Adidas Strategic Management Case Analysis from Harvard Business Review, Papers of Strategic Management

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ADIDAS HBR

CASE

SUMMARY

I. An Adidas overview II. Vision and mission III. Internal assesment IV. External assesment V. Strategy formulation VI. Strategy implementation VII. Strategy evaluation VIII. Evaluation

Vision Mission "Through sport, we have the power to change lives." Sport has the ability to change people's lives by promoting teamwork, discipline, perseverance, and a healthy lifestyle. It is committed to using sport as a means to inspire and motivate individuals to achieve their full potential. "To be the best sports company in the world." Adidas aims to be the world's leading sports company by providing high-quality products and services that meet the needs of athletes and sports enthusiasts. It is dedicated to innovation, sustainability, and social responsibility, and strives to exceed the expectations of its customers, shareholders, and employees. Adidas's vision & mission "Improved" vision & mission II. Vision & mission Nike vision & mission Vision Mission "To bring inspiration and innovation to every athlete in the world. If you have a body, you are an athlete." The vision statement emphasizes the importance of remaining true to the brand's values and maintaining a unique connection with consumers. "To remain the most authentic, connected, and distinctive brand." Nike's mission emphasizes the brand's desire to make a positive impact on people's lives through sport, regardless of their abilities, gender, or background. Vision Mission "Through sport, we have the power to change lives in a better environement." This "improved" vision follows the guideline of the current Adidas vision. Nevertheless, it adds an environmental and social aspect to the Adidas identity. "To be the best sports and connected company in the world." Adidas should aim to be the best world company in this sector. However, to complete this mission, Adidas has to compete against other major companies which are tech-expert as Nike.

III. INTERNAL ASSESSMENT 2016: 5,43% of the total revenues vs 2019: 12,7% of the total revenues E-Commerce revenues have slightly increased in 3 years

FINANCIAL RATIO ANALYSIS

All the efforts put by the company to digitalize have worked as the amount of e-commerce revenues have increased E-commerce is the fastest growing channel

ADIDAS ORGANIZATIONAL CHART GOOD AND BAD ASPECTS GOOD POINTS : Ensuring that the company can effectively manage its global operations and maintain its position as a leader in the sports apparel industry Clear Hierarchy: Adidas' organizational chart has a clear hierarchy, which ensures that responsibilities are well- defined and everyone knows who they report to Collaboration: Adidas' organizational structure promotes collaboration across different departments and teams. This helps to break down silos and encourages cross-functional cooperation, which can lead to better decision-making and improved performance Innovation: Adidas' business units are structured to encourage innovation and creativity. Each business unit has its own team of designers and marketers, allow the company to face competition POINTS TO IMPROVE : Bureaucracy: With a clear hierarchy and many layers of management, Adidas' organizational structure can become bureaucratic, which can slow down decision-making and limit flexibility Centralization: The centralized structure of Adidas can make it difficult for local teams to make decisions and respond quickly to local market conditions. This can limit the company's ability to adapt to local needs and preferences Complexity: With many different departments and teams, the organizational structure of Adidas can be complex and difficult to navigate. This can lead to confusion and inefficiencies, particularly for new employees

MARKET POSITIONNING MAP EXPENSIVE CHEAP FASHION^ PERFORMANCE

ADIDAS MARKETING STRATEGY GOOD POINTS

• Effective branding : Adidas has built a strong brand that is recognized around the world : logo, slogan, and marketing campaigns, have helped to create a distinct identity -Partnership & Sponsorship : Adidas has invested heavily in sponsoring some of the world's top athletes and teams (Kanye West or Lionel Messi) --> limited edition products
• Effective use of social media : Adidas has leveraged social media platforms, such as Instagram and Twitter, to connect with consumers and build a community around its brand -Innovative marketing campaigns: unique and creative marketing campaigns: "Here to Create" which promotes a message of empowerment and creativity. -Sustainable initiatives: "Parley for the Oceans," which turns ocean plastic waste into sports apparel and shoes. BAD POINTS
• Reliance on partnerships and celebrities representations: can be an issue if the partnerships does not align with the brand value anymore or is involved in a scandal -Lack of diversity: criticized of lacking of diversity in its marketing campaigns and the products offered - Overlapping product lines : Adidas has several product lines that can overlap, making it difficult for consumers to differentiate between them.

ADIDAS MARKETING STRATEGY OUR RECOMMENDATIONS: MORE FOCUS ON DIVERSITY AND INCLUSIVITY : diversification of the marketing campaigns as well as range of products --> partnerships with diverse influencers and athletes (wider range of body types and cultural backgrounds) USE DATA ANALYSIS : use date to gain precise insights on customer preferences and behavior --> in order to make more customized marketing campaigns USE SOCIAL MEDIA EFFECTIVELY : already strong presence on social media, but could increase its presence by using more platforms like Instagram or TikTok to showcas its products PRIORITIZE SUSTAINABILITY AND ENVIRONMENT : emphasize commitment to sustainable development by developing sustainable product lines or partnering with environmental organizations

ADIDAS SOCIAL MEDIA

ADIDAS WEBSITE ADIDAS SOCIAL MEDIA^

GOOD POINTS: -Creation of an authentic content : reflects the brand values and image -Creative storytelling and engaging content -Strong partnerships with celebrities and influencors

POINTS TO IMPROVE / RECOMMENDATIONS:

-Developp a more targeted and customized content: the brand does not reach enough young generations -Inconsistent posting : the brand could post more consistenly, implementing a consistent posting schedule to maintain the engagement of its audience -Not adapting to emerging platforms: the brand is very present on established social media such as Facebook or Instagram but could also establish itself more in emerging platforms such as Tiktok to atract younger customers

Discussing the value of Adidas Market Capitalization As of March 15, 2023, Adidas' market capitalization is around €64 billion ($71 billion USD). Market capitalization is the total value of a company's outstanding shares of stock, and it's a widely used metric to assess the size and worth of a company. Revenue In 2021, Adidas generated €24.4 billion ($27 billion USD) in revenue. Revenue represents the amount of money a company earns from its operations, and it's a key indicator of a company's performance and growth potential. Profit In 2021, Adidas' net income was €1.7 billion ($1.9 billion USD). Profit measures the amount of money a company earns after deducting expenses from its revenue, and it's an important metric for assessing a company's financial health and ability to generate returns for shareholders. Brand Value Adidas is considered one of the world's most valuable brands, with a brand value of $16.4 billion according to Forbes' 2021 list of the World's Most Valuable Brands. Brand value is a measure of the monetary value of a company's brand reputation and recognition, and it reflects the influence and recognition a brand has among consumers. Overall, the value of Adidas as a firm is significant, with a strong market capitalization, impressive revenue and profit figures, and a highly recognized brand value. However, the value of a company is subject to change over time, and it's important to monitor various factors that can affect the firm's value, including competition, consumer trends, and global economic conditions.

Internal factor evaluation matrix With the major internal factors of Adidas, we constructed the IFE matrix. The major strenghts of Adidas are : the global presence and the brand recognition... Concerning the Weaknesses, Adidas has to work on : its problems of Supply Chain, its dependance on key suppliers and its dependance to footwear sales... As the total score is above 2,5, this means that Adidas has a strong internal position. The weaknesses are minor comparing to the stranghs whiwh support the business.

Major competitors Here is our Competitive Profile Matrix , in which we compared Adidas, Nike and Puma, its major competitors. We can analyse that Nike is far ahead from Adidas and Puma in most of the factors cited, such as brand image, market share, innovation, diversification etc. Sources : https://app.emaze.com/@AIRCWILZ#/ III. EXTERNAL ASSESSMENT

20 Opportunities Expansion into new international markets Partnerships with high-profile athletes, teams, or celebrities Collaborations with other fashion or sportswear brands Increased focus on sustainable and eco-friendly production processes Developing and marketing new and innovative product lines Expansion into new product categories such as fitness technology Building a stronger online presence and e-commerce platform Diversification of revenue streams through acquisitions or investments in other companies Increased investment in marketing and advertising campaigns Developing and marketing more inclusive and diverse products and campaigns Focusing on improving supply chain efficiency and reducing costs Developing more premium and luxury product lines to compete with higher-end brands Developing partnerships with retailers or distributors to expand market reach Creating more personalized and customized products for consumers Developing a stronger presence in emerging markets such as China and India Increasing investment in research and development to stay ahead of competitors Creating more community-focused initiatives and events Developing new and improved retail store concepts to enhance the shopping experience Capitalizing on the trend of athleisure wear and developing more versatile clothing lines Offering more subscription-based services or loyalty programs to incentivize customer loyalty.

20 threats of Adidas Intense competition (Nike, Under Armour, Puma) Economic recessions or downturns that could impact consumer spending habits Changes in consumer preferences Political instability or changes in trade policies Tariffs or trade barriers Increasing costs of raw materials Increasing cost of labor Fluctuations in foreign exchange rates Rapidly changing technology Rise of e-commerce Counterfeit products market Environmental concerns and regulations Scandals related to labor practices, ethics, or sustainability Shifts in demographics, such as an aging population Increased regulation of sports organizations and leagues Changes in fashion and style trends Disruptions in supply chain operations due to pandemics Intellectual property disputes with other companies Short product lifecycles Increased price sensitivity among consumers

External factor evaluation matrix (^) With the major external factors of Adidas, we constructed the EFE matrix. The major opportunities that Adidas has to seize are : expantion to emerging markets, Open to new partnerships, take advantage of the new trends... Concerning the threats, those that affect the most Adidas are : fierce competition, the changes liked to technology and the increase in general costs... As the total score is under 2,5, this means that Adidas is not properly set up to fully utilise the opportunities an protect against threats.