Environmental Sustainability In Fashion Supply – A Case Study Of Adidas

Analysis of macro environment

Discuss about the Environmental Sustainability in Fashion Supply.

The report explains the business activities and operation of the sportswear company. Adidas Company has been selected for the report. Adidas is leading sportswear company across the world. It explains that how the company is increasing its net profit and operating profit in the market. It describes the various marketing strategies that are used by the company. Further, the report explains the SWOT analysis, Pestle analysis and porter five forces analysis of the company. It tells that how the company is becoming a most popular brand in the world. It explains the current innovation and production techniques of the company.

Adidas is a German multinational company which was founded on 1924. Its head office is located in Herzogenaurach, Bavaria. It deals and manufactures clothing, shoes, baseball, football products, and accessories. It is one of the biggest sportswear producers in Europe and second biggest in the world. There are approx 53,731 employees are employed in the association. The company maintains the highest brand loyalty in the world. The company has done various collaborations with popular designers such as Raf Simons, Alexander Wang, and Jeremy Scott. The company is increasing its revenue and profit day by day. The Adidas group wants to bring innovation and inspiration to every athlete in the world. The firm wants to become a leader in the sports and apparel industry. Mainly, the company focuses on the business practice, strategies and transactions in order to meet long-term goals and objectives. The main aim of the company is to provide a wide range of good quality of products to its customers in the market. Further, the company wants to make good relationship with its customers. The firm continues improving the quality and image of the products in the market (Ratten, 2011). The core values include performance, integrity, diversity, passion, honesty, and trust. The firm identifies target customer in the market to satisfy the customer needs, wants and requirements across the world. The capabilities and resources of the company include efficient employees, strategic innovation, and supplier relation, good reputation, outsourcing capability, financial control, and distribution network. Adidas is selling its products through various distribution channels to gain the revenue and profit of the company. The unique and effective brand image and reliable and excellent products are the main competitors’ advantages for the company (Uhrich, Koenigstorfer & Groeppel-Klein, 2014).

Analysis of microenvironment

A macro environment is a situation which exists in the economy. The macro environment is also called as the external environment. It includes various external factors such as inflation, political factors, economic factors, socio-cultural factors, gross domestic product, and fiscal policy.These factors cannot be controlled by the company. The business activities and operations are highly affected by these external factors. By using of pestle analysis, the company can evaluate and measure these external factors (Lu & Xu, 2015).

Political factors: Theses factors play a vital role in the external environment. It affects the business operations and activities. The political factors such as war, risks, terrorism, nationalism, vital changes in trade policies and regulations influence the business of the firm. The firm cannot take the benefits of the low labor salary due to political factors. Thus, the company should evaluate and analyze these factors to gain the long-term goals and objectives (Shank & Lyberger, 2014).

Economic factors: These factors influence the profits and revenue of the firm. The economic factors include taxation, unemployment, inflation, interest rate and per capital income. The business goals and objectives are affected by these economic factors. These factors should be controlled by the government to maintain sustainability in the market. In this way, the firm can also overcome on its competitors (Hlophe, 2013).

Sociocultural factors: These factors also affect the business innovation of the company. The sociocultural factors include language, race, culture, religion, buying habits, gender, and lifestyle of the people. The company should measure and evaluate these factors to overcome on its competitors and to obtain a higher return in near future. 

Technological factors: Adidas is one of the biggest companies in footwear industry across the world. The technological factors affect the business activities and operation of the company. Therefore, the company should analyze these factors to gain the competitive benefits in the market. The firm must analyze and evaluate the technological factors to measure the technology of the competitors across the world.  In this way, the firm can increase its production process and it can also enhance the production quality in the market. It will save the energy, time and efforts of the employees (Rothaermel, 2015).

Environmental factors: Adidas must evaluate and analyze the environmental factors which influence the business actions and operations across the world. The main aim behind to evaluate these factors is to encourage and increase the use of sustainable and good quality of products in the market (Luo, Sun & Wang, 2011).

Porter five forces model

Legal factors: These factors play a vital role in the macro environment of the country. Therefore, the firm must evaluate and identify these factors to run the business smoothly across the world. Legal factors include various acts such as sales and supply of goods act, press complaints commission, advertising standards authority import and export. All these factors play an integral and significant role in Adidas Company. These factors can affect the business activities, management and operation of the firm negatively thus these factors should be controlled and monitored by the company to maintain a good position in the market (Pangarkar, 2011).

A microenvironment is also called as internal environment of the country. It affects the business areas, operations, activities, and decision-making process of the company. These external factors include customers, suppliers, competitors, public, and distribution channels. These factors can be controlled and managed by the company with the help of SWOT analysis (Krüger, Stieglitz & Potthoff, 2012).

Through SWOT analysis, Adidas can evaluate and analyze the strengths, weaknesses, opportunities, and threats of the company. The SWOT analysis has been discussed below (Gabel, 2015).

Strengths	Weaknesses
·       Adidas develops new and innovative sports products. ·       It provides effective wider distribution network. ·       It provides collaboration and teamwork to its employees. ·       The firm maintains strong financial position in the market.	·       It provides limited economical and financial resources. ·       Competitors affect the business activities and operation of the company. ·       It includes market and foreign exchange risk. ·       The company charges high prices due to its effective and innovative production strategies, methods and techniques.
Opportunities	Threats
·       It provides excellent growth opportunities in Asia. ·       It increases fitness and health tendency and trend across the world. ·       It increases the demand for premium and good quality of products.	·       Mainly, the firm focuses only on sports and footwear products. ·       It increases the competition in the market. ·       Government rules and regulations also affect the business activities and operation of the firm.

Porter five forces model has developed by the Michael Porter to analyze and evaluate the competitors of the company. This model includes rivalry/ competitors, bargaining power of suppliers, bargaining power of buyers, threats of substitutes and threats of new entrants. The porter five forces model has been discussed below (Shank & Lyberger, 2014).

Rivalry: It is the first step of porter five forces model which should be analyzed by the company to overcome on its existing competitors in the market. The main competitors include Nike Inc, Puma SE, converse, Fila, Asics, Air Jordan are the main competitors of the firm. First, the company needs to identify its competitors which are existed in the market. The firm needs to evaluate and analyze the strategies and plans of the competitors in order to gain long-term goals and objectives (Mahdi, Abbas, Mazar & George, 2015).

Bargaining power of suppliers: It is the important step to analyze the bargaining power of suppliers in Adidas. The company is not able to find out the main competitors of the company. Thus, the company should identify the main suppliers of the firm to maintain the sustainability across the world (Mann & Byun, 2011).

Bargaining power of buyers: There are two main buyers of the company such as professional’s athletes and a group of buyers who want to wear comfort and stylish footwear, apparel and sports accessories. Thus, the firm should evaluate and measure the bargaining power of buyers in the market (Elangovan, 2012).

Threats of a substitute: The Company should analyze its substitutes who are producing the same products as well as Adidas. Although, they are not considered the competitors of the firm but still substitutes affect the productivity and efficiency of the company (Miloch, Lee, Kraft & Ratten, 2012).

Threats of new entrants: To starts a new business, first the company needs to think the market of the country. New entrants are the major issue for the company, thus the corporation should analyze the new entrants and competitors which are entering the market. In this way, the company can beat the competitors and the firm has chances to know the marketing strategies and position of the company (Ratten, 2011).

Nike Inc. is one of the biggest competitors across the world. Through porter five forces analyze, Adidas can evaluate and measure the plans and mission of its competitors in the market.

Due to high competition exists in the market; the firm is facing various key challenges in the retail world. The firm is not fulfilling the expectations and requirements of the customers. The competition is increasing between Adidas and Nike Inc, under armour.  But in today’s era, Nike is making effective and excellent position in the market due to its effective and unique strategies. Inventory is the big issue in the company (Kahle & Close, 2011). As a result, it has a negative impact on its financial and economic report. Now a day’s the firm is charging high prices for its sports and athletic products in the market. Further, the company is operating its business globally but still, the distribution network of the company is very weak and inappropriate. Adidas supply chain management is also very complex and long and it depends on the factories across the world. In this way, it becomes difficult to manage distribution in an appropriate and effective manner. Changes in purchasing power of customers and individual various product choices are the major key issues for the company. The firm is not able to do effective planning and forecasting. Globalization and competitive environment are also a big challenge for the company. Further, the company is not able to find good and potential employees to do the job effectively in the company. All these challenges are faced by the Adidas group in the market (Piller, Lindgens & Steiner, 2012).

Adidas should make effective plans and policies to overcome these challenges across the world. The firm needs to focus on its communication and information technologies. The firm must use advance time sensitive innovative techniques to control and resolve these key challenges. Further, the firm needs to improve its distribution network across the world. The company should provide training to its employees to improve the productivity and efficiency of the employees. Adidas should use collaborative physical logistics across the world to increase the productivity of the company.  By using of collaborative physical logistics management,  the company will become able to share and exchange its physical infrastructure and transportation such as warehouse storage and stores. In this way, the company can resolve entire issues and challenges that are faced by the company (Cafagna, Diterlizzi & Voorhorst, 2014).

Global sales strategy: It is an important strategy of the company. This strategy is responsible and liable for the commercial activities and functions of the Adidas. Through this strategy, the company is able to maintain a good image in the market (Brennan, Merkl-Davies & Beelitz, 2013).

Global brand strategy: To secure and maintain long-term sustainable growth and success, the global brand strategy is focusing on the development and improvement of the brand across the world.  Through brand strategy, the company is able to make a good image in the market (Caniato, Caridi, Crippa & Moretto, 2012).

Marketing strategy: The Company is using the effective marketing strategy to analyze and evaluate the plans and strategies of the competitors in the market. In this way, the company can maintain sustainability in the market. The company needs to aware in the market to beat the competitors in the market (Connor & Haines, 2013).

Distribution and promotional strategy: The Company is using the distribution strategy to distribute its products across the world. Through distribution and promotional strategy, the company differentiates its products from the competitors’ products in the market.

After various researches, it has been analyzed that the firm is using effective and innovative strategies and plans to gain the success and growth in the market (Merk, 2014).

Although, the company is increasing its business in the market but still it needs to improve the marketing strategies to gain success and growth in the market.  The firm should tie up with various chain supplying companies to increase and enhance the distribution network in the market. Through this strategy, the firm can reach its targeting customers in the market. Adidas can establish more shops and stores around the world to provide various products to its customers in the world. The company should conduct advertisement programs and campaigns to attract the more customers in the market. The firm should use effective and unique promotional strategies to increase the sales of the products.  The firm must focus its positioning and targeting strategies to generate more sales in the market. The company should reduce the prices of the products to increase the demand of the Adidas products across the world. The firm should use effective and excellent internet applications so that the various products are made available in the market. The company should produce some new products to gain the competitive advantages in the market.  Adidas must improve its advertisement and marketing strategies to gain success and growth in the market. It should focus on the marketing mix of the firm. The marketing mix includes product, price, promotion, and place. Through marketing mix strategies, the firm can overcome on its competitors in the market.

Conclusion

 On the above discussion, it has been evaluated that the company can improve their business with using various effective and unique strategies in the market. The company should focus on the market penetration, product development, market development and diversification. By using effective marketing strategy, the firm can determine the success and growth of the association. The company is improving its two-way communication system to attract more customers in the market. Further, it is maintaining teamwork and collaboration at the workplace.   In addition, Adidas needs to use some innovative and new technologies to make different sportswear and footwear in the market. Through SWOT analysis, PESTLE and porter five forces analysis, the company can evaluate and analyze the position and strategies of the competitors across the world. Some recommendations have been suggested in the report to improve its brand and goodwill across the world. Therefore, the company is trying to become a most popular brand in the world in the sportswear industry.

References

Uhrich, S., Koenigstorfer, J., & Groeppel-Klein, A. (2014). Leveraging sponsorship with corporate social responsibility. Journal of Business Research, 67(9), 2023-2029.

Ratten, V. (2011). Sport-based entrepreneurship: towards a new theory of entrepreneurship and sport management. International entrepreneurship and management journal, 7(1), 57-69.

Lu, J., & Xu, Y. (2015). Chinese young consumers’ brand loyalty toward sportswear products: a perspective of self-congruity. Journal of Product & Brand Management, 24(4), 365-376.

Shank, M. D., & Lyberger, M. R. (2014). Sports marketing: A strategic perspective. Routledge.

Haemers, I. (2016). Success story of a young fitness brand: Social media influence as an indicator of success in the fitness industry.

Hlophe, N. (2013). The role of local context in the local strategies of global brands (Doctoral dissertation).

Rothaermel, F. T. (2015). Strategic management. McGraw-Hill Education.

Pangarkar, N. (2011). High performance companies: Successful strategies from the world’s top achievers. John Wiley & Sons.

Luo, Y., Sun, J., & Wang, S. L. (2011). Emerging economy copycats: Capability, environment, and strategy. The Academy of Management Perspectives, 25(2), 37-56.

Krüger, N., Stieglitz, S., & Potthoff, T. (2012, December). Brand Communication In Twitter-A Case Study On Adidas. In PACIS (p. 161).

Gabel, A. E. (2015). Methodology for the Implementation of 3D Technologies in the Improvement of Athletic Wear.

Shank, M. D., & Lyberger, M. R. (2014). Sports marketing: A strategic perspective. Routledge.

Mahdi, A., Abbas, M., Mazar, T. I., & George, S. A. (2015). A comparative analysis of strategies and business models of Nike, Inc. and Adidas Group with special reference to competitive advantage in the context of a dynamic and competitive environment. International Journal of Business Management and Economic Research, 6(3), 167-177.

Mann, M., & Byun, S. E. (2011). Accessing opportunities in apparel retail sectors in India: Porter’s diamond approach. Journal of Fashion Marketing and Management: An International Journal, 15(2), 194-210.

Elangovan, N. (2012). Cluster Institutional Isomorphic Pressures: A case of Tirupur knitwear cluster. Research Journal of Social Science and Management, 2(4), 95-102.

Ratten, V. (2011). Sport-based entrepreneurship: towards a new theory of entrepreneurship and sport management. International entrepreneurship and management journal, 7(1), 57-69.

Miloch, K. S., Lee, J., Kraft, P. M., & Ratten, V. (2012). Click clack: examining the strategic and entrepreneurial brand vision of Under Armour. International Journal of Entrepreneurial Venturing, 4(1), 42-57.

Kahle, L. R., & Close, A. G. (Eds.). (2011). Consumer behavior knowledge for effective sports and event marketing. Routledge.

Piller, F. T., Lindgens, E., & Steiner, F. (2012). Mass Customization at Adidas: Three Strategic Capabilities to Implement Mass Customization.

Cafagna, C., Diterlizzi, A., & Voorhorst, F. (2014, June). MyWear: Customized green, safe, healthy and smart work-and sports-wear. In Engineering, Technology and Innovation (ICE), 2014 International ICE Conference on (pp. 1-5). IEEE.

Merk, J. (2014). The rise of tier 1 firms in the global garment industry: Challenges for labour rights advocates. Oxford Development Studies, 42(2), 259-277.

Connor, T., & Haines, F. (2013). Networked regulation as a solution to human rights abuse in global supply chains? The case of trade union rights violations by Indonesian sports shoe manufacturers. Theoretical Criminology, 17(2), 197-214.

Caniato, F., Caridi, M., Crippa, L., & Moretto, A. (2012). Environmental sustainability in fashion supply chains: An exploratory case based research. International journal of production economics, 135(2), 659-670.

Brennan, N. M., Merkl-Davies, D. M., & Beelitz, A. (2013). Dialogism in corporate social responsibility communications: Conceptualising verbal interaction between organisations and their audiences. Journal of Business Ethics, 115(4), 665-679.