A

CASE STUDY DOCUMENT

on

Adidas Shoes Management

for
B.Tech. in Electrical Engineering
Submitted to

Department of Mechanical Engineering,

Annasaheb Dange College of Engineering & Technology, Ashta, Sangli.
(An Autonomous Institute Affiliated to Shivaji University Kolhapur)

SEMESTER VII

ISE II (ACTIVITY I)

Mr. Omkar Dilip Shewale (21042057) (Roll no. : 58)

TOTAL QUALITY MANAGEMENT [1MEOE401]

Subject Co-ordinator
Prof. S T. Ghutukade
Introduction:
In every industry there are some firms who take the lead in it, & the customers trust in
their products. This project discusses the management strategy of the German company that
started its journey very long time ago to become a key competitor in the field. Adidas group
which is the leading sports company in Europe & the world's 2 leading company in the sports
field after Nike Ink. The brand portfolio is consisted of Adidas, Taylor-made, Reebok, & Rock-
port. The brands of the Adidas Group complement each other in a unique way to help athletes
perform better, play better, feel better. Our products break. records, set trends, and make
history, every day, all over the world. The main aim of the project is to find the points where
Adidas has a competitive advantage in, & where it has weaknesses, providing possible
solutions or changes that could make the group in a better position.
The project's structure is as follow: After introducing the project, several elements of
the strategic management course will be discussed & how Adidas is doing in each. Starting
with a discretion of the sports sector using the five forces model, PESTEL analysis, then the
Vision & Mission statements are going to be analysed critically, then the resources &
capabilities of the firm are going to be identified, SWOT analysis, then the strategy
diamond is going to be discussed in detail, after that, an explanation of Adidas group's corporate
level & Business level strategy will be given, VRINE model, Value chain, & ending with the
Cage distance of the firm. Then a conclusion that will summarizes the key points, findings &
recommendations for the company.

Field Description Using Five Forces model:

The purpose of this model is conducting an external analysis by measuring the: degree
of rivalry, power of suppliers, and power of buyers, threat of substitutes, and threat of new
intranets.
Rivalry:
This can be measured using many sub-measures that are going to be shown in a table
after this paragraph. The first step is to identify the main competitors in the field, and in the
sports field they are Nike Ink & Puma who are the main two competitors of Adidas group.
For sure the industry of sports is a very competitive market and competitiveness is based on
price, quality, & many other factors. And according to what’ve been taught in Strategic
management course we've came with the sub-measures shown in the table below to get an
average degree of rivalry of 3.8 which set Adidas group as a very key competitor in the field.
Power of Supplier:
The first step to measure the supplier power is to know who the main suppliers for
Adidas group are, but it wasn’t clear who the main suppliers are. The group discloses the
whole list of its suppliers and that’s rare to be done. But we collected some information of how
Adidas manages its supply chain system to make the sub-measures, and we got an average of
the supplier power of 2.6. Such result refers to that suppliers of Adidas group don’t have a
significant power.
Buyer Power:
Two main categories of buyers in the case of the German company: professional
athletes who need Adidas’s products to maximize their performance, & the second group of
buyers are normal customers who like comfort stylish apparel, footwear & sports
accessories. The sub measures for the buyer power are going to be expressed in the table below.
Threat of Substitutes:
One could mix between competitors & substitutes while they aren’t the same! As
discussed before, Adidas's main competitors are Nike Ink & Puma. But its substitutes would
likely be firms that produce non-sport footwear, apparel, or accessories like suits and formal.
clothing and accessories for example. And this measure is to check whether the substitutes
make a threat for Adidas group or not. By logic it's not likely for athletes or people who already
like sports apparel to change to formal clothing and such stuff, but by making the sub-measures
in the following table, and getting an average of 3.2 we found out that substitutes might make
a threat for the sports brand in general.
Threat of New Entrants:
To conduct a new business, the first thing you need to think about is from where to get
the capital. Studies of finance had proved that people prefer to make their business leveraged
(part of their own capital, and the other part from financial institutions) but no one will trust to
put his money in a new business where strong rivals exists unless the new entrant has an access
to the field’s resources, and has a strong brand name in other fields in a way the company will
gain the customers trust. The sub-measures in the table shown, has an average of 2.5 of the
threat of new entrants, which means that new entrants have a significant threat on Adidas
Group.
PESTEL Analysis:
Political Factors:
Adidas puts a great emphasis on political stability in all the countries it operates in.
risks such as terrorism, war, expropriation, nationalization, civil unrest and significant changes
to trade policies (Lawson 2006) leads a significant loss in time and money because there will
be delay in shipments and product delivery. And not all the countries have the same tax system
which will cause in more complexity. Also, they can’t take advantage of the low labour salary
everywhere, because a few countries like China for example offer low labour salaries.
Economic Factors:
The economic factors that affect Adidas profitability are Taxation, Inflation,
unemployment and per capita income. And unstable stock market which is caused due to the
fluctuation of interest’s rates and thus the growth rate will be affected as well.
Sociocultural Factors:
The social factors that affect Adidas innovation are culture, language, religion, race,
gender, buying habits and lifestyle. All those factors decide how Adidas will operate and
implement its strategy. Like if it will make a commercial on an Islamic TV, it should consider
a proper outfit.
Technological Factors:
In any big and well-known company like Adidas it must possess unique technologies
that distinguish it from its competitors. Not only it will put her in front of the other
competitors, it will also speed up its production, enhance its production quality, save time,
energy and effort. Adidas didn’t use the technological factor in the production process only;
it used it in the products itself like the smart ball that uses smart phones to operate with the ball
data collection. And on the internet, like the online store to facilitate the purchasing experience.
Environmental Factors:
Adidas makes sure all its factories doesn’t use restricted substances, reduce Volatile
Organic Compounds emissions, and follow the “better Place” program they started back in
2007, Its aim is to encourage the use of more sustainable products without compromising
their functional and quality performance.
Adidas Marketing Mix (4Ps) Analysis Mind Map

In order to have a better understanding of the four elements in the Adidas marketing
mix and how you can incorporate such strategies into your own business, you can plot them
into a diagram that is easier to analyse. Look at this example.

Product

• Adidas Superstar
• Adidas Stan Smith
• Adidas Samba
• Adidas Ultra Boost

Price

• Competitive pricing strategy

• Skimming pricing strategy
Place

• Online stores
• Offline stores

Promotion

• Billboards
• TV commercials
• Magazine ads
• Social media ads

Product Strategy of Adidas

Although Adidas manufacturers a wide range of sportswear and equipment, it's best
known for its athletic footwear. Adidas is currently the second biggest sports shoe brand in the
world. As of the latest 2021 data, the brand is valued at US$14.3 billion. The company's sales
in 2021 surpassed US$11.6 billion, and a large portion of this revenue came from shoes. All in
all, the product lineup of Adidas is quite well-rounded, with superior choices in all the different
categories. In clothing, Adidas offers sweatshirts, shorts, tracksuits, jackets, swimwear, sports
bras, hoodies, and so on. Adidas also has sports accessories like bags, sunglasses, goggles, and
even watches. Adidas has even ventured into perfumes and lotions, as well as sports equipment
like balls.

Price Strategy of Adidas

Adidas has always utilized either of two strategies when it comes to pricing – the
competitive pricing strategy and the skimming pricing strategy. The competitive pricing comes
into play with its regular products, taking into account the prices of rival companies like Nike
and Puma. The skimming pricing strategy is used whenever Adidas launches a cutting-edge
product that is more advanced than what competitors offer. Adidas generally targets high-end
customers who are more than willing to pay for quality; hence, the premium prices are typical
of Adidas products. With their superior quality, the products do deserve an expensive price tag.
But these high prices also inadvertently serve another purpose, which is to give upper-class
customers the reassurance that they are indeed purchasing a product of quality.
Place Strategy of Adidas

The place strategy is an integral part of the Adidas marketing mix. The sportswear
company utilizes both online and offline venues to market and sell its merchandise. As of the
last count, Adidas operates 177 stores across all the states in America except for New Mexico.
California is the state with the most Adidas outlets at 29. Outside the US, Adidas has more than
1200 concept stores, plus thousands of multi-brand outlets and other sports retail stores that
carry its merchandise.

Promotion Strategy of Adidas

Adidas is a household name today, but this certainly did not happen overnight. The
brand enjoys instant recognition today because it has invested heavily in a lot of effective
promotion and marketing strategies in the past. Adidas spends a lot on traditional promotional
campaigns like advertisements for billboards, TV, magazines, and more recently, social media.
Adidas has also approached a number of influential celebrities to represent its brand to the
target market, like Kanye West, Beyonce, Lionel Messi, and Stella McCartney. These
endorsements cost a pretty penny, too, with each contract costing millions of dollars. Also,
Adidas has earned quite an impressive reputation for sponsoring football teams of different
countries, like Germany, Mexico, Spain, and Argentina.

References

• Marketing Mix of Adidas

• Detailed Marketing Mix of Adidas with Complete Company Overview
• Adidas Marketing Strategy & Marketing Mix (4Ps)
• Marketing Mix of Adidas (4Ps of Adidas)
• Marketing Mix of Adidas | Learn the 4Ps of Marketing Mix of Adidas
• Global Brand Value of Adidas from 2016 to 2021