Porter’s Five Forces of Adidas 

Adidas AG is a German sportswear and apparel manufacturing multinational company. Adidas came into existence in 1924, but its current name was branded in 1949. Today, we’ll discuss Porter’s five forces of Adidas; bargaining power of suppliers and buyers; threat of new entrants and substitute products; and competitive rivalry in the Adidas five forces analysis.

Porter’s five forces of Adidas would focus on the bargaining power of suppliers and buyers; the threat of new entrants and substitute products; and competitive rivalry in the Adidas five forces analysis. Here’s Adidas Porter’s five forces analysis as follows;

Porter’s Five Forces of Adidas 

Let’s discuss the Porter’s five forces of Adidas; they’re as follows;

Bargaining Power of Suppliers of Adidas

Adidas deals with various suppliers for raw supplies and materials across the globe and it makes the bargaining power of suppliers very low. Some of the main factors impacting the bargaining power of suppliers in the Adidas five forces analysis are as follows;

I-Vertical & Forward Integration

Many suppliers offer the service of selling proposition and cost efficiency by forcing them to outsource their production and manufacturing works, rather than building it in-house. It allows them to have significant bargaining power over the company.

II-Prefer Top Brands

Many suppliers prefer to work with the top global brands that have a significant influence in the sportswear industry. It offers them various benefits like the prestige of working with the top brands; mass volume orders, and establishing long-term contracts.

III-Same Raw Material

Many suppliers offer similar types of materials and supplies without any differentiation for the production and manufacturing of sportswear and apparel goods. It comprises of following materials and supplies;

• Packaging material
• Fabric dyes
• Textile
• Leather
• Rubber
• Fabric

IV-Suppliers Availability

There are a lot of suppliers available in the market for sportswear and apparel supplies and materials. Companies could outsource a plethora of materials from various suppliers in different countries worldwide. It makes the bargaining power of suppliers very low.

Bargaining Power of Buyers of Adidas

Customers and buyers are the main reasons for the business and existence of Adidas, and they have a lot of choices and options. It makes the bargaining power of customers a very strong force; some of the main factors impacting the bargaining power of buyers in the Nike five forces analysis are as follows;

I-Brand Differentiation  

New Balance and Reebok are the alternative sportswear brand and they offer their products at an affordable price range. Brands like Ralph Lauren and Lacoste focus on the specific target customer market and particular sports. They have their own unique selling points.

II-Price Sensitivity

Unlike casual products, sportswear products, and goods are luxury items. There are various low-cost and affordable sports brands available in the market; they target the price-conscious customer market. However, it amplifies the brand switching from Adidas to other lower-cost brands.

III-Alternative Products

Nike is the top competitor in the sportswear industry. New Balance and Reebok are the alternative lower-cost brands. Along with top competitors, there are various counterfeiting brands available in the market and they offer affordable options to customers. Various shopping choices increase the bargaining power of customers.

Threat of New Entrants to Adidas

Outsourcing production and manufacturing of sportswear products has amplified the threat of new entrants. However, Adidas has achieved a significant market share due to high quality and brand value. Some of the main factors impacting the threat of new entrants in the Adidas five forces analysis are as follows;

I-High Running Cost

It has become affordable for brands to outsource their production and manufacturing works and operations. That’s what many counterfeiting brands would do. However, the overall brand running, operational, and maintenance cost is very high.

II-Global Network

Adidas has established a strong supply chain and distribution network across the globe by contracting with retailers, 3PL, and suppliers. The sportswear brand has a plethora of capital resources to expand its business in any market at any time. It is a type of competitive edge that many new brands don’t have.

III-Strong Brands

Adidas and Nike are the top dominant brands in the sportswear industry and they have earned a significant portion of the market share with increasing growth rates. They run aggressive marketing campaigns to maintain their position in the market.

Threat of Substitute Products to Adidas

There are various brands available in the market in the sportswear and apparel segment, and it makes the threat of substitute products a dominant force. Some of the main factors impacting the threat of substitute products in Adidas Porter’s five forces analysis are as follows;

I-Easy Substitution

An ordinary customer has a plethora of brand options available while shopping for sportswear products and goods. They could easily find various types of brands in the sportswear and casual wear category. When customers have got limited budget, they would look for affordable and cheaper brand alternative options.

II-Low Switching Cost

Adidas falls under the category of premium and expensive brands. While shopping for sportswear goods, customers could easily switch from one brand to another that offers better pricing without incurring any cost.

III-Differentiation & Substitution

There is no doubt there are various substitute and alternative brands available in the market in the sportswear, casual wear, and formal wear categories. In order to maintain their position, companies and brands offer some unique selling propositions and features differentiated from others. For instance, they offer higher quality and long-lasting features that other cheap brands can’t offer.

Competitive Rivalry of Adidas

Adidas is facing tough competition from various sportswear manufacturing brands in the market; they have the business very difficult. Some of the main factors impacting competitive rivalry in Adidas Porter’s five forces analysis are as follows;

I-High Competition

The sportswear industry has become highly competitive and there are various brands offering similar types of products and services without any differentiation. Customers have got a lot of choices while shopping. In order to maintain their position, the focus of brands is on brand differentiation, marketing, USPs, and research and development.

II-Marketing & Promotion

Competitive brands like Nike, Ralph Lauren, Puma, Reebok, H&M, Gucci, and others invest a significant amount of capital resources in marketing and promotion. It allows them to have market and brand exposure, and ultimately win the brand loyalty of customers.

III-Limited Growth Rate

The sportswear and apparel manufacturing market has reached saturation point, where the exponential growth of any brand is not possible. Brands could amplify their sale and earnings to some extent, but they can’t win the overall market.

Conclusion: Adidas Porter’s Five Forces Analysis 

After an in-depth study of Porter’s five forces of Adidas; we have realized that Adidas is the world’s leading sportswear brand. If you are learning about the Adidas five forces analysis; then you should keep in mind the abovementioned bargaining power suppliers and buyers; threat of new entrants and substitute products; and competitive rivalry in Adidas Porter’s five forces analysis.