With the increasing demand for quality products and clothing, fashion companies
have come into play to provide the best outfit and fashionable outfits for their clients in
recent years. Adidas is one of the fashion companies that has set its goals to design and
sell merchandises that include shoes, shirts, skirts, pants, and accessories, including
gloves. The missions, objectives and the vision of Adidas has been clear to the public for
the provision of better services and goods. Notably the business legal structure of Adidas
company has enabled it to flourish in the business world and they deserve mention .the
matrix method of business structure has proved its worth in the upbringing of the amazon
company. The organization structure of amazon has played its part well to ensure the
company drives towards the better route. The staff from the manager to the least of the
subordinate staff have played major roles ensuring that the company’ wellbeing is not
questioned. However, Adidas has had a more significant market brand for itself. The
brand has enabled the company to grow and achieve greater heights in terms of
performance and profit gain. Conventionally, Adidas has been affected by the constantly
changing factors in the business world, including demographic, political and
On the other hand, analysis has to be done to see if the company is headed in the right
direction based on the profit margin. The factors that should be considered before any
analysis is done are the intensity of industry rivalry, bargaining power of the buyers and
suppliers, and finally, the SWOT analysis. As much as the organization and the company
would enjoy the full advantage and prosperity in the present and future, the company is
still at significant risk of encountering challenges that will cause significant turbulence in
its ways of operation. Despite the challenges, recommendations have been put into play
to prevent the company's fallout. These recommendations will prevent future unseen
fatalities that may have occurred in the past.
Adidas, one of the top leaders in terms regarding fashion, has been rising as the
day goes by. According to (Edrawsoft, 2022), Adidas’ missions states that to be the
leading producers of sports merchandise, the bran has built itself on passion for the
sporting activities and lifestyle to improve the competitive position of athletes. Therefore,
the same study shows that through promoting active lifestyle, and improving sporting
activities and athletes, it has ensured that the athletes live a healthy lifestyle through
provision of a better superior product. Over the years, Adidas has always vision to be
better, to create better superior products, to reach the global market, and maximizing
athlete performance. Throughout the ages, Adidas main objective was to be the leading
merchandise producing company and to own the game. Recent studies (Adidas-
group.com, 2018), says that Adidas objectifies credibility, expanding boundaries, and
increasing the customer’s experience.
Adidas business structure helps it manage its resources to encourage profit in the
company. The structure has a four-person board, which entails the chief executive officer,
six members representing the staff and the three members that represent the shareholders.
The matrix design system is used by the company to elevate itself. Extant studies
(www.cram.com, n.d.), show that matrix method is a simple and very flexible. Notably,
Adidas has had its priorities and is now grouping people according to their function and
product. The later suggests that Adidas is run by the six main departments including
human resource, manufacturing, engineering, project department, finance, and marketing.
Arguably, these departments play fundamental roles that help the organization perform to
the best of its capacity. The marketing department plays crucial role in enlightening he
people and the customers on the products manufactured. However, the finance
department controls the planning processes, carrying out audits, and controlling finances
in the company. On the other hand, the manufacturing department is responsible in
making what the company sells.
The onset and arrival of Adidas in the fashion industry has had many
implications in play. According to (Adidas-group.com, 2015), the company started in a
washroom and then expanded its boundaries to the rest of the world. The same literature
elucidates that the Adidas brand focuses on the past, present, and future to realize her full
throttle potential. Notwithstanding, the company is enjoying the fruits of the success and
determination it has garnered over the years. Precisely, various factors are into play that
is still affecting the growth and success of the company—for instance, demographic
factors, technological factors, and political factors. Recent reviews (BBC Bitesize, 2022)
have shown that the political factors that are in play and are affecting the business world
include tax, political stability, and laws. The extant study explains that these factors will
always determine the business's decisions to better its service provision. Taxes are
government-imposed policy to ensure that it earns revenue from their citizens. The latter
pieces of literature (in, 2012) show that the people's economic activity will dictate what
they want to buy for themselves and the needs of their family. However, the ironic
implication is that the economic policy has more significant effects by increasing the
demand curve of the people. Notably, when the tax rates are high, employee wages will
have to be increased to sustain them and their families. Precisely, the later course will
make the company lose more money and other essential services that are to be provided
by the company. On the other hand, the political arena has to maintain a stable
composure to make her realize her full potential. Political heavyweights have to maintain
cool heads and keep calm to avoid the abrasiveness of the people in the ground (Kaushik,
As it is the statistical and scientific study of the human population, Demography plays a
significant role in influencing business dimensions and objectives. According to
(Corporate Finance Institute, 2019), demography is the characteristic of the people
perpetuated in the socio-economic realm. Arguably, companies have researched and
studied the purchasing characteristic of the people and their customers. The advantage
that demography poses to the company is that the company Can strategize and make the
best out of the possible little input. Companies can regulate the pricing of goods, service
offers, and packaging. The same literature explains that the components that will enable
the companies to understand their customers include their purchasing power, geographic
region, age, and family status. The same literature explicates that purchasing power will
allow various individuals to make heavy purchases that will drive the business's profits in
the right direction. For instance, high-end hotels and dining establishments will provide
carter to the customers with large incomes and are wealthy. The same analogy appears to
happen in Adidas in that the high-end professionals will get and purchase goods that are
authentic and have a high quality. Customers with lower incomes will receive lowly
manufactured goods that will not last long as they wear the merchandise regularly. In
addition to this, age plays a significant center-back role in driving the company’s profit
margins. The same literature has shown and explained precisely, saying that the
company's products and services will majorly appeal to different age groups as time flies.
The majority of the population being the youth, the companies have resolved to maintain
their calm by producing more products that appeal to the youth in different ways and
Nevertheless, technology has revolutionized the processes of the business and how
operations of the business are done and carried out. Recent findings (Shaw, 2019), the
alternatives the business needs to carry out its operations can affect the operations of the
business. The extant literature explains that the companies have innovated the online
platform used to keep in constant touch with their customers, enhancing customer loyalty.
Consequently, the effects of technology have had its statement read out clearly.
Technologies have enabled companies to store their data on the internet through the
advancement of information technology. Marketing strategies have been technologized to
reach many people and the community they want to communicate and sell to. Notably,
through creating websites and other online services, customers can access and know more
about the company’s vision, mission, and values. Recent works of literature (Small
Business – Chron.com, 2019) technological advancement in an organization have created
a competitive advantage against the company’s competitors. Arguably, the operation cost
of the business is stripped low when technological parameters are put in place. Ironically,
the effect of technological advancements in the business and companies poses significant
threats to the company and its ways of operation. According to (ITChronicles, 2021),
technology has had security vulnerabilities. Cybercrimes and theft have been detrimental
factor that discourages the use of technology in companies.
Before the emergence and involvement in business, analysis has to be done to
confirm the legitimacy of the business and the company. Being one of the top players in
the fashion industry, Adidas had to do its research and develop strategies that would
enable it to stay afloat to shake off other competitors. Buyers usually bargain to make the
most suitable for their wanting and liking. However, the buyer's bargaining ability will
always be affected depending on the various factors (Managementstudyguide.com, 2015).
The extant explains that it is best to understand the buyer’s priority since some customers
would prefer to bargain on the price and quality rather than the delivery time. Notably,
customers new to the business world would have their bargain based on the right product
and the quality of the on-demand product. Notably, regardless of the cost of the product,
timely delivery, and other features of the product, the customer and the buyer would
prefer to base their arguments on the positive features of the product that would help
them accomplish their needs. This analysis shows that companies will have to bear in
mind that the customer's view will help their business agendas flourish and have plenty of
profits to enjoy in the future. In other words, it is in the company’s best interest to
consider the bargaining power of the customers and the buyers to strategize and remain
effective in the real competitive world.
Furthermore, for customers to remain afloat in their bargaining power, they have to be
knowledgeable and ready to learn new hacks about the products they want to buy and
vent. In addition to this, the intensity of company rivalry should take a keen and practical
analysis to better the company's services. Literature such as (https://strategiccfo.com/,
n.d.) rivalry intensity among competitors could be the extent companies have to go to put
pressure on other firms to limit their operations which will reflect their profit margins.
The same literature indeed explains that the profit margins of these companies involved
in the rivalry coup will be significantly reduced by a significant portion and that their
operations will be paralyzed to the extent that the company could go bankrupt. Notably,
to conduct a precise and perfect analysis, SWOT analysis has enabled the company's
stakeholders to carry out the analysis to more significant portions. According to
(Schooley, 2019), this analysis analyses the company's strengths, weaknesses,
opportunities, and threats involved in the field of business. The extant literature
elucidates that the principal objective of carrying out a SWOT analysis is to help
organizations find and develop a full awareness of the factors involved in the company's
prosperity. Arguably, SWOT analysis is the key and should be idolized in organizations
and companies before commencing any operations. This will help the company work on
its strength to maximize profit margins and efficiency. However, the weaknesses of the
other companies will enable the company to strengthen its way of operation by working
on the competitor's weaknesses.
Ironically, as the company will enjoy prosperity over the years, Adidas still faces
significant challenges that have drawn them away from its goal and achievement.
According to (Info Entrepreneurs, 2009), cash flow and financial management are
challenges that the organization and various companies that are still growing face. The
same literature shows and explains that financial factors can limit the growth of
organizations and companies. However, the companies involved have had major
resolutions to make the best use of the resources available to them, which in most times is
insufficient to run the enterprise. Nevertheless, rapid changes in technological
advancement have created tension and are o the verge of breaking most companies. Later
literature (https://kaaa.co.ke/author/admin_kaaa, 2017) has shown that most of the
growing companies and enterprises have failed to adapt to the changes that are inevitable
in the business field. The pieces of machinery that the companies need to utilize
technology-wise have been so expensive that they cannot handle the changes. In addition
to this, these technological advancements, more often than not, never suit the needs of the
company and the growing organization.
To prevent future disparities and commotion, it is best to lay down
recommendations that the enterprise will need to overcome its challenges. According to
(Celarity, 2015), some recommendations are that communication should be the critical
factor to prevent unnecessary damage. However, the same review articulates that when
communication is broken in an organization, employees begin to feel disconnected from
the organization and the company’s management. Poor communication among employees
and the employer can significantly harm the organization’s way of operation. Concerning
this, employers should take time to know their employees and comprehend their abilities,
desires, and needs. The consequence of the same procedure is that the employees will feel
more connected with their employers, creating an environment of trust. Retaining
customers is a major and the best way to retain and maintain a clear path in the business
world. As many organizations and companies offer the same services, it is paramount that
the organization maintain clear strategies that will help maintain customers and buyers.
Other reviews (The Daily Egg, 2018) explain that customer retention has helped many
organizations build and engage customer relations. The later consequence of customer
retention is that they will trust the organization's products.
Despite the economic growth that Adidas has enjoyed over the recent years, it has
suffered a 14 % decrease on revenue due to the covid-19 pandemic. However, revenues
in Russia have remained flat in Russia. Notably, in euro, the revenue has decreased by
16% to € 19.844 billion from € 23.640 billion in the year 2019.
financial highlight (€ in millions)
2020 2019 change
operating highlights in millions
net sales 19844 23640 16%
gross profit 9855 12293 20%
other expenses 9229 9843 6%
EBITDA 2079 3845 46%
operating profit 751 2660 72%
net income from continuing operations 429 1918 78%
net income attributed to shareholders 432 1976 78%
gross margin 49.70% 52.00% 2.3pp
other operating expenses in % of net sale 46.50% 41.60% 4.9pp
operating margin 3.80% 11.30% 7.5pp
effective tax rate 25.40% 25.00% 0.3pp
net income attributable to shareholder in % of net sale 2.20% 8.40% 6.2pp
average operating working capital in % of net sales 23.50% 18.10% 5.4pp
equity ratio 30.70% 32.90% 2.2pp
adjusted net borrowings/ EBTIDA 1.50% 1.10% n.a
financial leverage 48.80% 61.40% 12.4pp
return equity 6.70% 29.10% 22.4pp
balance sheet and cash flow
total assets 2105300.00 20,680 2%
inventories 4397.00 4,085 8%
receivable and other current assets 3763.00 4338 13%
operating working capital 3960.00 4007 1%
shareholders' equity 6454.00 6796 5%
capital expenditure 442.00 711 38%
net cash generated from operating activities 1486.00 2819 47%
per share of common stock
basic earnings 2.15% 9.7 78%
diluted earnings 2.15% 9.7 78%
net cash generated from operating activities 7.62 14.26 47%
dividend 3.00 0 n.a
share price at the year-end 297.90 289.8 3%
other ( at year-end)
number of employees 62285.00 65194 4%
number of shares outstanding 195, 066,
average number of shares 195,155,924 197,606,10
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