MATRIX ANALYSIS OF ADIDAS

Submitted in fulfilment of Semester III End Term Assignment

Strategic and Innovation Management

Submitted By

Anjali | Asmita | Dipika | Keshav | Priya

Under the guidance of

Dr. Vikas Kumar

Associate Professor

Department of Fashion Management Studies

National Institute of Fashion Technology, Patna

Mithapur Farms Area

Patna, PIN - 800001
Ph. 91 612 2340032, Fax: 2360078
Web: www.nift.ac.in
December 2021

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 DECLARATION
We, hereby declare that the report entitled “Matrix Analysis of Adidas” is the result of our
research work carried out during Third Semester except as cited in the reference. This report has
not been submitted to any other university or institution for an award for any Degree, diploma
etc.

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 ACKNOWLEDGEMENT

Foremost, we would like to show our deepest gratitude to Dr. Vikas Kumar sir, our Strategic
and Innovation Management professor, for providing us this assignment as well as for his
patience, encouragement, passion, and vast knowledge. His advice was beneficial to us during
the study phase. For this subject, we couldn't have asked for a greater advisor and mentor.
We want to express our gratitude to NIFT Patna for providing us with the opportunity to work in
such a prestigious institution. We did a lot of research and learned a lot of new things as a result
of this.

We are quite grateful because we were able to do our assignment in the time allotted by our sir.

We also like to thank our parents for all the help and cooperation that we received from them.
Their contributions are sincerely appreciated and gratefully acknowledge.

We also like to express our deepest gratitude to everyone who has helped us, both directly and
indirectly.

Anjali
Asmita
Dipika
Priya
Keshav

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 TABLE OF CONTENTS
Sl. No. Title Page No.
DECALARATION ii

ACKNOWLEDGEMENT iii

LIST OF TABLES v

Introduction 1
1.
Mission, Vision and Core Values 1
2.

3. SWOT Analysis 2
4. Case Study 5

4.1. External Factor Evaluation 6

4.2. Internal Factor Evaluation 8

4.3. Competitive Profile Matrix 10

5. SWOT Matrix 12

6. SPACE Matrix 14

7. Matrix Analysis 16

7.1. Conclusion 16

8. Quantitative Strategic Planning Matrix 17

8.1. Conclusion 18

9. References 18

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 LIST OF TABLES

Fig. No. Title Page No.

1. External Factor Evaluation 6

2. Internal Factor Evaluation 8

3. Competitive Profile Matrix 10
4. SWOT Matrix 13

5. SPACE Matrix 14
6. Matrix Analysis 16
7. Quantitative Strategic Planning Matrix 17

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1. Introduction

Adidas is a multinational corporation, founded and headquartered in Germany

that designs and manufactures shoes, clothing and accessories. Adidas is well
liked by many as they sell a different range of items such as men’s and
women’s clothing, shoes and accessories. The benefits and services of Adidas
are that they are putting in continuous efforts to strengthen the brand to
maintain in a competitive market by improving the quality, looks and designs
in order to exceed customer’s expectations. Adidas is also a global organization
that focuses on being creative to attract more customers to achieve an
outstanding sales target.

2. Mission, Vision and Core Values

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3. SWOT Analysis

SWOT analysis is a framework used to assess a company's competitive position

and to create strategic planning. It stands for strengths, weaknesses, opportunities,
and threats. The SWOT analysis evaluates internal and external variables as well as
present and anticipated future situations. Strengths are what make a company stand
out from the competition and what it excels at. An organization's weaknesses
prevent it from operating at its highest potential. They are areas where the
company needs to strengthen itself to stay competitive. Opportunities are
advantageous outside variables that might provide a company a competitive edge.
Threats are things that could do something bad to an organization.

ADIDAS - SWOT Analysis

Strength

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  Brand Value: Adidas is one of the most valuable brands in sports.
According to Forbes, it is ranked at #3 position with a brand value of $12.9
Billion. In 2020, Adidas was ranked the 51st most valuable brand in the
world. 

 Diversified Portfolio: Even though the Adidas brand is restricted within the
sportswear industry, the company’s products are diversified. It offers
multiple products that are designed to cater to a wide range of sports,
including footwear, apparel, and hardware accessories. Footwear represents
53%, Apparel represents 41% and Accessories and Gear represents 6% of
Adidas annual sales of € 21.2 Billion.

 Culture of innovation - Innovative products are one of the driving forces

behind its ever-growing customer base. Since its founding, Adidas has
prioritized the quality of its products over everything else. In 2021, EUR 130
million was invested in R&D.

 Strong Financial Position- Adidas is among the most financially stable

companies globally. In 2021, Adidas’s currency-neutral revenue grew by
16% from EUR 18.4 billion to EUR 21.3 billion.

 Strong & Diversified Distribution Network: Adidas has several

distribution networks, including over 2300 company-owned retail stores,
over 14,000 branded franchise stores.

 Celebrity Endorsements: Adidas has strived to maintain and enhance its

recognition as a youthful and urban brand through endorsements from
celebrities.

 Strong presence on social media  

Weakness

 Expensive Products- Adidas charges a premium or high prices for its

products, which has alienated low-income consumers. Only upper- and
middle-income group customers can afford over a $100 shoe.

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  Limited Product Line- Under its portfolio, this has restricted the company
within sports footwear, sports apparel, and accessories. Therefore, a decline
in demand for sports-related products can be disastrous to Adidas.

 Outsourcing -Adidas outsources the production of most of its products to

3rd party or independent manufacturing suppliers, mainly in China,
Cambodia, and Vietnam. It has exposed Adidas to the risk of
overdependence on foreign suppliers

 High attrition rate in work force – compare to other organizations in the

industry adidas has a higher attrition rate and have to spend a lot more
compare to its competitors on training and development of its employees.

Opportunity

 Growing sportswear industry- Sports and fitness have grown in

popularity with no sign of slowing down soon, which means there will be a
consistent increase in demand for sportswear products and assortments.

 Increased demand in developing countries- Improved economic situation

in developing countries has increased purchasing power and demand for
premium products. Adidas can capitalize on this by expanding into countries
such as India, where discretionary income is expected to increase by 45% by
2025.
 Product line expansion - Even though Adidas has a diversified portfolio,
there is still room for expansion of its product line.
 Potential to expand in other media- In recent years, the number of
consumers who shop online or use e-commerce sites has increased
significantly. Adidas incorporated various e-commerce such as Instagram.
Adidas can replicate in other social media platforms such as Facebook and
Snapchat. Its e-commerce is expected double to €8 billion by 2025.
.
 Technology development - Adidas announced that it will expand the
product lines using newly launched fabrics made from recycled marine
plastic and polyester.

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Threats

 Supplier dominance - Because of majority production being outsourced:

Suppliers have more bargaining power.

 Competition- Adidas is lost 1 position to Nike and there is regular

competition from local players, market penetration and substitutes
 Technological Advancements: The threat posed by competitors increases
as they become more technologically advanced. This implies that a
competitor such as Nike will pose a greater threat if they become
technologically advanced than Adidas.

 Fake Products: According to CEO Rorsted, 10% of Adidas products in

Asia could be fake. The number and quality of fake products for premium
shoe brands have increased significantly in the recent past, which poses a
threat to shoe-manufacturing companies.

4. Case Study: Analysis of EFE, IFE, CPM Matrix of Adidas

Abstract

This study presents analyzing the strengths, weaknesses, opportunities, threats of

Lifestyle International Private Limited. SWOT was further used in formulating
internal factor evaluation and external Factor evaluation.

Introduction

Internal factors are influences on a firm's performance that originate within the
company, or can be managed by the company. A company's internal environment
must be identified and evaluated as part of the strategy-making process. The
corporation expects the outcomes of the identification and evaluation to reveal the
profile of the company's strategic advantage. In order for the organization to be
able to foresee business possibilities and respond rapidly to existing business
dangers.
External influences are those that come from outside the company and have an
impact on its success. External factors are crucial to consider since they can
provide a comprehensive picture of the company's prospects and risks.

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SWOT analysis looks at four perspectives: strength, weakness, opportunity, and
threat. Strength is used to analyze a company's strengths, weakness is used to
analyze a company's limitations, opportunity is used to analyze environmental
situations that benefit companies, and threat is used to analyze situations that are
not profitable and can threaten a company.

4.1. External Factor Evaluation (EFE)

This matrix allows companies to compile and assess the key external forces like
economic, social, cultural, demographic, environmental, political, governmental,
legal, technological, and competitive information. There are 5 steps to develop
EFE matrix.
Step: 01

 List the identified external factors

 For opportunities & threats, 15-20 factors can be included.
 Opportunities are listed first follow by threats.
 Use percentages or ratios, as specific as possible.

Step: 02

 For each of the external factors, weight is assigned.

 Range: 0.0 to 1.0 (not important to very important)
 Higher weights are given to Opportunities than to Threats.
 The total assigned weights = 1.0

Step: 03

 A rate between 1 & 4 is assigned to the listed external factors.

 The rate shows the response of the company’s ongoing strategies to the
factor.
 4 = the response is superior
 3 = the response is above average
 2 = the response is average
 1 = the response is poor

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  Ratings = Company-based
 Weights (Step 2) = Industry-based
 Both threats & opportunities can be 1, 2, 3, or 4.

Step: 04

 Each factor’s weight X Rating = Weighted Score

Step: 05

 Total up the weighted scores for all variable = total weighted score.

Total weighted score indicator:

 Highest score- 4 (The company current strategies are effective)

 Lowest score- 1 (The company current strategies are not effective)
 Average score - 2.5

Step 1: Input Stage

Table 1: External factor evaluation of Adidas

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  This table shows external factor evaluation of Adidas. Various external
opportunities and external threats were noted down and weights were
allotted to each of them. Less weights were allotted to those opportunities
which might take time to happen similarly less rating were allotted to those
opportunities which were given less weights.

 At the end, the total weighted score was calculated for key external factor.
Total weighted score of key external factors of Adidas is 3.2. Since it is
above average score i.e., 2.5. Thus, it can be concluded that the company
current strategies are quite effective.

4.2. Internal Factor Evaluation (IFE)

IFE (Internal factor evaluation) matrix is one of the best strategic tools to perform
internal audits of any firm. There are some important points related to a rating in
the IFE matrix. Rating is applied to each factor.

 A major weakness is represented by 1.0

 A minor weakness is represented by 2.0
 Minor strength represented by 3.0
 Major Strength represented by 4.0

Major weakness needs company attention to change into minor weakness then
strength and finally major strength. As compared to major strength minor
weakness need little efforts of the company to change it into strength. The range of
rating starts from minimum 1.0 which is worst and maximum 4.0 which is the best
factor of the company.

Weight

In the IFE matrix, the weight attribute reflects the relative relevance of a factor to
the firm's success in its industry. The weight ranges from 0.0 to 1.0, with 1.0 being
the most important. The sum of all assigned weights to factors must equal 1.0, or
the calculation would be incorrect.

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Weighted score
The outcome of multiplying each factor rating by the weight is the weighted score
value.

Total weighted score

The overall weighted score is equal to the sum of all weighted scores; the total
weighted score should be in the range of 1.0 (low) to 4.0 (high). The IFE matrix's
average weighted score is 2.5, and any company with a total weighted score below
2.5 is considered weak. A total weighted score of more than 2.5 indicates that the
company is in a solid position.

Table 2 – Internal factor evaluation of Adidas

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Table shows internal factor evaluation of Adidas. Various internal strengths and
internal weaknesses were noted down and weights were allotted to each of them.
More weights were allotted to strong strength which is depicting major strength of
the company similarly more rating was allotted to those strengths which were
given more weights.
At the end, the total weighted score was calculated for key internal factor. Total
weighted score of key internal factors of Adidas is 2.61. Since it is above average
score 2.5. So it can be concluded that the company is in good position.

4.3. Competitive Profile Matrix (CPM)

A Competitive Profile Matrix (CPM) is a strategic analysis that reveals a

company's relative strengths and weaknesses by comparing it to its competitors.
Product range/quality, customer service, brand equity/reputation, marketing
innovation, management, and HR competency are some of the important
components that are evaluated. After they've been weighed, they'll be rated for a
full evaluation.

Key components of competitive profile matrix:

Weight
Once the critical success factors have been determined, they must be given a
weighting from 0.1 to 1. For example, a factor given a weighting of 0.2 means that
it is not a particularly large driver of success. A rating of 0.8, on the other hand,
denotes a critically important success factor.

Weighted score

With critical success factors and their associated weightings determined,

a business can now be scored against them. Most use this simple scale:

 4 = major strength
 3 = minor strength
 2 = minor weakness
 1 = major weakness

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Total weighted score

To arrive at a total score for each competitor, weighted scores are added together.
The company with the highest score is the strongest in its industry, relative to its
competitors.

Table 3: Competitive profile matrix of Adidas

Table shows competitor profile matrix of Adidas. Various critical factors were
identified first and then weight was allotted and then rating was done.
CPM matrix is created below comparing the factors of the company with its two
major competitors NIKE and PUMA.
Nike has the highest weighted score of 3.35. Adidas has the weighted score 3.13
which is above then average but not showing a great result of the company as
compared to its competitor NIKE. Hence company can formulate strategies in

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order to beat its competitors.

Step 2: Matching Stage

5. SWOT Matrix

SO Strategies

 Expansion strategy will allow for Adidas to grow as long as its strong brand
name.
 Strong financial resource will help to increase amount of production due to
increasing demand in developing countries.
 Strong financial condition will help adidas to development of technology
advancement and its product lines.
 Due to strong distribution network and financial position increase marketing to
attract customers of developing countries.

WO Strategies

 Through product expansion adidas overcome from restriction of limited product

line.
 Improved economic situation in developing countries has increased purchasing
power and demand for premium products. Adidas can sell their expensive
premium product in developing countries.

ST Strategies

 Use a strong distribution network to reach out to customers and fight off new
entrants into the market.
 Use finance to become technology advanced then competitors.

WT Strategies

 Increase spending on research and development to enable Adidas to better

compete with competition.

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 Provide incentives, increase engagement, or provide a better work environment
to retain talent. This will ensure that employees don’t leave and join
competitors.

Table 4: SWOT Matrix

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6. SPACE Matrix

Table 5: SPACE Matrix

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for Aggressive

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 7. Matrix Analysis

Table 6: Matrix Analysis

7.1. Conclusion
Here, we have listed all type of strategies in 1st column and then listed the matrix
which we have done. Through SWOT and SPACE matrix we came to conclusion
that market penetration, market development , product development and
diversification got the highest weighted score. Adidas should follow either of these
three strategies.

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8. Quantitative Strategic Planning Matrix

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Key external factor Market Development Market Pentration Product Development

Internal strength Weight AS TAS AS TAS AS TAS

Strong brand value 0.15 4 0.6 4 0.6 2 0.3
Culture of innovation 0.10 2 0.2 2 0.2 4 0.4
Strong financial position 0.09 4 0.36 4 0.36 4 0.36
Strong & Diversified
0.15 3 0.45 4 0.6 0 0
distribution network
Diversified Portfolio 0.08 3 0.24 3 0.24 3 0.24

Internal weakness
Expensive Products 0.10 2 0.2 1 0.1 1 0.1
Limited Product Line 0.15 2 0.3 2 0.3 4 0.6
Outsourcing 0.09 0 0 0 0 3 0.27
High Attrition rate 0.09 0 0 0 0 0 0

Opportunity

Increase in demand for

sportswear products and 0.10
assortments.
3 0.3 3 0.3 4 0.4

Adidas has a diversified

portfolio, there is still room
0.15
for expansion of its product
line.
2 0.3 2 0.3 4 0.6

Increased demand in
0.05
developing countries
4 0.2 2 0.1 1 0.05
Potential to expand in
other media 0.10 2 0.2 4 0.4 1 0.1
Product development with
the help of technology
advancement. 0.20 0 0 1 0.2 4 0.8

Threats
Supplier dominance 0.05 2 0.1 2 0.1 3 0.15
Threats from local players
and competitors 0.15 3 0.45 3 0.45 0 0

The number and quality of

fake products for premium
shoe brands have increased
significantly
0.10 0 0 3 0.3 2 0.2
Technological
Advancements 0.10 2 0.2 2 0.2 2 0.2
4.1 4.75 4.77

Table 7: Quantitative Strategic Planning Matrix

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8.1. Conclusion
Product development got the highest weighted score. So adidas should follow
the product development strategy.

9. References

Kasi. (2020, July 15). EFE Matrix of Adidas. Retrieved from mba-tutorials: https://mba-tutorials.com/efe-
matrix-of-adidas/
Lewis, R. (n.d.). Adidas. Retrieved from Britannica: https://www.britannica.com/topic/Adidas-AG

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