Introduction
Adidas is a German multinational company that designs and manufactures sports wear and accessories. The headquarters of the company are located in Herzogenaurach, Bavaria in Germany. Apart from sportswear, the company manufactures shirts, eyewear, bags, watches and other clothing related goods. It is the second largest sportswear manufacturer in the globe. The company was founded by Adolf Dassler in 1948. The total revenue for the company that was listed in 2012 stood as € 34.48 billion. The success of the company has come along as a result of being respectful to its strengths, acceptability of its weaknesses, recognition of its opportunities, and adaptation to the threats within its operations. Strengths, weaknesses, opportunities, and threats of Adidas Company can only be realized through execution of SWOT analysis for the company.
This is the internal potential of the company to perform extremely well in its field. The first strength of the company is the existence of the Adidas innovation team. It is through the efforts of this group that productions of the company were split into Apparel, Footwear and Hardware. The team also involved information and research from partners such as University of Loughborough, Waseda University, and the University of Michigan (Adidas, 2014).
The other strength is the existence of youthful appeal, which is observable through its various marketing campaigns. Through youthful campaigns, the company uses celebrities to endorse Adidas products during football competitions and night clubs’ organized events (Adidas Market Analysis, 2014).
The other strength is that Adidas Group owns various sporting brands, such as Reebok and Taylor made. Although, Reebok is regarded to as cheaper brand, it allows Adidas to release fundamental breakthroughs in R+D by creating chances for the expensive Adidas brand (AdidasMarketing, 2014).
The company also draws strength from sponsoring sports celebrities such as David Beckham and major sports competitions such as UEFA and FIFA competitions, as well as NBA, and the Olympics (SwotAdidas, 2006). This automatically leads to increased awareness of products in the world.
Also, the company benefits from being the second best manufacturer of Sporting apparel. Despite Nike being the dominant Sporting apparel company in the US, Adidas has earned a reliable market share through creation of Reebok, which has been able to acquire a reliable market share in the country (Adidas, 2005).
Weaknesses
One of the weaknesses that Adidas face is the fact that the company outsources 97% of its global production to 3rd party manufacturers. The highest portion of these manufacturers is based in Asia (Frenkel and Duncan, 2002). Approximately 35% of the manufacturers are in China. Although, this has been done to reduce costs as a result of laidback labor laws, it has led to a number of problems. Different people have raised their voices in the past over concern on the production of low quality products by Asia manufacturers (AdidasGroup, 2014).
The other weakness is the openness of the company into criticism. For example, the company lacks adequate labor laws to control the people who work in the factories of the company. This has led to child labor, which is a major element that may attract massive criticism to the company (Adidas, 2005). There is adequate need to take control of such laws within the organization before the issue gets into the public.
Opportunities
The first opportunity is restructuring for global operations. Adidas has recently taken extensive approach for application of vertically integrated brand structure, to a function connected structure. This comprises global sales and brand functions, which is responsible for Adidas, and Reebok brands (Moore, 2006). Also, the company has closed some of its regional headquarters to allow for a centralized structure.
The company also has an opportunity of becoming a global figure through extending its sponsorship programs to various parts of the globe. For example, the company may sponsor competitions like NBA to make it known in the United States. In Europe the company is well known following its sponsorship for FIFA competitions. Therefore, if it extended its aid to other areas like Asia, and Africa it would acquire a wider market in the world (Moore, 2006).
The other opportunity that is exposed to Adidas is based on the company that it gave birth into known as Reebok. This is a company that has had extensive impact in different areas within which it has been operational. For example, Reebok has challenged Nike in the United States for the few years it has been operational in the country. Reebok has different innovative products, which are extremely attractive to customers and Adidas has to emphasize on these products to remain relevant in the market (D'mello, 2014).
Threats
The one and only threat that Adidas is exposed to is competition. Competition is a vastly strong force in the sports apparel and footwear market. However, it faces extensive competition from its express competitors such as Nike and Puma (McCall, 2006). These competitors have denied Adidas, exclusive control of the market thus reducing revenue for the company. Also, following the competition that has risen in the market, the company has experienced competition from Lacoste and Hugo Boss designers (Euromonitor, 2014).
Conclusion
Adidas is a major player in the footwear and sports apparel market. As a company destined for global market, Adidas has been at the fore front in executing strategies to help it command an outstanding share of the market. This has been achieved through excellent execution of Strengths, Weaknesses, Opportunities, and Threats analysis. Each of these elements is useful in realizing the potential of a company and defining its success.
Works Cited
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