This paper is a case study of MNCs’ operations worldwide. It particularly analyses the operations of the Adidas Group and how its handles foreign operations both socially and financially. Multinational Corporations (MNCs) are international enterprise companies that seek to offer services or engage in the manufacturing of products in different countries. The best example here is the Addis (AG). Adidas Group is one of the leading MNCs, whose main brand is the production of sporting goods. Its main headquarters is in Germany but operates in different nations in the world by offering varieties of sporting products and providing thousands of employment opportunities (Stair & Reynolds, 2012).
Addis Group is a company that is interested in joint ventures with other like-minded companies all over the world. Addis Group is a company that is interested in joint ventures with other like-minded companies all over the world. It has successfully contextualized its brands to fit into the local and global markets. According to Borowski (2011), Adidas is arguably the second-largest sporting firm globally, with annual revenue ranging to about 10 Billion Euros. Part of its brand, that could be included in bench making a study of the sporting goods industry are Taylormade, Reebok, and Rockport. Being a Multinational Corporation, Adidas is often subjected to if not affected by changes within Foreign Exchanges rates in most of its foreign operations.
There are two main ways in which a firm like Adidas Group can carry out its foreign operations, one way is by transacting foreign currencies, and the other way is through foreign operations. International companies can also present their financial statements in a foreign currency if they so wish (Hayes and Kuchinskas, 2003). However, the organization usually studies all the items within its foreign currency and translates them into a functional currency. It is at this point that the study will reveal whether or not the differences within the exchange rates have had an effect on its finances, whether loss or gain (IFA, 2000).
Just like any other international firm working in foreign countries, the Adidas Group is often exposed to experiencing losses or gain in foreign exchanges, due to volatile socio-economic and political situations around the world. It is due to these reasons therefore that the Adidas Group often carries out though assessment of all the financial risks and the impact of social-economic and political environments of their foreign operations. This assessment provides them with accurate details on how to carry out their foreign cash transactions and balances (Greuning et al, 2011).
This benchmarking study focuses on foreign statement analysis. Financial statement analysis usually covers a large scope but focuses on three main areas, which the Adidas Group should utilize within its operation. The first aspect of a financial statement deals with accounting analysis. This analysis mainly tries to reflect on the economic reality of any given foreign-based company. The Second aspect of the financial statement looks at the financial analysis focusing on the flow of cash, profitability, and the analysis of risks made. The third aspect of financial statement analysis deals with prospective analysis which operates through accounting, financial, and business analysis to forecast the future of cash flow as well as the income (Doupnik & Perera, 2012).
Adidas Group continually analyses its foreign financial statements for a variety of reasons. The first one is to create the company’s foreign investment portfolio that can potentially spread the risks of investments for international investors who rely on international mutual funds, foreign financial statements, and US stock markets. The second reason for analyzing foreign financial statements is to provide information to assist international companies to analyze the financial status of other foreign companies that they wish to acquire or merge with. Thirdly, the foreign financial statements enable companies to extend credit to their customers, evaluate international vendors, and compare their international competitors (Doupnik & Perera, 2012).
In conclusion, it can be argued that Adidas Group is a perfect example of how MNCs operate in foreign countries taking into the socio-economic, cultural, and environmental situations of the host countries.
Reference List
Borowski, A., (2011). Adidas Marketing Strategy- An Overview: Seminar paper. Nordestedt, Germany: Grin Verlag.
Braun, J. (2008). Strategic Sports marketing – the impact of sport advertising upon consumers: Adidas – a case stude. München [u.a.: Grin-Verl.
Doupnik, T. S., & Perera, M. H. B. (2012). International accounting. New York: McGraw-Hill Irwin
Giovanninni, J., & Riera, O. O. (2002). Reebok World Headquarters. Mulgrave, Vic: Images.
Hayes, K., & Kuchinskas, S. (2003). Going mobile: Building the real-time enterprise with mobile applications that work. San Francisco: CMP Books.
Stair, R. M., & Reynolds, G. W. (2012). Principles of information systems. Australia: Course Technology Cengage Learning.