Essay Sample on Strategies Used by Adidas Group to Enter New Markets

Introduction

Adidas is international athletics wear company with branches in several countries. It was found in 9149 by Adolf Dassler. When a company enters a new market, there is no guarantee that it will perform well. Therefore, it is important to consider the best market entry strategy that can help a firm perform well in its operations. A company must have well-set priorities before deciding to enter a new market by looking at its level of competitiveness and internal strengths. Adidas use several strategies to enter new markets including licensing, pull, joint venture, exporting, and

The Adidas Group used the licensing method to enter the Chinese market. Licensing refers to the market entry method where a company in one company gives a firm in another country the chance of using its trademark, processing, know-how, manufacturing, and other skills which the licensor provides. The strategy gave Adidas Group the chance of starting its operations in the country and it opened doors to manufacturing relationships with low risks. The strategy has enabled the company to perform well in the Chinese market and it currently has about 300 factories that manufacture its products.

Adidas group also used the licensing method to enter India by having an agreement with Bata. After seven years, Adidas group had a joint venture with a firm called Magnum International Trading Company. The company opted for the second option of a joint venture since the first method was not doing well. The benefits that Adidas Group got by having a joint venture with a company in India include having a joint financial strength, sharing ability and risk of combining the local detailed knowledge with the foreign partner, and it acted as a third country's source of supply.

Adidas Group used a pull market entry strategy to enter the Russian market. For a long period, Adidas has created its brand name by advertising heavily on the Russian Television Channels. In Russia, television, especially through national networks, acts as the major source of international and domestic news. Adidas usually flirts with fashion more than most of its rivals. The use of global advertising agencies and promotional tools including guerilla marketing and TV campaigns enabled Adidas to use the pull strategy in Russia. The other factors that enhanced the use of Pull strategy in Russia include favorable political structure, niche opportunities, positive demographic trends, and availability of innovative retail culture. Unfortunately, the company has not been performing well in the Russian market and this made it

Exporting is another essential market entry strategy. Adidas Group has used this method by selling its products to other countries without necessarily making a commitment for the local production. For most of the African countries, Adidas has used this method to enter its markets including Tunisia and South Africa. Exporting is a good strategy since there is no direct manufacturing needed in a foreign country. however, the company needs to have a significant investment in the market. This strategy has given Adidas the chance of learning more about its overseas markets before it decides on investing.

Conclusion

In conclusion, it is significant for a company to first learn about a market before deciding to enter a new market. Although there are some challenges, the entry strategies used by Adidas has enabled the company to increase its production, the number of customers, and profits.