adidas case study strategic management

How Adidas manage their supplier relationships

Adidas has now outsourced most of its production and currently work with more than 400 independent factories around the world that manufacture products in around 45 countries. Their supply chain is global and multi-layered, with some suppliers working as directly contracted factories.

Relationships with strategic partners

The company’s global supply chain extends through various tiers from strategic manufacturing partners to componentry and materials suppliers, to raw material sources, such as cotton, leather and natural rubber. Adidas works closely with key strategic partners, the vast majority of their products are produced in the facilities of around 110 manufacturing partners worldwide. 

Their strategy is constructed to value long-term relationships, with 65% of their independent manufacturing partners working with the company for at least ten years and 35% recording a tenure of more than 20 years. The length of supplier relationships is determined by specific performance criteria which is regularly measured and reviewed, with suppliers incentivised to maintain a high level of performance against the criteria through the awarding of higher orders.

Sourcing relationships

Direct sourcing

Adidas holds direct contractual relationships with core suppliers who are centrally supervised by the company’s Global Operations function. Global Operations manages the development, production, planning, sourcing and distribution of the vast majority of Adidas products. These suppliers produce the predominant share of the total sourcing volume of the company.

Indirect sourcing

The remaining minor part of their product volume is sourced by agents or made under licence. Agents place orders with their preferred suppliers. Licensees may either place orders directly with their suppliers or use agents as intermediaries. Adidas’ indirect supply chain complements their direct sourcing by meeting specific requirements that cannot be serviced through the Global Operations approach.

Local market production

To remain agile and quickly seize short-term opportunities in their local markets – and to satisfy a niche market requirement or specific trade regulations – Adidas subsidiaries may also source from local suppliers in a specific country that are not overseen by Global Operations. These suppliers require authorisation from the Social and Environmental Affairs team for production.

How do Adidas review their supplier performance?

A critical part of Adidas’ supplier performance policy is the implementation of their Workplace Standards , and the supply chain code of conduct, which also covers workers’ health and safety and provisions to ensure environmentally sound factory operations. To enforce compliance with our Standards the company have a multi-level review and enforcement process in place. The rating results supplier receive are shared with sourcing teams and incorporated into the overall supplier rating that influences decisions whether and to which extent Adidas continues the business relationship with a specific supplier.

Alongside those monitoring activities, the company values independent and unannounced assessments by independent third parties. As a member of the Fair Labour Association (FLA), Adidas is subject to external assessment by independent monitors. In 2005, their own  monitoring program was accredited by the FLA for the first time and re-accreditation took place in 2008 and in 2017. This decision was based on independent factory monitoring and verification reports of supplier facilities and a thorough audit of monitoring protocols, training programs and auditing systems.

Read more about the key to effective supplier relationship management 

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Work-life- and Health Management

It is our goal to develop a culture that values the experience, well-being, and performance of our employees. Our people and our culture are key to delivering our ‘Own the Game’ strategy; and one of the ways we are supporting our people is by introducing six new values that will guide our behaviors. Our new values are: Ownership, Courage, and Innovation, as well as Team Play, Respect, and Integrity. In 2022, we will focus on implementing and embedding these values across our people policies and processes, including the way we hire, promote and evaluate performance.

WORK–LIFE INTEGRATION

We aim to harmonize the commercial interests of the company with the professional, private, and family needs of our employees. Our work–life integration initiatives and programs include the provision of flexible working times and locations, personal development, and leadership competence related to work–life integration, as well as family-oriented services:

• Childcare: In addition to providing flexible working opportunities such as work from home and sabbaticals, we cater for a family-friendly environment and infrastructure. At our headquarters in Herzogenaurach, we offer parent–child offices, and provide for a childcare facility, the ‘World of Kids.’ It offers space for 270 children and includes an outdoor group and ad-hoc childcare to support parents in emergency situations or during transition phases and short-term assignments. During school holidays, kids’ camps are very popular and offered at various locations across the globe. Due to the ongoing coronavirus pandemic throughout 2021, we were forced to adjust well-established offers in many locations. Different solutions were implemented to assist parents working from home in challenging times while catering for childcare and home-schooling. These included coronavirus hotlines for parents and caregivers, interactive online sessions, and presentations from experts, as well as tutoring for pupils.
• Parental leave: For parental leave and re-entry, programs are in place to provide employees with advice early on and options for their return to work, also taking into consideration flexible working hours and work locations. In Germany, we guarantee our employees on parental leave their positions, which are only filled temporarily. In the US, in addition to regular parental leave for new parents (up to ten weeks at home, 70% of their salary), adidas offers an extra two weeks of paid parental leave for parents. Furthermore, adidas’ special parental bonding leave provides parents with the opportunity to stay home for up to six months within the first twelve months after the child’s birth or placement. While unpaid, it offers parents the opportunity to stay home longer and take care of their new arrival and new life together. Latin America provides for an extended parental leave approach across the market where mothers will be provided 24 paid weeks in total to spend with their children, and fathers/partners will be provided 20 paid days in total. On top of this, mothers are allowed to work fewer hours one month before and after their maternity leave period.
• Flexible work: Based on the good experience we have made with our worldwide off-campus-working approach, which allows our employees to work up to 40% of their working hours remotely, adidas has been well prepared and equipped for the transition to full home-office mode during the pandemic. At the same time, we experienced the importance of social and personal interaction first-hand during the pandemic. As we think about the future, we want to provide flexibility to support employees’ unique needs and experiences.

HEALTH MANAGEMENT

We support our employees by aiming to provide the best possible conditions to ensure that they feel good and stay healthy. Our holistic approach includes people’s physical, mental, and social well-being, and focuses on four pillars: mindset, nutrition, movement, and medical services. We provide employees access to various sports activities and facilities, and lockers and showers in many office buildings allow people to run or cycle to work. Employees in Herzogenaurach, Portland, Boston, Moscow, Gurgaon, and Manchester, and at other locations across the globe, have access to a corporate gym. However, with the ongoing coronavirus pandemic throughout 2021, we continued to follow a cautious approach and keep programs stopped and gyms closed where necessary. Our focus remained on digital offers for employees to support a healthy lifestyle at home. This included an online sports program as well as broad virtual offerings on nutrition, mental health, remote work, and resilience. In addition, our Employee Assistance Programs were extended over the past months; the offering now fully covers nearly every market, including North and Latin America, Emerging Markets, Asia Pacific, and various countries in Europe.

Mental Health Week 2021: As part of our focus on holistic well-being and an inclusive culture, following World Mental Health Day, we provided employees worldwide with support, tools, and information to proactively recognize and manage their own mental health and that of those around them. ’Mental Health Week 2021’ had – based on the motto ‘Mind your mind’ – a focus on creating productive conversations, showing support, and giving a call to action for prevention and positivity with regard to mental health.

NAVIGATING THROUGH THE CORONAVIRUS PANDEMIC

Since the beginning of the covid-19 pandemic, the safety and well-being of our employees, consumers, and partners has been our top priority. In our offices, stores, and warehouses around the globe, we have installed a variety of measures to ensure the ongoing safety of our people and limit the risk of infections at the workplace or while traveling.

• Crisis management team: To monitor and assess the impacts and potential spread of the coronavirus globally, we have continued to work with a dedicated Steering Committee since February 2020. The task of this HR-led, cross-functional team is to provide guidance to our markets on emerging issues, standards, and company policies to ensure alignment in our response to covid-19. The team also tracks internal covid-19 cases globally on an anonymous basis, and reports these to the Executive Board. This measure enables us to determine any actions needed at all locations globally. The Steering Committee meets up to two times per week to review employee case numbers, impacts to the business, emerging issues, and review current policies, guidelines, and direction to the business and our workforce. Updates are provided to the Executive Board on a regular basis, at least once a month.
• Return to the office: In 2021, we slowly started to re-open some locations, with limited capacity according to local regulations, and attendance on site is on a voluntary basis. All regulations regarding safety protocols were extended, such as wearing masks, social distancing, and meeting room limitations. Additionally, we are continuously monitoring the development of the situation by market and keep transparent communication to our employees every week, as well as reinforcing the strict rules of conduct in place in our workplaces to ensure maximum safety levels.
• Vaccination: We encouraged all employees who can to get vaccinated to protect themselves, our colleagues, families and friends. In Germany, we were able to have our own vaccination centers on site (available for corporate, retail, and distribution center employees) to accelerate the vaccination progress, as well as extending the flu shot campaign in some countries. When governments around the world asked for companies to facilitate and/or fund the vaccination of their employees, we readily did this and funded vaccination for our employees in the United States, Colombia, Russia, Ukraine, and India.
• HR training and alignment: To enable our HR Business Partners to report on covid-19 cases, conduct contact tracing, and manage any employee-related crisis issues, we introduced global trainings for them. These trainings are repeated as often as necessary to ensure our HR Business Partners are able to act upon the most recent developments at any time. To create alignment and awareness of new processes or emerging situations in the markets, we have also set up a weekly call for market HR leaders, where any employee- or covid-19-related issues are discussed and decisions are made on necessary actions.
• Retail: In our own-retail stores, safety protocols include social distancing rules and the installation of plexiglass screens. Our retail staff have been trained on these safety measures, contact tracing, and case reporting to guarantee sufficient response actions to ensure the safety of all employees and customers. In addition, we created so called ’Retail Response Teams’ to ensure the implementation of regulations and standards in our stores in a timely manner.

Under the ‘Lifestyle’ category, we subsume all footwear, apparel, and ‘accessories and gear’ products that are born from sport and worn for style. ‘adidas Originals,’ which is inspired by sport and worn on the street, is at the heart of the ‘Lifestyle’ category.

Strategic management analysis of adidas. Conditions in the sports equipment industry and available resources

Term Paper , 2011 , 28 Pages , Grade: 2,0

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This paper aims to evaluate conditions in the market environment in which adidas operates. Not only the sports equipment industry itself - the micro environment - is looked at, but also the wider macro environment. Additionally, adidas' critical success factors are outlined, its resource capabilities are evaluated, highlighting threshold and unique resources, and the company's core competences are specified. Using a SWOT analysis, conclusions are drawn by assessing how well the strategic capabilities of adidas fit the environmental factors relevant to the company.

TABLE OF CONTENTS

1. INTRODUCTION TO ADIDAS

2. MARKET ENVIRONMENT ANALYSIS 2.1 Overview of the sports equipment industry 2.2 Analysis of adidas’ macro-environment 2.3 Analysis of the sports equipment industry 2.4 Conclusion

3. INTERNAL ANALYSIS 3.1 Analysis of adidas’ value chain 3.2 Identification of adidas’ strategic capabilities 3.3 Identification of adidas’ distinctive capabilities 3.4 Conclusion

4. STRATEGIC FIT

APPENDIX I – PESTEL ANALYSIS

APPENDIX II – VALUE CHAIN ANALYSIS

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Adidas-Organizational Transformation casestudy

2018, Organisational Transformation Case Study Sportswear industry - Adidas

This report provides insights into the global sportswear market as well as a comprehensive analysis of Adidas to develop an understanding about the company’s internal situation in line with the external environment concerning surrounding competitors, customers, and suppliers…etc. Accordingly, opportunities and threats can be identified, which helps realize the reason why Adidas implements proactive changes to not only grasp these opportunities but also address those threats. At the same time, this finding serves as a reference for anyone to evaluate their profession possibility in this field. At the end of the paper, it is concluded weather the sportswear is an attractive industry and Adidas is an attractive company for employees.

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Adidas Case Study And SWOT Analysis

Adidas was founded by Adolf Dassler and his elder brother Rudolf Dassler in the early 1920s and is now recognized as one of the most famous global manufacturers of sports products. Adidas is developing its products to serve customers’ needs at best possible level. Adidas works on its products by incorporating new fashion trends and technology and making them more sport-specific. Today, we will discuss the Adidas marketing strategy, marketing mix, and market analysis through SWOT analysis in this case study. 

There are three main areas of marketing where Adidas sees an increase in its mix of sales and investment. 

• First, the company is expanding into new places, such as developing new products and services, enterprising in new fields, and moving from production to development for upkeeping. 
• Second, Adidas’s presence on social media platforms is increasing as people seek out its products for fresh flavors and ingredients. 
• And third, Olympics-related advertising will continue to be a major part of Adidas’s marketing strategy.

Marketing Mix of Adidas

Here is Adida’s marketing mix comprised of the 4Ps of marketing: Product, Place, Price, and Promotion.

Product:  This product that Adidas markets under its various labels, such as energy boost, running, football training, tropical heat wear, etc.

Place:  This is a place where these products primarily sell out depending upon the developed region.

Price:  Adidas is aggressive in promoting prices to enjoy a competitive position. In this area, Adidas believes the price will be dictated by the market’s demand, not its shortages or excesses. In 1964 when Adidas began pricing shoes at $12 vs. Nike at $15, Shoe sales went down, but once set price, they stayed the same, becoming more attractive to prospective buyers versus new entrants with their much lower prices.

Promotion:  This refers to the strategies of Adidas for attracting consumers to purchase its products, whether it is competition, direct marketing campaigns, or social media messaging and advertising.

Adidas differentiation strategy

Adidas focuses more on the broad differentiation strategy. The corporate level strategy of Adidas focuses on innovation, trying to produce new products, services, and processes to cope with the competition. The group’s multi-brand portfolio gives them an important competitive advantage. That created a global sales function responsible for commercial activities, and international brands serve accountable for the marketing of both brands.

The global sales function was split into two departments, wholesale and retail. That catered to the various needs of both these business models . It has been done to sustain their corporate-level strategy for the long run so that these divisions could emphasize and work hard in their respective departments to make the most of their efforts.

They implemented a multi-brand strategy by having a diverse brand portfolio, allowing them to cater to all market segments, from players to almost everyone. It helped them to keep a unique identity and concentrate on their core competencies.

Adidas’ digital marketing strategy

Adidas uses a straightforward digital marketing strategy to communicate with its current and potential customers. By implementing this strategy, they have been able to take competitive advantage with their top competitor, Nike. By changing the behaviors of consumers with this digital transformation, Adidas has to change how they work. The use of technology has helped Adidas connect with more consumers and build stronger relationships with customers.

Six components aid Adida’s digital marketing strategy, including:

• Digital and technology
• High-speed manufacturing
• Personalized experience to create strong relationships with customers
• Open-source innovations and collaborations
• Strategic cities include London, LA, New York, Paris, Tokyo, and Shangai.
• Improve portfolio of both brands, i.e., Adidas and Reebok.

Creative Idea

Creative Insight: 

The past year has witnessed the growing popularity of Instagram Reels with millennials and Gen-Z audiences. Thus, harnessing the popularity & impact of Instagram Reels was the approach to creating visually appealing and stirring content that drove product heat and led the campaign story #OpenForum

Visual Storytelling & Content Output :

Social media has played an important role in bridging information gaps. In contrast, brands have ensured that Indian consumers access the best global launches on the same day as consumers in other parts of the world.

An Instagram campaign was undertaken that engaged 50+ creators from various fields to bring the campaign message to life and drive appeal for the launch of the new Adidas sneakers through relevant storytelling.

View this post on Instagram A post shared by I S H A B H A N S A L I (@ishabhansali)

SWOT Analysis of Adidas

SWOT analysis is the method of measuring the organization and its environment, whether internal or external. It is the first stage of planning, which helps marketers focus on the key issues an organization can face.

SWOT stands for Strengths, Weaknesses, Opportunities, and threats. Adidas’ strategy analysis focuses on Strengths and Weaknesses, which represent the company’s internal environment. In contrast, the other two represent the external environment with direct and indirect impacts on the business.

• The brand recognition of the product it’s well-reputed.
• High-quality products.
• Provides a diverse range of products (shoes, bags, shirts, perfumes, toiletries, etc.)
• Obeys environmental laws (Adidas has never been accused of pollution)
• Adidas’ policies and management safeguard employees’ rights.

Weaknesses                                              

• Online stores are offered only to the USA or some locations in Europe.
• Customer services are not functional, which creates problems, especially in the case of e-marketing
• Price is interwoven to high quality.

Opportunities

• Outsourcing web development and e-commerce/marketing to a third party is possible.
• The growing market for sports apparel
• Joint Venture with partners around the world to increase participation in athletics.
• Unstable economic environment
• Competition at the supply chain management level
• Nike’s strong reputation in the sports industry

Related: Amazon Case Study: Marketing and Advertising Campaigns

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This two part case series discusses the successful turnaround of Adidas. Case A describes the financial and competitive situation of Adidas and the sporting goods industry in 1993 when Robert Louis-Dreyfus, CEO, takes over the management of the company. Adidas is in economic and organizational disarray and Louis-Dreyfus’s challenge is to turn the company around from its current deficit of close to $100 million. Can he do it? What changes should he make? Case B describes the strategies and actions Louis-Dreyfus put in place, which effectively resulted in the dramatic turnaround of Adidas between 1993 and 1998. Readers will also discover the personality and work values that drive Louis-Dreyfus to success.

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