adidas Group: IT Multi-Sourcing at adidas SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Technology & Operations
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of adidas Group: IT Multi-Sourcing at adidas
This case describes the design and implementation of an IT-multi-sourcing strategy at a large global sportswear company, the adidas Group, which is headquartered in Germany. To help increase the benefits and reduce the risks of its sourcing arrangements, adidas carefully selected two tier-2 vendors to work with its primary tier-1 vendor, a large Indian outsourcing firm that it had worked with closely for over a decade. The management of the multi-sourcing arrangement is posing a number of challenges. The Chief Information Officer is considering a number of options to ensure the continued success of the multi-sourcing strategy, including restructuring the IT group, developing the skills of its staff, and starting a captive center.
Authors :: Lynda M. Applegate, Martin Wiener, Carol Saunders, Grandon Gill
Swot Analysis of "adidas Group: IT Multi-Sourcing at adidas" written by Lynda M. Applegate, Martin Wiener, Carol Saunders, Grandon Gill includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Adidas Sourcing facing as an external strategic factors. Some of the topics covered in adidas Group: IT Multi-Sourcing at adidas case study are - Strategic Management Strategies, Operations management, Organizational structure and Technology & Operations.
Some of the macro environment factors that can be used to understand the adidas Group: IT Multi-Sourcing at adidas casestudy better are - – there is increasing trade war between United States & China, supply chains are disrupted by pandemic , wage bills are increasing, technology disruption, increasing transportation and logistics costs, talent flight as more people leaving formal jobs, geopolitical disruptions,
central banks are concerned over increasing inflation, increasing government debt because of Covid-19 spendings, etc
Introduction to SWOT Analysis of adidas Group: IT Multi-Sourcing at adidas
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in adidas Group: IT Multi-Sourcing at adidas case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Adidas Sourcing, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Adidas Sourcing operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of adidas Group: IT Multi-Sourcing at adidas can be done for the following purposes –
1. Strategic planning using facts provided in adidas Group: IT Multi-Sourcing at adidas case study
2. Improving business portfolio management of Adidas Sourcing
3. Assessing feasibility of the new initiative in Technology & Operations field.
4. Making a Technology & Operations topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Adidas Sourcing
Strengths adidas Group: IT Multi-Sourcing at adidas | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Adidas Sourcing in adidas Group: IT Multi-Sourcing at adidas Harvard Business Review case study are -
Organizational Resilience of Adidas Sourcing
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Adidas Sourcing does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Digital Transformation in Technology & Operations segment
- digital transformation varies from industry to industry. For Adidas Sourcing digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Adidas Sourcing has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Training and development
– Adidas Sourcing has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in adidas Group: IT Multi-Sourcing at adidas Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Sustainable margins compare to other players in Technology & Operations industry
– adidas Group: IT Multi-Sourcing at adidas firm has clearly differentiated products in the market place. This has enabled Adidas Sourcing to fetch slight price premium compare to the competitors in the Technology & Operations industry. The sustainable margins have also helped Adidas Sourcing to invest into research and development (R&D) and innovation.
Superior customer experience
– The customer experience strategy of Adidas Sourcing in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Strong track record of project management
– Adidas Sourcing is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Innovation driven organization
– Adidas Sourcing is one of the most innovative firm in sector. Manager in adidas Group: IT Multi-Sourcing at adidas Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Operational resilience
– The operational resilience strategy in the adidas Group: IT Multi-Sourcing at adidas Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
High brand equity
– Adidas Sourcing has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Adidas Sourcing to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Learning organization
- Adidas Sourcing is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Adidas Sourcing is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in adidas Group: IT Multi-Sourcing at adidas Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Ability to lead change in Technology & Operations field
– Adidas Sourcing is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Adidas Sourcing in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Cross disciplinary teams
– Horizontal connected teams at the Adidas Sourcing are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Weaknesses adidas Group: IT Multi-Sourcing at adidas | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of adidas Group: IT Multi-Sourcing at adidas are -
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study adidas Group: IT Multi-Sourcing at adidas, it seems that the employees of Adidas Sourcing don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Lack of clear differentiation of Adidas Sourcing products
– To increase the profitability and margins on the products, Adidas Sourcing needs to provide more differentiated products than what it is currently offering in the marketplace.
Products dominated business model
– Even though Adidas Sourcing has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - adidas Group: IT Multi-Sourcing at adidas should strive to include more intangible value offerings along with its core products and services.
Aligning sales with marketing
– It come across in the case study adidas Group: IT Multi-Sourcing at adidas that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case adidas Group: IT Multi-Sourcing at adidas can leverage the sales team experience to cultivate customer relationships as Adidas Sourcing is planning to shift buying processes online.
High cash cycle compare to competitors
Adidas Sourcing has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Adidas Sourcing supply chain. Even after few cautionary changes mentioned in the HBR case study - adidas Group: IT Multi-Sourcing at adidas, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Adidas Sourcing vulnerable to further global disruptions in South East Asia.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study adidas Group: IT Multi-Sourcing at adidas, in the dynamic environment Adidas Sourcing has struggled to respond to the nimble upstart competition. Adidas Sourcing has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Low market penetration in new markets
– Outside its home market of Adidas Sourcing, firm in the HBR case study adidas Group: IT Multi-Sourcing at adidas needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study adidas Group: IT Multi-Sourcing at adidas, is just above the industry average. Adidas Sourcing needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Adidas Sourcing is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study adidas Group: IT Multi-Sourcing at adidas can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
No frontier risks strategy
– After analyzing the HBR case study adidas Group: IT Multi-Sourcing at adidas, it seems that company is thinking about the frontier risks that can impact Technology & Operations strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Opportunities adidas Group: IT Multi-Sourcing at adidas | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study adidas Group: IT Multi-Sourcing at adidas are -
Redefining models of collaboration and team work
– As explained in the weaknesses section, Adidas Sourcing is facing challenges because of the dominance of functional experts in the organization. adidas Group: IT Multi-Sourcing at adidas case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Buying journey improvements
– Adidas Sourcing can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. adidas Group: IT Multi-Sourcing at adidas suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Adidas Sourcing to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Adidas Sourcing can use these opportunities to build new business models that can help the communities that Adidas Sourcing operates in. Secondly it can use opportunities from government spending in Technology & Operations sector.
Building a culture of innovation
– managers at Adidas Sourcing can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Technology & Operations segment.
Leveraging digital technologies
– Adidas Sourcing can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Adidas Sourcing in the consumer business. Now Adidas Sourcing can target international markets with far fewer capital restrictions requirements than the existing system.
Developing new processes and practices
– Adidas Sourcing can develop new processes and procedures in Technology & Operations industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Adidas Sourcing can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Using analytics as competitive advantage
– Adidas Sourcing has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study adidas Group: IT Multi-Sourcing at adidas - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Adidas Sourcing to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Creating value in data economy
– The success of analytics program of Adidas Sourcing has opened avenues for new revenue streams for the organization in the industry. This can help Adidas Sourcing to build a more holistic ecosystem as suggested in the adidas Group: IT Multi-Sourcing at adidas case study. Adidas Sourcing can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Adidas Sourcing can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, adidas Group: IT Multi-Sourcing at adidas, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Manufacturing automation
– Adidas Sourcing can use the latest technology developments to improve its manufacturing and designing process in Technology & Operations segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Threats adidas Group: IT Multi-Sourcing at adidas External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study adidas Group: IT Multi-Sourcing at adidas are -
Increasing wage structure of Adidas Sourcing
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Adidas Sourcing.
Regulatory challenges
– Adidas Sourcing needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Technology & Operations industry regulations.
Stagnating economy with rate increase
– Adidas Sourcing can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Adidas Sourcing in the Technology & Operations industry. The Technology & Operations industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Adidas Sourcing can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study adidas Group: IT Multi-Sourcing at adidas .
Technology acceleration in Forth Industrial Revolution
– Adidas Sourcing has witnessed rapid integration of technology during Covid-19 in the Technology & Operations industry. As one of the leading players in the industry, Adidas Sourcing needs to keep up with the evolution of technology in the Technology & Operations sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Easy access to finance
– Easy access to finance in Technology & Operations field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Adidas Sourcing can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Adidas Sourcing business can come under increasing regulations regarding data privacy, data security, etc.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Adidas Sourcing.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Adidas Sourcing will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study adidas Group: IT Multi-Sourcing at adidas, Adidas Sourcing may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Technology & Operations .
Weighted SWOT Analysis of adidas Group: IT Multi-Sourcing at adidas Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study adidas Group: IT Multi-Sourcing at adidas needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study adidas Group: IT Multi-Sourcing at adidas is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study adidas Group: IT Multi-Sourcing at adidas is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of adidas Group: IT Multi-Sourcing at adidas is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Adidas Sourcing needs to make to build a sustainable competitive advantage.
