Strategic Analysis of Adidas and Ashtead Group

Part 1

Introduction

Strategies are a requirement for any organisation to be made for better efficiency and work processes. It allows a company to undertake the right decisions and gain a competitive advantage. In this context, the following essay will be based on Adidas for which a strategy will be developed and suggested. The focus will be on the development of a strategy using the cultural web which is a useful tool for analysing how different factors influence the organisational culture.

Organisational Culture

Adidas is a Germany based multinational company which operates in the industry of footwear and textile. The company is considered to be the largest manufacturer of footwear in the European market and the second largest in the world. The company works on the mission of being the best company in sports product which drives its culture and organisational processes (Adidas, 2022). The large size of the company makes its culture quite diverse as many people are employed under it. Also, the huge customer base around the world makes culture an important aspect for the organisation.

Using the tool of cultural web, it is more probable to understand Adidas’ culture and develop a strategy for it (Brough, et. al., 2016).

Figure 1 Cultural Web Framework

Source: Mindtools, 2022

Stories

• Second largest after Nike

• Adolf Dassler – 1949

• Reebok, TaylorMade, Five Ten Footwear

Symbols

• Two logos – trefoil and three stripes

• Bold letter font

• Black and white colour theme

Power Structures

• Flexible power structure

• Decision making by CEO with other board members

• Diversity and non-discrimination

Organisational Structures

• Three levels of authority/ matrix organisational structure

• Executive board, supervisory board and general meeting board

• Top down hierarchy with executive board on top

Control Systems

• Mutual dedication towards a common vision

• Team support and quick thinking

• Democracy

Rituals and Routines

• Rebellious leaders/ look for opportunities everywhere

• High performance and passionate work ethics

As discussed previously, Adidas is the second largest footwear manufacturer in the world after Nike. It was found by Adolf Dassler in 1949 in Herzogenaurach, Germany. The company’s headquarters are still in the same place and is now known all over the world as the founding place of Adidas. The company consists of several other subsidiaries under it in the name of Reebok and TaylorMade which have been successful as well as Adidas. This is how most of the people across the world know Adidas. Visually, the company is known by its logo and name written in basic font. Adidas is known by two logos – one showcase three parallel stripes resembling the shape of a mountain and the other is a leaf shaped logo. In the present time, the logo which is more common and mostly used by Adidas is the three stripes resembling a mountain. In addition to this symbol, the company is also known to use bold yet basic fonts for its name by which it is known popularly now. Both the logos and company name are written in black and white colour theme. All these factors combined allow Adidas to be known by customers and companies all over the world.

The power structure of the company is quite flexible and provides all members a chance to have a say in the matters. The major decisions of the company are taken by the CEO Adolf Dassler with the consideration of people around him. The board members are also consulted for any major strategic decision to be taken by the company. The organisational structure of Adidas is in a top down pattern with Executive Board being at the head. The Executive Board is mainly tasked with the responsibility of making important strategic decisions that direct the company towards success. The other board i.e. supervisory and general meeting board are jointly responsible for the daily operations and management of the company. This also specifies the organisational structure of the company in which roles and responsibilities are divided on the basis of products and function. This shows that organisational structure of Adidas is that of a matrix design (Cetinkaya and Rashid, 2018). The case company’s routines and rituals involve the leaders and members of the organisation to always look for opportunities in every situation. In situations where other companies give up and call it impossible, Adidas is prone to find salutations in it as well. Quality and efficiency of performance is one of the areas where the company keeps its focus on and dedicates its efforts.

The control system of Adidas involves all staff members, leaders and other stakeholders of the organisation to move towards the same mission at all times. All relevant people work towards the same vision and mission with equal dedication to ensure high quality functions. The organisation makes full use of team support and makes sure that isolation does not create issues in the business environment.

Strategy

With gaining cultural knowledge of Adidas, a strategy can be devised for it in order to enhance its position in the market. As seen by the cultural web’s element of stories which discussed how Adidas is known all over the world for its name along with other brands under its umbrella. The strategy which can be implemented by the chosen company in relation to its culture is making a policy of having 40% staff members from non-German background in the company. Adidas has its operations across the world and employs more than 61 thousand people (Tighe, 2022). It is important to have a diversified staff population as it helps in building a business environment which is effective and efficient. Culturally different people have various sets of skills and knowledge since they come from different background and learn distinctively. By creating a policy which makes it necessary to inculcate 40% non-German people inside the organisation, it will only add to the value of the products and services.

Some benefits which will be reaped by Adidas after having a culturally diverse workforce could include the following:

• The recruitment process of the company is improved when differently cultured people are initiated. It is so because when a company opens its doors to the world for employment, it brings in highly qualified and attractive prospects. Adidas will become more appealing to prospective employees from across the world when it begins recruiting people from non-German backgrounds.

• The creativity of the entire team will be enhanced. When people come from different backgrounds, they have different mindsets and thoughts processes. They think in various manners which bring new ideas that are creative and innovative.

• The level of communication is increased in an organisation when there are diverse people working together. People are intrigued by the other person’s culture and background which induces them to talk more and learn about each other (Lambert, 2016). With the implementation of this policy, employees of Adidas will be more engaged which will improve employee satisfaction and thereby, performance.

Despite the benefits, there is a chance that perception and semantic barriers can affect the working environment negatively. However, with the right strategies and focus, they can be easily resolved.

Conclusion

With the analysis of Adidas’ culture using the cultural web, it will not be wrong to say that Adidas is working well in the industry. However, there is always scope of improvement which can be brought by implementing a policy of having a 40% culturally diverse workforce.

References

Adidas, 2022. About - Profile. [online] adidas.group. Available at: https://www.adidas-group.com/en/about/profile/ [Accessed 27 April 2022]

Brough, P., Chataway, S. and Biggs, A., 2016. ‘You don’t want people knowing you’re a copper!’A contemporary assessment of police organisational culture. International Journal of Police Science & Management, 18(1), pp.28-36. https://journals.sagepub.com/doi/abs/10.1177/1461355716638361

Cetinkaya, A.S. and Rashid, M., 2018. The effect of social media on employees’ job performance: The mediating role of organizational structure. https://mpra.ub.uni-muenchen.de/id/eprint/91354

Lambert, J., 2016. Cultural diversity as a mechanism for innovation: Workplace diversity and the absorptive capacity framework. https://twu-ir.tdl.org/handle/11274/12976

Mindtools, 2022. The Cultural Web: Aligning Your Organization's Culture With Strategy. [online] Mindtools.com. Available at: https://www.mindtools.com/pages/article/newSTR_90.htm [Accessed 27 April 2022]

Tighe, D., 2022. Adidas - Statistics & Facts. [online] Statista. Available at: https://www.statista.com/topics/1257/adidas/#dossierKeyfigures [Accessed 27 April 2022]

Part 2

Introduction

No organisation can work in isolation without having to interact with others. Communication and interaction with other stakeholders like customers, government and others has an impact on the operations of a company. This essay will focus on Ashtead Group for which a strategy will be recommended that can benefit them in competitive advantage and market position. It will be followed by discussing if the strategy will be feasible enough for implementation by stakeholders and leaders.

Strategy Implementation

Ashtead is an industrial equipment rental company working on the international grounds. It operates under the name of Sunbelt Rentals and has a network in the United Kingdom, United States and Canada (Ashtead, 2022). The company has been earning really well which is evident by the total revenue of £5,031 million in the year 2020-2021 (Ashtead, 2021). The company has been working well in its industry which makes it in a comfortable position to widen its reach. There are several models which are potentially useful for recognition of strategies of development. The one which has been chosen for Ashtead is Ansoff Matrix.

Ansoff matrix is a strategic tool which provides companies different ideas about how to plan for growth in the industry. It is also called product/market expansion grid and specifies four types of developmental strategies which include market development, product development, product penetration and diversification (Loredana, 2017). The strategy which is suggested for Ashtead is market development. Market development refers to the growth strategy under which a company expands into new markets with the usage of the existing product line. The case company Ashtead Group is currently operating in the markets of Canada, USA and UK. However, there is a lot of potential in the Asian market with a focus on countries like India, China and Malaysia. Since these countries are geographically large and developing, they need a lot of industrial equipment for enhancing their infrastructure. Thus, Ashtead will prove to have a high utility for these markets.

In order for the case company to expand, it will have to analyse its stakeholder environment and identify if they will be able to adapt to the growth strategy.

Stakeholder Mapping

As per the opinion of Pedrini and Ferri (2018), stakeholders are the ones without whom the organisation will stop to operate or, at least, not be able to function appropriately. Depending on the scale of a company, the number of stakeholder groups can vary. Since Ashtead operates on the large scale within different markets, its stakeholders include:

1. Government

2. Customers

3. Shareholders

4. Employees

5. Suppliers

6. Distributors

Figure 1 Stakeholder Mapping of Ashtead

Source: Author, 2022

Depending upon the nature of stakeholders, they can be segregated into facilitators and blockers.

Facilitator

As the name suggests, facilitators refers to those groups of stakeholders that help a company in achieving its goals. They are essentially the positive factors that can support a growth strategy implementation (Vogler, et. al., 2017). In Ashtead’s market development strategy, the following stakeholders can be the facilitators:

• Customers: Customers are the individuals to whom the product offering of a company are targeted at. They are the ones who give money in exchange of the services and goods catered to them. Asian customers will likely be very interested in rental industrial equipment provided by Ashtead as there is continuous development in those countries. Ashtead’s products will help in more development in the country and, hence, they will prove to be facilitators of the strategy implementation.

• Suppliers: Suppliers are the stakeholders who provide companies with required resources such as raw material and equipment etcetera. Ashtead will require a network of local suppliers who will provide the resources at competent rates. There is no doubt that suppliers will allow Ashtead to benefit from them but it will not be a one-way street. Suppliers will gain a new recurrent customer in the form of Ashtead that will improve the suppliers’ market position and profitability as well. Hence, due to the mutual benefit, suppliers will be a facilitator for the adoption of market development strategy.

• Distributor: Distributors refers to those stakeholders that help in the transportation of goods to the end consumer. Ashtead is a company which is primarily based in the United Kingdom; this makes it difficult for the company to export heavy duty equipment across seas on a daily basis. By having a network of distributors in the required markets where expansion will be done, Ashtead will be able to penetrate through a bigger market. The distributors will prove to be the facilitator by being the intermediary who transport the goods to the end consumer.

• Shareholders: Shareholders are often confused with stakeholders but are quite different. Shareholders are those groups of stakeholders which have a financial stake in the company. These individuals or companies have part ownership of the company because they have money invested in the company stocks or shares. Shareholders will be facilitators of Ashtead’s market development strategy since they will provide the required money the strategy in the form of investment. After expanding its market, Ashtead will be able to earn higher revenue which will ultimately benefit the shareholders through higher of dividend.

Blocker

While facilitators were the ones who support strategy implementation, blockers are the individuals or parties which challenge the concept. The possible blockers for Ashtead are:

• Government: The government of every country work differently since they follow multiple guidelines. The government in Asia will work differently than the British or American government. Policies, plans, interest rates, and such factors differ in every country which will create complications for Ashtead to develop its market. In addition to this, there are several governments across the world which prohibits the entry of outside organisation to support the local industries. China is one such Asian country which promotes its local industries more than outsiders which could be a blocker for Ashtead. Strict regulations, complex licensing processes and such factors which government set up can block the expansion for Ashtead.

• Employees: Employees are the group of stakeholders who play the role of both blocker and facilitator. Employees are the internal resources of an organisation that help the company to achieve its goals. When Ashtead decides to develop its market and expand into Asian countries, employees can possibly raise concerns and create a conflict like situation. This will be because expansion will create the need for more recruitment which will lead to internal competition among the employees. Thus, employees might not like the idea of expansion and become a blocker. On the other hand, employees are the one who help in the implementation of change across the entire organisation. In case, Ashtead wants to implement the strategy of market development, employees will stand at the front end of adoption. The new policies, processes and plans will be brought into action by the employees itself and hence, they will facilitate the strategy.

Conclusion

This essay was based on the recommendation of a developmental strategy for Ashtead, a United Kingdom based organisation. The most suitable strategy was identified to be market development using the Ansoff Matrix. The essay has also involved stakeholder mapping with the recognition of blockers and facilitators in it. Some stakeholders were found to be the supporters of strategy implementation while some were found to be possibly troublesome.

References

Ashtead, 2021. Annual Reports. [online] Ashtead-group.com. Available at: https://www.ashtead-group.com/investors/results-centre/annual-reports/

Ashtead, 2022. Delivering for our customers - About Us. [online] Ashtead-group.com. Available at: https://www.ashtead-group.com/ [Accessed 27 April 2022]

Loredana, E.M., 2017. The use of Ansoff matrix in the field of business. Annals-Economy Series, 2, pp.141-149. https://www.utgjiu.ro/revista/ec/pdf/2017-02.Volumul_2_Special/21_EcobiciL.pdf

Pedrini, M. and Ferri, L.M., 2018. Stakeholder management: a systematic literature review. Corporate Governance: The International Journal of Business in Society, 19(1), pp.44-59. DOI 10.1108/CG-08-2017-0172

Vogler, D., Macey, S. and Sigouin, A., 2017. Stakeholder analysis in environmental and conservation planning. Lessons in conservation, 7(7), pp.5-16. https://www.amnh.org/content/download/158575/2593966/file/LinC%207_Stakeholder%20Analysis.pdf