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External and Internal Environments

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Introduction:
In researching an industry for this assignment I chose the sporting goods industry that is a major industry with over $3 billion in sales per year. Within that industry I chose a company that I am familiar with “The Adidas Group.” The Adidas group is a publically traded company in Europe and with globalization it has increased its shares in the market. Adidas being traded on the European market is what we call an overnight stock. These stocks are traded at night here in the United States and open after the New York Stock Exchange closes at 4:00 PM eastern time.
I will choose two segments of the general environment business factors that I feel influence this company and the industry to assess how they affect both Adidas Group and the Sporting Goods Industry. In addition I will use the five (5) forces of competition and evaluate which two of the processes are the most significant to the corporation by evaluating how Adidas has addressed them in the recent past. I will further use the two forces to predict what the Adidas Group might do to improve their corporation by addressing these forces in future endeavors.
By choosing this corporation I will identify the external threats that affect them in the industry as well as the opportunities available. By doing this I will attempt to give my opinion on the corporation’s greatest threat and opportunity to identify some of their strengths and weaknesses for future growth potential. Identifying the firm’s resources, capabilities, and core competencies will assist in these opinions. Identifying its greatest competitor will also give me an idea of the competition and what their core competencies are that Adidas Group has to compete with in order to continue to be a giant in this industry.
Finally I will analyze the firm’s value supply chain to determine where they have room to try and create opportunities using the information found for the above mentioned resources, capabilities and core competencies.
Choose two segments of the general environment that would rank highest in their influence on Adidas Group and the sporting goods industry and assess their effects on both the corporation and the industry.
In order to choose any segment of a general environment, we must first understand what general industry competitor environments are and how the environmental elements work. The General environment is composed of dimensions in the broader society that influence an industry and the firms within it. These are grouped into seven segments the Demographic segment; the Economic segment; the Political/ Legal segment; the Sociocultural segment; the Technological segment; the Global segment; and the Physical environment segment (Hitt, Ireland, & Hoskisson, 2013). The two highest ranking segments of the general environment for the Adidas Group are the sociocultural segment which is concerned with society’s attitudes and cultural values and Global segment which includes new global markets, existing markets that are changing (Hitt, Ireland, & Hoskisson, 2013).
The Adidas Group’s sustainability strategy is rooted in the Group’s values – performance, passion, integrity and diversity. It is built on the achievements and learnings from previous years while taking into account the societal landscape and future global trends (Adidas, 2015). The firm operates on a four Pillar policy People, Product, Planet and Partnership with the following explanation: People: We positively influence the lives of our employees, factory workers and people living in the communities where we have a business presence. Product: We find better ways to create our products – mainly through innovation, increased use of more sustainable materials and efficiencies. Planet: We reduce the environmental footprint of both our own operations and our suppliers’ factories. Partnership: We engage with critical stakeholders and collaborate with partners to improve our industry. Which goes into the sociocultural aspect of understanding the societal changes and reforms, keeping informed of the newest trends while trying to create their own, and fostering a companionship with the communities in which they operate.
The global element is that sports have no boundaries. We have the Olympics, the World Games and basic sports and competition on all continents. With the different cultural and institutional attributes of these countries, the need for sporting goods does not change. Every team needs equipment and this industry supplies that need. The Adidas Group itself is a European traded company with large influence in the United States, Asia, Africa, and South America. This is done through marketing and the industry through various sports, more especially Futbol or Soccer (as it is known in the U.S.). The international ad campaigns and world stars that they sign to endorse their products make them a sporting goods giant.

Choose two of the five forces of competition model that you estimate are the most significant for Adidas Group and evaluate how they have addressed them in the recent past.
Compared to the general environment, the industry environment is more direct and has a more decisive effect on the firm’s ability to earn above average returns (Hitt, Ireland, & Hoskisson, 2013). There for the way you deal with competition in this environment is crucial. The two of the five forces I think are the most important for Adidas Group are Rivalry among competing firms and Bargaining Power of Buyers. I feel that the two go hand and hand in the fight for supremacy of the sporting goods world.
Rivalry among competing firms is high and the ability to squeeze a firm out is what most corporations look for when they plan their strategy. In the sporting goods industry firms are competing for business globally. If they can corner a market they do so by securing lengthy contracts there by holding their competitors at bay for the length of said contract. For example the National Basketball Association (NBA) signed a five year deal with Adidas which gave the Adidas Group sole rights to official team equipment and uniforms. This was achieved by beating out Nike and Under Armor for the deal. In addition Adidas secured their constant contract with Federation Internationale de Football Association (FIFA) to outfit all the teams in the World Cup. All of which has improved their market position globally. Though Adidas has these contracts other corporations have deals with individual athletes with in the associations that bring in constant revenue. Nike, one of Adidas biggest competitors has a hold on multiple individual athletes, but Adidas has the NBA and FIFA in its entirety. This gives Adidas the advantage in Bargaining Power of Buyers.
Bargaining power of buyers comes from the customer in the form of encouraging competitive battles among firms in an industry. This happens when the customer can switch to another product at little if any cost, sales of the product are a significant portion of the seller’s annual revenues, and or if the customer purchases large portions of the industry’s total output (Hitt, Ireland, & Hoskisson, 2013). This corporation achieved this by allowing the customer to pay lower prices due to having the contract to sell merchandise for the entire association there by cornering the market of certain sports. In addition to the assets mentioned above Adidas has a diverse portfolio of brands such as Reebok and Taylor Made (golf) that helped the group make a gross of over 15 Billion Euros or 16.4 Billion dollars (SEC, 2015). This was achieved by selling quality goods at reasonable prices to the average customer. Yes Nike has Jordan, Kevin Durant, and LeBron James, but their shoes alone cost over $200, not one of Adidas’s brands or shoes cost over $160. This gives parents the ability to buy their children shoes at a cost that fits their budget.
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With the same two forces in mind, predict what the company might do to improve their ability to address these forces for future earnings.
Going forward I feel that the Adidas group can continue to compete among their rivalry firms by signing more athletes to endorse their brand portfolio not only Adidas. The new venture with Taylor Made has entered them into another market of the industry and their technological expertise of providing innovative outerwear for runners is on the cutting edge. In the words of their CEO “Everyone deserves products, services and experiences that match their respective individuality” (Adidas, 2015). Not only does this help them compete, it gives them the edge in the Bargaining Power of the buyers.
By having contracts and new technology at reasonable prices the firm cements its pillar of helping the community. What good is a product that you cannot sell? I mean sell in large abundance. If Adidas can continue to secure long term contracts and bring awareness to the youth of more and more sports then they will continue to be strong in this industry. Yes some things are going to be hot at a point in time for fashion, but Adidas has been a pillar in the sporting goods industry since 1924 when Adi Dassler birthed the idea of providing athletes with the best equipment in his mother’s wash kitchen (Adidas, 2015).

Assess the external threats affecting the Adidas Group and the opportunities available to them. Give your opinion on how they should deal with the most serious threat and the greatest opportunity.
Identifying external threats and opportunities in business is crucial. Management must use the components of Scanning, Monitoring, Forecasting, and Assessing the factors to identify these conditions and be able to take advantage of opportunities and avoid or recover from threats (Hitt, Ireland, & Hoskisson, 2013). One of the most effective ways corporations do this is environmental scanning. Environmental scanning refers to possession and utilization of information about occasions, patterns, trends, and relationships within an organization’s internal and external environment (MSG, 2015). In doing this there are three correlated environments that a firm should monitor constantly Industrial environment which shows where the industry is headed and get an appraisal of the competitive structure of their rivals, National environment to identify if the corporation is meeting the national framework and giving them an advantage in the global market, and the socio-environmental environment to identify if there are any international or new technological factors that will influence a new trend or law that affects their firm (MSG, 2013). From this they can identify the opportunities and threats or do a SWAT analysis.
What is an opportunity? In business an opportunity is a condition in the general environment that if exploited effectively, helps a company achieve their strategic competitiveness (Hitt, Ireland, & Hoskisson, 2013). The greatest opportunity for Adidas their innovative ways of making their brand and its product. Adidas’s choice of materials and how they are manufactured are the two main ways by which their innovation teams can influence the environmental footprint of our products. Thinner or lighter materials mean less waste and less embedded carbon. Dry-dyeing clothes saves water, chemicals and energy (Adidas, 2015). This gives them an edge on the competition and helps cement their pledge to the global environment preserving natural resources for the future.
What is a Threat? It is a condition that may hinder a company’s efforts to achieve strategic competitiveness (Hitt, Ireland, & Hoskisson, 2013). Adidas’s biggest threat is their ability to get new and rising athlete’s to sign with them and endorse their brand. In addition if they sign a new athlete’s and they don’t reach their potential or get hurt the group loses money and standing in the industry. The non-predictability of an athlete is a chance that any company takes when signing a player. If a participant gets injured for any reason they aren’t able to be visible to their fan base. This in return can cause negative revenue for the company because they are the direct link to the Adidas brand. Case in point Adidas signed Derek Rose of the NBA after his League MVP honors. His had an injury the next year and Adidas lost big money on marketing and the urban youth demographic because he did not play for three years. This set the company back in the NBA and forced the group to find a new face of the brand. During this time Nike signed Kevin Durant and he has influenced a new KD brand for Nike with the urban youth demographic gravitating to his play and new style of shoe. In the sporting goods industry you are only as good as your new star wearing your brand on the field or court of play.
Give your opinion on the Adidas’s greatest strengths and most significant weaknesses. Choose the strategy or tactic that Adidas should select to take maximum advantage of its strengths and address the most serious threat.
The strategy that I feel Adidas Group should use to their advantage is one that could also be their biggest threat, that is effectively managing their customer relationships. Managing customer relationships is an all-inclusive situation form quality products to employee benefits. This is in line with the socio-cultural general environment and pat of the external environment analysis. As discussed prior these things shape a business, it gives them a sense of direction awhile cementing their ability to market their brand.
To take maximum advantage of this Adidas has and should continue to operate on their four pillar policy People, Product, Planet and Partnership giving the customer not only what they see in the catalog, store, or online but offering them the ability to design and wear their own design of Adidas personalized apparel. Producing a quality product that is not only for the professional athlete but for the average person from eight to eighty. Showing the globe that they are in tune with nature and using innovation to prove their commitment of saving natural resources and lowering their carbon footprint.
Additionally using this strategy they can also address their largest threat which is losing customers and profit by addressing the customers and understanding the wants and needs of each demographic. All companies are in business to earn a profit and to do so you must develop a relationship with the customer to gain their trust and build your brand. By doing so you create a culture that helps their stature in the industry and fosters a clientele base that others follow. For instance the movement of Adida-color! Which has been able to reach all demographics by introducing new styles and colors of the rainbow and bringing back old styles that appealed to the hip-hop culture of the 80’s.
Determine Adidas Group resources, capabilities, and core competencies
The Adidas Group has resources, capabilities, and core competencies are gathered in what they call the Social and Environmental Affairs (SEA) team. This team is comprised of 70 employees from all spectrums to solidly represent the group, lawyers, engineers, HR managers, environmental auditors to name a few. The team is broken up into three regional areas around the globe and are responsible for ensuring compliance with the Workplace Standards within the Adidas Group’s supply chain, Facilitating, promoting and managing the development and implementation of environmental initiatives across the Group’s own facilities, Extending and maturing the engagement and collaboration with others to drive changes in the industry, and Managing the Group’s community engagement programming (Adidas, 2015)
The core competencies of the SEA as well as the marketing teams is what they call the sustainability group in their mission strategy. The firm has built a reputation of quality merchandise and has a history of commendable service to their customer, employees, and the community. This is what has and will keep Adidas in a league of their own.

Analyze the Adidas Group’s value chain to determine where they can create using the resources, capabilities, and core competencies discussed above
Value chain analysis allows a firm to understand parts of its operation that create value and those that do not (Hitt, Ireland, & Hoskisson, 2013). This way they can make the most of their resources and use them in the most efficient way possible. Adidas dose this by utilizing their SEA team to streamline processes and forward them to the CEO. This team has the power to make corporate decisions, levy new rules, and evaluate regulations. This is a world group so the SEA team must stay abreast of all international rules and technology. To do so the group has in place multiple levels with develop innovation, protect the companies interests, design new products, and introduce their products to new markets.

Conclusion.
Adidas Group is a leading corporation in the sporting goods industry and by evaluating their internal and external competitive environments I think that they will continue to be leaders. The way that Adidas introduces new sports to different communities and fosters an environmentally friendly product line will enhance their customer relationship qualities and lead them into the future. I like Adidas to the point that I have invested in their stock which has gone up and down with the end of the World Cup but, has stayed solid over 50 years. Long term growth is what they have developed and continue with each new innovation. References:
Adidas Group Inc., (2015). Retrieved from http://www.adidasgroup.com/. Retrieved on 29 July 2015.
Hitt, M., Ireland, R., & Hoskisson, R., (2013). Strategic Management: Concepts and Cases: Competitiveness and Globalization, 10th Edition. Cengage Learning. Mason, Ohio.
Management Study Guide., (2013). Environmental Scanning- Internal & External Analysis Environment Retrieved from: http://managementstudyguide.com/environmental-scanning.htm. Retreived on 30 July 2015.
Securities and Exchange Commission. (2015). Fossil Group Inc. (CIK 0000883569). Retrieved from http://www.sec.gov/edgar.shtml Retrieved on 18 July 2015.

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External and Internal

...And External Environment Have you ever imagined yourself as a leader of a huge or small organization ? Which decisions would you make to guarantee a high efficiency of work ? I know that you feel that it may be easy to successful. It's just a decision-making and some employees who need someone to command them. Sitting behind large offices is a dream target for many employees, but to achieve this goal you need not only a hard work, but a high level of knowledge. Neglecting a simple thing could lead to the end. Over years many companies suffered from losses while others had already collapsed and did not exist anymore. There were many different reasons behind these problems. Some companies ended due to the competition with other firms. Others gave up because their products are no longer desirable. Most these firms figured out the main reasons of the problems too late. Many employers focus on internal environment more than the external environment or they would not pay attention to the outer boundaries. They may believe that the external environment is something you can’t control or deal with. For example, they look after good staff, great services, high quality of products ,appropriate structure…etc. All these issues manage and handle internal environment of the organization. Unfortunately, many firms somehow or another neglect external factors which could also affect negatively their business. Many companies went out of the market just because of the impact of external......

Words: 1137 - Pages: 5