Adidas
adidas Strategic Analysis 2011 ‐ 2016
David Bajak
MET AD 711 Leadership and Strategy December 18, 2010
What business are we in? • Currently
– Athletic Performance Enhancing Footwear, Apparel & Equipment (80%)
– Athletic Fashion Styled Footwear, Apparel & Equipment (20%)
• Recommend – Design
– Marketing
– Retail Distribution
Competitive Forces Affecting adidas • Five‐Forces Model of Competition
– High Rivalry among Competitors
• Intense rivalry between adidas (21%) & Nike (36%) for market share
• Powerful competitive strategies used by market leaders
– Low Threat of New Entrants
• Strong brand preferences and customer loyalty
• Market leaders benefit from significant economies of scale
• Difficult for new entrants to establish distributor/retailer networks
– High Threat of Substitute Products
• Substitutes are readily available and attractively priced
• Low Switching Costs
– Low Supplier Power
• Materials supplied are commodities
• Manufacturing is outsourced to low cost producers
– High Buyer Power
• Buyers benefit from intense rivalry for market share
• Low switching costs for buyers
• Buyers have discretion in purchasing products
• Buyers are well informed on purchased products due to intense marketing
Our Impact from Globalization
• Heavy competition continues to develop in emerging markets between adidas and Nike for worldwide market leadership
• Production activities are migrating to countries where costs are lowest
• Growing global consumer demand
• Reduced trade barriers and government cooperation for production
Forces Driving Change in Industry • Changes in long term industry growth rates in emerging markets due to high demand
• Increasing globalization as a result of intense rivalry
• Aggressive product innovation averaging one major product innovation annually in each product category of each brand
• Reduced costs and increased efficiency achieved by acquisition of diversified companies
• Consumers demand
David Bajak
MET AD 711 Leadership and Strategy December 18, 2010
What business are we in? • Currently
– Athletic Performance Enhancing Footwear, Apparel & Equipment (80%)
– Athletic Fashion Styled Footwear, Apparel & Equipment (20%)
• Recommend – Design
– Marketing
– Retail Distribution
Competitive Forces Affecting adidas • Five‐Forces Model of Competition
– High Rivalry among Competitors
• Intense rivalry between adidas (21%) & Nike (36%) for market share
• Powerful competitive strategies used by market leaders
– Low Threat of New Entrants
• Strong brand preferences and customer loyalty
• Market leaders benefit from significant economies of scale
• Difficult for new entrants to establish distributor/retailer networks
– High Threat of Substitute Products
• Substitutes are readily available and attractively priced
• Low Switching Costs
– Low Supplier Power
• Materials supplied are commodities
• Manufacturing is outsourced to low cost producers
– High Buyer Power
• Buyers benefit from intense rivalry for market share
• Low switching costs for buyers
• Buyers have discretion in purchasing products
• Buyers are well informed on purchased products due to intense marketing
Our Impact from Globalization
• Heavy competition continues to develop in emerging markets between adidas and Nike for worldwide market leadership
• Production activities are migrating to countries where costs are lowest
• Growing global consumer demand
• Reduced trade barriers and government cooperation for production
Forces Driving Change in Industry • Changes in long term industry growth rates in emerging markets due to high demand
• Increasing globalization as a result of intense rivalry
• Aggressive product innovation averaging one major product innovation annually in each product category of each brand
• Reduced costs and increased efficiency achieved by acquisition of diversified companies
• Consumers demand