PEST Analysis of Adidas

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Pest Analysis

Political: Adidas should be aware of the political state in the UK and all other countries that they operate in. This is because if the government for the country there operating in is unstable then this may have a bad effect on Adidas decision making. However in the UK there is political situation in which Adidas can depend on. This is down to the fact that there is a democratic situation which Adidas can capitalise on. Because there is a democratic government it means that they are highly unlikely to make any drastic changes which will drastically affect Adidas. This is because if any major changes are made by the acting party then the public may oppose to these change which will eventually lead to the party being voted out at the next election. This means that Adidas now have a firm base that they can begin to work on.

 The government, in most cases, tend to give companies funding if they set up a factory in a high area of unemployment. An example of this is when Sony set up a factory in Cardiff. However I don’t believe this would be beneficial for a company such as Adidas as the products that they produce don’t need workers that are highly skilled so they tend to manufacture their products outside of the UK where there is no minimum wage. The minimum wage is quite a major restraint for Adidas in the UK as they can’t acquire labour at a similar price to what they could if they manufacture their products abroad. There is however a problem with this as Adidas have to pay a rather large cost to transport all goods to the UK. The UK government could put in a system where they don’t allow big companies such as Adidas to import the volume of goods they import. This would eventually lead to a tough decision for Adidas as they would have too either have to sacrifice the opportunity of cheap labour or they could lose sales in the UK.

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This is highlighted especially with the new changes that have raised the minimum wage to the living wage. This will mean that a percentage of Adidas profit is going to be used to fund the wages for employees in the UK.

Economics: Adidas however are majorly affected by the economy in the UK. This is because of the interest rate and its flexibility. Currently is 4.5% however 3 months ago it was 4.25%. This shows that the interest rate constantly fluctuates and can make it harder for Adidas to plan ahead in terms of spending of their budget. Also ...

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