Adidas Case Study: SWOT analysis and Michael Porter's Five Forces Model, including strategic recommendations

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Executive Summary:

Adidas was the dominating manufacturer of sporting goods. It achieved this success by developing cleated shoes for the soccer and track and field sports. The landscape of the sporting goods industry has changes, but Adidas has not changed with it. Sporting good textiles and footwear have become popular with younger individuals as a substitute for casual wear. Soccer and track and field sports are no longer the mainstream sports. These sports have been replaced in market share by sports such as baseball, basketball, football, and fitness activities like aerobics. Adidas has not developed the marketing mix to compete in these sports and fitness activities. The participation by women in these sports is growing, yet Adidas
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The sporting goods industry consists of three segments: athletic footwear, apparel, and equipment. Athletic footwear makes up 33% of the sporting goods industry, apparel 50%, and equipment makes up the remaining market share. The three largest markets for athletic equipment are the U.S. at 50% of the market share, Western Europe at 25% of the market share, and Japan at 10% market share.

An industry that had one primary market segment consisting of the serious male soccer and track athlete has now separated into several market segments containing the professional athlete, the amateur athlete, the fitness group (aerobics and cross-training), and the mass consumer who is not interested in athletics but enjoys the comfort of wearing athletic apparel.

Barriers to Entry

The footwear-manufacturing segment has the highest barriers to entry out of the three sporting good industry segments. In the U.S. 53% of the footwear market share is controlled by two companies- Nike and Reebok. Adidas came in at 7th place with only 4% of the U.S. market share. The competition in the industry is fierce, requiring a substantial investment in marketing to establish a successful brand. Research and development expenses are high requiring a substantial investment to develop a shoe that could provide the necessary level of comfort to compete with companies like Nike and Reebok.



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