ADIDAS: A Global Sportswear Giant

Introduction

ADIDAS is a multinational company in the sportswear industry. Headquarter of this company is in Germany. It is the largest sportswear company in Europe, and it is the second-largest company in the world. The founder of this company was Adolf Dassler, and it was started in 1924. This company always introduces new and innovative products for the sports lover customers. This company operates its business in Europe, North America, Asia, etc. This company and distributes its products globally. The company also provides products for tracking and health managing. This company earned more than $21 billion in 2018. This company manages more than 57,000 employees all over the world (Song, Sun, and Jin, 2017). The PESTEL analysis is a tool, which is used by a company to analyze and track the external environmental factors. These factors can affect the business of a company in the upcoming days. This tool analyzes the opportunities and threads in terms of political, social, technological, economic, legal, and environmental. The outcome of this analysis helps to decide on the business operation of a company. This tool helps to provide information about the external influences of a company (Kara, 2018). It helps to gather knowledge for making more effective decisions for a company. This tool also helps for the marketing, development of a product, management of a project of a company. This study contributes to understanding the PESTEL analysis of the ADIDAS. This study also provides a recommendation about the PESTEL analysis of this company. Adidas is one of the biggest sports goods’ companies all over the world. This company always develops products, which are used by the health-conscious people. The outcomes of this company are not essential for the use of people all over the world.

This company has faced issues for business in developing countries where the earning of people is quite low. The PESTEL analysis tool of this company helps analyze the external factors of this company. This analysis helps them to analyze the market and the improvement in the business operations in a continuous process. This analysis also helps for the growth, development for the business model, and the strategy for the market of this company (Kara, 2018).

Political

The political factor of the Adidas can affect the profitability factor and survival factor of this company. The risk of the political factor varies by different changes in decisions of political policies, which are taken by the government of the respective countries. The political factor does not only affect the host country, but it also affects all the countries, which are contained with the operations of the business or engages trading with this company (Song, Sun and Jin, 2017). The most important issue related to the political is violating the policies of trading in many countries. This company needs to deal with these issues to retain its performance globally. This company is doing business with many countries all over the world. Therefore, this company needs to deal with different policies of the taxation system for all the countries. This company reduces its manufacturing cost for the products to do business with the developing and under-developing countries. The major barrier of this company in terms of import and export of its products is restricted by the US government. This reduced is profitability because Germany is the key exporter of this company. This restriction will cost this country more than $20 billion. This is a globally recognized company (Song, Sun, and Jin, 2017). Therefore, this company maintains a long and complex supply chain to deal with the laws and policies to achieve its objective. Various factors like war, terrorism, and exploitation can increase the time, cost, and effort of this company if these factors are not stable in a country.

Economy

The economic aspects are the factors the country economy where ADIDAS is doing business. These economic factors are the rate of the economy, rate of foreign exchange, rate of interest, the product of gross domestic, and the economic cycle of the current situation of those countries. The results of these factors are for this company in demand, investment, and the climate of the business of this company. This may have the potential to make this company highly profitable, or it may face a huge loss. This company contributes more than 55% of the total revenue of this industry (KC, 2017). The economic factors like unemployment, rates of wages, changes rate of taxation are also affected the profitability margin of this company. The customer of this company maintains a significant lifestyle that prefers the products of this company. The products of this company are not considered as essential rather than it is considered as luxury items. ADIDAS always analyzes the market situation before doing business in that market. This company manufactures its product in China because the labor cost of this country is low. This company needs to price its product carefully for the countries of North America. The increase of the rival product can hamper the value of the market share of this company, and it can also decrease the profitability margin of this company (KC, 2017).

Social

The social aspects, which affect ADIDAS, are the reflection of the factors of the society. The social factors are not essential for this company to operate its business, but it affects the marketing aspects of this company. The analysis of the customer, their belief, education, and the society segment helps this company to design its product and marketing its new products, which leads them to success. This company changes its product design to match the interest of the customers. The product of this company is available for any age, gender, and lifestyle. The main focus of this company is to attract people who are sports, love, and health-conscious (KC, 2017). This company maintains a healthy trend for its customers, and it prefers to care about its customers. This company also offers a program like a corporate volunteer. It always is willing to support the communities and foster the health-related issues of individuals. These companies always support coaches and professional players of all around the world, and it helps the tournament like the Olympics. This is an advantage for this company to attract more customers from all around the world. This company invests in many tournaments, which helps them to improve their sales of products to increase the profitability level (Madaliyeva, 2017).

Technological

The technology effectively breaks the structure of the prices of the products of the ADIDAS. It is essential for this company to always changes innovative ideas to change the profit level constantly. It helps to become the leader of its business market. It also helps to prevent the problems for the upcoming days. There are many examples of innovative products of this company, which redesign this sports goods industry. Technology not only helps the improvement of products of this company, but it also helps the process of operations, management, and the system of accounting of this company (Madaliyeva, 2017). The products of this company are going through many tests in different conditions because the coaches and the professionals mainly use these products. It helps them to optimize their performance. Sometimes athletes and the players face some problems with the durability of the products. This company replaces the products with a new one. This company invests and expands its research on the smart study of the industry of the sportswear. This company develops and understands Fitbit technology. This technology is most popular in health-conscious communities. ADIDAS also sells its products on the portals of online, and it quite presents in social media to communicate and gives service to its customers (Madaliyeva, 2017). Social media also helps them to market new products, which can attract new customers.

Legal

This company has intellectual property ownership and the system of IP. ADIDAS designs its patents to defend its rights for copy and its violation. The patents of this company work as the protection of legally, and it helps to eliminate the copy of its business products. ADIDAS is one of the biggest companies in the world. Therefore, this company has its production of the trademark. This company endorses sponsorships to the professional players to promote the brand name and its products. This needs to follow the local law and the national policies of the country (Cordeiro, 2016). This is a huge brand name for this company worldwide. This company uses three stripes as its trademark for its every product, like clothing, shoes, and hats. The branding of the shoes of Europe was applied to the officer of the intellectual property of the EU for violating the trademark. ADIDAS cannot provide any strong evidence about this matter. This company lost this legal fight against them. This company ensures that all the retailers of this company have the knowledge of its products and obey the law in respective countries and locals. On the other hand, if the retailer does not provide essential knowledge about the product to the customer, then the company does violate any law. The retailer violates the law of trade description (Cordeiro, 2016).

Environmental

All the factories and units of manufacturing of the ADIDAS does not manufacture any product which restricted by the government. This helps the company to reduce the emission of compound elements. This company has an aim to complete a fully green company by 2020. ADIDAS starts a new program named low waste initiate (Cordeiro, 2016). This program focuses on the choice of the raw material and process of manufacturing to reduce carbon emission to the environment. This company avoids oil-based plastics, to reduce carbon emission. There are various initiatives taken by this company for the situation like oceans parley, bio-steel fiber, sports infinity, etc. The thinner also helps this company to reduce carbon emission and waste management. This company makes sure that it always uses the ethical sourcing of the resource supply. This company provides various regulations for the supplier of the countries where this company operates its business and makes sure that every supplier obeys these rules and regulations. Climate change can destroy some of its products for use to the customers. This company always manufactures sustainable products, which helps them to improve the brand name of this company and improves its profitability (Antonsen and Ho, 2019).

Recommendations

ADIDAS is one of the biggest companies in the world in terms of sportswear. This company needs to analyze the political stability of a market before entering the market for its business operations. A high taxation amount of a country can reduce the profitability margin of this company. It should analyze the taxation policies before doing business with that country. A low waging market means that highly beneficial aspect for this company. This company should use low waging laborers to manufacture its products. This company should business in high GPD countries for future growth (Barrow, 2016). The interest rate of a country means the amount of borrowing and investment. This company should business inn a high-interest rate country for its business growth. A higher unemployment rate means people are willing to work at a low wage. This company should implement manufacturing units in high unemployment areas for more profitability. The exchange rate of the currency can affect the profitability of this company. This company should do business where the exchange rate of the money is stable. This company should market its particular products for the respective age and genders in certain areas for making more profitability. The weather condition affects the ability of this company to manage the transportation and the resources and the final product. This company should analyze those aspects to make it an advantage. These are recommendations for the ADIDAS (Barrow, 2016).

Conclusion

ADIDAS is the biggest company in terms of the sportswear industry all over the world. This company faces many problems for investing in low wages and low-cost material in developing countries. It helps them to increase their profit margin. Many small companies try to copy and sell the products of this company. This is a problem for the brand image of this company. This company has designed a patent, which helps them to protect their products from copy and selling by another company. This company always looks after the customers who are health conscious. It forever changes its design and introduces new innovative products as per customer requirements. The customer of his company always moves forward for the smart technical product of fitness. This company invests in the research and development of new technologies to provide the most advanced product. This company always expands its business operations to the modern market. It expected to be a green company by 2020. This company always tries to reduce carbon emissions in the environment. ADIDAS obeys all the laws locally and internationally and maintains the ethical practices in its business.

References

Antonsen, M.R. and Ho, T., 2019. Fundamental verdivurdering av XXL ASA (Master's thesis, Nord universitet).

Barrow, C., 2016. The 30 day MBA in international business: Your fast track guide to business success. Kogan Page Publishers.

Kara, E., 2018. A contemporary approach for strategic management in tourism sector: pestel analysis on the city Muğla, Turkey. İşletme Araştırmaları Dergisi, 10(2), pp.598-608.

KC, C., 2017. Problem of franchising in Nepal and possible solutions.

Müller, D., 2017. The role of brand communities within the athletic footwear industry: an assessment of selected brand communities with a focus on the Swiss athletic footwear industry.

Song, J., Sun, Y. and Jin, L., 2017. PESTEL analysis of the development of the waste-to-energy incineration industry in China. Renewable and Sustainable Energy Reviews, 80, pp.276-289.