Adidas' Foreign Investment Plan in Hungary: Business Environment Analysis

0BUSINESS ORGANISATIONS AND ENVIRONMENTS
BUSINESS ORGANISATIONS AND ENVIRONMENTS IN A GLOVAL CONTEXT
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Table of contents
1. Introduction.................................................................................................................. 2
2. Background of the organization................................................................................... 3
Market Structure...............................................................................................................7
3. Background of the business environment..................................................................10
4. Analysis of the business scenario..............................................................................14
5. Conclusion................................................................................................................. 15
Reference list and Bibliography..................................................................................... 17
Appendix........................................................................................................................ 21

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1. Introduction
The term foreign investment indicates the process in which the process of capital
flow can be maintain between two or more countries. The foreign investment denotes
that the foreign organization has strong roe in management as a part of investors (Tang
and Tan 2015). In this study, Adidas, which is popular sportswear manufacturing global
brand has decided to enter in the Hungary market. Before entering in the foreign
market, it has become necessary for the company to analyze the external environment
of the country. Adidas has developed its strong brand image in the global market and
more than 50 countries it has expanded its business. With increasing business
opportunities in the Hungary market, the company has decided to expand its business
in Hungary market for enhancing its customer base.
Objectives of Adidas in Hungary market
The objectives of Adidas in market in Hungary are as follows:
 To expand its customer base by entering in the Hungary market.
 To highlight different key factors that can drive the growth of Adidas in
Hungary market by analyzing both the external and the internal market
opportunities
 To increase the revenue of the company by 12% of current revenue with
incoming 4 year from the hungry market.
 To shed light on the organizational popularity, its expansion and
competitors in global market.

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 Using analytical tools like Porter’s five forces and Pestle analysis to
measure the current condition of the foreign market.
 To critically analyze different statistical data, charts and graphs related to
the unemployment rate, GDP per capita, Age-sex ratio, earning and
revenue record of the company have been highlighted trough this study.
 Development of feasible foreign investment plan for achieving the
objectives and goals
2. Background of the organization
Adidas is a Germany based organization, which was established in 1924 by Adolf
Dassler (Careers.adidas-group.com 2018). The company had its headquarters in
Herzogenaurach, Germany. The company is known for manufacturing and designing of
clothes, accessories and shoes. The products served by the companies are sportswear,
toiletries, sports equipment and footwear. Adidas group comprises of brands such as
Reebok, Runtastic and Taylormade. The company has expanded its business in all over
the world by introducing the combination of innovation and production. It has
established strong image in the market with standard quality of products and innovative
designs. In the initial stage, Adidas was an ordinary shoe factory and was run by the
Dassler brother. In case of business expansion, different popular events such as
Olympic, FIFA and UEFA have been sponsored by the company (Careers.adidas-
group.com 2018). Adidas has developed its business in near about 55 nations. In every
year near about 900 million sports lifestyle and sports products are being produced by
the company (Careers.adidas-group.com 2018).
Legal forms

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General policies
The account establishment policies are different in different countries. Obeying
the domestic law is being considered as the first business obligation. On the other hand,
minimizing the cost is another important policies in the business.
Industrial and employment relation
Adidas follows the employment standard in the workplace. The organization has
contributed in child in the labor abolition process (Stavseng and Handy 2018). Adidas
focuses of promoting co- operation and consultation between the employees and
employers in the workplace. On the other hand safety and occupational safety is being
maintained in the workplace.
The code of conducts are being maintained by adidas, which is called as
‘Standards of engagement’. In the SOE, the issues regarding the core labor standard
is being maintained. Analyzing the wages structure of Adidas it can be said that the
workers are being pad for every ball (Berge and Gaede 2017). In the words of Moreno-
Munoz et al. (2017), reasonable working hours is being maintained and the middleman
of the business gets paid 10% of in each kit. In case of internal structure of the
company, it is true that due to lack of monitoring process the benefits and wages
regarding challenges have become major concern for the company. By recognizing the
business practices of Adidas, it has been identified that in case of maintaining the buyer
and seller relationship, adidas arrange different events in every four year.
Financial performance

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Figure: Adidas earnings and revenue record
(Source: Careers.adidas-group.com 2018)
In the financial statement of adidas, the cash flow statement of the company has
been analyzed. In the year 2017, the revenue of the company has increased 12% than
the previous year. It has been identified that the gross margin of the company has
increased 2.4pp to 50.4%. In case of operating margin, it has been identified that in the
year 2017, it has reached 2.7 pp to14.0 %. After the brad development initiative near
about 13% of the sales has been increased. In this study, the financial performance of
Adidas has been examined from 2007 to 2017, in the diagram it is shown that the
gradual financial growth. In the annual report of Adidas, it has been identified that the
growth rate has increased 16% where the sales of the company shown € 21.218 billion.