Adidas is reducing its environmental effect. It is their responsibility to detect and eradicate harmful contaminants. This could explain why they use natural materials in their products.
They adhere to ethical business practices by committing to ensuring that supplies adhere to regulations in each country where their products are manufactured.
3.2. Internal data
Bargaining power of the suppliers:
Despite the importance of suppliers to Adidas, their bargaining power is quite low due to the enormous number of suppliers in Adidas' supply chain. Because of their large number and small size, suppliers do not have significant bargaining leverage. While some suppliers are huge in size and have some clout, the majority do not. Furthermore, switching to new suppliers is easier for the brand. However, if a supplier risks losing business to Adidas, it can result in a significant loss for the supplier.
Its suppliers are scattered globally, and none of them can impose any pressure on Adidas on their own. Adidas outsources the majority of its production and collaborates with over 1000 independent firms in 63 countries. It has a global and complex supply chain with a variety of vendors, some of whom are direct contractors and many of whom are not. As a result, Adidas gets to determine the rules of the game, such as labor and product quality standards, and suppliers must follow them. Adidas has a layered monitoring and enforcement framework in place to guarantee that suppliers comply with the criteria. In this sense, it is clear that Adidas has a high level of control over their products.
Bargaining power of buyers:
Buyer negotiating power is modest to moderate in the case of Adidas. While individual buyers do not wield great power, as a group they wield considerable power. It has a huge competition in Nike, as well as other large and small competitors such as Under Armour and Puma. In this industry, various local and multinational brands compete for market share. Customers' switching expenses are minimal. However, the product quality and marketing of Adidas mitigate this factor to a significant extent. Adidas has prioritized product quality, design, and performance, which has resulted in an exceptional level of customer devotion.