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Swot analysis for ADIDAS Company

Fundamentals of Entrepreneurship (Universiti Teknologi MARA)

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SWOT ANALYSIS

SWOT stands for strengths, weaknesses, opportunities and threats. This is a method
of analysing the environment and the companies that are in it. The SWOT consists of two
parts: strengths and weaknesses relate to the internal aspects of a company, while
opportunities and threats lie outside the company and are exist in the environment. A
company's strength can lie in managing the branding process quickly and thoroughly. Its
flaws can lie in the distribution of products or in payment delays. These are internal issues /
issues that need to be understood and addressed on an ongoing basis. You are called upon
to evaluate these two aspects in the belief that a stranger could provide more information
about the company. These are internal issues or issues that need to be understood and
addressed on an ongoing basis. Consultants are often asked to evaluate these two aspects
in the belief that an outsider could provide more information about the company. The
company has no control over the two external factors, opportunities and threats. The
environment, which consist of social, economic, legal, regulatory, national and even
international events must be continuously scanned in order to track them.

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WEAKNESSES:
STRENGTHS:
- Outsourced Manufacturing
- Powerful brand - Narrow product line
- Distribution network - Few endorsement

ADIDAS
OPPORTUNITIES: THREATS:

- Growing Industry - Competition

- Smart materials - Counterfeit products

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STRENGTHS

1. Powerful Brand

One of the greatest strengths of Adidas is without a doubt the powerful brand.
Adidas is one of the world's leading premium sportswear brands alongside Nike
and many others. A positive brand image. Adidas products stand for fashion and
relatively high quality. Overall, Adidas’s strong brand is an integral part of how it
manages to generate such a large portion of sales in luxury sportswear.

2. Distribution Network

In addition to its excellent brand image, Adidas has a well-developed sales

network. On a logistical level, Adidas’s sales network delivers millions of products
worldwide in reasonable time. When the products are ready for retail sale,
customers have many options in how and where to buy. Adidas sells its products
in physical stores around the world. Some of them are Adidas branded stores and
others are large sportswear retailers. In addition to physical sales, Adidas also
has an established presence in e-commerce. Available in thousands of online
stores including Amazon and Adidas.

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WEAKNESSES

1. Outsourced Manufacturing

Adidas outsources the production of its products to manufacturers in the Far

East. While this strategy allows the brand to cut costs, it is one of its main flaws.
Through outsourcing manufacturing processes to external suppliers abroad,
Adidas is losing control of how its products are manufactured. As a result, Adidas
finds it extremely difficult to ensure that all of its products meet the same strict
quality standards. By outsourcing the manufacturing of its products, Adidas is at
the mercy of third parties. Unsatisfied with their compensation, they can simply
stop working, which can quickly lead to problems for a company as large as
Adidas.

2. Narrow Product Line

Another big weakness of Adidas is the narrow product line. Adidas has yet to
diversify its product line, despite diversification across multiple price ranges and
international markets. Adidas currently sells almost entirely sportswear, with an
emphasis on shoes. It's tough to imagine the sportswear shrinking any further,
but it's not impossible to imagine new competitors entering the market and
shedding Adidas' market share. If Adidas were to diversify its products more, it
would be less affected by market changes or new competitors.

3. Few Endorsement

Compare to Nike, Adidas has made a very little investment in securing

celebrities for its products. This is a main weakness as Adidas has consistently
lagged behind Nike in phase of development. Paid endorsements could certainly
only improve it. It's also worth noting that endorsements not only add brand
equity, but also directly increase sales.

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OPPORTUNITIES

1. Growing Industries

The main opportunity for Adidas could be the growing sportswear

industry. Health and fitness are more popular than ever and there are no
signs that it will slow down anytime soon. This means that the number of
athletes will steadily increase. And because of that, they will need suitable
sportswear. However, this is not a one-of-a-kind opportunity for Adidas. Other
sportswear brands will face the same growing industry, and it's up to Adidas
to find smart ways to overcome this.

2. Smart Materials

Science has advanced further than ever before. New materials are
discovered every week that offer dozens of advantages over traditional
alternatives. Additionally, consumers are always looking for products that are
better built. These two factors together offer Adidas a new opportunity: the
use of intelligent materials. By continuously advancing in the development
and manufacture of new materials for sportswear, Adidas can offer its
competitors a greater product. Adidas, for example, can invest in developing
new, breathable fabrics to keep athletes cool in summer, or in different
rubbers and rubbers to improve the response of running shoes with every
step.

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THREATS

1. Competition

As with any business, there is always a risk of competition. Adidas is

well-known for its fierce rivalry with Nike, and they cannot afford to let their
guard down in this fight. Currently, consumers are choosing between Adidas
and Nike based on their personal preferences as there are no significant
differences in product lines or qualities. Because of this, it is extremely
essential for Adidas continue to promote its brand image with the support of
celebrities.

2. Counterfeit Products

There are many counterfeit products in the sportswear industry. Given

the high prices of premium sportswear brands like Nike and Adidas, it's no
surprise that many customers want a less expensive alternative with the
same powerful brand.

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