Managing Organisational Health

(BUSN11080)

CONSULTANCY CASE STUDY

ADIDAS

B00378349 – Feyza Kekevi

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Contents
1. Introduction 3
2. Organisational Performance Management and Performance Measurement 3
3. Stakeholders 4
4. Risk Management 4
5. Quality Management 5
6. Financial Performance 5
7. Customer Perspective 8
8. Company Culture and Human Resource Management 9
9. Conclusion 9
10. References 11

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 1. Introduction
Adidas is one of the most famous sport and fashion retail company in the World. The company
founded in 1949 by Adolf (Adi) Dassler in Germany. They have a story for over than 70 year. In fact, their
story started before 1949 as Dassler Brothers Shoe Factory in 1924. Adolf and his elder brother Rudolf
run this company over a period of twenty five years between 1924 and 1949. After they had a
disagreement about their family organisation, they decided to leave from each other and broke the
business. As a result of this, both of them, built two different brands. Rudolf created ‘Puma’ as we know
today and Adolf established Adidas. As a 70 years old company, today, Adidas has 2400 stores in
Worldwide. 57000 people working for this organisation to make it better from all over the World. Some
key facts about Adidas are explained below:

● Kasper Rorsted is taking role of Chief Executive Officer and the Chairman is Igor Landau in the
organisation
● Adidas Group has two core brands: Adidas and Reebok.
● Their motto is “Trough sport. We have the power to change lives.”
● Their mission is ‘to be best sport company in the World.’
● Competitors: Nike, Puma, Under Armour etc.
● They have seven offices from all around the World to manage the works in better way. Head
office is located in Germany. Other cities are; Amsterdam, Portland, Boston, Shanghai, Hong
Kong and Panama.
● Over than 900 million units of production in Worldwide.
● Net sales: 21.915 billion euros
● Operating Margin: 10,8%
● Net Income from Continuing Operations: 1.709 billion euros
● Average Number of Shares: 201,759,012

2. Organisational Performance Management and Performance

Measurement
Organisational Performance Management and Performance Measurement is directly connected with
each other. By the help of some specific tools of Performance Measurement, managing the performance
is getting easier today. Companies can measure staff, products, each department, quality or creativity
performances. For instance, the performance prism model, intangible assets monitor model and
quantum performance measurement model can be useful to measure variety of performances in many
organisations.

Adidas has many opportunities to develop and train yourself while working for the company. These
activities for the staff are organised by Adidas to along with a structure. This structure helps for create
fair and clear performance measurement and also manage it. Addition to that, Adidas put into use
Performance Evaluation and Planning (PEP) as their performance management. There are some key
performance indicators like business targets based on each employee’s job descriptions. By the help of

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measuring these indicators, they are getting awards and also feedbacks once in year from the
management level or colleagues.

3. Stakeholders
For Adidas, basically there are seven stakeholders from different kind of groups. The
stakeholders of the company are directly connected with operations of the organisation. They can affect
or affected by the activities which the company has. Adidas stakeholders including following:

● All Adidas staff from all around the World

● Authorizers: government, trade associations, shareholders, Executive Board
● Company partners: clubs, suppliers, service supporters
● All employees in their suppliers’ production places.
● Idea-formers: news agents, society members, specific interest communities
● Consumers: professional sport player, wholesalers, sell and buy organisations, customers
● Group members: other multinationals, customer products business and brands

Adidas analyses and refresh the priority of stakeholders every year. There are many different
kinds of stakeholders for the company which can easily change regarding to specific situations or
problems. They have great network for managing and detect the stakeholders which includes 60
different countries. By the help of this network they get some feedbacks to restore their strategy about
the stakeholders’ plan.

They want to be open and active about their relationship with the one with a vested interest.
Because of that reason they have some ways to keep in touch with them:

● Formal collaborator advises conference/ collaborator dialogues with our business group
members, with staff, group delegates, non-governmental organizations (NGOs) and our company
partners.
● Come together with socially responsible investment (SRI) analysts
● Internal reporting and induction training with their workers
● Give answers to requests from customers, special groups and the media
● Come together with different companies which are provide their services in same sector
● Reaching or keeping touch with graduated people and academic society

4. Risk Management
Risk management basically rely on four factors: Identification, assessment, control and
monitoring. First of all, the risk must be detected and company should aware what are the risks for
them. Following that, all these risks must be analyse for how they would affect company in short and
long term. And of course, at the end of all these examines, a plan must be created to keep under control
the risk or avoid from the worse scenarios. Last step for risk management is monitoring. After the plan is
applied, the company must check if anything changes about the situation or not. They always must keep
everything under the control to avoid new risk potentials or missing something important. Because of
this, monitoring step is the most important one to deal with risk management.

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 Adidas do their risk management with very professional way as a leader company in the sport
retail sector. An extensive risk management method must include internal or external risks that may
affect the business’s targets, strategies, brand image or financial performance. The company’s Social and
Environmental Affairs (SEA) department is an elemental function of the risk management method and
provides the Executive Board with standard new comes on human rights, social and environmental risks,
offers or chances and improvements.

Special guidance that forms part of our governance framework includes:

● Factories’ Rules, Adidas' supplier code of management

● Workers' Rights Charter, outlining Adidas' position on human and core workers' rights for
organisation’s staff.
● Adidas Code of Management, defining standard for all workers with respect to legally compliant
and ethical behaviour
● Adidas Environmental Policy, outlining the company's position with respect to sound
environmental management and its commitment in continuous improvement of its
environmental impact.

5. Quality Management
Quality management includes every step of products. Product life cycle starts with production
and end with the sales at stores. Quality management is responsible from factory standards to
customers’ satisfaction. As well as every big corporate companies in the World, Adidas also following The
International Standard for Quality Management (ISO) which has many rules about quality management.
These rules are customer focus, leadership, engagement of people, process approach, improvement,
evidence-based decision-making and relationship management. As a summary, the company must be
sure about have the capability to answer the costumers demand. Regarding to this demand they
organise the suppliers, suppliers’ workers standard, improve the quality which they already have and
make new decisions for better quality standards. While doing all these things they need to strongly
consider the health safety for their products. For instance, Adidas provides clothes and shoes for babies
and children, there must me additional rules to improve the quality and safety. Because of the type of
the customer, they even must be more careful about dye of the fabric, fabric composition or packaging
method etc.

6. Financial Performance
Adidas is a company which is objective driven and have strong passion. Every year they produce
over 900 million sports and sports lifestyle products with independent manufacturing partners from all
around the World. In 2018 they achieved sales of € 21.915 billion which was 8% better than last year.
They also had an increase on Gross Margin which was 1.4pp to 51.8%. There are some financial
highlights of Adidas belong last year (2018) and previous year (2017) below:

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 According to this report, adidas seems had a better year than previous one. All data show
positive numbers for growing. 3% growth in net sales, %6 in gross profit. Despite currency headwinds,
their gross margin climbed 140 basis points to 51.8%. According to their annual report of 2018, they
made many record in 2018. They fed the gross margin improvement through to the operating margin,
which expanded to a level of 10.8%, the highest operating margin in the history of the company. Their
net income from continuing operations grew six times as fast as their top line in nominal terms, up 20%
to € 1.7 billion. That was also a new record. There are also last five years records of Income Statement,
Balance Sheet and Cash Flow Statement below. As we can see from reports last five years was also very
successful for the company. In these five years between 2013 and 2018 the revenue growth 34,45% and
they never loss while this period. Difference on cash on hand between 2018 and 2017 is also have great
numbers.

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Income Statement:

Balance Sheet:

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 Cash Flow Statement:

7. Customer Perspective
Adidas is the largest sportswear company in Europe and is second only to Nike worldwide.
Adidas is well-known, trustful and preferred brand in the World. Mainly Adidas’s target customers are 14
and 40 years old. Adidas targets upper-middle-class consumers to wealthy consumers. They get their
target in Europe about being best and favourite brand for sportswear. Marketing strategy of Adidas is
also so strong. Their choices about face of the brand were always top person of their times. For instance:
Justin Bieber, Kendall Jenner, Pharrell, David Beckham, Selena Gomez, Beyoncé, Gigi Hadid (with Reebok)
etc.

Adidas is also very sensitive about social responsible projects. They organised “Run for the
Ocean”. With this event Adidas, Runtastic and Parley for the Oceans have come together to raise
awareness: between June 8 and June 16, 2019, they run for the oceans and Adidas donated $1 for every
kilometer run, capped at 1.5 million US dollars, to the Parley Ocean School. These kind of activities
makes Adidas more respectable at customer side.

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 8. Company Culture and Human Resource Management
Today Adidas have over than 57.000 employees from all around the World. Average age of the
staff is pretty young, which is only 31. The range of employee gender is almost half half. 51% of the staff
is male and the rest 49% is female. Head Quarter offices employees are from more than 100 different
nationalities. In the management level, 33% of manager positions are belonging to women. This is also
very attention grabbing subject especially for who wants to work at Adidas.

Adidas adopt 3C as company culture. Basically, 3C’s is creativity, collaboration and confidence.
They also define this belief as winning culture. They aware that winning a game it is not just about the
physical ability. People must prepare their mind for reaching the target, like athletes. Because of that
reason, Adidas cares employees’ mental strength as well as physical one. There are explanations of 3C’s
below:

● Creativity: Their mission is being best sport company in the World, and they believe that
they can catch the mission with good creative thinking ways. Being open for the new
ideas, care and improve them is one the important steps of this culture.
● Collaboration: Every elite athlete relies on partners: coaches, teammates, and
nutritionists. They also know that they are stronger together. Winning as one team takes
open and candid dialogue, inclusiveness and trust in each other’s abilities and talents.
● Confidence: At adidas confidence means to acknowledge that they aware that they don’t
have all the answers. But they are willing to take risks, they try new things. And if they
fail, then take this is part of their learning – it helps them improve.

At Adidas, they focus about training their employees. Today, majority of the companies hire a person
from other companies who have many experiences for their high-level management positions. On the
other hand, Adidas prefer to train and develop their staff to create good and talented managers.

They are also sensitive about role model leadership. That means, if you have great leaders in the
company that continually improve and inspire their teams and serve as role models for the leaders of the
future. Together with employees and leaders worldwide they believe that they have developed a global
framework that clearly defines the behaviours that are expected of leaders and what great leadership at
adidas should look like. This leadership framework strongly supports the company culture and therefore
is based on the three company behaviours: confidence, collaboration, creativity.

9. Conclusion
In this study, we explained Adidas’s general information and company history, how they are
measure the performance and manage it, who are the stakeholders of the company and how Adidas
deal with them, their risk and quality management methods and rules, last financial situations that the
company has, what kind of consumers they have and what they are think about Adidas, company culture
and how they are apply this to human resource management.

In my opinion and according to this study, Adidas is living one of the best times recent years.
They got their power back with their designs. They especially successful on shoes sales. They already
have the name of best in Europe, now they need to focus on North America to beat their best

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competitor in this area and make their dream real. And keep their current strategy or improve to get
better.

As it is shown above graph, Adidas is third favourite sportswear brand in United States. This area
is a massive place to reach more sales and customers with good marketing strategy. I believe that when
they achieve the American customers, they will take the seat from Nike and would be the best in the
World.

Adidas has also other brand which is Reebok. They can also use this brand’s power to grow the
company. They could focus on where Reebok is strong and analyse it to create powerful areas to sell
Reebok products. When they find to correct customer target for this brand, it also so suitable to grow
like Adidas in some time.

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 10. References
UKEssays. November 2018. The Performance Management System. [online]. Available from:
https://www.ukessays.com/essays/management/the-performance-management-system-management-
essay.php?vref=1 [Accessed 4 December 2019].

UKEssays. November 2018. The Strategy Of Managing Human Resources. [online]. Available from:
https://www.ukessays.com/essays/commerce/the-strategy-of-managing-human-resources-commerce-
essay.php?vref=1 [Accessed 4 December 2019].

Statista. (2019). Number of adidas stores worldwide 2008-2018 | Statista. [online] Available at:
https://www.statista.com/statistics/268442/number-of-retail-stores-of-the-adidas-group-worldwide-by-
store-type/ [Accessed 4 Dec. 2019].

Adidas Group. (2019). History. [online] Available at: https://www.adidas-group.com/en/group/history/

[Accessed 6 Dec. 2019].

Adidas Group. (2019). Profile. [online] Available at: https://www.adidas-group.com/en/group/profile/

[Accessed 6 Dec. 2019].

Adidas Group. (2019). Culture. [online] Available at: https://www.adidas-group.com/en/group/culture/

[Accessed 6 Dec. 2019].

Adidas Group. (2019). PARTNERSHIP APPROACH. [online] Available at: https://www.adidas-

group.com/en/sustainability/managing-sustainability/partnership-approach/#/2001/2006/richtlinien-
zum-umgang-mit-stakeholdern/ [Accessed 6 Dec. 2019].

Adidas Group. (2019). GOVERNANCE AND RISK MANAGEMENT. [online] Available at:
https://www.adidas-group.com/en/sustainability/compliance/governance-and-risk-management/
[Accessed 6 Dec. 2019].

Adidas Group. (2019). Product and Consumer Safety. [online] Available at: https://www.adidas-
group.com/en/sustainability/products/product-and-consumer-safety/#/nanomaterials/ [Accessed 6 Dec.
2019].

Report.adidas-group.com. (2019). Adidas Group. [online] Available at: https://report.adidas-

group.com/fileadmin/user_upload/adidas_Annual_Report_GB-2018-EN.pdf [Accessed 4 Dec. 2019].

Procurementjourney.scot. (2019). Risk Management Process | Procurement Journey. [online] Available

at: https://www.procurementjourney.scot/risk-management-process [Accessed 7 Dec. 2019].

Market Business News. (2019). What is quality management? Definition and examples. [online] Available
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Macrotrends.net. (2019). Adidas AG Income Statement 2005-2019 | ADDYY. [online] Available at:
https://www.macrotrends.net/stocks/charts/ADDYY/adidas-ag/income-statement?freq=A [Accessed 7
Dec. 2019].

Heart Of Codes. (2018). Positioning of Adidas | STP Analysis of Adidas - Heartofcodes. [online] Available
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Welty, M. (2018). What the Hell Happened to Adidas in 2018?. [online] Complex. Available at:
https://www.complex.com/sneakers/2018/12/what-the-hell-happened-to-adidas-in-2018 [Accessed 7
Dec. 2019].

adidas Runtastic Blog. (2019). Run For The Oceans — Run With Us Against Marine Plastic Pollution.
[online] Available at: https://www.runtastic.com/blog/en/run-for-the-oceans/ [Accessed 7 Dec. 2019].

Sneakers Magazine. (2016). 9 Reasons Why adidas Is Better Than Nike. [online] Available at:
https://sneakers-magazine.com/9-reasons-why-adidas-is-better-than-nike/ [Accessed 8 Dec. 2019].

Statista. (2018). Favorite sports apparel brands of US consumers 2018 | Statista. [online] Available at:
https://www.statista.com/statistics/630846/favorite-sports-apparel-brands-of-us-consumers/ [Accessed
8 Dec. 2019].

Eae.es. (2018). "At Adidas, we apply the 3C culture: creativity, collaboration and confidence" | EAE.
[online] Available at: https://www.eae.es/en/news/eae-news/adidas-we-apply-3c-culture-creativity-
collaboration-and-confidence [Accessed 6 Dec. 2019].

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