Situational Analysis of Adidas; SWOT analysis
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| AUTHOR: DAVIDSON OTIENO OMONDI |
Situational
Analysis of Adidas
Part
A: SWOT Analysis
Adidas has advanced significantly in its field of
creating fashionable sportswear throughout the years and recorded various
successes, it is one of the most appreciated brands in sports.
Strengths
Strong brand recognition, new Products Innovation, diversified
Portfolio, and digital
transformation are the core strengths of Adidas; The company’s iconic three-stripe logo and numerous different product lines
provide it a strong brand recognition that helps attract and thus helps in customer
retention. Adidas' reputation for producing high-quality items puts it in an
advantageous position as compared to its competitors. Saatchian et al (2021)
state that affection for a brand has
an important impact on the consumers buying habits and choice of a product. In addition, for any brand’s success,
creativity and invention through experience and research play a big role.
Adidas is globally
known for its cutting-edge products; this creativity and invention puts it a
step forward. Since its founding, Adidas has always put forward the improvement
of its product
quality. According to Jain et al (2021), Adidas
invented the Environmental Footprint Tool (EFT) to evaluate its micro and macro
monetization environmental footprint that accounts for the complete value chain
from raw material production to product use and disposal. This has positively
impacted Adidas to identify opportunities to reduce its energy consumption and
waste at its contract manufacturing sites.
The company’s product though dealing with sportswear items,
the company’s products are diversified. David (2017) states that the strength of Adidas is largely
attributed to its diverse brand portfolio The company offers footwear, leisure clothes, accessories, and apparel. The company also offers
divisive products for seasoned athletes and newcomers. This divisive portfolio gives the
company the advantage
of not relying on one line of products.
Adidas has
successfully adopted the field of e-commerce,
this has greatly impacted the company positively, as it has made it easier to explore
the more divisive markets, and
increased the company’s close contact with its customers
earning trust and reputation for the company.
Gotz et at (2018) state that digital transformation reflects the
general challenges faced in the international context by
checking the weakness and strengths. This has made it easier for Adidas to
overcome its challenges in the international market
Weakness
Major shortcomings of the company include; dependence
on the sports market, intense Competition, Limited Presence in Emerging Markets, and
Slow Response to Fast Fashion Trends: Adidas'
reliance on sportswear products could be disadvantageous to its ability to
adapt to changes in the market as this makes it vulnerable to the shifts in
consumer preferences and economic downturns affecting the sportswear industry.
This can make Adidas experience a sudden downturn in sales and revenue the
consumer taste and preference changes.
Adidas also faces
stiff competition from international companies like Puma
and Nike. This can lead to pricing
and market share, maintenance a challenge, and thus decreased profitability. Although
Adidas has a global market presence, it has poor penetration to underdeveloped
nations’ growing marketplaces as compared to its competitors, which may limit
its potential for expansion.
In
addition, Adidas has been struggling to react swiftly to shifts in consumer
changes in preferences and tastes. Though Adidas has made efforts to improve
the quality of its products and respond to consumer needs, it still struggles
to keep up with fast-fashion trends and the rapidly changing demands of the
market, which can affect the sales and earnings of the company.
Opportunities
E-commerce and digital transformation, product diversification, collaborations
and partnerships, and gender-neutral collection are possible opportunities for Adidas; Due
to advanced technology, the number of consumers shopping online has increased
greatly. By partnering with more e-commerce platforms, Adidas has a
significant opportunity of increasing its sales and profit by reaching many
people. The company has the potential of understanding its consumers' tastes
and preferences easily, by enhancing the digital consumer experience and data
analytics. Gotz et at (2018) state that digital transformation reflects
the general challenges faced in the international context by
checking the weakness and strengths. This has made it easier for Adidas to
overcome its challenges in the international market.
Adidas
can increase its product portfolio by creating room for more sports brands and
by bringing in new categories of products
different from sportswear. Since consumers' preferences change regularly, the
company should not depend entirely on sportswear.
Adidas can increase its sales and awareness by
collaborating with more celebrities, influencers, and other
brands will help the company create more fashionable and innovative products that are more appealing and attractive to customers.
This could help making Adidas in a strategically advantageous position as compared to its competitors
The
demand for gender-neutral products is
unmet in many markets, and this leaves a big gap. Adidas
could grab this opportunity by tapping this market gap to generate the company
a big amount of turnover.
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