Factors Influencing Business Expansion in Sweden

This assignment requires analysis of the Swedish economy, including interest rates and per capita income. It also involves understanding the importance of market research tools such as PESTLE and Porter's five forces to determine consumer demand and competitiveness. By applying these concepts, businesses can maximize profits, revenue, growth, and sustainability in Sweden.

Business

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
a) Information on the selected business organisation.................................................................3
b) Discussion of the allocated business environment.................................................................4
c) Application of an appropriate analytical approach.................................................................5
d) Charts......................................................................................................................................8
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Business environment is the combination of all internal and external factors which helps
in influencing business. Both factors internal and external can influence and work together for
affecting enterprise. In order to expand business in any country, different elements needs to be
considered by company. The business plan plays vital role in success of corporation in
competitive market (Bell, Bryman and Harley, 2018). The given assignment is based on Adidas
which was founded in 1924 at Germany by Adolf Dassler. It is multinational company which
manufacture and design shoes, accessories and clothing. It is planning to expand business in
Sweden country. This report covers different analytical approach for macro environment and
marketing such as PESTLE and Porter's Five Force Model which are discussed here.
MAIN BODY
a) Information on the selected business organisation
As per scenario given in assignment, selected business organisation is Adidas which was
founded in 1948 whose headquarter is located in Germany, Herzogenaurach founded by Adolf
Dassler. The legal form of organisation is Adidas AG and providing goods and services such as
footwear and clothing to all categories of consumers. It is operating business worldwide which
has 1557 stores across world. According to data of US 2017, market share is 9.5% and market
structure followed by it is monopolistic competition. The major competitors of Adidas are Nike,
Under Armour and Puma. As per report of 2017, global net sales is 21.2 billion euros and

revenue foot wear is 14.9 billion US dollars. The CEO of this organisation is Kasper Rorsted and
Chairman is Igor Landau. The major products are footwear, sports, toiletries, spotwear,
equipment. There are more than 56,888 number of employees working worldwide in Adidas
organisation (Bharadwaj and et. al., 2013). The subsidiaries of respective enterprise are
Runtastic, Matix and Reebok. This firm is largest sportswear manufacturer in Europe and second
largest after Nike in world.
This corporation was formed by Adolf Dassler in mother's home where elder brother
Rudolf joined in 1924 under Dassler Brothers Shoe Factory. They helped in development of
spikes shoes for all athletic events. For improving and enhancing quality of spiked shoes, they
transitioned previous model of heavy metal to utilising rubber and canvas. Dassler persuaded
U.S. Jesse Owens for using handmade spikes at 1936 summer Olympics. The logo used in
Adidas is three stripes that is used for clothing of company and shoe designing. Brand name of
Adidas is capitalized and used with lower case “a”. Under category of products it has apparel
sportswear and accessories. In apparel, it sells multiple clothing for men, women's jacket, pants,
t-shirt, hoodies, leggings. Similarly, under sportswear, it has manufactures clothes for various
sports such as association football, basketball, golf, lacrosse, skateboarding, Kabaddi, baseball,
cricket, Gymnastics, running, Tennis. Under category of accessories, products are sandals,
watches, bags, socks, mobile accessories, eye-wear, baseball caps, deodorants, lotions, perfumes,
aftershaves. It has produced adilette and adissage, santiossage. Adidas has done marketing and
promotion through help of game advertisement, sponsorship and collaborations. Adidas is
featured in different games such as Commodore Amiga: Daley Thompson's Olympic Challenge,
Amstrad CPC: Adidas Championship Football and Sony PlayStation: Adidas Power soccer and
Commodore 64, ZX spectrum (Bloom and et. al., 2018). It has collaborations with many
designer for increasing awareness in market along with rise in sales, profits and revenues.
b) Discussion of the allocated business environment
The business environment chosen by Adidas is Sweden where it is planning to expand
their business and market. It lies in Europe continent which has 9,995 million population
surviving as per 2017 data. Also the unemployment rate was 6.6% in august, 2018. Sweden is
country which lies in Northern Europe on Scandinavian Peninsula. This borders Norway to west,
Finland to north-east, Baltic sea to south and Gulf of Bothnia to east. This country has maritime
borders with Germany, Russia, Latvia, Denmark, Poland, Lithuania, Estonia. Sweden is fifth

largest in Europe, 55th largest in world and largest in Northern Europe. The Gross Domestic
Product (GDP) of Sweden is $550 billion in 2018. In GDP it rank 21st in nominal and 38th in
PPP. The growth rate of GDP is 5% in 2017, GDP per capita is $52,311 in nominal and $51,316
in PPP and according to sector GDP is 1.8% in agriculture, services is 70.8% and industry is
27.4%. The inflation rate is 2.3% in 2018 and interest rate is averaged 3.07 % from 1994 to 2019
and which reach highest in July 1995 that is 8.91% and lowest in February 2016 that is -0.50%
(Gilchrist and Zakrajšek, 2012).
The GDP of Sweden is highest in EU which has good banking system and low inflation.
The economy of Sweden suffered from low to high. As per International Monetary Fund, it debt
was reduced from 80% to 41% from 1995 to 2017. It is highly and diverse competitive and
successful economy. It is ranked among top ten competitive countries in world. Sweden is
considered as one of easiest countries for doing business. The main reason for growth of Sweden
is liberal and openness approach for trading and doing business and maintaining trade surplus
where value of goods and services that is export is greater than imports. There is growth in
contemporary service sectors like Information and Communication Technology (ICT). It
produces number of unicorns where start up values for companies is more than USD 1 billion
that includes video games, music, video calls. The stable economic policies that is combined
with innovation and competitiveness and open approach leads Sweden to economic success
(HOW SWEDEN CREATED A MODEL ECONOMY, 2019)
c) Application of an appropriate analytical approach
For expansion of any business in any place, analysis should be done by organisation.
Here, Adidas is planning to expand business in Sweden so it has to do market environment with
help of PESTLE analysis and for marketing, Porter's five force model has used. These are
discussed below:
PESTLE Analysis
It is tool that is used for analysing and monitoring macro environmental factors by
marketer which has impact on organisation (Gourio, 2012). Such type of framework is used
when new business is going to start or entering into foreign market. There are six elements of
PESTLE analysis which are described below:
Political Factors- This factors are related with how and what degree there is intervenes
of government in economy or industry. It can include political stability, corruption, government

policy, foreign trade policy, tax policy, labour law and so on. The legal system of Sweden is
based on constitution of 1974. There are different political parties such as democratic, centre,
Christian, left party, Greens, moderate, people's party liberals. Sweden is the best, safe and
politically stable country for expanding business. It has comprehensive law on corruption which
is fully implemented. Here, all parties have equal access for communication and national media
and are not treated differently. It is very easy for Adidas to expand business because of free
policy in Sweden.
Economic Factors- These are the determinants of performance of economy which
includes inflation rate, disposable income, economic growth, exchange rates, interest rates,
unemployment rates. Sweden maintain sound fiscal policy, efficiently increasing public spending
and enhancement of labour force participation. Sweden has efficient investment and capital
markets where credit is available for all foreign investors in unbiased way. As central bank is
increasing international cooperation. Due to fiscal policies implementation, economic of Sweden
has rise and prevent unemployment. It is very easy for Adidas to do expansion of business in
Sweden for fast growing and development. This can lead in increasing sales, profit and revenue
of organisation.
Social Factors- This factors represent demographics characteristics, customs, values,
norms of population within operation of organisation. It can be age distribution, population
growth rate, career attitudes, income distribution (Kiyotaki and Moore, 2012). The people of
Sweden are very punctual and love dedication for doing work. The individual living in Sweden
prefer new taste and preference for survival and prefer new trendy and latest products. Adidas
has great opportunity to fulfils need and demand of customer by providing them with latest and
current fashion goods. Under norms and value of Sweden, gender equality is improving and life
satisfaction is very high. Culture, value and opinion of Sweden is very high as compared to
others.
Technological Factors- This types of factors can affect operations of industry and market
unfavourable and favourable in terms of innovations in technology. According to UN ITU,
Sweden is considered as first rank in Information and Communication Technology (ICT) which
is facilitator of environmentally, economically and socially sustainable world. Adidas is large
corporation which can easily expand business in Sweden by using ICT technology. The
information can be passed easily from one to other and communication can be done in better

way. There are many products developed by Sweden firms such as cream separator, refrigerator
without moving parts, three phase electronic motor and self aligning ball bearing. With rise in
technology, Adidas can produce products with help of new, innovative and unique
manufacturing techniques that can be easily adopted by people of Sweden.
Environment Factors- Such factors come forefront recently and become important
because of increasing scarcity of raw materials, carbon footprints, pollution targets. It includes
environmental and ecological aspects like climate, weather, climate change and environmental
offset (Newbold, Carlson and Thorne, 2013). This has led organisation to involved in practices
of sustainability and Corporate Social Responsibility (CSR). Sweden is considered as most
sustainable country in world where it has renewable energy sources and low carbon dioxide
emissions. There are many environmental policy which are made by Sweden government which
need to be followed by any country which is expanding business in Sweden such as reduced
climate impact, protective ozone layer, balanced marine environment. Adidas can easily expand
business by following environmental laws made by Sweden for survival and sustainability
(SWEDEN - Basic Knowledge For An Expatriate, 2019).
Legal Factors- These factors influence or determined by environment or surrounding. It
includes antitrust law, discrimination law, employment law, consumer protection laws, copyright
and patent law, health and safety law. Sweden has different types of laws which need to be
established by business. The Swedish Law Act (1992:160) applies to all companies operating
any types of business. Every enterprise running firm in Sweden has to register at Swedish
Companies Registration office. Trademark need to be registered in Sweden for protection of
legal rights and obtained. Adidas is doing their business expansion in Sweden so need to follow
all acts and laws of that country. As government of respective country offers specific incentives
for setting up business. Loans can be easily taken from National Board for Industrial and
Technical Development (NUTEK) and development funds. There are numerous support
programs such as low rent industrial parks, location and employment grants, economic free
zones. Also Europeans funds provide subsidiaries for starting new enterprise. Thus, it is great
opportunity for Adidas for doing business expansion in Sweden (ANALYSIS OF SWEDEN AS
AN ATTRACTIVE COUNTRY FOR INVESTMENT, 2019)
Porter's Five Force Model

This is tool used for analysis of competition of business in market. It draws from
industrial organisation for deriving five forces which determine competitive intensity and
attractiveness of industry in terms of profitability (Storey, 2016). It helps in knowing marketing
environment of organisation. They are described below:
Bargaining Power of Supplier- This means suppliers to drive up prices. It includes
number of suppliers, uniqueness of products, strength of supplier and cost of switching power.
The bargaining power of supplier is high as Adidas can easily buy raw materials from different
suppliers with high quality and low price. Here, it is planning to expand business in Sweden so it
can easily expand with their product. Sweden has large number of suppliers offering good
quality so there is no threat for Adidas.
Bargaining Power of Buyers- It is the way through which buyers drive down prices
which includes number of buyers, cost to buyers for switching, importance of individual to
organisation. Adidas is planning to expand business in Sweden so bargaining power of buyers is
very low as it provide high quality goods and service to buyers. They can switch their demand
but quality provided by other company is not up to the level of Adidas. Thus, it has great
opportunity for Adidas to expand market and provide high quality of goods and services.
Threat of New Entrants- The organisation is affected by force of new entrants into
market. Profitable market helps in attracting new entrants that erode profitability. For example,
patents, capital requirements, economies of scale, government policies (Schaltegger, Lüdeke-
Freund and Hansen, 2012.). Adidas is expanding business in Sweden which has high economies.
There is high threat for Adidas of new entrants as number of organisation which can enter into
Sweden market for providing goods. The legal laws and others are very simple for entering into
Sweden which creates for respective market. Thus, organisation need to bring innovative in their
products, branding, marketing and promotions.
Threat of Substitute- When there are number of substitute products in market then there
is high chance for consumers to switch their brands. For Adidas, there is high threat of substitute
as there are other brands providing same types of products in market. This helps in reduction of
power of suppliers and attractiveness of market. If Adidas continue in increasing innovation and
manufacture new products with new techniques and tools. Sweden country has various types of
brands providing same type of products for their consumers. If Adidas want to expand business

then proper research should be done regarding taste and preference of consumers and move
forward for supplying goods and services.
Rivalry Among Competitors- It is important force which represent number of
competitors and their ability to threat company. Here, large number of competitors exist,
providing more number of products, and less power of company. There are many competitors
offering undifferentiated goods and services that reduces market attractiveness (Seubert and et.
al., 2014). There are competitors of Adidas such as Puma, Nike and many more providing same
types of goods and service in market. Adidas has high competitors so before doing expansion in
Sweden it need to analyse their competitors strategy and enter in market.
d) Charts
The interest rate and Per Capita Income of Sweden is represented below:
(Source: Sweden Interest rate, 2018)
Illustration 1: Sweden Interest rate, 2018

(Source: Per Capita Income of Sweden, 2018)
CONCLUSION
From above report it can be concluded that organisation need to make proper plan and
strategy before entering their business in any country. Through analysis they can easily figure
about taste, preference, demand of consumer and provide accordingly. In order to conduct
market analysis, PESTLE and Porter's five force model should be used by organisation. PESTLE
helps in knowing about macro external environment and their conditions regarding expansion of
business. Similarly, porter helps in knowing marketing about their business and threat of
competitors, new entrants, substitute, suppliers and buyer bargaining power. Thus, through help
of such tools enterprise can earn maximum profits, revenue, growth and sustainability.
Illustration 2: Per Capita Income of Sweden, 2018

REFERENCES
Books and Journals
Bell, E., Bryman, A. and Harley, B., 2018. Business research methods. Oxford university press.
Bharadwaj, A. and et. al., 2013. Digital business strategy: toward a next generation of
insights. MIS quarterly. pp. 471-482.
Bloom, N. and et. al., 2018. Really uncertain business cycles. Econometrica. 86(3). pp.1031-
1065.
Gilchrist, S. and Zakrajšek, E., 2012. Credit spreads and business cycle fluctuations. American
Economic Review. 102(4). pp.1692-1720.
Gourio, F., 2012. Disaster risk and business cycles. American Economic Review. 102(6).
pp.2734-66.
Kiyotaki, N. and Moore, J., 2012. Liquidity, business cycles, and monetary policy.
Newbold, P., Carlson, W. L. and Thorne, B., 2013. Statistics for business and economics.
Boston, MA: Pearson.
Schaltegger, S., Lüdeke-Freund, F. and Hansen, E. G., 2012. Business cases for sustainability:
the role of business model innovation for corporate sustainability. International Journal
of Innovation and Sustainable Development. 6(2). pp.95-119.
Seubert, M. and et. al., 2014. Consistent set of interfaces derived from a business object model.
U.S. Patent 8,924,269.
Storey, D. J., 2016. Understanding the small business sector. Routledge.

Weske, M., 2012. Business process management architectures. In Business Process
Management (pp. 333-371). Springer, Berlin, Heidelberg.
Online
SWEDEN - Basic Knowledge For An Expatriate. 2019. [Online]. Available through:
<https://www.slideshare.net/sknasifhasan/sweden-in-perspective-of>.
ANALYSIS OF SWEDEN AS AN ATTRACTIVE COUNTRY FOR INVESTMENT. 2019. [Online]
Available through: <http://hrmars.com/admin/pics/44.pdf>.
HOW SWEDEN CREATED A MODEL ECONOMY. 2019. [Online]. Available through:
<https://sweden.se/business/how-sweden-created-a-model-economy/>.