Sports Industry: Analysis of Different Types of Organizations and their Interrelationships

This report analyses the sports industry with focus on public, private and voluntary organizations. It explains the interrelationships between different functions and their link with organizational objectives and functions. It also discusses the positive and negative impact of macro environment on the company.

Business and
Business
environment
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Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
TASK 1............................................................................................................................................3
P1 Explanation of different kinds and purposes of organizations..........................................3
TASK 2............................................................................................................................................8
P3 Explain relationships between different functions and their link with organizational
objectives and functions.........................................................................................................8
TASK 3............................................................................................................................................9
P4 Positive and negative impact of macro environment on the company..............................9
TASK 4..........................................................................................................................................11
P5 Internal and external analysis of the company to understand strengths and weaknesses11
P6 Explanation of interrelation between strengths and weaknesses and external environment
factors...................................................................................................................................12
CONCLUSION..............................................................................................................................14
REFRENCES.................................................................................................................................15
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INTRODUCTION
The sports industry is diverse and different organizations in various sub-sectors
contribute to sale of wide range of sports products and services (Aghaei Shahri and Azimzadeh,
2021). This report focuses on the sports industry. The sports industry is analysed with focus on
public, private and voluntary organizations in the industry. Factsheets providing insights into
various sub-sectors of the sports industry is included in this report. The interrelation between
various function of organization in the sports industry is also analysed in this report. The external
and internal environment of sports organization is analysed in this report with creation of a
traffic light chart.
MAIN BODY
TASK 1
P1 Explanation of different kinds and purposes of organizations
Sports industry on a global scale has the current valuation of 291.5 billion GBP as for the year
2020 with the ratio for future progress at 3.4% since the year 2015.(Global Sports Market
Opportunities and Strategies Report 2021: Sports Market Forecast to Reach $599.9 billion by
2025 as COVID-19 Lockdowns Ease, 2021). On a national the valuation of the sports industry in
UK is valued at 3.1 billion great British pounds (Sports Facilities in the UK - Market Size 2010–
2028, 2021). The British sports business landscape is highly diversified with different types of
organizations including private sector, public sector and voluntary sports business enterprises.
The information on sports industry is covered below;
Private Sector Organization
Company Overview: The private sector organization of the sports industry is Adidas. The
company was founded in the year 1949. Adidas has operations present in one hundred and sixty
international markets across the world with Nike, Under and Under Armour. These three
companies have the highest market share of the sports private sector firms. The franchises of the
company are available at 2,500 locations.
Products and services: Adidas has three main lines of product segments which are
apparel, accessories and footwear which are all focused on sportswear. Apart from this The
company also produces sports equipment.
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Mission: The mission of the company is “to become the internationally leading company
in the market for sports products with brand name related to sports passion and the global leader
in the sporting goods industry with brands built on a passion for sports and a sporty lifestyle. As
a brand the focus is on improvement in competitiveness.”
Vision: The vision of Adidas is “To become the internationally renowned leader which
supports athletes in improving performances with high quality sports goods (Adidas Mission
Statement and Vision Analysis, 2020).”
Business Objectives: The business objectives of the company are provided below:
To enhance the overall sales by margin of sixty percent alongside growth of income by fifteen
percent in the upcoming 5 years.
To improve technology and offer consumers best designs which can also be used for sports
activities.
Organizational Structure: The company has a matrix organizational structure.
Public Sector Organization
Company Overview: England and Wales Cricket board is the national governing body for
Cricket in UK. The ECB runs successful England teams, international, regional and recreational
cricket, and runs participation programmes that get children active and playing cricket
Products and services: The company ensures that Cricket sports are completed as per the
regulations in England and cricket is promoted in the country.
Mission: The mission of ECB is “To inspire the nation to choose cricket”
Vision: The vision of the company is “To unite people and communities through cricket (Our
Strategy, 2021).”
Business Objectives:
 Grow and nurture core cricket through partnership and collaborations
 Provide inspiration through high performing team
 Improve accessibility of cricket
 Enhance connection with youth and child age individuals
 Bring positive change into the cricket of women and children
 Provide assistance to cricket communities
Organizational Structure: The organizational structure adopted by ECB is hierarchical
organizational structure.
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Voluntary Sector Organization
Company Overview: England athletics is a prominent voluntary organization in the sports
industry. England Athletics England Athletics is the membership and development body for
grassroots athletics and running clubs in England.
Products and services: The company has the responsibility to conduct athletic events and
promote athletics sports in UK.
Mission: The mission of the company is “To act as an inspiration for athletic sportspersons from
different backgrounds and various abilities to reach their full potential and create appreciation for
the sport.”
Vision: The vision of UK athletics is “To promote inclusivity in the sports of athletics and
running for collective development.”
Business Objectives: The business objectives of UK athletics are provided below:
 Participation: Young People and Running
 Club, club leaders and facilities
 Talented athletes
 Competition (Our Strategy, 2021)
 Coaches and Officials
Organizational Structure: The organizational structure for this company is flat organizational
structure.
P2 Size and Scope of different types of organizations
Private Sector Organization
Size
The size of Adidas is huge as it is present in 160 countries and has a physical and digital
distribution network to reach large number of consumers. The global workforce of Adidas equals
to 57,016 which further showcases the huge size of the company.
Scope
The scope of the company is large because it has huge global supply chain connected
with large number of external parties impacting the global sports industry at a large scale.
Legal Structure
 Sole Proprietorship: In this type of private sector legal structure, a single owner of the
company is responsible for the loss and profits of the company (Ostrow, Nemec and
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Smith, 2019). The financial transactions of the company along with any legal actions of
the company are completed under the name of the single owner. The advantage of sole
trader legal structure is that it can be formed easily.
 Partnership: This legal structure is created when two or more individuals start-up an
enterprise with focus of carrying on the business in order to attain common objectives of
profit. This legal structure is advantageous because it eliminates the gap in expertise and
capital needed to create a successful entrepreneurial venture.
 Limited Liability Partnership: The main aspect of a limited liability partnership which
separates from other type of partnership is that each partner has limited liability. The
main advantage of a private company adopting such legal structure is that it provides
flexibility and corporate ownership (Allen, Kraakman and Khanna, 2021). These features
support swift growth of the company.
The legal structure of Adias is Limited Liability partnership.
Public Sector Organization
Size
The size of England and Wales Cricket board is large as it consists of umpires cricketers
and members across UK who are dedicated towards the betterment of the cricketing sports in
UK.
Scope
The scope of the England and Wales Cricket board is also large because the governing
body is concerned with completing both domestic as well as international activities related to
cricketing in UK.
Legal Structure
 Central government: This legal structure of a public company is under the control of the
chief government of a country. The control of such public organizations extends to the whole
country because it is the national governing body.
 State government: The government authorities of specific states or provinces control
this type of public organization (Mwonzora, 2021). This means that such organizations have
the limited control which is restricted to the specific area of the state or province.
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 Local government authorities: This legal structure is given to public organizations
under the control of regional governing authorities which have responsibilities to a
specific locality in a state or province is defined as local government authorities.
The legal structure adopted by ECB is central government.
Voluntary Sector Organization
Size
The size of UK athletics is huge with 18,00 affiliated clubs and organizations, 187,000
registered athletes and 30,000 licensed coaches and leaders and 5,200 officials.
Scope
The scope of UK athletics is huge because it covers the area of athletic activities in
England, Ireland and Wales.
Legal Structure
 Trust; In this legal structure a legal entity is created which represents a fiduciary, agent
or trustee on the behalf of a person or an enterprise. This type of legal structure is formed in
order to administer, manage and eventually transfer assets of an organization to the primary
beneficiaries of the trust (Wells, 2018).
 Unincorporated association: An ‘unincorporated association’ is an organisation set up
through an agreement between a group of people who come together for a reason other
than to make a profit. This type of organization does not require registration which makes
it more suitable for small voluntary organizations.
 Company limited by guarantee: This is one of the most common legal structures used
by voluntary organizations (Roberts, 2018). Under this legal structure profits are not removed
from the organization as in the case off private organizations which are limited by shares.
The legal structure adopted by UK athletics is company limited by guarantee.
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TASK 2
P3 Explain relationships between different functions and their link with organizational objectives
and functions
Finance and Marketing Function
The finance function supports maintenance of stable financial health of the organization
which provides the marketing function funding needed to conduct promotional activities. On the
other hand the marketing department supports growth of the company through engaging
promotional activities which increase consumer base (Ferreira, Pimenta and Wlazlak, 2019).
This helps reach the financial objectives of the organization. This type of interrelationship exists
between the marketing and finance function and marketing function in case of Adidas. Matrix
organizational structure of Adidas supports this interrelation as it creates nimble teams. The
advantage of this interrelationship is that it helps the company complete marketing activities
under limited budget and achieve organizational growth. The disadvantage of this
interrelationship is that dependency on marketing to attain funding can limit the funding
resources of the company.
HR and IT function
The HR function provides training and career development opportunities to the IT
employees which supports smooth completion of the IT function (Agnihotri, Sareen and
Sivakumar, 2018). On the other hand the IT function facilitates development of technologies
which ensure better HR management for the HR function. This type of interrelationship between
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HR function and IT function helps Adidas create talented workforce and best in the industry IT
infrastructure. The impact of the Matrix organizational structure of Adidas on this interrelation is
that it supports interaction between different functional areas by improving flexibility. The
advantage of this interrelationship is that it facilitates effective usage of technology while the
disadvantage is that cyber security issues can negatively impact HR compliance at the company.
R&D and Consumer Service
The consumer service function provides information about consumer concern so that
product and operation improvements can be made by the R&D function. The R&D provides
innovative technology such as chatbots to increase the efficiency of consumer service function.
This interrelationship between R&D and consumer service function at Adidias is affected by the
Matrix organizational structure of the company. The matrix organizational structure promotes
open communication between employees of different functional areas which helps in
maintenance of such interdependent relationship. The advantage of this interrelationships is that
it helps produce innovation at Adidas which provide additional value to the consumer. The
disadvantage is that data gained from consumer service function can be difficult to interpret
which can also lead to taking the R&D function in unprofitable direction with regards to
improving innovation (Zhu and et. al., 2018).
TASK 3
P4 Positive and negative impact of macro environment on the company
Political Factors: The political tension between America and China affects the global sports
goods and retail industry. This is because China is one of the primary areas which provide cheap
labor and infrastructure for preproduction of sports retail goods. The political tension between
USA and China along with the subsequent tariff imposed by the American administration affects
retail sports goods supply chain and costs.
Positive Impact: In case of Adidas the positive impact of such America-China Political
Tension is that the company can maintain smooth supply chain and gain competitive advantage
by relying on other developing nations for cheap labor such as Bangladesh.
Negative Impact: Many of Adidas products are manufactured and sourced from China.
The American Chinese political tension will negatively affect the production costs of Adidas.
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Economical Factors: COVID-19 pandemic lower the growth of global economy and has
disrupted supply chains of different sub-sectors of the global sports industry.
Positive Impact: The positive reaction of vaccination campaigns all around the world,
specifically in developed regions showcases a better economic future with recovery.
Negative Impact: Adidas has faced loss because of the COVID-19 pandemic which
equaled to 3.5 billion euros (Adidas has lost €3.5B of revenue in COVID crisis, 2020). The
COVID-19 restrictions on social activity has reduces the sale of sports goods.
Social Factors: The trend of body fitness is increasing among millennial and generation z. This
trend affects sale of sports retail goods and services because sports is one of the most common
ways of achieving fitness.
Positive Impact: This provides Adidas the opportunity to increase sale of sports goods
and athletic apparel by appealing to the fitness trends of younger generation. The respective
organization will be able to gain huge profits from the young generation consumer segment by
adopting to this emerging social trend.
Negative Impact: The quickly changing fast fashion trends affects the sale of athletic
apparel. This can affect the sale of Adidas athletic goods as there is already high competition in
the sportswear industry.
Technological Factors: The main technological factor which affects sports goods manufactures
is the development in automation and AI technology is that it helps lower dependency on labor
and improve operational efficiency (Sahu, Young, and Rai, 2021).
Positive Impact: The usage of AI and automation technology can help Adidas save on
labor costs and provide better designed sports goods to gain leading position in the sports retail
industry.
Negative Impact: Implementation of AI is associated with many challenges such as high
computing power, trust deficit, cyber security and privacy issues. The usage of AI can be
challenging and introduce barriers to success for Adidas.
Environmental Factors: The sports retail industry is associated with unethical labor as many
multinational brands in the past have been accused of using labor from modern slavery.
Consumer demand and government concerns regarding such issue have increased focus on
ethical business and sustainability in the sports retail industry.
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Positive Impact: In case of Adidas the company has adopted several policies and CSR
initiatives to enhance sustainability and ethical business so that positive brand image is created.
This can help the company gain better public perception in comparison to rivals.
Negative Impact: Investing in improving ethical nature and sustainability of global
supply chain is financially taxing for Adidas which can also lead to lower profit margins.
Legal Factors: New technology solutions have been introduced which can help multinational
organizations with regulatory compliance in different international market to ensure smooth
movement of goods (Saputra, 2021).
Positive Impact: The usage of such type of technology by Adidas can help the company
smoothly deal with the legal complexity in the sports retail industry.
Negative Impact: The dependency of Adidas on such technology for dealing with legal
issues and regulations can create the problem of inability to handle region specific regulations
and legal requirements such as Emiratization. This UAE specific legal requirement involves
ensuring employment of certain amount of UAE citizens in the company. This kind of regional
legal requirements cannot be completely understood by technological program because it is
related to region specific issues and government policies.
Competition Funding Activity Legal Complexity Investment
TASK 4
P5 Internal and external analysis of the company to understand strengths and weaknesses
SWOT Analysis
Strengths Weaknesses
 Adidas is an internationally  The company outsources its production in
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High High
Mediu
m
High

recognized sports brand and is famous
for its high quality.
 The company constantly invests in
offering innovative products and
diversifying product range as per new
trends.
countries which offer cheap labor such as
China and Vietnam. This has increased the
risk of depending on foreign suppliers.
 The legal battle with Nike related to patents
harms the image of Nike (Nike Prevails in
Latest Fight with adidas Over Their Rival
Knitted Footwear Technology, 2020).
Opportunities Threats
 Adidas has the opportunity to make
profit from the Athliesure trend.
 The company has the opportunity to
diversify sporting equipment offered
by the company and target different
sports.
 The company faces extreme competition in
the sports retail goods industry which is
threat to market share.
 The fake product circulation of Adidas
brand is threat to the profits of the
company.
P6 Explanation of interrelation between strengths and weaknesses and external environment
factors
Political Factors Economical Factors Social Factors
Strengths Complying with
different government
policies is beneficial
for international
growth of Adidas.
Economic growth in
developing countries helps
the company increase
profits (Alabdullah, 2020).
The rising influence of
social media influence on
sports apparel trends can be
used by Adidas to market
new products.
Weakness The political
instability of trade
wars affects expansion
potential of Adidas.
The decrease in consumer
confidence because of
pandemic affects financial
recovery of Adidas from
COVID-19 loss.
The fast changing social
media fashion trends
negatively affect profit
potential of Adidas apparel.
Technological
Factors
Environmental Factors Legal Factors
Strengths The rise of e- The CSR programs Adidas has created strong
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commerce helps
Adidas reach larger
audience.
undertaken by Adidas to
improve sustainability help
improve brand image.
supply chain by ensuring
compliance with global
legal requirements.
Weakness Cyber-security issues
and threats of cyber
fraud are threat for
Adidas (Sacks and Li,
2018).
The short-term impact of
CSR programs on financial
health of Adidas can limit
investment in other areas
such
The ineffective
international patent rights
protection has lead to high
counterfeiting of Adidas
products.
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CONCLUSION
From the above report it can be concluded that different sub-sectors of the sports industry
fulfill different goals. The legal structure and scope of these sub-sectors is different. The internal
departments in an organization affect each other. Marketing function supports finance function
by managing growth of the business while financial function arranges finance needed for
marketing campaigns. The internal departments of an organization are also affected by
organizational structure. The external environment affects organizations in negative and positive
way which can be determined through PESTELL analysis. The internal environment and
external environment factors are related and contribute to strengths and weaknesses of a
company.
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REFRENCES
Books and Journals
Aghaei Shahri, M. S. and Azimzadeh, S. M., 2021. The Infrastructure, Peripheral, Organizational
and Market Relations in the Iranian Sports Industry. Sports Business Journal, 1(1). pp.119-130.
Agnihotri, S., Sareen, P. and Sivakumar, P., 2018. A Comprehensive Model for Competency
Mapping: Connecting Organizational Goals with Employee Competencies and Strategy Driven
HR Functions. Asian Journal of Management, 9(1). pp.697-701.
Alabdullah, T.T.Y., 2020. Growth of companies: Empirical study of the companies listed in
developing economies. Journal of accounting Science, 4(2). pp.1-10.
Allen, W. T., Kraakman, R. and Khanna, V.S., 2021. Commentaries and cases on the law of
business organization. Wolters Kluwer.
Ferreira, A. C., Pimenta, M. L. and Wlazlak, P., 2019. Antecedents of cross-functional
integration level and their organizational impact. Journal of Business & Industrial Marketing.
Mwonzora, G., 2021. Demolitions of Informal Business Structures in Harare, Zimbabwe Under
the Guise of COVID-19 City Clean Up. Journal of Asian and African Studies,
p.00219096211058878.
Ostrow, L., Nemec, P. B. and Smith, C., 2019. Self-employment for people with psychiatric
disabilities: advantages and strategies. The journal of behavioral health services &
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Roberts, J., 2018. Multinational business service firms: development of multinational
organization structures in the UK business service sector. Routledge.
Sacks, S. and Li, M.K., 2018. How Chinese cybersecurity standards impact doing business in
China. Center for Strategic and International Studies (CSIS).
Sahu, C.K., Young, C. and Rai, R., 2021. Artificial intelligence (AI) in augmented reality (AR)-
assisted manufacturing applications: a review. International Journal of Production
Research, 59(16). pp.4903-4959.
Saputra, B., 2021. Modelling Australian Transaction Reports and Analysis Centre (AUSTRAC)
for Indonesia in Order to Combat Financial Crime. NEGREI: Academic Journal of Law and
Governance, 1(2).
Wells, P., 2018. Degrowth and techno-business model innovation: The case of
Riversimple. Journal of Cleaner Production, 197. pp.1704-1710.
Zhu and et. al., 2018. How supply chain analytics enables operational supply chain transparency:
An organizational information processing theory perspective. International Journal of Physical
Distribution & Logistics Management.
Online
Adidas has lost €3.5B of revenue in COVID crisis, 2020. [Online] Available through
<https://engageemployee.com/adidas-has-lost-e3-5b-of-revenue-in-covid-crisis/>
Adidas Mission Statement and Vision Analysis, 2020. [Online] Available through
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<https://finance.yahoo.com/news/global-sports-market-opportunities-strategies-
080800261.html#:~:text=The%20global%20sports%20market%20reached,a%20rate%20of
%20%2D15.4%25>
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Nike Prevails in Latest Fight with adidas Over Their Rival Knitted Footwear Technology, 2020.
[Online] Available through <https://www.thefashionlaw.com/nike-prevails-in-latest-fight-with-
adidas-over-their-rival-knitted-footwear-technology/>
Our Strategy, 2021. [Online] Available through <https://www.ecb.co.uk/about/what-we-do/our-
strategy >
Our Strategy, 2021. [Online] Available through
<https://www.englandathletics.org/about-us/about-us/our-strategy/ >
Sports Facilities in the UK - Market Size 2010–2028, 2021. [Online] Available through
<https://www.ibisworld.com/united-kingdom/market-size/sports-facilities/>
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