The competition will become cut-throat when there is free market entrance. But such an established brand like ADIDAS will not be affected much. The entry barriers to the sportswear market are comparatively high. Any firm can freely enter into the market but survival in the market and to gain market leadership is quite difficult. When a new firm’s products are competing with such a huge brand name, it needed to be more cautious and have to adopt high quality strategies to gain the market. There are some barriers like High initial investments and fixed costs, Controlled access to the raw materials by Adidas, Controlled distribution channels by Adidas, Economies of scale, Government Policies and Protected Intellectual Property Rights like technical know-how.
3. SWOT analysis of Adidas
Adidas is one of the major company in the sporting goods industry. The key strengths are listed below-
1) Brand value-Is considered as one of the most successful brands since long time and is figured in the top 100 most valuable brands in the world for the year 2009 by 247wallst.
2) Strong and proven marketing strategy and networks-strong franchising networks and company owned outlets throughout the globe.
3) Leading market position in the industry-One of the largest player in the industry. The company dominates in most of the NON-US countries and the reebok brand helped to gain 20% share of the footwear industry in US.
4) Diversified operations in different parts of the world-The Company’s strategy differs in different parts of the world.
5) Strong on-line presence-The Company introduced the concept of on-line trading in this particular sector and manages to maintain the leadership.
6) Competitive pricing.
1) The bad performance of reebok in non US markets.
2) High cost structure.
3) Limited product line.
1) Change in consumer lifestyle and growing global footwear market-With changing lifestyle more and more people are using sports goods and moreover according to studies by different institutions, the global footwear market is expecting a steap increase especially in the Asian market.
2) Growing market-according to studies carried out by different industrial analysis institutions, the sector is expected to grow to $72 billion in 2010 which is a hike of 12% when compared to 2005.
3) Sponsoring major events-Company has announced sponsorship agreements with Australian Olympic committee, Japan football association, FIFA world cup football 2010 and 2014,merchandising partnerships with NBA and so on which they can utilize maximum for their publicity and growing their market.
1) Raw material prices are increasing rapidly
2) Forged products-imitation products are abundantly available in Asian markets especially in China and South East Asia.
3) Tough competition in the sector-puma Ag, Nike close rivals