SWOT analysis of Adidas
This detailed SWOT analysis of Adidas aims to examine the strengths and the weaknesses of Adidas. It also aims to examine the opportunities the company should explore and the threats it should keep an eye on. Adidas is a multinational company founded by Adi Dassler at the small town of Herzogenaurach in Germany.
Strengths of Adidas
Global presence of Adidas is noteworthy. As of March 2018, the company employs 56,888 people from over 100 countries. The total number of stores worldwide is 2464 (Adidas 2018). With these figures, it is clear that Adidas has travelled a long way since its inception in 1949.
The core brands of Adidas (adidas and Reebok) have global recognition. While adidas appeals to athletes, Reebok focuses on the consumers who are fitness-conscious (Adidas, 2018). Adidas is the second most valued sports brand in the world (Rinky, 2018). It is worth mentioning that Adidas is a major supplier of team kit to international football teams and clubs.
Adidas has a strong financial position. It produces over 900 million product units every year. It generated sales of €21.218 billion in 2017. The net sales of adidas brand in the first quarter of 2018 were €5 billion. The net sales of Reebok brand for the same period was €440 million (Adidas 2018).
Adidas has an extensive distribution strategy. Its products are available worldwide through channels such as franchises, mass merchandise, and speciality stores. In addition, Adidas has its own online retail operations and products are also available in other online platforms.
Weaknesses of Adidas
Adidas products are often unaffordable for many people, particularly in developing countries. The company usually keeps the prices of products higher than its competitors.
Adidas has drawn a number of criticisms over the years. For example, it has been accused of working with suppliers that have very poor and socially unacceptable working conditions.
Adidas does not have a good track record with regards to upholding trade union rights (Oxfam Australia, 2018). For example, it fired 33 workers at the Panarub factory in Java (Indonesia) because of their strike for better pay in 2005.
Opportunities for Adidas
Adidas saw double-digit sales increases in China and North America by the end of 2017 (Thomasson, 2017). Therefore, exploring further expansion opportunities there is worth the effort. Likewise, entering into new geographical markets should help Adidas widen its span of operations and minimise challenges from competitors.
Customers’ taste and preferences are changing constantly. Therefore, introducing new products is worth the effort. Adidas is well-known for new product design and innovation, and therefore new product development is consistent with the company’s competences.
Threats to Adidas
Threat is the last element to address in the SWOT analysis of Adidas. Adidas works with around 800 independent factories from around the world (Adidas, 2018). Therefore, any serious conflict with the suppliers may turn out to be a considerable threat.
Adidas faces a fierce competition from Nike and Puma. Likewise, constant competition from small and local competitors and substitute products is also a threat for Adidas.
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Last update: 14 July 2018
Adidas (2018) Fact sheet, available at: https://www.adidas-group.com/media/filer_public/7d/04/7d04b949-7318-4ad6-8a41-99c25875e342/fact_sheet_q1_2018_en.pdf (Accessed 10 July 2018)
Oxfam Australia (2018) adidas – So what’s the problem with adidas? Available at: https://www.oxfam.org.au/what-we-do/ethical-trading-and-business/workers-rights-2/adidas/#workers (Accessed 14 July 2018)
Rinky, S. (2018) Top 10 Sports Brands in the World 2017, available at: http://textilefocus.com/top-10-sports-brands-world-2017/ (Accessed 10 July 2018)
Thomasson, E. (2017) Adidas expansion in China and US boosts third-quarter profit, available at: https://www.independent.co.uk/news/business/news/adidas-china-expansion-us-q3-profit-2017-sportswear-firm-a8045271.html (Accessed 10 July 2018)
Photo credit: Pixabay
Author: Joe David
Joe David has years of experience both in the UK and abroad. He writes regularly online on a variety of topics. He has a keen interest in business, hospitality and tourism management.