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Adidas Company Background

Question:

Discuss about the Business Plan Analysis of Adidas Company.

The start-up of the business calls for an entrepreneur to have in place a well-established business plan that will guide him to get together necessary resources needed for the start-up of the business. (Nunn & McGuire, 2010, p. 23) Therefore, an entrepreneur should ensure that business plan is detailed enough and has covered all the key details that will help the business stabilize once started. Key aspects that should be included in the business plan comprises of the business overview, the market opportunity, the market, management team, financial analysis, environmental impact analysis and funding request. This report will consider Adidas Company business plan and discuss its applicability in the business environment of Sydney.

Adidas Company finds it roots in Bavaria, a small town in Germany. Adi Dassler was the founder of the company with the mission of providing athletes with sport products (Adidas Group, 2012). Currently, the company mission is focused on making Adidas a global leader in the sporting industry through continuous provision of high quality products. Adidas Company major goals are adapting to the new trends through continuous expansion (Allocca, 2015).

The World Bank Group report points out that doing business in Sydney is easier than in most other parts of the country (Regional Dvelopment Australia Sydney , 2017). The Group goes further to note that Sydney has the well-regulated business environment. For example, the overall Australia political stability is extended to Sydney, and the regulatory framework in the region provides entrepreneurs with business protection assurance and confidence. Besides, Sydney is region endowed with economic prowess because of its strategic position that attracts tourists from all over the world. Similarly, Sydney has been found to be one of the most influential cities in the world (Regional Development Australia Sydney, 2017).Therefore, Adidas Company business plan is suitable to the Sydney business environment because of the favorable business condition in this region.  

The Sydney economy has proved to be stable by overcoming the continuous global financial crisis. Findings show that businesses in the city have expanded to more than 3000 between 2012 and 2012 (cityofsydney.nsw.gov.au, 2016). The continued growth of the business in the region it is an indication that new business can thrive in the city. Apart from the favorable business environment, Adidas Company enjoys the choice of setting different types of business entities. For example, the region has been found suitable for companies, trusts, partnerships, sole traders and joint ventures. Therefore, Adidas Company can business plan be based on any business entity that he finds applicable and suitable in the Sydney business environment. Thirdly, Sydney region enjoys political stability as exhibited by high government support on business and low levels of corruption. This makes it easy for Adidas Company to operate in Sydney. Fourth, Sydney enjoys favorable tax system. This means that Adidas Company profits are not be diluted to meet the costs associated with the tax payment. Lastly, the region enjoys robust infrastructure and communication network that will support the success of Adidas business.

Sydney Business Environment Analysis

Despite Sydney City and region experiencing favorable business environment, it faces some challenges that may hamper the success of the business especially the small ones. It is important for the entrepreneur to mention this in the business plan to avoid conflicts with the investors in future. According to Nicholas, (2016) no business is immune to the global forces irrespective of the size. This is problem attributable to the small businesses operating in Sydney region. Nicholas notes that finance is a worldwide game and therefore the financial decisions by the major developed economies of the world are likely to affect business activities in Sydney. For example, lending practices and funds that an entrepreneur should borrow from the financial institutions is highly affected by the global financial crisis.  

Secondly, the poor business location has proved to be a negative business factor that can hamper the success of business in Sydney (Regional Development Australia Sydney, 2017). Therefore, an entrepreneur should mention the location of the anticipated business in the business plan and analyze how the location of the business will ensure its success. The appropriate business location will require to carry out extensive market research on the numbers of the competitors in the market. Thirdly, the entrepreneur should include in the business plan the changes in sales during the year because of the changes of the number of people visiting Sydney city. Sydney being a tourist site, its population vary within the different seasons of the year.

Sydney is a huge city comprising of the huge population that forms a target market for a variety of business products. Besides, the city of Sydney comprises of people from different nations making easy for Adidas to target international tourists visiting the city. (Nicholas, 2016). The Adidas business plan suits in the Sydney City because of the existing target market.  However, the company business plan fails to serve the large market share based on the target characteristics and the preferences.

Market problem scope is another area that Adidas business plan appears to address  (Hytti, 2015, p. 3). This area requires the companies’ business plan to address three key issues. First, consumer problem which calls entrepreneur to understand the unsatisfied consumer needs in the market. Adidas has realized the need to serve sport product consumers in Sydney region. Secondly, existing product problem that has hampered the satisfaction of the consumer needs. Thirdly, a technological problem that has hindered the manufacturers in the market to meet the customer needs satisfactorily.

Challenges Facing Businesses in Sydney

Finally, under market opportunity, the company business plan must quantify the market opportunity (Yu & Wiklund, 2012, p. 6). Adidas business plan has quantified the financial benefits that will be realized if the business succeeds in resolving the existing market problem. This has help the company top  management to determine whether it is worth to invest in the identified business opportunity. The Adidas business plan also analyzes the sustainability of the competitive business advantage. This because the market opportunity can be viable for only limited time and disappear when competitors invest in the same opportunity (Awwad, et al., 2013, p. 70). If the entrepreneur finds out that the opportunity is worth according to the market quantification data and benefits, then the entrepreneur should use this to influence the investors to finance the idea.

The Adidas Company business plan extensively explains the laid down plans of having an effective marketing team that will help the company achieve its major goals and objectives. There is a stiff business competition in Sidney, and therefore, the company will be forced to come up with well-elaborated  market management team (Crow & Goldstein, 2013, p. 8). For example, the company must in its business plan indicate in the business plan the number of the marketing staff required, their skills, experience, and qualification. This will help the stakeholders assess whether the business will have in place a robust market system.

Putting into consideration the cultural diversity in the city of Sidney, the Adidas business plan put across the suitable market management team strategies. This because the cultural diversity in Sydney calls for the application of various marketing strategies (Denniss, 2016). The company business plan illustrates different  market management team approaches it has set in place to manage marketing team playing different roles in different fields within the marketing department. This helps the business to meet the important aspects of marketing and continue building on the same to maintain the desired competitive advantage.  

Financial analysis is the most important area for the financiers of the business plan (Bewayo, 2015, p. 3). This is because the investors want to know the returns on their investment. Additionally, they will like to know the how long it will take before they start enjoying profits from the investment. The Adidas business plan has an extensive and understandable financial plan and analysis that create assurance to the investors that their funds are being used in the best way and they are not investing on an idea that is likely to fail.

Market Problem Scope

In the financial plan, the company has to mention the financing combinations that are deemed suitable for the business (Baliga & Rodrigues, 2015, p. 212). For example, for the Adidas case debt financing, equity financing and ploughed back financing have been considered. Bearing in mind that companies require huge capital both debt financing and equity financing are most applicable for Adidas. The financial plan and analysis of Adidas Company has been accompanied by the anticipated period when the company will be able to clear the debt.  

Adidas Company financial analysis also identifies the underlying assumptions that an in the business plan. For example, for Sydney business plan case, the company can assume that there will be stable economic growth without any recession interruptions. Secondly, another assumption can be that there are no unforeseen uncertainties that can affect the operations and growth of the business. Finally, the third assumption can be based on the notion that the financing methods used will be sufficient to sustain all the financial needs of the business.   

Finally, Adidas business plan has illustrated the key financial indicators that pinpoints out that the idea is worth investing. This has involved the analysis of the key financial aspects such as sales, gross margin, inventory turnover and operating expenses. The projection of this financial indicators appear real and is accompanied by the profit and loss forecast for the next five years.

Business extract resources to operate from the environment. The raw materials obtained from the environment undergo through transformation process into finished products or output. The extraction of the raw materials, transformation process, and outputs affect the environment in one way or the other (Hilary & Jesse, 2012, p. 7). Therefore, it is very vital for the entrepreneur to indicate in the business plan how the operations of the business are likely to affect the surrounding environment. The entrepreneur should identify the environmental management plans that will ensure prevention and mitigation of the harmful effects associated with the business operations.

It is evident that Sydney is a tourist attraction city. Therefore, Adidas runs by avoiding operations that can contribute to negative environmental impact. To address the problem of environmental impact, the company business plan has identified business operation factors that can negatively impact the surrounding environment. The company has proven that its operations do not have negative effects on the environment by providing the analysis of the environmental audit in the business plan.

Market Opportunity

Secondly, the company has identified the impact of business on the surrounding community. To address this problem, Adidas Company business plans has laid down practices to engage the local community in the business to help in reducing the foreseeable impacts. Thirdly, an entrepreneur the company has listed constraints and risks that will accrue the business as result of environmental impacts. Fourth, the company has highlighted the strategies available to minimize the environmental impact as well risk that may hinder the progress of the business. Finally, the company listed the action plan that is deemed to arise from the implementation of strategies meant to reduce environmental impact.  

 From the analysis of the business environment in Sydney City, it has come out clear that the city enjoys stable economy. It is also proven that some companies are likely to fail within the first three years in business. This challenge has been linked to poor financial planning and lack of enough funding that is caused by the global financial crisis. However, for the business with good financial plans like Adidas it can take advantage of the stable economy to obtain business plan financing from the potential investors.

Conclusion

A business plan is a crucial document that requires the entrepreneur to assess the planned location of the business to come up with several guidelines that should be considered. Sydney City is one of the best locations in Australia to start a business. The region seems to enjoy, economic and political stability, the huge market provided by the large population and geographical serene that attracts customers from all over the world. Therefore, Adidas Company should use features associated with the Sidney region to prepare an attractive business plan that will influence the financial support of the investors. 

References

Adidas Group, 2012. History. [Online]  Available at: https://www.adidas-group.com/en/group/history/ [Accessed 15 Agust 2017].

Allocca, B., 2015. Five Goals of Adidas’ New CEO. [Online]  Available at: https://gazettereview.com/2015/03/five-goals-of-adidas-new-ceo/ [Accessed 15 August 2017].

Awwad, A. S., Al Khattab, A. A. & Anchor, J. R., 2013. Competitive Priorities and Competitive Advantage in. Journal of Service Science and Management, 6(2), pp. 69-79 .

Baliga, A. J. & Rodrigues , L. L., 2015. Business Plan- The Secret to Success. The International Journal of Business & Management , 3(4), pp. 2010-214.

Bewayo, E. D., 2015. The Overemphasis on Business Plans in Entrepreneurship Education: Why does it persist?. Journal of Small Business and Entrepreneurship Development , 3( 1), pp. 1-7 .

cityofsydney.nsw.gov.au, 2016. Business and Economy. [Online]  Available at: https://www.cityofsydney.nsw.gov.au/vision/towards-2030/business-and-economy
[Accessed 13 August 2017].

Crow , R. & Goldstein, H., 2013. Model Business Plan: A Supplemental Guide for Open Access. Journal Developers & Publishers, 1(1), pp. 1-43.

Denniss, R., 2016. Sydney's cultural and ethnic diversity a chance to lift economy, arts, communities. [Online]  Available at: https://www.smh.com.au/comment/sydneys-cultural-and-ethnic-diversity-a-chance-to-lift-economy-arts-communities-20160316-gnl4da.html [Accessed 15 August 2017].

Hilary , S. & Jesse , S., 2012. Writing a business plan: reference tools to assist budding entrepreneurs. Reference Reviews, 26(8), pp. 7-9.

Hytti, U., 2015. Business planning and beyond? Qualitative approaches in entrepreneurship. 8th Edition ed. Turku, Finland: European Council for Small Business and Entrepreneurship .

NICHOLAS, J., 2016. Australia's Business Challenges: What small business should know about the global economy. [Online]  Available at: https://www.businessinsider.com.au/what-small-business-should-know-about-the-global-economy-2016-6 [Accessed 30 June 2017].

Nunn, L. & McGuire, B., 2010. The Importance Of A Good Business Plan. Journal of Business & Economics Research (JBER), 8(2), pp. 22-36.

Regional Dvelopment Australia Sydney , 2017. Economic Profile. [Online]  Available at: https://www.rdasydney.org.au/the-sydney-region~1/economic-profile/ [Accessed 13 August 2017].

Yu , W. & Wiklund , J., 2012. Business Planning in Entrepreneurial Teams: An Information Processing Perspective, s.l.: Syracuse University .

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