Adidas Case

4. Further Research—Gather information on Nike’s recent moves and accomplishments, and those of its rival Adidas. Are both firms following the same strategies and using the same structures to support them? Or, is one doing something quite different from the other? Based on what you learn, what do you predict for the future? Will Nike stay on top, or is Adidas the next industry leader?

How strong are the competitive forces confronting Under Armour, Nike, and The Adidas Group? Do a five-forces analysis to support your answer.

i. Both of the warehouses were running on full capacity, which increased the cost of managing inventory for Holt Renfrew.

* Inventory levels will have to be closely monitored as the customer orders will require special handling and production scheduling versus the push mentality of producing many products to stock.

The non-favorable variance could have resulted due to poorly budgeted and/or poor supervision during the production process.

1.What is your assessment of the strength of competitive pressures stemming from rivalry among Under Armour, Nike and Adidas-Reebok?

The sportswear industry is growing and becoming more competitive so the will be new producers and entries in the market with new ‘’aces up their sleeves’’. More competition in the market

Additionally, as expressed by Rebecca Ratner, Hsieh’s commitment to merging the workplace with social lives could present risk to the company in the form of unprofessional or inappropriate conduct that is not addressed properly.

The following is my five forces analysis of the competitive forces confronting the companies that operate in the industry that Under Amour, Nike and Adidas operate in.

The athletic shoe industry is made up of companies that produce footwear for athletic use. This is a strong industry and has been around for over 100 years. The athletic shoe industry is one of the fastest growing footwear industries and have top growing sales compared to other footwear industries (NDP Group, 2016). The key players that currently dominate the market are Nike, Adidas, and Puma (Kates & Bolduc, 2013). This paper will use the porter five forces, industry life cycle, and the key players to understand the industry. Over these years the athletic shoe industry has grown into a competitive market.

As shown in Figure 2 of the Appendix, a Porter Five Force Analysis makes it clear that the overall rivalry within the athletic apparel industry is medium to high. Because Nike and Adidas already have a substantial amount of capital resources and other assets, Under Armour struggles against them to gain market share. 8Also, private labels of retailers and newer sports apparel companies could potentially pose a threat to Under Armour, but mostly due to the fact that Under Armour does not hold any fabric or process patents. This makes it extremely easy for any competitor to duplicate a product or process with no consequence. However, the threat of new entrants is not too troublesome within the industry because of the great capital cost required for branding, advertising, and meeting product demand. Furthermore, the sports apparel industry is in the maturity phase of the industry life cycle. This means that each company included in the oligopoly must

Enderle, K., Hirsch, D., Micka, L., Saving, B., Shah, S., Szerwinski, T. (2000, March 14). Strategic Analysis of Nike, Inc. Retrieved on December 14, 2005, from

The athletic apparel industry is also defined by a moderate threat of new entrants. As mentioned earlier, the industry is extremely concentrated, with large companies (Nike, Adidas, Under Armour) at the top and several smaller companies following. While the costs for starting a local company is low, as the company grows, it will become harder to compete and be profitable in this industry. The incumbent firms in this industry have the advantage of existing production, distribution, and supply chain processes. New companies would consider the large upfront costs of these processes while incumbent firms take advantage of economies of scale due to having the benefit of already securing a large market share. These large costs in turn cause the company to have low profits, which discourages new entrants. Additionally, the threat of new entrants is low because of the brand preferences of consumers in the economy. This industry

It is a pragmatic exercise to ensure that changes in the external environment do not take the firm by surprise. The external environment consists of a set of forces that originate beyond a firm’s operating situation. To illustrate an example, when the German national football team faced the unbeatable Hungarians in 1954 World Cup final, they won far beyond only a trophy because they used Adidas’ football shoes, gaining tonnes of reputations and being recognised by the general public. These comprise of political, economic, social, technological, and legal forces which create opportunities, threats, and constraints for the firm. Adidas is competing with other sports apparel stores including the world leaders Nike, Puma, and Fila. The rivalry among existing competitors is pretty high due to abundant number of sports and compared to other similar industries. Adidas has adopted several strategic measures for their market growth such as an acquisition of an existing competitor, building partnership

The case discusses the proposed merger of Reebok International Limited with Adidas-Salomon AG. It describes the recent trends and studies the ongoing merger in the sporting goods industry. The case presents the rationale behind the decision to merge. Finally, the case ends with a debate on whether the merger would be successful.