Being Socially Responsible and Profitable Are Not Exclusive

Being Socially Responsible and Profitable are not Exclusive

The world has entered an era where profit-maximization is not the best way to do business. Consumers are starting to care more and more about the environment. Higher education levels and awareness has the consumers questioning the origin of the products they buy and the impact they have socially, environmentally, and economically on the world. In order to be consistent with demands and meet consumer standards, there needs to be a shift in the strategy of the way Adidas does business. It is not too late since most companies in the same industry as Adidas have not shifted yet, therefore competitive advantage could be attainable in the near future and boost performance.

Adidas, based in Germany, is the second largest sportswear manufacturer in the world (Nike is number one). With multi-billion dollar revenues, Adidas has the resources to make the world a better place to live. It has a moral obligation to do so. Being a profitable business and morally just are not mutually exclusive. On the contrary, applying a change in strategy can increase brand awareness of Adidas and innovation can possibly lead to obtaining a competitive advantage over Nike, resulting in being the most desired brand in the world. Studies show that 10% of sportswear produced by Nike are actually worn in the field of sports. The same could be generalized to Adidas since the two are pretty similar. That leaves 90% of the customer base just regular average people. These people are looking for cool, hip shoes and sportswear. From merely a competitive viewpoint, there have been many protests going on against Nike lately in the US. Allegations for sweatshop workers are high, therefore Adidas needs to seize this opportunity and transfer its value chain to a more responsible one.

Adidas has faced allegations for mal-treatment of workers in factories in south-east Asia where Adidas gets its products from, just like Nike. There are two options to combat this challenge. One is to open its own factory to manufacture the goods. Labor costs in Europe are very high so opening a factory there would not be so profitable since the skill required to manufacture sportswear is low. So Adidas could open its own factory in Indonesia or Vietnam or China where labor costs are still low. By doing so, Adidas could have its own set of standards for workers and working conditions. By setting higher standards that are morally just, consumers would start buying more Adidas then Nike because they would feel good about themselves. Consumers might probably be willing to pay a little more if they knew exactly where their sportswear comes from. By opening a factory in one of these countries, Adidas could supply jobs to many people who would want to work there because of higher standards. By working more, these people can thus make more money and be able to provide for their families and children's