FIVE FORCES MODEL OF ADIDAS
Adidas is one of the most reputated companies which produce sports clothing as well as accessories.Although adidas is ganing hard competition from reebok and nike ,adidas still has been making growth in market.this is the discussion of how five forces model creates the growth in adidas.we will come to know which forces is favourable to adidas and which is not.
Bargaining power of the suppliers:
Although suppliers have crucial role in business of adidas brand yet their bargaining power is low as in supply chain of adidas contains huge number of suppliers.in addition,adidas can switch to another supplier easily.it can be threat to supplier if adidas stops doing business with that particular supplier.there is huge distribution of suppliers the world over due to which solely no one among them exert pressure on Adidas.adidas gets a lot of material which are outsourced and it has around 1000 factories in more than 60 countries.therefore,they have many direct as well as indirect contractors.To maintatin control over its suppliers,Adidas moniters its suppliers time to time.
Bargaining power of buyers:
The bargaining power of buyers is low in the case of Adidas.although the are some competitor in market like nike,puma etc yet adidas focuses on quality,performance and design.people have a great trust on the quality offered by adidas.Hence;this brand has been capable of maintain a magnificent extent of loyality.whereby,customers’ bargaining power is considerably low.
Threat of substitutes:
The threat of substitute products before Adidas is low to moderate. Its number of competitors is not very large and yet not so small either. There are small and large; local and international competitors which offer products under a wide range of prices. Some of them cater to the needs of the high end customer whereas the local competitors offer substitutes at lower prices. The threat from the substitute products is moderated by the quality of products and marketing efforts of Adidas. In order to further moderate the threat, Adidas has focused on marketing in the metropolitan markets since a large part of its customer base lives there.
Threat of new entrants:
The threat of new entrants for Adidas is low to moderate. While a brand can enter with a small capital on a local scale, to grow a brand the size of Adidas requires a very large investment which can be understood from the size of its production and supply chain. There are several factors requiring large investment like technology, skilled human resources, marketing, advertising etc. So, unless someone has enough capital to spend entering the industry would be difficult. Moreover, one cannot build as much brand equity overnight. It also takes time as well as efforts to build as much brand equity. All these factors moderate the threat arising from any new player trying to enter the industry.
Level of competitive rivalry in sports fashion industry:
The level of competitive rivalry in the industry is high. Apart from the main competitors like Nike, Puma and Under Armour there are several other smaller competitors too which add to the level of competition in the industry. While the level of saturation in the industry has grown, the existing players are also engaged in an intense battle for market share. All the brands are investing heavily in marketing and spending billions on advertising and sponsorships. While the number of top brands is limited, still the level of competition in the industry is intense.