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Adidas

Name

Institution

Date
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Contents

Introduction...............................................................................................................................................2
History of Adidas........................................................................................................................................3
BUSSINESS STRATEGY.not..........................................................................................................................4
ADIDAS’ PRODUCTS..................................................................................................................................5
Apparel...................................................................................................................................................5
Association football...............................................................................................................................5
Basketball...............................................................................................................................................5
Baseball..................................................................................................................................................6
Golf.........................................................................................................................................................6
Cricket....................................................................................................................................................6
Ice hockey..............................................................................................................................................7
Skateboarding........................................................................................................................................7
Running..................................................................................................................................................7
MARKETING...............................................................................................................................................7
ADIDAS SWOT ANALYSIS..........................................................................................................................10
CONCLUSION............................................................................................................................................13
References...............................................................................................................................................14
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Adidas

Introduction

Adidas AG is a company that was initially incorporated, founded and registered in

1924 by Adi Dassler. It stylized as Adidas since 1949 [ CITATION Mos06 \l 1033 ]. Adidas

headquarters Is based in Herzogenaurach, Germany. It focuses in the design and

manufacture of footwear, Apparel, sportswear, sport equipment, toiletries and

accessories. It has been ranked the largest sport wear in Europe as well as the second

position after Nike in the whole world [ CITATION Mos06 \l 1033 ].

History of Adidas
Adi Dassler began the Adidas dream by making his own mother some shoes while in

her laundry soon as he had returned from the world war I. In 1924, the sibling joined

him together in this business [ CITATION Mah10 \l 1033 ]. Adi Dassler was mainly taking

part in making of spike which had been spiked on the bottom with specific target

being athletes. In order to ensure the best quality of the spiked shoes, he made a

transition from the initial model to one which made use of rubber and canvas mainly

for the sake of them the best quality for athletes. In 1936, Sprinter Jesse Owen won

four gold medals wearing Dassler Spiker shoes in turn earning a good reputation for

the shoes. In return Dassler sold many shoes as it was on high demand from the

athletes and different coaches [ CITATION Sch18 \l 1033 ].

In the year1943, shoe production was forced to stop its operations as its premises

were used as a store in the manufacture of war-weapons which was a target by the US

forces but lucky enough it was not damaged through the efforts of Adolf Dassler’s
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wife and instead the American forces ended up being the best buyers in the company

they got their shoes [ CITATION Mos06 \l 1033 ].

In 1947, there was a rivalry between the brothers which led to their relation split. This

led to Rudolf, Adolf’s brother forming a new firm which was called Ruda from his

name Rudolf Dassler, and later changed its brand to Puma.

The split of the Dassler brothers led to a fierce and bitter business rivalry this also

affected the town the operated in leading to the division of the town's football clubs

into two. Which one team supported by Adidas and the other endorsed Rudolf's

footwear [ CITATION Sch18 \l 1033 ]. The rivalry went on and the two brothers never

reconciled until their death.

In 1949, Adolf formed and registered a company as Adidas AG from Adi Dassler.

Adidas was operating with a mission to provide athletes with the best possible

equipment. Therefore, he took his time to gather feedback from athletes and in 1970

for the first time, Adidas delivered TELSTAR an official ball for the 1970 FIFA

WORLD CUP. 1n 1972 Adidas presented a new Logo: The Trefoil to symbolize

performance however as time changes the logo has remained but the Original

Collection now stands for lifestyle and street [ CITATION Mos06 \l 1033 ].

Adidas 3-Stripes was well received by players and was trusted for its good quality and

modification to suites the player’s needs. Football has always been the core of

Adidas’s efforts. With a broad range of athletes trusting Adidas to make them better

Adidas expanded from Herzogenaurach to the world [ CITATION Sch18 \l 1033 ]. Adidas

AG is the holding company for Adidas Group which consist of Reebok sportswear

Company which innovatively hit the market in 1989 following the booming fitness

trend with women around the world work out in Reebok.

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BUSSINESS STRATEGY.

According to Adidas CEO Kasper Rorsted; Adidas strategy is deeply rooted in sport.

Their strategic focus is on the people and prioritization of the customer needs

[ CITATION Tee14 \l 1033 ]. Their focus is to increase the credibility of the brand,

elevating the experience consumers and pushing the boundaries in sustainability.

Currently, the company uses a strategy known as “Own the game”. This is one

strategy has enabled the brand to have it own unique appreciation and increased the

customer experience making it a more sustainable company [CITATION Mah19 \l 1033 ].

This is a strategy they believe will increase their sales and growth until the year 2025.

ADIDAS’ PRODUCTS.

Apparel
Adidas produces and design a range of customized merchandise varying from Men’s

and Women’s hoodies, pants, t-shirts, jacket and leggings. Franz Beckenbauer

tracksuit was created the first Adidas Apparel [ CITATION Ras19 \l 1033 ]. Adidas AG is

also recognized as the second largest manufacturer of sports bras in the world.

Association football
Adidas main focus is football and all other associated equipment and has remained to

be one of the major global supplier of team kits for football teams and clubs [ CITATION

Ras19 \l 1033 ].

Adidas has remained Innovative over the years with the production of different

footwear including; Copa Mundial, FIFA football Adidas Telstar the balls were

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supplied during the 2006 World Cup. In 2010 Adidas introduced Jabulani which was

used in 2010 World Cup and it was the first ball to be named by fans. Adidas Finale is

used as UEFA’s official match ball.

Basketball
Adidas' shelltoes which are the Superstar and Pro Model shoes, are examples of kits

that used to be recommended highly by some of the best coaches such as UCLA’s

John Wooden [ CITATION Ras19 \l 1033 ]. There was also the Adidas stripe-sided polyester

which were world ‘s best shoes in the 1980’s with many hip-hop starts getting to

appear with them almost everywhere.

Since 2006 to 2017, Adidas replaced Reebok as the uniform supplier of all the 30

teams in the National Basketball Association, which was later replaced by its major

competitor, Nike after the 2016-2017 season.

Baseball
Adidas also provide baseball equipment’s and is also recognized a major sponsor for

many players of the:

- Major League Baseball and also the

- Nippon Professional Baseball in Japan.

Golf
Adidas Golf is a special category that specifically designs and makes golf kit and all

accessories needed both for male and female. The collection consists of pants,

footwear, shorts, eyewear, shirts, wind suits and base layer [ CITATION Sch18 \l 1033 ].

 
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Cricket
In 1970’s, Adidas began venturing into the manufacture of cricket footwear targeting

Australian market. The cricket boots were designed from traditional leather cricket

boot to be lighter and more flexible but also offering less toe protection [ CITATION

Tee14 \l 1033 ].

In 2006 the company started manufacture bat including:

- Pellagra

- M-blaster

- And the Libro.

Ice hockey
Since 2017- 2018 season, Adidas replaced Reebok in providing all the needed kit for

the national hockey competitions.

Skateboarding
Adidas has the skateboard branch which is known for the production of shoes that are

specifically for skaters. They include a modified design from previous models and it

releases signature models by team riders.

Running
Adidas currently manufactures a number of running as well as lifestyle shoes and

there some renown brands such as the spring-blade trainers as well as the energy-

boost kicks work perfectly for athletes [ CITATION Sch18 \l 1033 ].

In 2017, adidas relaunched EQT is a style of sneakers. In 2016, the brand launched
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Some two-color ways of their NMDR1 as well as one color for the NMDXR1. Their

latest model is the EQT support ultra.

MARKETING
In 1990s, Adidas moved to dividing the brand into three main groups to ensure each

have its separate focus.

Adidas Performance which was a category specifically meant for the athletes and their

devotion to the game. There were the Adidas originals which focused on the lifestyle

icons and celebrities and the Style essentials which was specifically meant for the

fashion market.

In addition to this, Adidas has also launched several campaigns that helped market its

products and also formation of more collaborations and partnerships. "Impossible is

Nothing” is the most memorable Adidas Campaign was launched in 2004 [ CITATION

Jen20 \l 1033 ].

For 2006-2007 NBA season the company launched "Believe in 5ive" a basketball

specific campaign. "Adidas is all in" was the top marketing strategy and slogan for the

company in 2011 which mainly aimed at tie all other brands and labels together.

Adidas launched "Creating the New" in 2015, as its new strategic business plan which

served up until 2020 [ CITATION Jen20 \l 1033 ]. This strategic plan has strategic choices

namely; cities, speed and the open source.

In 2015, the company made a contract with Ranveer Singh who is prominent in India

for his Bollywood performances making him the brand ambassador of the brand in

India. Later on, the company launched a new cricket campaign ‘Feel Love Use Hate’

with one of the best Indian cricket players, Virat Kohli as the brand ambassador in

India. Adidas has collaborated with top designers such as; Raf Simons, Jeremy Scott
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and Alexander Wang. They have also linked up with other top celebrities the likes of

Kanye West, Stan Smith, Beyoncé as well as Pharrell Williams.

Revenue

According to Adidas’ 2020 Annual report, just like other companies, Corona virus

had negative implication in the company. Its Revenues decreased by 1.4% on a

currency- neutral basis. The Operating profit declined at 72% from €2.660 billion in

2019 to €751 million in 2020 [ CITATION Pan21 \l 1033 ]. Operating margin was at 3.8%

recorded as a decline compared to 11.3% in 2019. This was because of the decrease in

gross margin and an increase in the operating expenses in terms of percentage sales.

Adidas brand currency-neutral revenues decreased with a double digit decline in sales

in both sports Inspired and Sport Performance. Compared to 2019, the brand revenues

decreased by 16%. This is because they had €21.505 billion and went down up to

€18.095 [ CITATION Pan21 \l 1033 ].

Adidas’ footwear Currency-neutral sales declined to 15% in 2020 due to the sales

declines at double digits in both Sport Inspired and Sport Performance. Revenue

generated by Apparel currency-neutral basis were down to 12% which is a good

reflection double-digit sale in the sports performance as well as the sport inspired

apparel. There was a slight decline however in the gear sales of 8% since not many of

the products got ordered. This is something which can be blamed on the pandemic

that struck last year.

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The cost of all sales of production, deliveries as well as all other expenses

accumulated to € 9.990 billion in 2020 reflecting a decrease of 12% compared to 2019

financial year which has accumulated up to € 11.347 billion. According to Adidas

AG, the compan was in a position to make a slight growth in the last quarter of the

year 2020 something which was boosted a lot by online sales since most people were

at home during the pandemic [ CITATION Pan21 \l 1033 ]. This is something which they

however expect to go higher even in 2021.

ADIDAS SWOT ANALYSIS.

STRENGTHS.

High Value.

Adidas has recorded a sustainable success story, since it was launched. It has made an

enormous development which led to its recognition and being ranked by Forbes as the

2nd best sports brand after Nike with a value of 6.8 Billion.

Innovation.

Adidas began by making football shoes. With time they have advanced into

production of apparel, clothing, sports accessories, they have expanded beyond

football footwear to basketball, golf, cricket, ice hockey, skate boarding, fitness

clothes and running.

Effective and sustainable marketing strategy.

Adidas started its operation from a small town in Europe and over the years it has

expanded and occupied the global market.

it’s marketing strategy includes;

Sponsoring high- profile players for instance Lionel Messi and David Beckham.

This sponsorship package includes provision of Adidas merchandise. Through their

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excellent sport performance their victory is also associated to the shoes they use hence

creating a high demand of the merchandise.

Celebrity endorsement: Adidas has partnered with celebrity like Beyoncé who are

endorsed as Adidas brand ambassadors. These celebrities have a wide fan base hence

a wider reach.

Financial Stability: Adidas has a strong financial ability hence can support more

innovations and advancement of technology.

WEAKNESS

Supply Chain shortage.

Adidas outsources its production products mainly from China, Cambodia and

Vietnam. Hence, Adidas are at high risk of over-dependence of foreign product

supplies.

Price of products: Adidas’ products are highly priced in that low-income consumers

cannot afford the products. Therefore, only the middle- and high-income customers

only can afford to purchase.

OPPORTUNITY.

Global expansion: Adidas has ventured into the global market, therefore has an

opportunity of expansion of the current Adidas stores and opening of new stores

across the world.

Clothes culture: There a shift of focus to Yoga culture due to consumers health

conscious, change of taste and development of new preference.

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Increasing demand for premium sports products: There is a significant increase in

the demand of premium products which in turn creates an opportunity for Adidas to

venture.

Introduction of new type of sports: new sports creates a demand for new types of

sport equipment, clothes and Accessories.

THREATS.

Competition: Due to globalization and advancement of technology small and

medium firms are penetrating the market hence creating a competition for Adidas. It

also faces competition from companies like NIKE, Under Armour and PUMA.

Fake products: There's a threat in increase entry of fake Adidas in the market. This

tarnishes the image of Adidas and its reputation on the quality it's products. It also

creates market for fake and cheap brand hence poses a threat to Adidas.

Adidas Trade mark: Adidas 3-strip Logo Court case paused a threat of imitation to

the company.

Technological advancement: Technological advancement by Competition like NIKE

pauses a threat to Adidas if they are not more advanced.

Global Economic Slowdown: Global Economic Slowdown leads to lower sales,

hence a threat to business including Adidas.

Sponsorship
Adidas has a range of deals where they provide major football teams with kits clubs

worldwide, including their own and other clubs. The company, has sponsored some of

the largest teams such as Spain, Mexico, Russia, Argentina and also Germany.

Adidas has sponsored numerous players, for instance Lionel Messi, Paul Pogba, Paulo
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Dybala, Zinedine Zidane, Kaka, David Beckham, Thomas Miller, Dele Alli, Iker

Casillas, Diego Costa, Luis Suarez, Xavi Steven Gerrard and Gareth Bale [ CITATION

Pan21 \l 1033 ].

This company is also part of the official sponsors of the UEFA leagues and they also

have the Adidas Finale competition. Despite supporting teams financially, Adidas also

provides them with the sports attire and all needed equipment in all the major league

soccer matches.

FINANCIAL INFORMATION.

1. Growth ratio- This refers to those ratios that measure the growth rate of a

company and also does an assessment of the potential for future growth. This

includes the net sales.

2. Profitability ratios- They are ratios which help in measuring the returns that

are generated on all sales and investments as well which helps the company to

generate its profits. This includes the margin ratios, as well as return on equity,

and return on assets.

3. Assets utilization ratios- They are ratios which help in measuring of the

overall efficiency of the company and all its operations and they allow some

comparisons between companies, and industries to take place.

4. Capital structure and liquidity ratios- They are the ratios which measure the

extent to which the companies are relying on debt to fund the necessary

operations and also the ability of paying back the debt.

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CONCLUSION.

Based on the above Observations, the Success of Adidas can be attributed to Good

and organized organizational structure, proper market research, production of quality

merchandise, marketing of the products, networking and collaborations, partnership

productions and sponsoring their major consumers such as football clubs.

Following previous financial years reports, it is evident that Adidas was adversely

affected by Covid leading to a drop in their profits and operation margin. However,

considering 2021 quarter the company is doing fairly well compared to 2020.
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References

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Business Management and Economic Res.

Mahdi, H. A. (2010). A Comparative Analysis of Strategies and Business Models of

Nike, Inc. and Adidas Group with special reference to Competitive Advantage

in the context of a Dynamic and Competitive Environment. International

Journal of Business Management and Economic Res.

Moser, K. M. (2006). ransforming mass customisation from a marketing instrument to

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Pandey, R. R. (2021). Analysis the Effect of Product Quality and Price on Purchase

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Journal of Accounting & Finance in Asia Pasific.

Rasool, A. T. (2019). Twitter sentiment analysis: a case study for apparel brands. In

Journal of Physics: Conference Series (Vol. 1176, No. 2, p. 022015). IOP

Publishing.

Schmid, S. D. (2018). Adidas and Reebok: Is Acquiring Easier than Integrating?. In

Internationalization of Business (pp. 27-61). Springer, Cham.

Teece, D. J. (2014). Business models, business strategy and innovation. Long range

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