Task 1(a)

Using information from your own research of the company, conduct an environmental audit/
external audit on Adidas

From the research, several information has been gathered which are goal and strategy. Adidas's
goal is to lead sporting goods industry with brands built upon a passion for sports and sporting
lifestyle. What can we understand here, Adidas try to meet their customers needs by creating
sports kit like shoes for runners, boot for footballers and lifestyle fashion. They try to highlight
that they have ability to create product that will help sports people achieve great performance
by using their product and at the same time they develop fashion of sport lifestyle. This will
toughen the competitiveness and empower the financial performance. This also will make
valued their shareholder for long term.

The strategy of Adidas Group is reorganization of group provides solid platform for growth. In
order to meet the goal, Adidas has take decision to move from a vertically integrated brand
structure into a functional multi-brand structure for Adidas and Reebok brands. The changes
lead to the creation of Global Sales and Global Brands. Global Sales organization responsible
for commercial activities and it has been divide by two which are Wholesale and Retail, and
Global Brands responsible for marketing activities of both brands.

The external audit that has been chosen is SWOT. From SWOT, the external factors are
Opportunities and Threats. These external factors can be used alongside with PEST.
Opportunities are the chances to become better. It is also situation in organization environment
that might help the organization to obtain something that worth for them. It is usually trend, way,
or effort that are needed to increase business performance, demand for products or services in
order to make the organization become better to compete with others. Any organization or
company will have their own opportunities and they should grab the opportunities because it is
the chances to become better and meet economy of scale.

Related to the case study, Adidas is one company that offers a variety of sports and fashion
style product with high qualities for a range of ages which are adult, teenager also for kids. With
this variety of product, they can get opportunities like make sponsorship for world-class sport.
How this can be opportunity for Adidas? The examples of world-class sport that has been
sponsored by Adidas are NBA, New Zealand national rugby team, Top football club and many
more. Those who get sponsored will promote Adidas products by showing best performance in
sports. As world-class sport is a media attention around the world, this will help Adidas promote
their range of product around the world and save cost for promotion. From sponsorship also, a
lot of chances and opportunities can be obtain. Example, Adidas can improve their product and
meet consumers need, empower their brand and increase their profit as their product become
well known.

Other than that, the opportunities they have are the operating period because the longer the
company operates the more experiences they have. When a company or organisation has long
operated, they know the market environment, easy to identify their weaknesses, get consumers
trusted and have their own loyal consumers. Example, as we all know Adidas is founded in
in1949 by Adolf Dassler. Until now, 61 years they has operated and a lot of experienced,
products and services they gained and become easy to build consumer trust in products quality.
Thus, it is opportunity for Adidas when operate in Asia countries like Malaysia, Philippine,
Thailand and so on.

In economic terms, it can be an opportunities for Adidas according to the chosen country for
operating and distributing. Means, Adidas will get the opportunities if the chosen country has
good rapid economic development. Malaysia can be good example because it is development
country that has good economic development. Good rapid development will be opportunity
because demand will increase and this shows that the design or quality is meet the need people
in that country.

Another opportunity that Adidas have is in term of social. How social can be opportunity? It can
be opportunity when the lifestyles of consumers are meets the product offered by Adidas. As we
all know, Malaysia is one of the country that distributed Adidas product in their country. What we
can see here, as developing country Malaysian seems can adapt with fashion lifestyle, active in
sports and the population are increases every year. Furthermore, the nation has started to have
awareness of healthy living and take serious about sports and this is opportunity for Adidas to
supply sports product, accessories, clothing and so on. Thus, the chosen of the potential
country also play big role to develop opportunity.

Technologies are another opportunity for Adidas because we should aware that good product
will come out with high quality performance. To get high quality, technology play big role
because nowadays, technologies are rapidly growing. High cost for transport and manufacturing
are one of the reasons why big company chooses to setup factory in certain country. After setup
the factory, cost for transport, manufacturing and labor can be reduces. This has been applied
by Adidas as they build factory in country like Vietnam, China, India and many more. From this
country, Adidas can take advantage by produce their product in the country that offers lowers
cost of production and distribute to other country.

Threat is any bad situation in the organisations environment that is potentially damaging its
strategy. Means, threat is barrier, a constraint or anything that external medium that will put
company or organisation in difficulty situation. The difficulty may be in terms of damage, injury,
loss, changing in customers tastes, tax increases and so on. Sometimes, threats may be
something bad for our company but it will be opportunities for our competitors and vice versa.
From this point of view, we should understand our own threat and try to make it as our
opportunities or strength. The most important thing, a company should list their threats to know
the situation of their company, competitor and market condition.

Related to the case study, there are several threats has been found and might cause problem
for Adidas. First is in terms of political factors where it includes government regulations and
legal issues like tax policy, political stability or environmental regulations. For tax issues, it will
be a threat when the tax that has been setup by the country is high. If this situation happens,
cost for distribution will increase and price for the product also increases. Other issues are
political stability where, Adidas should consider entering market in country that has good
political stability. If not, the sales will drop because local of that country has financial problem
and the government will prevent outside product from entering the local market. Environmental
regulation also is a threat because if Adidas fail to meet the requirement, they will be prevented
from entering the market. Example, if Adidas fail to meet the environmental regulation of United
States, they might prevent from entering United States market. As a result, Adidas might failed
in expended their business in that country

Second are economic factors where it should be taken into account where, it will relate to
inflation rate and economic growth issues. Adidas should be aware when choose to distribute
their product outside from their origin country because wrong chosen might make they faced
difficulty. Bad economic growth will affect Adidas because this relate with public expenditure. We
should understand that bad economic growth might cause by financial problem where people
has no money to buy things and they will avoid from spending money. Inflation rate also can
occur because the power of money becomes small. As a result, Adidas might face difficulty to
survive in the market.
Third are social factors which are in population of growth rate and culture. Less population of
growth rate will affect Adidas because the small population will not develop high demand. Cost
of manufacturing for this country cannot be accommodated with the sales and this will
unbalance the flow financial of the company. Cultures become threat if Adidas did not conduct a
study of culture and behavior of the country. Produce product that not follows the culture may
cause the product become undemanding. Example, if Adidas market stuff like winter coat in
Malaysia, maybe the sales is none or fail because Malaysia is country that has no winter season

Fourth is in terms of technological factors where it will relate to efficient production issues. As
well known product brand, Adidas should maintain standards of their product. To maintain the
efficient, the technology used for their product in origin country should be used in other country
and this will be barriers for Adidas if they failed to ensure the efficient of the product. This
problem will happen if the technology needed is not available in the manufacturing country. This
is the reason why company cannot just focused on lowering the cost for manufacturing,
transporting and labor but technology also need to be considered.

Adidas also should aware with their closed competitors like Nike and Puma where maybe the
threats of Adidas become opportunities for them. As we all know, Nike is popular with the design
and technologies and this goes same with Puma. Adidas should get some effort on how to turn
the threats become opportunities and compete with their competitors. Example, if environmental
regulation is the threats, Adidas can come out with new product that emphasizes natural
material and so on. Thus, this will turn threats to opportunities to win demanding of consumer
because nowadays, a lot of educated consumer has awareness about important in protecting
environment.

PEST analysis also is external audit as its concern with environmental influences of business.
PEST stands for Political, Economic, Social and Technological. Example, Consumer protection
is under political/ legal. For economic, the policies towards unemployment is like minimum wage
or unemployment benefits and this will lead buying power reduces as people become
unemployment. For Social, the lifestyle will changes like people not interested to buy fashion
design of shoes or watch. For technological, the speeds of technology transfer become slow
and this will make Adidas hard to put technologies in the products design according to countrys
consumer protection.