PESTEL analysis is a framework used to evaluate the macro-environmental factors that can affect a company. The PESTEL analysis of Adidas is conducted to evaluate the political, economic, sociocultural, technological, environmental, and legal factors that can impact the sportswear industry and the company. Understanding these external factors can help Adidas identify opportunities and challenges in its operations and strategy development.
Background and Introduction
Adidas is a multinational corporation that specializes in the design, manufacture, and marketing of sportswear, footwear, and accessories. The company was founded in 1949 by Adolf Dassler in Herzogenaurach, Germany, and has since become one of the most recognized brands in the global sportswear industry.
Adidas’s success can be attributed to its commitment to innovation and quality, as well as its ability to adapt to changing market trends and consumer preferences. The company’s product portfolio includes a range of athletic and casual wear, as well as footwear and accessories for men, women, and children.
In recent years, Adidas has shifted its focus towards sustainability and ethical production practices, recognizing the importance of environmental and social responsibility. The company has set ambitious goals to reduce its environmental impact and improve working conditions in its supply chain.
Despite facing intense competition from other sportswear brands, such as Nike and Under Armour, Adidas continues to grow and expand its global presence. Today, the company operates in over 160 countries and employs more than 60,000 people worldwide. With a strong brand image and commitment to innovation and sustainability, Adidas is poised for continued success in the future.
Company Information
| ype | Public |
| Industry | Sportswear |
| Founded | 1949 |
| Founder | Adolf Dassler |
| Headquarters | Herzogenaurach, Germany |
| Area served | Worldwide |
| Products | Athletic and casual wear, footwear, and accessories |
| Revenue | €23.8 billion (2020) |
| Number of employees | 62,285 (2020) |
| Website | www.adidas.com |
Political Factors
Adidas is a big name in the retail industry, as it manufactures, supplies, distributes, and ships to many countries across the globe. Its’ business is expanded on global levels, which means it has maintained good international supply chain networks along with the respective country’s rules and regulations. Adidas also uses political factors as one of the main methods in intervening the counterfeit items. Adidas makes sure to abide by the rules of every country which mainly involves products’ safety laws, consumer safety products regulations, labour laws, and international trade agreements. However, it prefers to manufacture its products in developing countries to reduce the manufacturing cost (Frue, 2017).
Economic Factors
The revenue of the sports industry is concentrated with the largest 50 companies who contribute to 70% of the total revenue of the industry. Adidas is one of the biggest companies in the sports industry that needs to consider economic factors into consideration like unemployment, taxation, interest rates, inflation, wage rates, and price sensitivities. The consumer of the company follows a certain lifestyle which is mostly driven by the preferences of the company’s products. Adidas products are considered as luxury items. Its products are manufactured in China to reduce labour costs. it carefully sets the prices to stay competitive in the market (Farooq, 2019).
Social Factors
Customer preferences, lifestyle, religion, and culture are the social factors that affect the performance of Adidas and the brand image and loyalty of its customers. Adidas must keep customer’s demands, beliefs, and communities into consideration when making decisions and implementing the strategy. As people are getting more and more health-conscious and prefer to live an active lifestyle. Adidas takes this seriously and offers the best sports footwear, fitness accessories, and apparel. It affects the positive brand image of the industry. Social media also plays an important role in this factor as it helps Adidas in growing sales and brand awareness (Wiselancer, 2021).
Technological Factors
As being a global sportswear company, Adidas must be efficient in technological terms. It tests all the manufactured products as per the standards through advanced machines. It believes in optimizing the efficiency and performance of players in the industry. It prefers to use natural materials. Adidas is working more towards online sales growth through websites or social media. Its’ technological products like Fitbit is gaining popularity in the health industry. This will help in further growth and will open new doors of opportunities (Farooq, 2019).
Environmental Factors
People are now more concerned about environmental protection and support businesses that are involved in saving the planet and provide environmentally friendly products. Adidas has responded to this concern of consumers by claiming that its manufacturing facilities are producing under environmental regulations and restricted manner. This leads to the reduction of compound emissions. It also introduced low waste initiative programs and focused on material and manufacturing methods. They constantly work towards reducing their carbon footprint and avoid using oil-based products (Adidas, 2021).
Legal Factors
Adidas owns IP systems, has copyrights and design patents to defend the company from any infringements. These patents serve as legal protection for the company and help in ending counterfeit businesses. As being a huge brand, it has trademark production on three parallel equidistant stripes with identical widths and the same direction on all hats, footwear, and apparel. It endorses celebrities and players with all laws and regulations concerning increasing sales (Frue, 2017).
Conclusion
Adidas has faced a lot of controversies regarding the endorsement of low wages in developing countries, thus, violating the basic labour laws. They do this to reduce the production cost. However, they attract health-conscious shoppers and constantly bring in new designs to attract consumers.
References
- Adidas, 2021. About us. [Online], Available at: https://www.adidas-group.com/en/group/profile/, [Accessed on: 1st April, 2021].
- Adidas, 2021. Environmental approach. [Online], Available at: https://www.adidas-group.com/en/sustainability/managing-sustainability/environmental-approach/, [Accessed on: 1st April, 2021].
- Farooq, U. 2019. Adidas Pestel analysis. [Online], Available at: https://www.marketingtutor.net/adidas-pestle-analysis/, [Accessed on: 1st April, 2021].
- Frue, K. 2017. PESTEL analysis of Adidas. [Online], Available at: https://pestleanalysis.com/pestle-analysis-adidas/, [Accessed on: 1st April, 2021].
- Wiselancer, 2021. Pestel analysis of Adidas. [Online], Available at: https://wiselancer.net/pestle-analysis-of-adidas-adidas-pestle/, [Accessed on: 1st April, 2021].