Adidas SWOT Analysis and the Ethical Implications of Pursuing a Social Responsibility Program

Introduction

Corporate social responsibility has become an essential subject for companies due to
increased competition driven by advancements in technology and globalization. Most
organizations have been forced to institute strategies inclined to improve the environment and
communities while meeting their mandates to stakeholders. For example, sportswear and apparel
firms like Adidas have been forced to embrace corporate social responsibility to remain
competitive in the market. This paper explores Adidas’ strengths, weaknesses, opportunities, and
threats (SWOT) and the ethical implications of pursuing a social responsibility program targeting
stakeholders and stockholders.

SWOT Analysis

Weaknesses

1. Pricing strategy
2. Focus on sports
3. Legal woes

Adidas SWOT
Analysis

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Fig 1. The quadrant represents Adidas’ strengths, weaknesses, opportunities, and threats (SWOT)
analysis.

Strengths

i. Global presence
Adidas distributes its product globally, making it a household name. Adidas has invested
heavily in visibility, and its association with the sporting culture practiced worldwide increases
its visibility.
ii. Technology
Adidas uses a high level of technology in its production. The organization has become a
global leader in the sports and apparel industry by leveraging its products’ technology and
innovation (Dogiamis & Vijayashanker, 2009). Some of Adidas’s products are in the fashion
industry and are driven by technology.
iii. Diversified Portfolio
Adidas has product offerings in fashion for men, women, and kids. It sells sportswear for
all genders and accessories such as bags, water bottles, headphones, and sunglasses. Adidas
diversifies its portfolio through partnerships with renowned brands such as Ivy Park, Yeezy, Y-3,
Terrex and Disney, and Lego for kids.
iv. Efficient Supply Chain
Adidas has an efficient supply chain that ensures that its products arrive promptly at the
required destinations worldwide. Adidas describes its supply chain as a comprehensive, multi-
tiered, varied, and systematic approach that ensures stability and continuity of critical activities
(Adidas Group, 2022b).

Weaknesses

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i. Pricing Strategy
Adidas products are expensively priced. The company pegs its exorbitant prices on
quality (Mahdi et al., 2015). However, Adidas’ pricing strategy locks out many potential
customers. The firm also does not have a product segment for cheaper priced products.
ii. Focus on Sports
Adidas has focused on the sports industry. It has structured most of its products to
conform to the sports culture. The lack of diversification into other sectors made Adidas prone to
reduced revenues in 2019-2020 during the COVID-19 pandemic.
iii. Legal Woes
Adidas has been at the center of recent legal battles, the most notable being the defense of
its 3-stripe logo in the European Union. In another case, Adidas was accused of greenwashing its
customers when it claimed that 50% of its sustainability kits were made from recycled ocean
waste, a claim which was found to be false.

Opportunities

i. Partnerships
Adidas can take advantage of partnerships with renowned brands such as Disney, Lego,
Yeezy, Xbox, and Coinbase to increase its brand value and equity.
ii. E-commerce
Adidas has a robust e-commerce system to fulfill its sales to global customers. The firm
can leverage rapid transaction processing to enhance customer experience and ensure no
downtime. Additionally, a partnership with Coinbase will allow Adidas to accept payment in
cryptocurrency.
iii. Innovation and Creativity

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Adidas has used innovation and creativity to remain relevant in the sports industry.
Adidas keeps launching newly enhanced products like Adidas Strung, transforming athletes’ data
into high-performance material.

Threats

i. Competition
Adidas’s main competitor is Nike, with almost a similar product offering. Other brands
which compete with Adidas include Under Armour, New Balance, Puma, ASICS America,
Eastbay, and Callaway. Adidas, therefore, has to keep improving and innovating to maintain its
share of the sports market.
ii. Rapid Technology
Adidas competes in an industry with the high movement of technology. Adidas’
competitors continue to make significant strides in technology and e-commerce, wiping out the
competitive advantage that Adidas has enjoyed over its competition.
iii. Counterfeiting
Adidas faces the threat of counterfeiting. Many of Adidas’ products have been
counterfeited and sold as Adidas brands. Counterfeiting and copying have affected Adidas’
reputation and sales, ultimately denting its revenues and profit margins.

Ethical Implications of Pursuing a Social Responsibility Program to

Stakeholders/Stockholders

Adidas’s massive responsibility to its stockholders is to generate more profits, increase
share prices, and guarantee the firm’s sustainability. Castello (2013) defines shareholder theory
as the responsibility of managers to use the organization’s resources to increase stakeholders’

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wealth by seeking profits. Stakeholder theorists consider this the most significant way to impart
the society as long as it is done within the law’s confines.
Adidas’ commitment to sustainability is meant to affect the organization’s business
method and bring change to the industry (Port, 2021). One of Adidas’ greatest strengths is the
technology with which it drives its production and sustainability practices. For example, the
company uses sustainable dye technology and innovative color methods to reduce environmental
impact and consumption of water, chemicals, and energy (Adidas Group, 2022). The sports
brand reduces its direct overheads in materials and energy use and increases its net earnings and
dividends to shareholders. Such innovation has also driven Adidas to conceptualize and produce
sporting attire and shoes made in part from ocean waste (Port, 2022). This way, Adidas
contributes to improving the livelihoods of the communities that depend on the ocean for
commercial activities like tourism. It also helps clean up the environment for coastal
communities and shorelines.
Adidas increases its customer retention values through the made-to-be-remade program.
This program is enabled by Adidas’ innovation and creativity and robust supply chain. Once the
purchaser wears the product down, they scan the QR code on the product to begin returning it
where it is remade into something entirely new such that the end of the life for one product
marks the beginning of another product. It is also important to note that Adidas stands out in
sustainability issues through partnerships with brands such as Parley, an organization committed
to raising awareness about the natural beauty of the oceans and the general deep-sea ecosystem.
Parley and Adidas have partnered to develop the Adidas-Parley ultra-boost boot, Major League
Soccer uniforms, Adidas-Parley Alpha edge 4D, and many other product lines through Parley.

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Adidas has also unified sport and sustainability education in the Parley Ocean School
sessions in Maldives, New York, Australia, and Los Angeles. In so doing, Adidas and Parley
have positively impacted the lives of communities involved in collecting waste in the Dominican
Republic and Sri Lanka. Adidas then creates a direct link to sustainable profits. For example,
Adidas reports that through its partnership with Parley, it has produced over 17 million pairs of
shoes from upcycled materials between 2017 and 2020 (Parley, 2021).
This has reduced the amount of plastic in the ocean and reduced the carbon footprint in
its production. The 17 million pairs generate revenues which translate into profits and added
value for the shareholders and stockholders. At the same time, Adidas contributes significantly to
the communities living on the shorelines of the Indian and the Caribbean Sea and to a sustainable
ocean ecosystem.

Conclusion

Like other global brands, Adidas plays a critical role in reforming societies and the
environment while fulfilling its obligation of generating profits and improving company value to
stakeholders. Today, Adidas is redirecting efforts towards a social course. The shareholder’s
ethics theory states that an organization’s social responsibility generates profits to fulfill its
commitment to the shareholders. However, Adidas can align its social responsibility motive and
social responsibility programs, ultimately fulfilling its mandate to shareholders and the
environment it operates in and surrounding communities.

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References

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Adidas Group. (2022b). Sustainability our target. Adidas-Group.Com. https://www.adidas-
group.com/en/sustainability/focus-sustainability/our-targets/
Castelo, B. M. (2013). Shareholder theory. Encyclopedia of Corporate Social Responsibility,
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Dogiamis, G., & Vijayashanker, N. (2009). Adidas: sprinting ahead of Nike. chrome-
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