Pestel on Adidas free essay sample

Furthermore, I will portray how Adidas if influenced further by several other factors including social, economic, technological,political and legal factors throughout the company. Adidas is a sports manufacturer founded by German brothers Adolf Dassler and Rudolf Dassler in the 1920s. Adidas products range from shoes and sports equipment to perfume and jewellery. These products an be easily accessed in any major department store, online and individual retailers throughout every big city in almost every country. With the slogan, â€Å"impossible is nothing†, Adidas has a vision that includes a passion for sport. They wish to help athletes accomplish their highest performance with every product they bring to the market. Political factors Adidas, as expected need to be knowledgeable of the political condition of the UK and all other countries in which their product is sold. Adidas policy is to limit and monitor dangerous substances to not harm human health or the environment. This is done through the elimination of the PVC making process. Adidas use substitutes such as Polyurethane, ethyl vinyl, silicones and thermoplastic rubber. (Hayouma 2012) Adidas assembles sales tax in states where a sales tax applies. The tax percentage is determined in each state and local organisations based on their shipping address. Tax is taken in on the order total. However, Purchases of Gift Cards are not included. (Luke Deakin 2012a) In addition, Adidas follows all current important employment laws which helps protect and support the rights of employees. However, as Adidas has production facilities throughout the world in countries such as Asia, minimum wage is a major restriction for Adidas as they can demand labour at a completely different cost as they would in countries that do not have a minimum wage. If they could possess labour below minimum wage in the UK they could relieve transport costs to the UK. Which, in effect, would produce more money that would be used on funding new products. Health and safety are extremely important to Adidas, this is demonstrated through their training activities on employment standards and HR systems. Also,Adidas have established teams to help manage and look over SARS in their Asia factory, washing machines and disinfectant stations. (Luke Deakin 2012b). Furthermore, Adidas would not benefit from government subsidies to help unemployment as no specialist skills are required for manufacturing football boots. If the government were to introduce a number limitation on Adidas products imported, only allowing a specific number of Adidas products to be taken into the country each year. Adidas could overcome this simply by situating a factory in the UK and therefore, removing the quota. Resulting in it not being necessary for products to be imported from other countries. This wouldn’t be great for Adidas as the opportunity cost of cheap labour is the sacrifice of sales by abiding to the quota. In effect, both ways would conclude losing money. This would have a negative outcome on their merchandise as Adidas would have less money to promote their product. (Luke Deakin 2012c). Overall, political factors, although, are taken into consideration by Adidas it does not influence their contemporary business environment drastically. Economical factors Adidas is a huge multinational company which helps countries to decrease unemployment by increasing every year the number of employees. Which in return, only benefits Adidas as less unemployed people means more money in the economy and more money for consumers to spend on Adidas products. As expected, Adidas is largely affected by the economy of the UK. The interest rate in the UK is currently 4. 25%, however it was 3. 75% until 6 months ago, and is probably rising to 4. 5% in the near future. This shows that the interest rate is not very stable and will make it hard for Adidas to plan ahead in terms of budget. (Luke Deakin 2012d). If interest rates are too high, people will buy less and be encouraged to save, causing a decline in the demand for Adidas items. However, it would also not benefit Adidas if the interest rates are too low then people will see products as being cheaper and less valuable and eventually cause inflation to increase. Personal disposable income (PDI) is an element which may affect Adidas. PDI is influenced by the actions of interest rates, taxation and inflation. In basic terms, if consumers have more PDI then the demand for Adidas’ products should go up, and the opposite if people’s Is decreases, due to the same reason as unemployment. (Luke Deakin 2012e) If the inflation rate increases, it will have a bad effect on Adidas as to the consumer Adidas products will become less desirable to the materialistic consumer and eventually change the targeted market. Furthermore, Adidas is partly responsible for the increase of The Industrial Production Growth Rate in Germany from 1% to in 2003 to 1. 7% in 2004 due to their support of the Olympic Games. Adidas 2012). In general, economical factors are largely important to Adidas in influencing their business environment as the state of the economy in a country will establish the overall success of a company within that country. Social factors: As in all countries, the UK consists of several largely different groups of people that come from different financial statuses. It is crucial that A didas are aware of things such as individuals education levels,culture, religion and race. Furthermore age distribution, gender and buying habits. Therefore, they need to help advance their merchandise so that it attracts to all social backgrounds of the UK. Resulting in the optimisation of sales and enable a good accomplish its accessible market share. The age distribution of the UK is constantly increasing, as life expectancy in the UK is also getting larger as a result of betterment in living standards and medical competence. (Luke Deakin 2012f). Nevertheless, this would not effect Adidas because Adidas is a company that specialises in sports, and the vast majority of the market for sports clothing relies on the younger generation. Therefore, this issue shouldn’t cause an issue for Adidas as it will be targeting younger age groups. The UK is becoming increasingly more dependant on the Internet, meaning that the way in which people buy products are differing. Other than using the normal way of purchasing products from inside a physical building, an increasing amount of the public are purchasing items from the Internet. (Hayouma 2012b). This is because Internet is easily the fastest and simplest way in which to buy goods and is less time consuming. It would be beneficial for Adidas to recognise this and advertise their product more frequently online. Ultimately, social factors do influence Adidas modern business environment to a certain extent. However, there are several other factors which influence Adidas business environment further. Environmental Factors Adidas take pride in being an environmentally friendly company. This is smart as it prevents boy cotting and encourages customers to trust in the honesty of Adidas. Especially as the craze to be environmentally green and friendly is more encouraged than ever before. Adidas derive their key focus for being environmentally conscious consistently. This is done through several specific areas covered by the Adidas team. For instance, In crafting and building new buildings, business partners are largely encouraged to adopt green building practices. The Environmental benefits of green buildings are that it: †¢ Embellishes and conserves ecosystems and biodiversity †¢ Advances air and water quality †¢ Decreases solid waste †¢ Protects natural resources . (Adidas 2012b). Furthermore, Adidas have started to review and analyse their products life cycles. Including each stage of the process such as how products designed, created, manufactured, transported and sold. The process is simple, crude oil is used to manufacture polyester, water is a necessity to produce cotton and chemicals are used for dyeing and finishing fabrics or for tanning leather. These goods are eventually manufactured and sold and inevitably become waste. (Adidas 2012c) Adidas have an Environmental Strategy 2015 which helps create and control their Group’s environmental ambitions. The Environmental Strategy 2015 aims to decrease their environmental footprint 15% by 2015 relative to sales. It pursues a clear vision and sets goals that will be achieved by 2015. (Adidas 2012d). These goals cover every value chain from product creation to sourcing and production and from their own operations to their shops and all other places that sell Adidas products In addition, there are further new designs of greener products and more reusable and recyclable materials are used. Product safety, sourcing and manufacturing, climate change,and end of life are all factors within Adidas ever progressing environmental strategy. (Adidas 2012e). To sum up, environmental factors are substantial to creating a healthy image and evidently, environmental factors are significant in determining Adidas business environment.