PEST Factor: Economic
This article talks about how the panic and fear of the financial markets are causing severe austerity (i.e. decrease in consumer spending) and increase in interest rates of European countries. Since Adidas is a European company, the panic driven austerity in Europe is going to linger (keeping Europe in recession) which would affect Adidas’ financial performance. According to Adidas’ 2011 annual report, the sales in Europe account for 32% or about 1/3 of their sales growth in the world, being the single biggest market for Adidas. To overcome this, Adidas needs to increase their sales internationally to address this problem. Also, there is potential social and political reaction to protest against the excessive austerity, so there could be a lot of business disruptions (e.g. workers going on strikes etc.) so Adidas has to be more careful of how they manage their activities in Europe as there could be a lot of disruption of the supply chain due to social unrest.
Sources: http://www.voxeu.org/article/panic-driven-austerity-eurozone-and-its-implications
http://www.adidas-group.com/en/investorrelations/assets/pdf/factsheet/adidas_Group_Booklet_2011_En.pdf
This article talks about how the panic and fear of the financial markets are causing severe austerity (i.e. decrease in consumer spending) and increase in interest rates of European countries. Since Adidas is a European company, the panic driven austerity in Europe is going to linger (keeping Europe in recession) which would affect Adidas’ financial performance. According to Adidas’ 2011 annual report, the sales in Europe account for 32% or about 1/3 of their sales growth in the world, being the single biggest market for Adidas. To overcome this, Adidas needs to increase their sales internationally to address this problem. Also, there is potential social and political reaction to protest against the excessive austerity, so there could be a lot of business disruptions (e.g. workers going on strikes etc.) so Adidas has to be more careful of how they manage their activities in Europe as there could be a lot of disruption of the supply chain due to social unrest.
Sources: http://www.voxeu.org/article/panic-driven-austerity-eurozone-and-its-implications
http://www.adidas-group.com/en/investorrelations/assets/pdf/factsheet/adidas_Group_Booklet_2011_En.pdf