Porter's 5 Forces Analysis of Adidas

1. PorterAnalysis of ADIDAS
By, Akshay Narkar
Akshay Vaswade
Kedar Dhekane
Shrivatsa Madhav Kulkarni
ADIDAS occupies the top spot as leading shoe manufacturing company in
entire Europe and is the second largest shoe brand in the World lagging NIKE.
Adidas Group, which consists of the Reebok sportswear company, Taylor
Made-Adidas Golf Company, 8.33% of Bayern Munich and Runtastic, had
annual revenue of €19.29 billion in 2016.
1. Potential of New Entrants
The possibility of new entrants in the market is relatively low due to more
barriers of entry. Because of the capital investment of ADIDAS, it is difficult
for new competitors to invest in advertisement R&D and signing Elite athletes
from various sports.(Wilkinson 2013)
Outsourcing more than 35% of manufacturing to China and other Asian
countries, ADIDAS is utilizing cheap labour making it not to face much
competition from its competitors.
2. Power of Suppliers
With the brand power that ADIDAS possesses it attracts tons of suppliers from
across the globe. It has global and multi-layered supply chain with several type
of suppliers in the chain, so none of the suppliers possesses the power to
influence ADIDAS single headedly. This enables ADIDAS to set the rules that
suppliers are required to comply with. Despite the importance of Suppliers in
ADIDAS‟s business, their bargaining power is very low.(Kasi 2017)
3. Bargaining Power of Buyers
Consumers are always looking for Standardized products, and for those who
doesn‟t have the knowledge about the product, brand makes the decision for

2. them. Bargaining power of buyers in case of ADIDAS Is low to moderate,
because of the presence of significant competitors like NIKE and PUMA.
4. Threat of Substitute Products
With the number of competitors neither large nor small, the threat of substitute
products is low to moderate. Some of them supply to the needs of high end
customers, but the local competitors provide the products at much lower rates.
However, Adidas is fighting with every other substitute product, whether it is
sports related or with a cheaper option.
5. Rivalry among the Competitors
Adidas is facing a tough competition in the market from Nike ink. Also, there
are many other competitors like New Balance, Puma knocking the door with
wide range of products. Adidas is maintaining its position in the market as the
second largest brand of shoes and sportswear.
6. Conclusion
Adolf Dassler started the company with the name „Gebrueder Dassler
Schuhfabrik‟ in 1924, which was renamed as Adidas in 1949. Even with the
tough competition from Puma, Adidas went on to become the leading shoe
brand. The demise of Adolf Dassler started the downfall of Adidas, but with
some smart mergers and good decisions, Adidas has overcome its problems and
currently holds the position as the 2nd
largest brand in sports manufacturing
sector.
Bibliography
Bhasin, H. 2017. “SWOT Analysis of Adidas” Marketing91.
Kasi, Adam. 2017. “Porter's Five Forces Model of ADIDAS.” Companies.
Wilkinson, James. 2013. “Threat of new entrants.” WikiCFO.