Adidas Business Environment: Macro Factors and SWOT Analysis

This report provides a comprehensive analysis of Adidas' business environment, covering various aspects such as the types and purposes of organizations, their size and scope, and the relationship between organizational functions and objectives. It delves into the positive and negative impacts of the macro environment on Adidas' business operations, supported by specific examples. Furthermore, the report conducts internal and external analyses of Adidas to identify its strengths and weaknesses, explaining how these interrelate with external macro factors. The analysis incorporates frameworks like SWOT and PESTLE to offer a detailed understanding of Adidas' strategic position and the environmental factors influencing its performance, with references to relevant academic sources.

Business and the
Business Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Explain different types and purposes of organisations..........................................................1
P2 Size and scope of different types of organizations................................................................3
TASK 2............................................................................................................................................4
P3 Relationship between different organisational functions and how these functions are
related to organisational objectives and structure .....................................................................4
TASK 3...........................................................................................................................................6
P4 Identify the positive and negative impacts the macro environment has upon business
operations, supported by specific examples................................................................................6
TASK 4............................................................................................................................................7
P5 Conduct internal and external analysis of specific organisations in order to identify
strengths and weaknesses............................................................................................................7
P6 Explain how strengths and weaknesses interrelate with external macro factors...................8
CONCLUSION .............................................................................................................................10
References:.....................................................................................................................................11

INTRODUCTION
Business environment is defined as the sum total of internal and external factors which
directly or indirectly effect the operations of a business organisation. Some of environmental
factors are political factors, competitors, government, customers and many more. Effective
identification of factors of business environment helps the organisation in gaining the
opportunities related to the improvement of productivity and profitability of organisation. The
chosen organisation for this report is Adidas which is a German multinational company doing
production of shoes, clothes and other sports accessories. It was founded by Adolf Dassler in
1924. The identity mark of Adidas is three stripes which is being used by the organisation as a
marketing aid while designing clothes and shoes (Weng and Chi 2019). This report covers the
types, purpose, scope and size of business organisation along with the relation among
organisational structure, functions and objectives. In addition to this, it also deal with the positive
& negative impact of macro environment of business operations, SWOT and PESTLE analyses
of the specified organisation.
TASK 1
P1 Explain different types and purposes of organisations
Business organisation refers to the place where a number of people are working together
for the purpose of achieving the organisational purposes and objectives. All the organisations are
established in a proper and systematic structure so that organisational operations are performed
in an effective and efficient manner (Quinn, R.E and et. al., 2020). Several types of business
organisations along with their purpose and legal structure are given below:
Private Sector: It include those organisations which are owned and managed by the private
individual for the purpose of earning profit. These are the organisations in which government do
not interfere in their operations. The main objective of organisation of private sector is to earn
profit by providing products and services to the customers. Adidas is a private organisation as
they are also working for the purpose of maximizing profit.
Purpose: The objective or purpose of private sector is to enhance the productivity and
profitability of organisation. Their main focus is only on the generation of higher profit. Adidas
is providing higher quality products for the purpose of satisfying the needs and demands of
customers. Their sales result in the enhancing the profitability.
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Legal Structures: There are several of legal structures have been identified in which the
private organisation perform the business functions. Some of legal structure of private sector are
given below:
 Partnership: It is defined as a formal and legal agreement which is formed among
two or more than two individual for the purpose of performing business operations
collectively and distribute the profits and losses in a specified ratio.
 Sole Proprietorship: It refers to a business organisation which is managed and
owned by a single individual (Parnell, B and et. al.,2021). All the business
operations are being performed by the single individual. That single individual is
responsible for making decisions in the business organisation.
 Corporation: It is defined as a business organisation having separate legal entity
which state that it is different from its owner. It is a huge organisation or a group of
several companies which are operated or controlled as a single organisation.
Public Sector: The organisations which comes under public sector are owned and managed by
the government. Political parties and government provide the funds for performing the business
operations. These organisations are owned by the government. Hence, the government have
authority to take all the decisions in these organisation. Along with this, such organisations
provide products and services in a specified area. The example of public sector organisation is
JD SPORTS.
Purpose: The main aim of public sector organisation is to provide the quality products
and services to the people of a specific country . Majorly, such organisations focus on the
welfare of society rather than making profit.
Legal Structure: It is defined as the systematic process which leads to the facilitating the
business to perform business operations in an effective and efficient manner (Perdhani 2017).
BBC organisation is works under the legal structure of central government:
 Local Government: In the organisation of local government structure, local authority
is responsible for making and developing all the rules and regulations related to the
business operations of organisation.
 Central Government: Such organisations are managed and run by applying several
laws which are being passed by the central government. Mainly these organisation
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perform their business operations on large level and provide products and services to
the whole nation.
 State Government: The organisation of state government perform the business
operations as per the rules and regulations developed by the state government (Hooper
and Holtbrügge 2020). People of specific state are the targeted customers of such
organisation.
Voluntary Sector: It include those business organisations which perform business operations in
order to providing benefits to the citizen of society rather than earning profit. These
organisations are independent from local as well as national government. Sports England is the
best example of voluntary organisation as it collect the funds from several sources to meet the
needs and demand of people of society.
Purpose: Majorly, Voluntary organisations work for the purpose of solving several
issues and problems of people of society by providing them goods and services. Society welfare
is the main purpose of these organisations.
Legal Structure: Below mentioned are the legal structures of Voluntary Organisational
Sector: Charity: It refers to those voluntary organisations which perform business operations by
collecting funds and recurses from charity (Hassanien and Dale 2019). Organisation use
this charity for the welfare of society.
 Trust: It is defined as a type of voluntary organisational sector in which trustees
contribute funds and resources so that all the functions can be performed in an effective
and efficient manner. The micro-enterprises eliminate unemployment and promote
balanced regional development through a fair distribution of income
P2 Size and scope of different types of organizations
It has been found that the organisation is divided into several types i.e. micro, medium
and large. Below mentioned is the brief description of these organisations: Micro Enterprises: It is defined as the business organisation having less employees
along with less investment. Mostly 0-9 employees are involve in these organisation with
the annual turnover of less than 2 million. The micro-enterprises eliminate
unemployment and promote balanced regional development through a fair distribution of
income. Such type of organisation do not involve high technology while performing
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business operations. It also leads to the addition of values in the economy by developing
the income opportunities along with reducing the costs. Sports England is consider as the
example of micro enterprise as it was run and managed by the local government with a
few number of employees. Medium Enterprise: It has been found that it involve employees more than 10 but less
than 49 with the annual turnover of more than 2 million but less than 10 million. This
type of organisation also involve less employees and focus on the increase in the volume
of sales. It can be said that the scope of such business organisation is enormous for
investors and entrepreneurs because the number of employees are kept below the
standard (Phadermrod And et. al., 2019). Mainly, these organisations are from retail or
manufacturing industry. In simple words, it can be said that these businesses do not
require much investment and time to start the business operations. JD sports is the
example of these organisations. The management of this organisation is using their scope
by doing innovation in shoes, clothes and several sports accessories for the purpose of
doing promotion of organisation.
 Large Enterprise: It is defined as the business organisation which include employees
between 50 to 250 with the annual sales limit of approx 250 million. Mainly, these
organisations are multinational organisations which perform their business organisations
in several countries (Haney, A.B and et. al., 2020). The scope of these organisation are
consider as the generation of higher revenues involving the multinational companies
which are working as a part of the government. Adidas company is the best example of
large enterprise as it is performing business operations in several countries. This
organisation is doing production of footwear, clothes and sports accessories on huge
level and trying to reach to all the customers.
TASK 2
P3 Relationship between different organisational functions and how these functions are related to
organisational objectives and structure
There are several business functions which are being performed by the business
organisation for the purpose of achieving organisational goals and objectives and it has been
found that all the business functions are interrelated with each other so that they can bring
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effectiveness and efficiency in their operations. In the context of Adidas, several of departments
are divided to complete all the functions. Production, human resource, finance, marketing,
technology and sales are the several business functions. Below mentioned is the description of
interrelationship among all of them: Finance and Human Resource: Finance department perform the functions related to the
finance or funds in an organisation where as human resource perform the functions
related to the employees working in the organisation. Both of departments develop
interrelation so that the business operations are performed in a well defined manner. In
the context of Adidas, the finance department prepare the budget plans for all other
departments so that they can perform business operations within a decided budget
(Rahmawati and et. al., 2017). Along with this, finance department of organisation is
also responsible for managing the payrolls of employees. Whereas the human resource
department provide training to the employees of finance department so that they can
perform their operations in an effective and efficient manner. Its interrelationship leads
to the growth and success of organisation by bringing the effectiveness in operations.
 Marketing and Production department: Adidas company is doing the production of
clothes, shoes and several sports accessories as per the needs and demands of customers.
Marketing department of Adidas perform the function of identifying the needs of
customers, their preferences and current market trends (Expósito and Sanchis-Llopis
2019). Employees of marketing department provide all these important information
related to customers to the production department so that production department can do
modification in their products and make the product as per the needs and preferences of
customers. Enhancement of performance of organisation can be analysed by this
interrelation as it also leads to the quality products.
Below mentioned are the several structures of business organisation: Functional Structure: Under this structure, the employees of organisation are divided in
several departments as per their skills and knowledge. Top level management is the
single authority of organisation. Adidas company is following functional structure in their
business organisation. Divisional Structure: As per this structure, the business operations are classified in
several groups and the employees are responsible for their own action. JD sports
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company is adopting the this structure under which they had made the divisions such as
sales, finance etc.
 Matrix Structure: According to this structure, the employees have to report to several
authorities which bring complexities in the organisation. Voluntary organisation Sports
England is adopting this structure.
TASK 3
P4 Identify the positive and negative impacts the macro environment has upon business
operations, supported by specific examples.
It is necessary for the business organisations to analyse the impact of macro environment
so that the management can prepare themselves to face any issue which is going to be influence
the business operations in near future. The organisations can identify the impact by applying a
tool i.e. PESTLE. It is defined as a tool which is being used by the business organisation to
analyse the impact of macro environment over the operations. Below mentioned is the PESTLE
analysis of Adidas company: Political Factors: It has been found that Adidas is supplying their products worldwide.
They are required to extend their supply chain internationally. Hence, it is necessary for
the organisation to follow all the political procedures while selling their products in
several countries. Along with this, the organisation is also following several political
rules and regulations such as international trade agreements, consumer safety law
which puts an positive impact (Cokins and Căpușneanu 2020). But the stable situation in
the marketing of some country effect the business organisations negatively as it directly
effect the profitability. Economic Factors: Adidas is providing products to the buyers by following their trends
and preferences. Fluctuations in the economy leads to the research of Adidas to where
they should sell their products puts positive impact on the growth and opportunity of
organisation. Due to the labour modification and low cost of creation, the products are
produced in the chain. It implies negative impact on export and import of goods with the
increase in the counterfeit hampers sales of Adidas. Social Factors: The changes adopted by the organisation as per the preferences of
customers and their lifestyle implies positive impact on the organisation but constant
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and quick change in the preferences of customers negatively effect the company
(Townsend, A.K., 2017). Technological Factors: The Adidas company is using several social media and online
e-commerce platforms to sell their products. It implies positive impact on the
organisation. This use of technology helps the organisation in generating more revenue.
On the other hand, the organisation have to spend lots of money on these platforms
which implies negative impact on the organisation. Legal Factors: Adidas company owned intellectual properties which provide defending
rights from copiers and infringement (Choudhary, S and et. al., 2020). The patents
provide legal protection to the organisation which puts positive impact on the
organisation. Also the Adidas company is dealing with several legal policies of different
countries. Legal structure of some countries are very rigid which implies negative
impact on the company.
 Environmental Factor: Adidas company is following ethical business practices through
pledging for making sure that the suppliers comply with regulations in each country puts
as positive impact. Whereas changes in the environment conditions directly effect the
business operations in negative way as it changes the preferences of customers.
TASK 4
P5 Conduct internal and external analysis of specific organisations in order to identify strengths
and weaknesses.
In order to achieve the higher profitability and market growth, the organisation is
required to identify the strengths and weaknesses. So that the company can grab the the
opportunities available in the market by eliminating threats. SWOT is a tool which is being used
by the organisations to analyse the strengths,weaknesses, opportunities and threats of an
organisation. Below mentioned is the discussion of analyses for the purpose of identifying the
strengths and weaknesses in Adidas: Strengths: Adidas is providing quality products by spending more money on research
and development which also result in the creation of positive brand image and attracts
the customers. The designs of their products are unique which is consider as the
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strengths of organisation as it leads to the creation of higher profit. Its global presence is
the huge strength for the company as they are covering all the customers. Weaknesses: The Adidas company is using several innovative technology along with the
advance production technology which increase the production cost of organisation. High
competition with several of brands result in the shifting of customers to the other brands.
Hence, it is the huge weakness for Adidas Company.
 Opportunity: The Adidas has opportunity to expand their business by designing new
foot friendly shoes. They can also tie up with several sports teams and clubs so that they
can enhance the presence of their products (Arhin, K., 2019). Along with this, by
providing the products budget friendly to the college students and young professionals,
the organisation can expand their business which result in generating higher profit.
 Threats- The competitors available in the market are the threat for Adidas as they are
manufacturing the same sports products and accessories on less prices.
P6 Explain how strengths and weaknesses interrelate with external macro factors.
The productivity and profitability of Adidas is affecting with the several strengths and
weaknesses. It has been found that the strengths and weaknesses are interrelated with the
external macro environment factors which are as follow:
Political Factors: Adidas company is considering up and downs of politics as factor which
effect the business organization. Below mentioned are the positive and negative effect of
political factors on the operations of business:
Positive impact Negative impact
Worldwide presence of organization
positively effect the business of Adidas
company as it is a strong strength of company
as well.
Constantly changes in the laws and trends
implies negative effect on the business
functions of Adidas.
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Economic factor: Identification of economic stability and modification in the growth rate are
consider as the economic factors which effect the business operations of Adidas (Rossignoli and
et. al., 2018).
Positive impact Negative impact
Adidas is offering products on low prices as
compare to its rivals. It implies positive effect
on the company. The strength of company is
to design innovative products.
Negative impact of economic factors on
Adidas company are consider as inflation, any
modification in economy and many more.
Social factor: It include the factors or social activities which effect the business operations.
Modification in lifestyle and trends of customers bring changes in the organisation as well.
Positive impact Negative impact
Adidas company is performing several
research activities for the purpose of
identifying the needs and preferences of
customers (Alles and Gray 2020). It helps the
organisation in making the products as per
their requirements which is a strength of
Adidas.
The performance of Adidas company is
affected with the high level of competition
which implies a negative effect on the Adidas.
Technological factor- The Adidas is concerned with the technology to cater more
attention of the customers for the high sales, with the use of technology it is offering innovative
and comfortable shoes with new designs and colours. The company also have strength and
weakness which is providing positive and negative impact on the external environmental factors.
Positive impact Negative impact
High level of technology was adopted by the
Adidas for the production of innovative
products which putted an positive impact.
With the great brand image the sales were to
upsurge having strength for the Adidas
company.
The charge of high prices on some products
in respect to accessories, apparel or shoes as
compare to other competitors or offering of
new design products puts an negative impact
on business operations of Adidas.
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Legal factor- All the legal considerations and legislations are followed by the Adidas to
have more revenue and profits. All legal factors have a positive and negative effect on the
company and are also related to external environmental factors.
Positive impact Negative impact
All the legal procedure is followed by Adidas
company which puts and positive impact and
business operations are run smoothly leading
to improvement in productivity (Zighan, S.
and Ahmed, E.Q., 2020).
There are some controversy and lawsuit
affecting the reputation of company. The
change in regulation and not keeping proper
safety for employees may affect Adidas
negatively.
Environmental factor: Any change in the weather and climate also effect the operations of
Adidas.
Positive impact Negative impact
Involvement of Adidas company in green
marketing activities implies a positive effect
on operations. Also, it is consider as the
strength of Adidas.
Change in marketing and technology effect
the situations and effect the ecological
sustainability.
CONCLUSION
` From the above report, it has been concluded that that there are several types of
organizations which comes under different sectors such as private, public and voluntary. All of
these companies have several legal structures which are explained above in the details. Along
with this, all these have specific purpose in the society as well. It has been also found that
business operations are being effected by macro and micro business environment which are
identified by applying the tools which include SWOT and PESTLE analysis. All of business
environment factors effect the business operations in positive and negative way. Furthermore,
this report also shoeing the positive and negative effect of macro external business environment
which effect the business operations of Adidas.
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