Adidas is my approved company thank you Research your company and its industry a

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Adidas is my approved company thank you

Research your company and its industry and perform a Porter Five Forces analysis.  For this assignment you should acquire a minimum of five separate pieces of APA cited research material, which can include periodical articles, investor analysis, and trend analysis for your company’s industry. Please be sure to use Berkeley College's Online Databases for information.

A Five Forces chart should begin your analysis to serve as a quick reference point. An example chart is Five-Force Model Chart.pdf

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.   Beneath each of the forces, you should provide a brief one or two word description (i.e., low, moderate or high) of what you will present on the pages following.

The Five Industry Forces are:

Barriers to Entry: Outline what, if any, barriers exist preventing new firms from being created and competing with existing rivals.

Intensity of Rivalry: Discuss the key four or five elements that effect intensity and how hard firms must do battle with each other. What must ANY existing rival do in order to succeed?

Supplier Power: Is there any power existing on the input side that forces firms to bend to the will of suppliers?

Buyer Power: Are customers of rivals able to unduly influence rivals such that they can be forces to do things they otherwise would not choose to do?

Threat of Substitutes: Define the basic need(s) met by the goods and services sold by rivals. Can this need be easily met by purchasing the goods and services of non-rivals and who/what might those substitutes be?

Each force should be discussed beneath their own headings in your paper using as much space as you deem necessary to complete your analysis.  Also, please conclude your paper with a brief (1-4 paragraphs are probably good) summary of the key competitive forces that characterize your industry.

IMPORTANT: Finally, please make sure that you focus on the industry and NOT your firm. Students who focus on their firm too much have a tendency to go on incorrect tangents that later have to be corrected and will thus mean more work on your part. You certainly can use your firm as an example of what a firm in general must do, but the focus of analysis must remain on the industry.

Explanation / Answer

Ans:

Barriers to entry:

While a brand can enter with a small capital on a local scale, to grow a brand the size of big companies like Adidas requires a very large investment which can be understood from the size of its production and supply chain. There are several factors requiring large investment like technology, skilled human resources, marketing, advertising etc. So, unless someone has enough capital to spend entering the industry would be difficult. Moreover, one cannot build as much brand equity overnight. It also takes time as well as efforts to build as much brand equity. All these factors moderate the threat arising from any new player trying to enter the industry.

Barriers to entry- Low to moderate

Intensity of rivalry:

Apart from the main competitors like Nike, Puma and Under Armour there are several other smaller competitors too which add to the level of competition in the industry. While the level of saturation in the industry has grown, the existing players are also engaged in an intense battle for market share. All the brands are investing heavily in marketing and spending billions on advertising and sponsorships. While the number of top brands is limited, still the level of competition in the industry is intense.

Intensity of rivalry - High

Supplier power:

Despite the important role of suppliers in the industry, their bargaining power is very low which is because of a large number of suppliers and smaller size. Moreover, it is easier for the brands to switch to new suppliers. The suppliers are distributed globally and singly none of them can exert any pressure on the brands. Most of the production is outsourced. They have a global and multilayered supply chain with several types of suppliers in the chain, some of which are direct contractors. As a result, companies get to set the rules of the game including labour cost and product quality standards and the suppliers are required to comply with.

Supplier power - Low

Buyer Power:

While the individual buyers do not hold any significant clout, as a group they exercise somewhat significant influence. There are several local and international brands competing for market share in this industry. The switching costs are low for the customers.

Buyer Power - Moderate

Threats of Substitutes:

There are small and large; local and international competitors which offer products under a wide range of prices. Some of them cater to the needs of the high-end customer whereas the local competitors offer substitutes at lower prices. The threat from the substitute products is moderated by the quality of products and marketing efforts of Adidas. In order to further moderate the threat, Adidas has focused on marketing in the metropolitan markets since a large part of its customer base lives there.

Threat of Substitutes - low to moderate

In conclusion, the industry is favourable for Adidas as much of the forces are low in power and give immense advantage to the company.

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