business ethics group assignment case study sweatshopat adidas factories

Adidas is a German multinational corporation that specializes in the design,development, manufacturing, and marketing of athletic footwear, apparel, andaccessories.. In 2020, Adidas repo

MINISTRY OF EDUCATION AND TRAININGNATIONAL ECONOMICS UNIVERSITY

BUSINESS ETHICSGROUP ASSIGNMENT

Lecturer: Nguyen Bich Ngoc

CASE STUDY: SWEATSHOP AT ADIDAS FACTORIES

Participants

V Adidas’ positive movements 15

1 Adidas directs to sustainability communities 15

2 Engagement 17

3 Adidas charity program: (specification) 20

REFERENCES 23

Adidas is a German multinational corporation that specializes in the design,development, manufacturing, and marketing of athletic footwear, apparel, andaccessories

It has experienced significant economic growth since its founding in 1949 Thecompany has expanded its operations to over 160 countries and has become one of thelargest sportswear manufacturers in the world In 2020, Adidas reported net sales of€19.8 billion, a decrease from the previous year due to the COVID-19 pandemic, butstill a strong performance considering the challenges faced by the industry.

Adidas has achieved growth through a combination of factors, includingproduct innovation, marketing, and strategic partnerships The company hasintroduced numerous iconic products, such as the Superstar and Stan Smith sneakers,and has collaborated with high-profile designers and celebrities to create limited-edition collections Adidas has also sponsored major sporting events and teams,including the Olympics and the FIFA World Cup, which has helped to raise its profileand increase its sales.

In recent years, Adidas has focused on sustainability as a key driver of growth,recognizing that consumers are increasingly concerned about the environmentalimpact of their purchases The company has introduced eco-friendly materials andmanufacturing processes, and has set ambitious targets to reduce its carbon footprintand water usage.

Overall, Adidas's economic growth has been driven by a combination offactors, including innovation, marketing, strategic partnerships, and a commitment tosustainability The company's strong brand identity and global reach have helped it toweather economic challenges and maintain its position as a leader in the sportswearindustry.

ADIDAS INTRODUCTIONI.History and Back ground story

Adidas, in full Adidas AG, German manufacturer of athletic shoes and apparel and sporting goods In the early 21st century it was the largest sportswear manufacturer in Europe and the second largest (after Nike) in the world Adidas products are traditionally marked with a three-stripe trademark, which remains an element in the company’s newer “trefoil” and “mountain” logos Headquarters are in

Herzogenaurach, Germany.

The name Adidas (written “adidas” by the company) is an abbreviation of the name of founder Adolf (“Adi”) Dassler The Dassler family began manufacturing shoes after World War I At the 1936 Berlin Olympics, the American track-and-field star Jesse Owens wore shoes that were reportedly a gift from Adi Dassler Owens’s medal-winning performances increased awareness of the Dassler brand around the world After the disruptions of World War II, Adi and his brother Rudolf (“Rudi”) strove to rebuild the Dassler firm, but a personal breach between the brothers had become irreparable by 1948 The business therefore split in two: Rudi’s company was eventually called Puma, while Adi’s became Adidas.

Adidas grew steadily during the 1950s as association football (soccer) players switched to the company’s shoes, which were light in weight and featured screw-in cleats The company then developed a line of sporting goods, introducing soccer footballs in 1963 Four years later Adidas began to produce apparel For many years Adidas was the biggest name in athletic shoes, but competition increased during the 1970s, notably from newer firms such as Nike Adi Dassler died in 1978, and the company experienced falling market shares during the 1980s, despite an innovative endorsement deal with the rap group Run-D.M.C., creators of the hit song “My Adidas” (1986) (The company was to ally with hip-hop again in a 2016 deal with the rapper and entrepreneur Kanye West.)

Between 1990 and 1993 Adidas was owned by the scandal-tainted French businessexecutive Bernard Tapie, who failed to revive it The company was sold to investors who brought in another Frenchman, Robert Louis-Dreyfus, as chief executive officer and chairman Under his leadership, Adidas acquired the Salomon Group in 1997 Although best known for winter sports products, Salomon also owned the golf supplier TaylorMade Adidas was renamed Adidas-Salomon AG and moved into retailing, following the lead of Nike, in 2001 In 2004 the company entered a successful partnership with the clothing designer Stella McCartney.

In 2005 Adidas sold Salomon but held on to the TaylorMade brand The following year the corporate name was changed back to Adidas AG.Adidas’s later acquisitions included the Reebok company (2006), which owned the Rockport brand of shoes, and

1 Innovation and Product Development: Adidas places a strong emphasis on innovation and continuous product development The company invests heavily in research and development to create technologically advanced and

performance-enhancing products By introducing new materials, manufacturingtechniques, and designs, Adidas aims to stay ahead of the competition and provide athletes and sports enthusiasts with cutting-edge products.2 Branding and Marketing: Adidas has adopted a powerful branding and

marketing strategy to create a strong brand image and connect with its target audience The company collaborates with high-profile athletes, sports teams, and celebrities to endorse its products and increase brand visibility Adidas also sponsors major sporting events, such as the Olympic Games and FIFA World Cup, to enhance its brand recognition on a global scale.

3 Multi-Segment Focus: Adidas targets various market segments, including professional athletes, sports enthusiasts, and fashion-conscious consumers The company offers a diverse range of products, including footwear, apparel, and accessories, to cater to different customer needs and preferences This multi-segment focus allows Adidas to capture a larger market share and maintain a competitive edge.

4 Digital Transformation: Adidas recognizes the importance of digital technologyand e-commerce in today's retail landscape The company has invested in digital transformation initiatives to enhance the online shopping experience andengage with customers through various digital channels Adidas leverages social media platforms, mobile applications, and e-commerce websites to reacha broader audience and drive sales.

5 Sustainability and Social Responsibility: Adidas has committed to

sustainability and social responsibility as integral parts of its business strategy The company strives to reduce its environmental footprint by using sustainable materials, implementing eco-friendly manufacturing processes, and supporting recycling initiatives Adidas also engages in social initiatives and community projects to give back to society and promote positive change.

 These strategies have contributed to Adidas' success and helped the company maintain its position as one of the leading sportswear brands globally.

III.Advertising and Communication

 Marketing campaigns: Adidas launches captivating marketing campaigns to create brand awareness and engage with their target audience They collaborate with renowned athletes, celebrities, and influencers to endorse their products

and convey the brand's message These campaigns often feature compelling visuals, storytelling, and emotional appeals.

 Sponsorships and partnerships: Adidas strategically sponsors major sporting events, teams, and athletes to increase brand visibility and association with sports excellence By aligning with high-profile sports entities, they can reach awider audience and build credibility For example, Adidas sponsors the FIFA World Cup, UEFA Champions League, and collaborates with athletes like Lionel Messi and Beyoncé.

 Digital marketing: Adidas leverages digital platforms to connect with customers and promote their products They maintain an active presence on social media channels, such as Facebook, Instagram, Twitter, and YouTube, where they share engaging content, including product launches, behind-the-scenes footage, and collaborations They also utilize targeted online advertisingto reach specific demographics.

 Influencer marketing: Adidas collaborates with influencers and content creatorswho align with their brand values and target audience These influencers create sponsored content, such as product reviews, style inspirations, or fitness routines, to showcase Adidas products to their followers and generate buzz around the brand.

 Retail experience: Adidas focuses on creating immersive and interactive retail experiences Their stores often feature innovative designs, digital installations, and personalized services to enhance customer engagement Adidas also utilizes technology such as augmented reality (AR) and virtual reality (VR) to provide unique and interactive shopping experiences.

 Public relations: Adidas maintains strong relationships with media outlets and actively engages in public relations activities They issue press releases to announce new product launches, collaborations, and initiatives Adidas also participates in interviews, press conferences, and events to share company updates and maintain a positive brand image.

Overall, Adidas employs a combination of traditional and digital marketing strategies, partnerships, and engaging content to effectively promote its brand and connect with its target audience.

One brand that dominates the mindshare while consumers think of Hip Hop and sporty brands is Adidas So much so that Adidas is now one of the most desirable sportswear brands Adidas produces various sports equipment across different types ofsports But then the question is what is the business model of Adidas that is helping the brand rule the sportswear industry across all the sports (obviously next to Nike).

As of 2020, Adidas had a turnover of €19.844 billion and has approximately 62,285 employees worldwide From establishing itself as one of the best sportswear, ithas also been working towards establishing itself as one of the best CSR (Corporate Social Responsibility) companies globally (as of 2020).

1 Currently, Adidas has products in the following category

 Footwear Apparel

 Accessories and Gear

The Adidas Group's number of stores worldwide from 2008 to 2022

2 Sell product

Adidas is one of the world’s leading sports apparel and footwear companies, with a presence in more than 160 countries The company’s products range from apparel to footwear, and it is estimated that around 1 billion pairs of Adidas shoes are sold every year In fact, the company has the second-largest market share in the global athletic footwear market, behind Nike.

Adidas sold 541 million pairs of shoes in 2019 The company reported a total revenue of €23.6 billion, of which €21.2 billion was in footwear Adidas has seen a steady growth in its footwear sales over the past few years, with the number of shoes sold increasing from 496 million in 2018 to 541 million in 2019 The company’s focuson innovation, sustainability, and collaborations has helped it create new styles of shoes, which have been popular among customers Adidas also offers customization options, making it easier for customers to find the perfect pair of shoes.’

ADIDAS’ ETHICS ISSUE: SWEATSHOP AT ADIDASFACTORIES

 In 2000, The European Parliament were told that clothes for Adidas were made in two factories using child labour, forced overtime and sexual harassment Representatives of workers in two Indonesian factories supplying the German company, will tell Euro MPs that in the Nikomas Gemilang and Tuntex factories, in the Indonesian capital of Jakarta, children as young as 15 were: made to work 15-hour days

 expected to do at least 70 hours a week and punished for refusing to do overtime

 paid less than $60 a month, rates below the International Labour Organisation'sdemand for a living wage;

 penalised for taking leave during medical difficulties and had illegal deductionstaken from wages as punishments for minor misdemeanours.

 Underpayment and poor conditions for child workers in the developing world is not confined to Indonesia The problem is severe in India where, according toaid organisations, children are making sports goods in appalling conditions A report by Christian Aid revealed that children, some as young as seven, were regularly used in the production of a wide range of sports goods in India Most of the £13m worth of goods went to Britain.

II.Disregarding human rights

 A worker from a Bangkok factory for Adidas claimed that for less than £1 per day she worked 12-hour shifts seven days a week, producing sportswear, shoes and replica kits for the company.

She claimed conditions were poor in the Thai factory and the management acted brutally to meet large orders within a limited time, often denying workersstatutory rights such as holidays and sick pay The accusations are similar to those made by the Indonesian workers.

The woman was eventually sacked in 1998 along with 23 others after they formed a union in an attempt to win more rights The factory management claimed she was a disruptive influence.

 In 2012, according to the Daily Telegraph, workers at Shen Zhou factory on theoutskirts of Phnom Penh had to work 10 hours a day, six days a week with a base salary of $61 per month and medical care allowances at $5

These workers said they would get a salary increase of $120/month if they work 2 hours a day This salary is lower than the minimum wage in Cambodia ($66/month) and the living wage for a family with 2 children in Cambodia is set at $260/month by the government.

 The new allegations against Adidas center on the Tuntex factory in Jakarta, where 1,700 workers, most of them women, produce jackets and socks.

A Urban Community Mission (UCM)’s investigation into conditions at Tuntex and two other factories - Tainan and Nikomas Gemilang - alleges that employees face "extraordinarily high financial sanctions" if they make mistakesor are late for work.

UCM also claims that sexual harassment and verbal and physical abuse are rife.Workers at the Tainan factory are threatened with the sack unless they work overtime, and are locked up if they refuse, UCM says.

Children suffer from psychosis and physical harms Children are often forced to work long hours, up to 15 hours a day, seven days a week, in cramped and hazardous conditions The lack of education for these children is also a major concern.The demand for products produced by child labor only perpetuates the cycle of exploitation, leading to more child labor and slavery The parents of these children may encourage them to work more to earn more money, which is not only harmful to the children's health and well-being but also deprives them of their right to education and freedom Encouraging child labor also fuels the black market trade of children, exacerbating the problem Thus, it is crucial to combat child labor and ensure that children have access to education and a safe environment to grow up in

IV.People’s awareness and Adidas’ reactions1 People’s awareness

2 Adidas’ reactions

Adidas has taken several steps to address these issues It has established a series of labor and environmental standards for its suppliers known as the "Adidas Group Workplace Standards." These standards outline the company's expectations for working conditions, including a prohibition on child labor and a limit on working hours