Within this report I will be writing about Adidas as an organisation and the nature of the company. Adidas is an international retailer of sportswear that is one of the second highest profitable business in this sector behind Nike however Adidas is hoping that through marketing itself well through using sporting events and the new purchase of Reebok it can overtake its main competitor as the biggest international sporting brand.
Adidas as a brand is expanding more and more and recently purchased one of its main rivals Reebok for $3. 8 Billion which was a big step in overtaking Nike as the biggest sporting brand. ‘The acquisition would hand Adidas about 20% of the global market, Nike controls roughly one-third of the $145 billion market. ’ Another way Adidas chose to try and overtake Nike was by trying to attract a number of sponsorships connected with the London Olympics and in this case Adidas came out on top with its stock increasing ‘by 36. 7% in 2012, while Nike ecked out at 3%’.
By attracting the biggest sports stars of the Olympic games to wear Adidas products by paying them vast amounts this provided advertisement for the company as the athletes were seen as role models and heroes to many different nations throughout the word with people such as Jessica Ennis and Yohan Blake opting to wear Adidas this created a lot of awareness of the products and were seen as the number one product worn by champions. ‘If Ennis wins gold, she will be bathed from top to toe in Adidas; a contract said to be worth more than ? 20,000 plus bonuses. ’ This shows that with the vast amount of money Adidas is spending and the quality of the starts it is attracting it is one of the biggest organisations in the world with Forbes listing it as the ‘53rd most powerful brand in the world’ that Adidas is a huge organisation and the size of the company is one of the biggest in the world to date. Also the income that Adidas continually receives each year shows how significant it is as a company. Revenue, Assets and the profit of Adidas in 2012.
This shows the market potential that is still increasing and that Adidas is capitalising on the interest of sport especially when events such as the London Olympics were on when many more people become interested in sport and backed their own country and were wearing their own country’s clothes. ‘ the company has spent ? 100m on sponsorship, marketing and advertising since the Games were first announced in 2007. ’ This shows the level of investment shown by Adidas and shows how vital the games were to the company and it is a risk that paid off as they began to close the gap on the main rivals Nike.
Adidas has achieved this size through significant investment towards its advertisement and boasts many huge names such as; David Beckham, Snoop Dogg, Lionel Messi, Sergio Garicia, Novak Djokovic, Noel Gallagher as well as teams including, Germany and Argentina In football and the Great British Olympic team. This shows the wide variety of Adidas adverts and the different background they have chosen to not only expand in Europe but throughout the world with sponsors such that represent many different countries and events that are shown around the world such as the world cup with many different teams competing from around the world.
An example of Adidas London Olympics adverts that could be seen around Britain of eventual medallist Louis Smith. Adidas operate within the private sector as an organisation as it is run for the purpose of profits. A private sector business is ‘an organization that is run for the purpose of profit or dividends and is owned by private citizens. ’ Adidas operates at extremely high profits and is also owned by shareholders that invest in the company and try to find the best route for Adidas to take.
Adidas do however use the funding they generate to input into many different charities expecting no return with the dominant choice being based around sporting charities to comply with the company’s image such as the Adidas Silverstone half marathon that is run every year to raise money and awareness for different charities. Many people argue that with the huge figures Adidas generate as profit, even in a poor economical market, they could help many more different organisations and charities compared to what they do and this is a negative aspect of the organisation.
The figures that Adidas spend on advertisement and the number of celebrities and events they sponsor may be seen as necessary by the company however they could use some of the funding they use on ‘lower status’ celebrities they could use on providing money to local communities or charities as Adidas sponsors approximately 1500 people and many of these sponsorships may seem unnecessary such as low level basketballers, golfers, footballers etc, who would not be seen by many people around the world.
Adidas is also operating in the Secondary sector in terms of its production methods as; ‘All businesses which manufacture and process the raw materials which can be used by the end consumers are known as Secondary Sector businesses. These include building, construction, compute assembly, shoes factories, textile factories etc. ’
Adidas fits this category as all of its items are manufactured and processed as it has many different production factories producing mainly shoes, sportswear, sporting equipment and other things of that nature that process the raw materials that will be used in the end by the customer as they are mostly made from plastics and microfibers and also sometimes artificial leathers that will suit the product the best.
Adidas do not need to farm or grow any of their own products therefore this makes them fall into the secondary sector and they rely on the manufacturing of their own materials such as new concepts like the ‘climawarm’ range where the jacket can ‘breathe’ and pours within the jacket open when the weather is warm and close when the weather is cold therefore there they would have to manufacture these products themselves.
References
- http://www. nytimes. com/2005/08/03/business/worldbusiness/03iht-reebok
- http://www. independent. co. uk/news/business/analysis-and-features/100m-in-sponsorship–and-the-olympics-have-adidas-written-all-over-them-7973367
- html http://www. forbes. com/companies/adidas/
- http://www. adidas-group. com/en/pressroom/archive/2012/02Aug2012. aspx http://www
- wisegeek. com/what-is-a-private-sector-business. htm
- http://www. dineshbakshi. com/igcse-business-studies/business-activity/revision-notes/1251-levels-of-business-activity
