Before starting Adidas pestle analysis we will discuss company profile and employees. Adidas is a world leading and valuable sports footwear and apparel brand. The company designs, manufactures and markets various athletic products like shoes, clothing, shirts, bags and watches and other related accessories. The company is operating in various geographic segments around the globe. Adidas Unique selling preposition is global recognition and quality sports products for its loyal customers from varied demographics.
According to the company, those people working with Adidas are vital for the company success. Adidas has 56,888 number of employees who are skilled and knowledgeable.
Here we will perform pestle analysis of Adidas to analyze its external environment. You can also read swot analysis of Adidas brand.
Table of Contents
Political Factors affect Adidas
The major political issues that affecting Adidas are changing trade policies and political unrest in many countries. Adidas has to tackle such issues in order to sustain its global presence and financial performance.
The Trump administration is imposing import tariffs and restrictions. US tariffs on Chinese goods is a huge area of concern for Adidas and other athletic apparel industries with respect to increase in products prices. Germany is a major exporter and US import restriction and tariffs can cost Germany up to 20 billion euros.
Adidas has a worldwide operations that involve shipping and distribution of products and services. Adidas is unable to achieve its overall goals and objectives without improving its complex supply chain to meet international and political laws and procedure. This will help the Adidas to increase its sales, profitability and brand awareness.
Economic Factors affect Adidas
Unemployment, wages rates, taxation, inflation and interest rates are those economic factors that can affect Adidas performance and profitability.
Adidas and Nike both are the giants of sports footwear industry. In 2011, the combine concentration ratio of both brands was 52.7% which means that these two are controlling almost half the industry.
Adidas products are not necessity of life but focus on active life style consumer and athletes. There are noticeable fluctuations in the global economy. Adidas marketing strategy should focus to select the markets to distribute and sell products that will help to increase Adidas market share, brand loyalty and profitability.
Adidas is manufacturing more than 50% of products in China. But due to rising labor cost the company has to transfer some of the production capacity to other countries. Here rising labor cost is another economic factor to affect its performance. On the other hand, Adidas must resolve the issues related to import and export of goods.
Social Factors affect Adidas
Culture, religion, life style and preferences are those social factors affecting Adidas performance and brand image and customer loyalty. Adidas should keep in mind all the communities and beliefs when taking any decision and implanting strategy.
People are becoming more and more health conscious. It means that they want to address health related issue and live an active lifestyle. For this purpose people will need sport footwear, apparels and other related fitness accessories. It can positively affect the demand for footwear and apparel industry.
Today social media has empowered consumers to share and respond to any issue arises. But social media platform can also stand you out from other. Many times Adidas used social media campaigns to increase sale and brand awareness.
Technological Factors affect Adidas
For every sports brand embracing innovative technologies is a competitive edge over competitors. Technology can not only be used in a product itself but also in overall company operation for example product and process, management and accounting system.
Though Adidas has opened few Speedfactories to speed up production. It still needs to expand this technology to other factories in Asia and other locations. Furthermore it should incorporate data collection integration technology in its products to measure performance athletes and other consumers. Adidas must address these technological challenges to increase productivity, market share and brand loyalty.
Legal Factors affect Adidas
Legal factors affect those business operating globally and Adidas is a good example. Like other sports companies, Adidas also face different regulations and tries to comply with these laws and regulations.
Environmental Factors affect Adidas
Adidas is trying to minimize the use of banned and restricted material in production, products and stores. Another company commitment is to reduce carbon emission and attain green company 2020 targets. Company is also looking to produce product and apparels followed by “low waste initiative program”.
