagram’s checkout globalization and technological advancements, which has enabled entry and penetration
feature into its distribution network, leading to a 40% increase in online sales in the 1st of small and medium companies.
Quarter of 2019, which implies that it can replicate this success in other social media 2. Rapid Expansion and Adoption of Ecommerce: Companies are adopting the rapidly
platforms such as Facebook and Snapchat. expanding e-commerce at an alarming rate, which can pose a threat to Adidas if its
2. Growing Sportswear Industry: Sports and fitness have grown in popularity with no main competitors such as Nike and Puma adopt e-commerce before them.
sign of slowing down soon, which means there will be a consistent increase in demand 3. Supplier Dominancy: The fact that Adidas outsources most of the manufacturing of its
for sportswear products and assortments. products implies that the suppliers have more bargaining power than the company. The
3. Investing in Smart Materials: Technological advancements have enabled the skewed balance of power exposes Adidas to the possibility of being held hostage by its
development of new synthetic materials that are better and more beneficial than biggest suppliers.
traditional materials. 4. Loss of Trademark: In 2019, Adidas lost the three-strip logo trademark case in the
4. Culture of Yoga Pants: Increased health consciousness, change in preference, and General Court of the European Union, which exposes the brand to the threat of
tastes among consumers have increased demand for sports-related products. “Culture imitation.
of yoga pants” is redefining our sports apparel industry. 5. Technological Advancements: The threat posed by competitor increases as they
5. Increasing Demand for Premium Sports Products: Improved economic situation in become more technologically advanced.
developing countries has increased purchasing power and demand for premium 6. US-China Trade Tensions: Adidas operates globally, which implies that the company
products is susceptible to the reckless tit-for-tat imposition of tariffs between countries
6. Diversification into sporting equipments: Even though Adidas has a diversified 7. Exchange Rates: Fluctuations of major currencies such as the Euro and the US Dollar
portfolio, there is still room for expansion of its product line. can negatively affect Adidas’s profits since it operates in the global marketplace.
7. Global Expansion: The rapid growth of emerging markets in Africa, Asia, and South 8. Global Economic Slowdown: The effects of economic slowdowns, such as lower
America provides Adidas with lucrative opportunities for expansion. For example, sales, negatively affect Adidas, just like any other company.
Adidas has about 12,000 stores in China, and in 2019, they plan to open additional 9. Fake Products: According to CEO Rorsted, 10% of Adidas products in Asia could be
1000 new stores. fake. The number and quality of fake products for premium shoe brands have increased
8. Product Development in Space: In 2019, Adidas has partnered with International significantly in the recent past, which poses a threat to shoe-manufacturing companies.
Space Station National Lab to explore new product development “Boost midsole 10. Regulatory Pressures:
creation” process without gravity.
9. Changing Lifestyle: With the saturation of the developed economies, changing taste
and preferences, education and changing lifestyle of developing economies, there is a
steep rise in the demand of premium goods and services.
10. Shoe Subscription: In the UK, it is estimated that over 300 million pairs of running
shoes are thrown away every year. Adidas engineers are trying to make the entire
running shoe from the same material. Once the shoe is worn out, it can completely
melted and recycled to new shoes.
STRENGTHS WEAKNESSES
1. Celebrity Endorsements 1. Supply Chain Shortage
2. Brand Value 2. Expensive Products:
3. New Products Innovation 3. Limited Product Line:
4. Diversified Portfolio: 4. Growing Operating Expenditures
5. Young Customers prefer Adidas: 5. Overdependence on External Supply
6. Effective Supply Chain Management: 6. Adidas Endorsement Deals
7. Strong Financial Position 7. Adidas Products Turn Around is Very Slow
8. Strong & Diversified Distribution Network: 8. Absence of Brand Loyalty
9. Effective Marketing Strategy:
10. Branding through international sponsorships:
OPPORTUNITIES SO- STRATEGIES WO-STRATEGIES
1. E-commerce: 1. S3,O3: 1. W9,O7
2. Growing Sportswear Industry - Creating new designs and producing them Building higher consumer loyalty through
3. Investing in Smart Materials with newer and smarter technologies that have understanding consumers culture and demands then
4. Culture of Yoga Pants: more benefits than the traditional ones. get them involve and introduced them the value and
5. Increasing Demand for Premium Sports Products 2. S1,O5: unique of the brand
6. Diversification into sporting equipment: - With adidas having endorsers which have a 2. W2,O3
7. Global Expansion huge fan base from all over the world, The use of SMART
8. Product Development in Space attracting new customers especially from 3. W4,O1
9. Changing Lifestyle developing countries will be a lot more easier, 4. W6,O7
10. Shoe Subscription because the presence of the brand will be
known with the help of the endorsers.
3. S5,O3
- With a lot of young customers that are loyal to
the brand, investing in a new and advanced
technology that creates new synthetic material
that differentiate the product to other brands
especially today where customers prefer
products which designs are one of a kind or
unique
4. S8,O1:
- Other than physical stores it is also great
opportunity that the brand create and
establish online stores or partner with online
distributors since in today’s generation where
everyone uses mobile phones or computers to
do errands.
5. S4,O6:
- Creating new design and products that caters
new market

THREATS ST-STRATEGIES WT-STRATEGIES

1. Competition: 1. S3,T1: 1. T1,w3
2. Rapid Expansion and Adoption of Ecommerce: The company must use each innovation capabilities to Increasing the product line, developing new flexible
3. Supplier Dominancy keep competitive pressure under control. product line (future change in product design, including new
4. Loss of Trademark: 2. S7, T5: products and derivatives of existing product)
5. Technological Advancements Since it has a strong financial position, adidas must 2. T5, w7
6. US-China Trade Tensions: consider serving advance technologies in order for it Using upgraded technologies will help the production
7. Exchange Rates to be more profitable of adidas to be productive to cope up with the trend in the
8. Global Economic Slowdown 3. S1,T1: markets.
9. Fake Products As the company and the products are properly 3. T1, w8
10. Regulatory Pressures promoted to the public, customers will consider the
Creating loyalty cards for customers to patronize more
 business which causes competitive pressure being the brands’ product…
controlled or minimized
4. S7,T10
Being financially stable adidas must consider to
remain focused on compliance teams to control legal
and regulatory pressure