Adidas Economics

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Economics of Adidas

by

Georgi Kolev

Sem03
2011
Table of Contents:

1. Traditional organization forms of a company and kinds of risks involved in each of the different forms.3

2. Factors in the economic environment influencing the business of Adidas©4

3. Adidas© and Porter’s 5 Forces model.5

-3.1 Major factors from each force and how they influence the industry.5

1. Traditional organization forms of a company and kinds of risks involved in each of the different forms.

Organization of different companies is always different. It usually depends on the size of the firm and could be one of the following - U form (unitary form), M Form (multidivisional form), Flat organization, H-form (Holding company). The size of a company plays a major role because small organizations are usually managed centrally and the hierarchy is well thought out and clearly recognizable. On the other hand the larger companies tend to be a lot more complex internally and even if they have a well developed managerial staff the technological changes and other influences may be a reason for a change while searching for the most suitable organizational structure for them. Here is a more detailed explanation of the organizational forms mentioned above:

U form (unitary form) is the term used to describe smaller companies whose activities are grouped into different departments like Human Resources, Marketing, Sales etc. Each of these departments is able to provide specialist expertise to the company’s operation. The managers of different departments have responsibilities to the chief executive who coordinates them and has to make sure they are on the right track and communicate well. If the number of products is big the divisions have to be more complex as well - into geographical areas for example.

Possible problems with communication and control may occur if the company starts to grow because one manager cannot manage too many employees.

M Form (multidivisional form) is a good way of maintaining good control in a company which is larger. This type of organizational structure is made up of divisions which are more autonomous and have their own resources and management hierarchy. It could also be said that such companies are made up of several smaller firms. These firms (the actual divisions) have their own operating procedures but are accountable to a board of directors. One of the major benefits in this situation is the greatly reduced information flow thanks to the fact that the small divisions are all responsible in their own right for different products, markets or services.

Possible problems include the desire of different divisions to be better and compete with the others which may harm the company as a whole.

Flat organization refers to a company in which most of the managers and supervisors at middle level have been removed and the general managers are in direct contact with the people doing the sales. It removes the problem with bureaucracy most of the multidivisional companies may come to suffer from. It is worth noting that with modern technology taking more and more part in everyday business life many companies have decided to move back to unitary or multidivisional structures. Things like e-mail, management information systems and the ongoing increase in the use of smart phones which allow modern technology to be even more mobile have made it easier for managers to communicate with their subordinates much more easily.

Possible problems involve the extensive use of technology and the major mistakes that can follow from relying mostly on technology.

H-form (Holding company) - is one of the more complex organizational structures a business can adopt. It is found in companies which with time have expanded their business on an international or global scale. A holding company is one that owns enough of the controlling interest in another company to control its board of directors...
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