Introduction
In the modern world, which is rapidly and relentlessly heading towards economic globalization, the ability of an enterprise to quickly adapt to global competition becomes the essential condition for its successful and sustainable development. It is worth noting that all companies, regardless of whether they participate in international trade, are subject to the influence of globalization (Lund & Tyson, 2018). It is essential to note that the rate of development of this market and the increase in its indicators in monetary terms are significantly higher than in natural terms (Zhang et al., 2018). The production of sporting goods is a young branch of industry.
Company Overview
At the beginning of the 20th century, sports goods were produced by small workshops and enterprises, resulting in limited mass production due to the small demand for these products and the limited number of athletes. The market situation changed in the 1930s and 1940s when professional and mass sports began to develop actively (Leeds et al., 2018). After these events, the market underwent several significant changes.
The three most influential companies in the sports industry are currently the main competitors in the sports goods market. Adidas, Nike, Puma, and the lesser-known Reebok have long competed to promote their respective models. Nike is the main competitor and industrial concern for Adidas AG (Singhvi & Srivastava, 2021). It is a world leader in producing sports goods, uniting leading brands such as Adidas, Reebok, Tailor-Made, Adidas Golf, and Rockport.
The company also includes Mavic (bicycle parts), Clich (skateboarding clothing, footwear, and equipment), Bonfire (snowboarding clothing), and Arc’Teryx (gear, mountaineering equipment). These brands account for about 12% of sales. Today, its assortment is represented in more than 400 stores worldwide (Singhvi & Srivastava, 2021). Thus, it can be concluded that the company is widely represented in the market.
Competitive Analysis
It is suitable to utilize elements of competitor analysis methods, factors influencing the external environment, and aspects of SWOT and PEST analyses to identify opportunities and threats to the brand. To understand any brand, it is important to understand its mission. Adidas’s mission is simple and concise: to be a leader among global sports brands.
Financial Performance
The value of this brand is 11.2 billion dollars (Matović et al., 2021). The company has eight enterprises in Germany, 25 subsidiaries worldwide, and is the leading advertiser and sponsor of world sports tournaments and teams (Turner, 2019). Almost all products are produced and sold to independent partner companies, with 71% in Asia, 18% in the Americas, 6% in Africa, and 5% in Europe (Saatchian et al., 2021).
According to the dynamics of financial indicators, the company’s turnover and net profit grew slightly every year (Shafee et al., 2020). This indicates a low demand for products, despite the constant updating of the assortment and improvements to the brand’s marketing. A well-developed marketing strategy, a wide range of high-quality products, and the attraction of various sponsors help the company withstand competition and remain a market leader.
Opportunities
Adidas’s opportunities include the growth in demand for premium sports goods and services, as well as changes in the education systems and lifestyles of developing countries, which indicate the possibility of market expansion. Additionally, entering new markets is a way to succeed in the future, as the needs of developed countries are already highly competitive (Paul, 2019). Increasing the range of the company’s products opens up new opportunities to increase its competitiveness (Cooper, 2019).
Equally important is reverse integration in the production of sports goods, which allows the company to protect its patent rights and integrate its research and development. Adidas reported an increase in operating profit of 0.887 million euros in 2018 compared to 2017 (Brown & Brison, 2021). This indicates the success of its principal activity and the availability of opportunities to repay interest on loans and finance other activities that do not belong to the operating room.
Additionally, the company has unique opportunities for sponsorship contracts, given the low competition in this sector (Tsordia et al., 2021). The development of fitness clubs opens up prospects for profitable cooperation, which will help strengthen the brand and increase sales among individuals who regularly engage in sports.
Threats
Adidas faces threats in the global market. Its strong competitor, Nike, has prevented it from securing a leading position for a long time. The company’s threat is also that, due to outsourcing, suppliers have more trading opportunities than the company does, as approximately 93% of the company’s production is carried out in Asia (Montes et al., 2019).
Therefore, the rules of importation, payment of duties, and tariffs play a crucial role in the company’s pricing, which can also pose a threat. Increasing the number of mixed sales departments will enable companies to expand their sales volumes, as they are currently primarily focused on large cities. However, a sufficient number of sales centers have already been built in megacities, so there is a threat of oversaturation in the future.
Currently, the demand for sports goods has increased, posing a threat to the emergence of new participants in the global market. In addition, new technologies are fundamental in producing sports goods; due to the growth of competition and the development of scientific and technical progress in many countries, the issue of substitutes is especially acute (Singhvi & Srivastava, 2021). Adidas has undergone significant technical advancements, thanks to which the company is one of the leaders (Goyal et al., 2022). However, one should consider new and existing competitors. That is, the probability of the appearance of substitute goods is relatively high.
Conclusion
According to Adidas’s assessment of the product’s competitiveness, the company is sufficiently competitive in the sports goods market, having an advantage in almost all characteristics necessary for the buyer concerning its products. Product attributes, such as efficiency and safety, are decisive for the consumer and are perfectly embodied in the researched products. The need to improve these characteristics is small, but further modification and improvement are still desirable. According to the company’s evaluation results, its products are beautiful.
References
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