individual assignment supply chain management subject adidas sourcing strategy for shoes in vietnam

Strategies of Adidas in Vietnam market ……… Page 127... They have a delicate design, are light, strong, pleasant to walk in without worrying about occlusion, and they are foot-pain-free.A

INDIVIDUAL ASSIGNMENT

Supply Chain Management

SCM201 Lecturer : Võ Thị Minh Phương

Subject: Adidas' sourcing strategy for shoes in Vietnam

Name : Nguyễn Đức Mạnh Student ID : SS160685

Class : IB1708 Date : 19 February 2023

Table of Contents

1 The Adidas company introduction ……… Page 3

2 History of Adidas company ……… Page 4

3 Mission, Vision , Core value , Objectives - gold ……… Page 4

4 Impact from adjacent environments ……… Page 6

4.1 PESTEL analysis

4.2 Competitive position of Adidas - Porter's five forces

4.3 External Threat

4.4 Competitive Advantage

5 Internal analysis - Analyzing Resources ……… Page 10

5.1 Strengths and Weaknesses

5.2 Adidas Capabilities

6 Strategies of Adidas in Vietnam market ……… Page 12

7 Recommendation ……… Page 12

8 Conclusion ……… Page 12

9 Cited references ……… Page 12

1 The Adidas company introduction

Adidas is a German multinational firm that was founded in 1949 and focuses on making footwear, apparel, and accessories

Adidas shoes are intended for all types of customers, including men, women, and children They have a delicate design, are light, strong, pleasant to walk in without worrying about occlusion, and they are foot-pain-free

Adidas brand products have the advantage of being consistently created from the best materials, precisely developed, and delicately and carefully displayed in each seam to provide users a comfortable and pleasant sensation

Outstanding product lines of the Adidas brand :

Sport - Adidas Performance

Street - Adidas Originals

Style - Adidas Sport Style

2 History of Adidas company

The Dassler Brothers Shoe Factory, which served as the predecessor to Adidas, was established in 1924 by Adolf Dassler and his brother Rudolf Dassler

In 1936, Dassler convinced American sprinter Jesse Owens to use his handmade spikes at the Summer Olympics

In 1948, the two Dassler brothers separated to form their own company

On August 18, 1949, Adolf Dassler registered the company Along with that, he introduced the legendary 3-Stripes shoe design

In 1967, the company expanded its business beyond the shoe line

In the 2000s, Adidas entered the lifestyle segment, launching sports-inspired streetwear products

In 2006, Adidas acquired Reebok Since then, Adidas has always been creative and affirmed its leading position in the sports fashion industry

3 Mission , Vision , Core value , Objectives

Image source : EdrawMind

Encourage an active lifestyle

Adidas encourages people to participate in sport by offering a multitude of high-quality products tailored to a very diverse market

Sports improvement

Adidas participates in various programs geared towards cultivating the skills of young athletes

More than expectation

Adidas' research and development team is constantly improving its products, creating innovative features

Create innovative products

Innovation and creativity are two of the most important points of the Adidas team

Adidas Vision

Create the best designs

Adidas has maintained a reputation for providing only the best products

Maximize athlete performance

Provides constant motivation for athletes to push their limits and maximize their potential

Produce top quality products

Adidas products are quite expensive and the reason for this is that these products are

of excellent quality

Reaching out to the global market

The company strengthens its global presence using strategic marketing campaigns and collaborating with international celebrities in the sports and entertainment sectors

Adidas Core Values

Efficiency

Adidas employs engineers, chemists and experts in clothing technology to ensure that only the best inputs go into the product, from design to production

Passion

The company is able to maintain a strong passion for collective sport because Adidas hires only athletic employees

Integrity

Adidas is committed to improving people's lives through sport

Diversity

Create a variety of products for everyone, regardless of size, age, gender

Vietnam is the most important manufacturing region Choosing Vietnam is strategic and important in the Group's manufacturing supply chain Manufacturing in Vietnam accounts for a higher proportion of the Group's total global output

As of July 2022, Adidas has 51 main suppliers in Vietnam, employing more than 190,000 Vietnamese workers These factories are mainly concentrated in the South in the production centers of Ho Chi Minh City, Binh Duong and Dong Nai

South Vietnam has developed a relatively skilled workforce in garment

manufacturing This source of labor is also low cost

This is mutually beneficial for both Adidas and Vietnam, with Adidas benefiting from lower input costs and Vietnam benefiting from a large inflow of foreign direct investment

4 Impact from adjacent environments

4.1 PESTEL analysis

Political factors :

Vietnam offers many incentives for Adidas; Vietnam continues to improve the business investment environment and designates appropriate sectors, ministries and sectors to support and promote the company's development Vietnam will also strengthen and strengthen sustainable industrial and commercial practices

Economic factors:

More than 40% of Adidas footwear will be manufactured in Vietnam by 2021 Adidas currently has 15,552 employees at 7 accessory factories as of 2022 In addition, it employs 63,513 employees at 24 garment manufacturers wear and 114,233 employees at 21 footwear factories Lower input costs help Adidas and capital inflows benefit Vietnam a large amount of foreign direct investment

- Low labor cost

- Low cost of raw materials

- Benefit from Vietnam's economic policy - tax incentives (Adidas VN pays this partner 8.25% of the value of each transaction This expense is recognized by Adidas

VN as a purchase cost and included in cost of goods)

- Vietnam's inflation rate is low: On average, in 2022, core inflation will increase by 2.59% compared to 2021, lower than the general average CPI (increasing by 3.15%)

- The purchasing power of consumers in Vietnam with Adidas is large: accounting for 64% of demand

Social Factors:

Adidas changed the product design The design matches the preferences of consumers in Vietnam

Adidas launched the "Vietnam Dong Hien" contest, calling for the community of creators to work with adidas to paint Vietnamese quality through unique artworks The ADIDAS X-RACE event just held in Ho Chi Minh City with more than 50 attendees has resonated in the running community

Technological factors:

Vietnam is now developing production technology thanks to technology transfer through foreign direct investment (FDI) projects

Online shopping is growing in Vietnam, helping Adidas bring their products closer to buyers, it also helps the company make a profit on rental space

Communication developed in Vietnam, easier to bring consumers to dry products

Legal factors :

Vietnam takes Adidas' proposals, gives them to the proper departments for study and analysis, and pays attention to input as it builds and enhances its systems and policies further guidance from the Group regarding export Investors should resolve issues as soon as they come within their scope of competence; but if they go beyond that, they should report it to the relevant authorities for review and possible action

Environmental factors:

Adidas recycles and produces shoes from waste, contributing to environmental protection

Commit to using only recycled materials from 2024

4.2 Competitive position of Adidas - Porter's five forces

Image source : Ray Moorman The most significant impacts on Adidas are buyer bargaining power and competitive rivalry For instance, in terms of Competitive Rivalry, this brand competes directly with Nike, Puma, and others In almost every way, these brands sell the same products - quality, price Furthermore, the existence of substitute products and substitute products from other brands is a strong driving force for

Adidas, and the impact of this force prevents the company from setting prices too high and restricts the company from experimenting with disruptive business models while forcing them to spend on product development and marketing

4.3 External threats

Fierce competition:

Nike and Adidas are always competing with each other, always racing to create new ideas so as not to lose out compared to the opponent

Counterfeit goods are rampant:

Recently, the Ha Nam Market Management Department and the Ha Nam Provincial Police inspected a clothing factory and discovered more than 4,000 separate labels with Adidas and Nike brands in Vietnam

The online environment is a place for trading in counterfeit goods, imitation goods, intellectual property infringing goods, brand counterfeiting

4.4 Competitive advantage

With durable, good products, sure to adapt to all environmental conditions, imported from good sources in other countries, easy to clean, and good bearing, Adidas has succeeded in attracting customers and owners have a competitive advantage over competitors

5 Internal analysis - Analyzing Resources

Analysis of the Adidas SWOT model

5.1 Strengths and Weaknesses

+ Strengths of Adidas

Technology and Digital:

Adidas is a fashion company that embraces digital technology

Spend 90% of Marketing budget on Digital, Social Media campaigns, promote online sales

Conversion speed:

Adidas has always come up with a rapid production process to create innovative shoes

Example: When realizing the prevailing consumer trend to buy online, created the Adidas (2017) App to meet customer needs

Skillful Customer Relationship Building:

Adidas generates enthusiasm and excitement for sportswear – using mobile devices, social media and retail channels that consumers can interact with to create

personalized experiences

Manage customer relationships when collecting data and sending tailored emails to each individual, creating a shopping profile for each person

Brand value:

Adidas becomes the second sportswear brand besides Nike to participate in the list of the 100 most valuable brands in the world 2018

Powerful Marketing Strategy:

Cooperate with professional athletes and big tech companies, collaborate with celebrities These partnerships include major music and fashion artists

+ Weaknesses of Adidas

High price range:

High costs due to innovative technology and production methods have made the brand suitable for limited customers only

Outsourced production:

Adidas has 93% of its production outsourced to 3rd party manufacturers (mostly in Asia) to take advantage of low labor costs and readily available resources, at the risk

of over-reliance on outsourcing

Brand scandal:

Adidas has been involved in many scandals For example, in 2015, Adidas was accused of spending money to buy the right to host the 2006 World Cup

5.2 Adidas Capabilities

Brand Image :

Adidas has managed a great image as an innovative brand that creates compelling products It has also maintained a great level of popularity and trust among its customers

Global presence:

The brand is present globally in several countries Its trade channels also reach 40 countries

Technology Capabilities:

Adidas has focused heavily on technology and invested in technology in every area

HR and Culture:

The brand has built a strong organizational culture and gives its employees everything they deserve from good salaries to great working environment and growth opportunities

Marketing capabilities:

Adidas increased its marketing spend, with a particular focus on digital marketing Strong supply chain:

The brand has managed the supply chain and distribution network Has strategic relationships with 109 suppliers and in 2017 worked with 296 suppliers

Customer Loyalty:

Adidas is a famous brand with a large number of loyal customers and fans

6 Strategies of Adidas in Vietnam market

Strengthening supply chain management: Adidas is focusing on improving

supply chain management efficiency to ensure its products are manufactured and delivered on schedule and with quality This includes better linking with suppliers and manufacturers in Vietnam

- Because Vietnam has a cheap supply of raw materials, low transportation costs, abundant high-quality human resources, moreover, potential competitors in the Vietnamese market are less than in Vietnam and other countries

Human resource training and development: Adidas is investing in human

resource training and development to improve the quality and efficiency of the production process and supply management

Collaboration with local partners: Adidas is working with local partners to

develop its supply in Vietnam This includes working with manufacturers, material suppliers and shipping partners to improve the production and distribution of its products

Product quality management: Adidas is focusing on product quality

management to ensure its products meet the quality and safety standards of customers in Vietnam This includes product quality testing prior to production and product quality testing after production is complete

7 Recommendation

Adidas has come up with a very successful strategy and marketing But it still has to focus more on customers, it needs to focus on customer retention and engagement

The brand has achieved high growth rates in most markets and now needs to sustain growth into the future To sustain this growth, making the customer experience engaging and customer service crucial

In addition to big cities, we must also look to other suburban areas, where the number

of modern working classes is constantly increasing, which is a potential market that needs attention and exploitation

8 Conclusion

Through this analysis, we have clearly seen an overview of Adidas, their mission, vision, core values and goals Moreover, it also shows the influence of the external and internal environment on the company, the challenges and advantages of Adidas There is also the company's strategy in the potential Vietnamese market

9 Cited references

1 The company introduction

https://thuvienmuasam.com/t/tong-quan-ve-thuong-hieu-adidas-va-cac-san-pham-cua-hang/1631

2 History of company

https://www.coolmate.me/post/thuong-hieu-adidas-lich-su-phat-trien

3 Vision , mission , Core value and Objectives - gold

https://www.edrawmind.com/article/adidas-mission-and-vision-statement-analysis.html

https://baochinhphu.vn/tong-giam-doc-adidas-viet-nam-la-doi-tac-tin-cay-ngay-ca-trong-luc-kho-khan-102221031191419508.htm

https://cafef.vn/bao-quoc-te-ly-giai-suc-hut-cua-viet-nam-voi-adidas-va-cac-thuong-hieu-lon-20230208090621346.chn

4 Impact from adjacent environments

4.1 PESTEL analysis

https://pestleanalysis.com/pestle-analysis-adidas/

Political factor :

https://tienphong.vn/adidas-muon-tiep-tuc-mo-rong-san-xuat-kinh-doanh-o-viet-nam-post1482667.tpo

Economic factor :

https://cafef.vn/bao-quoc-te-ly-giai-suc-hut-cua-viet-nam-voi-adidas-va-cac-thuong-hieu-lon-20230208090621346.chn