What is the Industry analysis relevant to the company Adidas? Include:
- Who are their main competitors in the industry
- What is the economic outlook for the industry
- What external factors will influence future expansion or contractions of the industry
An industry analysis, by definition, establishes the attractiveness of an industry and provides a starting point for understanding a company's competitive market position and for formulating a market strategy.
Industry analysis may also be called a Five Forces Framework analysis because it analyzes the five competitive forces of industry: current competitors, customers, suppliers, substitutes, potential entrants.
To write an industry analysis, determine:
- the industry rivalry defined as the degree of competition between competing companies
- the potential for substitute products of services since the availability of substitutes will affect the price raising potential
- the bargaining power of buyers since powerful buyers can impact prices
- the bargaining power of suppliers since powerful suppliers can demand high premium prices for supplies and thus limit the potential for profit
- barriers to deter potential entry in the market since new entrants increases competition
adidas Industry Analysis
adidas is in the sports footwear industry, which is part of the global footwear industry. The global footwear industry, though it suffered in the five years up to 2014 as it felt the continuing shockwaves of the economic conditions ushered in by the financial collapse begun in 2008, is a healthy one with a projected global demand reaching $195 billion by 2015 and $211.5 billion by 2018. adidas is reducing supply costs through technological innovations such as injected CO2-based waterless dyes, reducing dye requirements by 50 percent, and virtual electronic sample sending, which has reduced samples sent by 600,000. Their nearest rival is Nike who leads the market even after adidas' 2006 purchase of British owned Reebok, though the Reebok purchase positioned adidas to compete on the global level against Nike. Some external factors that influence industry expansion are rising populations, increasing disposable income levels, rising awareness about health and active lifestyles, and a rise in retail culture. Celebrity endorsements and fashion trends spurring innovations in styles and designs continue as external factors influencing expansion. Increases in non-store purchases (Internet) will boost overall industry growth.