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Unit 1 Assignment 2 Achieved Distinction
- Institution
- PEARSON (PEARSON)
In this assignment, I will examine the environment in which Adidas operate in and explaining how a external business environment impacts Adidas.
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Jasper Sobande Unit 1 Task 1In conclusion, as evidenced by the evidence given above, both businesses are incredibly
successful at what they do. Adidas is unmistakably designed for the energetic, fashionable,
and comfortable lifestyles of both teenagers and adults. Adidas, like their competitor Nike,
gives exceptional customer satisfaction to a degree, yet there are still some customers that
prefer Nike rather than Adidas due to familiarity. Adidas now has a broader consumer base
as a result of the investment in digital technology and DTC technology which allows the
business to engage with their consumers on channels that are preferred by the consumer. In
terms of cost, Adidas shoes are not overly expensive, since some customers who have
previously purchased them would do so again. Even with discounts being offered to
consumers to reduce the prices on specific goods to save consumers some of their money
that can be used to purchase more goods in the near future. In the athletic shoe sector,
competition is fierce, as several large companies are actively manufacturing new shoes that
fulfil consumer expectations. Adidas is also extremely vigilant and is constantly working to
improve its products to achieve customer satisfaction.
The UK military's mission is to serve and safeguard the country's interests and prosperity
from organisations or persons seeking to harm the country and its people. The organisation
aims to assist everyone in the United Kingdom and may even provide foreign aid if given
permission by both Her Majesty and the UK government, regardless of skin colour, religion,
culture, or other factors. This ensures that citizens in the United Kingdom know that their
tax dollars are going to a good cause that will not only ensure their safety but will also
benefit society by providing aid to those who are most in need, such as those who have
been affected by natural disasters, war and conflict, political turmoil, corruption, and so on.
As a result, the organisation has gained a high level of respect and priority from the
government, particularly during times of crisis such as when wars erupt around the world.
This enables the organisation to acquire more funds in order to carry out operations that
have a greater impact on our society and history.
P4
In this report, I will explain what environment a non-governmental business operates in
while providing evidence to help demonstrate how the business responded to events in the
past and what procedures have they taken place to respond to future events. The business
that I will be writing about in this report is called Adidas and I will be using secondary
research to help provide evidence on how the internal and external environment affects the
business. The research collected has been written by the business annual report, and data
analysts, with the information found on websites, and social media platforms. I need to
make sure the information that I am finding is reliable and valid in order to produce a report
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,Jasper Sobande Unit 1 Task 1
with valuable information. I need to ensure the information is written in my own words with
the limited similarity.
What type of ownership is Adidas?
Private businesses such as Adidas are those owned by citizens and therefore, they are
reliable for all aspects of the business. The owners of the business are likely to take more
risks because they can lose their investment money used to set up the business, and assets
used to cover their liabilities.
Adidas is also known as a public limited company; this means that the owners of the
business must ensure that they properly distribute the liabilities and profit generated by the
sales of goods towards the percentage of their ownership by each of its directors.
The businesses finance (sales received by the business) is kept separate from the owner's
personal finance, therefore if the business fails the owners' personal assets such as homes
and cars etc, cannot be used to pay off any debts that are related to the business.
What is the businesses liability?
Adidas is limited in liability because to protect the business against the risk of being sued or
held responsible, the owners of Adidas must ensure that they have enough cash and assets
to pay off the amounts owed to lenders and suppliers and can refund a consumer purchase
of goods and services if the components are damaged or missing.
The owner and shareholders in Adidas both shares responsibility for the business equally, no
matter how much of a percentage of the business is owned by them, they are responsible
not just for the profits but also for the losses, such as debts and claims against the business.
This means that all the owners are responsible for any shortfall of money if the business has
insufficient funds to pay back the amount due to lenders and suppliers by using their savings
and assets.
However, Adidas does not fall liable for any claims irrespective of their legal grounds, which
arise particularly in connection with the delay or impossibility of performance, infringement
of information duties or collateral duties or preliminary agreements, positive violation of
contractual duties, infringement of industrial property rights of third parties or tort. Unless
Adidas has committed such infringements wilfully or through severe carelessness, or if
Adidas has infringed important contractual duties via moderate negligence, or if such claims
for damages are based on the lack of an explicitly guaranteed characteristic.
Any claims against Adidas based on relevant causes will be restricted to the foreseeable
damage. In any scenario, compensation for consequential losses such as lost earnings is
ruled out. This limitation of damages does not apply if the loss was caused by gross
negligence or purpose on the part of a legal representative or executive officer of Adidas.
Any responsibility arising under the product liability laws will be unaffected. Liability in
respect of the death of employees or customers, or personal injury caused to any person
shall remain unaffected.
If the business pays the amounts due to lenders and suppliers:
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• It can damage the supply chain: delaying payments to a supplier can be caused by
receiving too many credit sales that delay payments when purchasing products off
from Adidas, which causes a cash flow gap that the business needs to cover by
increasing cash sales, and when the payment is due it increases the pressure on the
businesses ability to meets their own commitments. Because suppliers would then
have to resort to restricting raw resources (that are used by Adidas to manufacture
their goods needed to make a profit), from being imported into the business until all
payments have been met.
• Jeopardises the relationship between the supplier and Adidas; if payments are late
which is mostly caused by the business experiencing financial difficulties (lack of
sales). Suppliers are less likely to accept the next order because Adidas would be
seen as unreliable, because they would not have the ability to complete payments
towards their suppliers which will also restrict the idea of extending the payment
due.
• If Adidas cannot make repayments on loans authorised by lenders, the lender will
firstly charge interest on outstanding debts that are linked to the business that can
limit the businesses sales revenue. This can also rack up debts owed by the business
making them financially unstable allowing the provider to take legal action against
the business to reclaim the value of the loan, this costly process can cause many
investors to lose a certain number of dividends paid by the business and could
potentially cause them to lose their savings and assets, making them cut ties with
Adidas. The worst-case scenario would be the business filing for bankruptcy, to clear
their debts and restrict the owners from becoming directors and taking a huge loan.
However, since Adidas has unlimited Liability, they can prevent overdue payments owned to
suppliers and lenders because the owners and shareholders both have assets and enough
savings to cover their liabilities. If the situation where Adidas is experiencing cash flow
difficulties, then they could talk to their suppliers to make an agreement to offer Adidas an
extension for overdue payments. They could accept this offer because the business has
been a reliable payer in the past and would protect the relationship between Adidas and
their suppliers from more serious cash flow difficulties.
What is Adidas current Liability?
The total liability for Adidas slightly increased at € 9.161 billion at the end of June 2021
compared to when it was in 2020 (€ 9.137 billion). The accounts payable decreased by 16%
to €2.165 billion compared to when it was in 2020, caused by the normalization of payment
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terms, this means that the business is paying its debts at a faster rate than it is when
purchasing assets on credit which is reflected on the businesses cash flow.
However short-term borrowings have also decreased by 44% to €682 million in June 2021
compared to when it was in 2020 (€1.217 million) because Adidas knows that making
repayments in a short-term loan tend to charge higher interest rate rather than long term
loans which is why their long-term borrowings have increased by 55% to € 2.473 billion
compared to the previous year 2020 with (€ 1.599 billion) reflecting various bond
replacements in the second half of the year 2020.
The total non-current liabilities have increased by 14% up to €5.357 billion at the end of
June 2021 compared to when it was in 2020 (€4.693 billion). The total amount of shares
outstanding in Adidas financial report remained stable and has slightly increased by 33,171
shares to 195,066,060 at the end of June 2021. This shows Adidas is growing at a faster rate
than it was in 2020, meaning more investors are willing to go to purchase their stocks which
also increase the price set on each stock.
What is the purpose of Adidas?
The purpose of Adidas is to make a profit by designing and manufacturing footwear,
clothing and other accessories and distribute the goods to their retail shops to sell the goods
directly to the customer and make a profit online (B2C), by using their website to sells and
deliver the goods purchased by customers directly to their address. Adidas also distribute
goods to other private businesses (B2B) e.g., such as JD to sell their goods to the target
audience that are not influenced by Adidas.
However, the main purpose of Adidas is not to make a profit but become a global leader in
the sporting goods industry. However, to achieve their goals they must show people that
having a sporty lifestyle is exceptional and must encourage people to work out and express
themselves which can be achieved by creating innovative products that are available for
both men and females to support the idea of equality and with a slogan to help inspire the
idea that ‘impossible is nothing’ which means that you should always strive to go further,
break new ground, and learn to surpass your limits.
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