Internal Environmental Analysis of Adidas

Executive Summary

This paper examines the internal environment of the Adidas Company. Adidas is a well-known company which is operational for the last fifty years. It has a very sturdy financial support, and the company has the highest number of staffs as compared to their competitor’s. This paper analyzes the internal environment analysis and internal issue that has effected Adidas and the competitive advantages that Adidas has as compared to their competitor’s.

Introduction

Adidas is one of the market leaders in the manufacturing of sport apparent and shoes all over the world. The company is based in Herzogenaurach Germany. In the United States, the company is doing business as an American Depositary receipt. Adidas has the total market capital of nineteen billion dollars and a total sale of 16 billion dollars per year. It is, hence, considered as a stable sportswear corporation and its financial status gives him an edge over its competitors. The company started manufacturing shoes in 1949, and since then the company has witnessed steady growth. Adidas is manufacturing a wide range of sportswear and having more than five hundred thousand employees all over the world.

-Assess the organization’s internal environment.

Organizational Structure of Adidas Group

Adidas is a Germany based international company, which produces and designs accessories, sports wearing, and other sports products. The companies headquarter located in Herzogenaurach, Germany. The Adidas AG organization has three sister companies that are “Reebok Sportswear,” “Adidas” and “Tailor-made Adidas Golf Company” Reebok is the subsidiary company of Adidas from 2005, and the company is also a manufacturing accessory, dresses, and shoes for athletic. Whereas the “Tailor-made-Adidas Golf Company” manufactures and markets all the goods which are associated with the Golf. Adidas is the major manufacturer of sportswear products in Europe and Germany and the 2^nd biggest manufacturer across the globe, Nike is at 1^st place.

-Identify important internal environmental factors found in your analysis of the general, industry, and external environments.

The structure of the corporation is comprehensively distinct and clear. There are numerous practical departments, for example, production, marketing, customer services, distribution, R&D operations, and human resource departments that have very evidently distinct jobs and duties at all the levels. The Company’s vision is to become the leader in sportswear manufacturing and have many sub-brands which are designed on the urge for the sports and a sporting regime. To accomplish the objective, a deep and thoughtful understanding of the customer and consumer is vital. In order to fulfill the requirements of the clients, it is vital to make a strong client association and to comprehend their buying behavior (W.2012).

Capabilities

Specifically, in the times where the raw ingredients and materials are becoming more valuable businesses are required to use their assists and capitals in a very effective way, for the companies to remain competitive. These prospects are known as “capabilities.” The Capabilities could be defined as structurally entrenched non-transferable organization specified resources. Capabilities could be distributed into threshold and distinctive capabilities. On this way, The Threshold competences or capitals are accomplishing the general principles the company has to deliver, for the company to survive in the market. In Adidas Company, the threshold based criteria for numerous industries are land, structures, labor force, numerous sections, and subcontracted companies. But conversely, there are distinguishing capabilities, which must not only keeps the corporation alive but delivering a competitive benefit.

-Assess the structure of the organization and the influence this has on its performance.

Distinctive capabilities are also called as core capacities are the abilities and exclusive fundamentals that are rooted inside the company. These vital features are deliberated and highly preferred, as they offer the company with what it necessities to be very competitive in the market and further delivers the company with the competitive gain. So the distinctive capabilities are producing the essential capabilities in the corporation and are the crucial driving forces for the Adidas Company to accomplish its competitive benefits. Adidas is utilizing its important resources and competencies to make performance and value-based excellence. The Distinctive abilities and skills that Adidas grasps are their Distinctive R&D departments and their associations with international universities, sponsorship contracts with NBA and FIA, expanded processes, portfolio, and network, decent standing as an affordably priced brand in the manufacturing, strategic innovation, and distribution (Cleff, T, 2013).

-Determine the organization\’s competitive position and the possibilities this provides. 

Value Chain Analysis

To understand what a specific company or business is doing, it is essential to examine the explicit events that the corporation is doing in their daily routine. The competitive benefit is building upon the additional morals and values that the company is delivering its products. The Value Chain model by Michael Porter is exhibiting a sequence of numerous actions that companies are execution to provide or to deliver valuable products. Through sourcing all these activities, the process cycle could be plotted and could be used to separate particular activities, to reduce the cost of the structure. Now Converging back to Adidas, the business is splitting their undertakings as the following; outbound and inbound logistics, marketing, operations, and services and sales as their primary activities. Supporting the actions in their main industry are; human resource management, research, procurement and development

-Perform competitor analysis.

Adidas vs Nike Competitor’s Analysis

In the year 2009, the Market shares of Adidas company was around 22% of foot wares whereas Nike hold the total share of nearly 33%.

Due to the financial crisis, the sale of Adidas has dropped significantly to around 5% which was due to the marketing cost whereas the next year was proven to be profitable for adidas as the company has witnessed 15% increase in sale due to the 2010 FIFA World Cup. Whereas the sale of Nike was dropped to 7% in 2009 and Nike Company has witnessed 53% increase in sale in 2010.

Both Adidas and Nike are following the same marketing strategies and benchmarking each other, both the companies are using internet, magazines, billboards and Television advertisements to promote their products. Both companies are using celebrities to show-off their products and increase sales. Adidas mostly focuses on team sponsoring whereas Nike focuses on sponsoring sports stars.

-Identify the most important strengths and weaknesses of your organization including an assessment of the organization\’s resources.

Strength and Weakness of Adidas

The major Strength of the Adidas company is their robust and strong brand worth as the company is one of the world’s most popular brand, a robust and established networks, marketing strategy, and sturdy permitting, their top spot in the business and one of the major player in the manufacturing, expanded processes across the globe and the most significant strength is the competitive price of their product. However, the company also have many weak points. Several weaknesses Adidas may have to struggle with are the unrealistic performance of one of his company Reebok outside the United States, firm competition with the renowned brands that means clients have high ratio of brand switching, higher and costly structure and the dependence on sport based sponsorships.

Conclusion

In the year 2009 economic crisis, several enterprises and companies have suffered in their business, profit, and have to reorganize their commerce. Several different aspects were the crucial drivers for this economic crisis, but not effectively reformed strategies about demand and supply. Experts who are examining and instructing companies, implement different tools and methods, to recover the customer’s business.

In order to reduce the internal weaknesses by getting the prospects, the company must keep their attention on their marketing strategy, strong networking and focuses on their franchises, to stay competitive and to form a close long-term client relations.

Bibliography

W., (2012). Customer Relationship Management – Concept, Strategy, and Tools.

Berlin/Heidelberg: Springer Verlag. Nickels, W. G., McHugh, J. M., and McHugh, S. M. (2012).

Understanding Business (10th edition). UK: McGraw-Hill Education. Porter, M.E., (1980).

Cleff, T., Dörr, S., Vicknair, A., & Walter, N. (2013). Brand Experience–How It Relates To Brand Personality, Consumer Satisfaction, And Consumer Loyalty. An Empirical Analysis of The Adidas Brand. Interdisciplinary Management Research, 9(31), 731-754.