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TO: Adidas Board of Directors FROM: Fuyi Ma (Whitney) DATE: 15 Sep 2020 RE: Impact of Green Trends and Recommendations for Adidas

Sustainable development is a critical pillar in strategic management and the success of any business entity. In recent years, green business has emerged as one of the greatest forms of achieving sustainability. Companies have to show consideration to the future by directing efforts to environmental aspects to secure the existence of the business in the long-term. Besides the ecological advantages accruing from green business, firms also gain trust from consumers because the protection of the ecosystem is considered a form of corporate social responsibility (CSR). Green trends have influenced the industry significantly by encouraging firms to take responsibility for their actions, forcing them to restructure. Nevertheless, the economic benefits of transforming to green business prove to be higher as compared to sticking to traditional models, which makes it imperative for Adidas to adapt to these new sustainable practices for financial and environmental value. In the past two decades, discussions on the effects of industrial production on climate change have intensified, which has led to numerous solutions to tackle the growing challenge. Most companies have employed initiatives to reduce the amount of carbon emitted and their overall contribution to environmental pollution. Another factor that has driven firms to engage in these reforms is the 2030 Paris agreement, which tightened regulations to organizations (Zagel and Volodymyr). Customers also increasingly expect better from companies since they are more aware of the role of these institutions in improving the environment. Consequently, businesses are adopting green practices across all sectors, including production, marketing, and logistics. Therefore, the desire to tackle climate change issues has encouraged the growth of trends to promote cleaner practices in different levels of business. The increase in green adoption by companies has rippling effects across industries, especially for big companies such as Adidas. As consumers and stakeholders become more conscious of the importance of green business models, more pressure is placed on firms to shift into these practices. According to Neher, this awareness has caused a large percentage of customers to increase their expectations on the quality of goods companies should produce in regard to environmental friendliness (2). With the continuous shifts in customer taste, the brand has to develop a robust green business model to accommodate these changes to retain and attract new market bases. Green Product Innovation One of the most common trends in green business is green product innovation. Any efforts in innovation and improvement to make consumables eco-friendlier and greener can be classified as green product innovation (Do and Huyen 282). This trend is becoming a significant factor in the success of companies because it impacts both the business entity and the whole industry by improving both the environmental and business environment. According to Do and Huyen, firms achieve green product innovation by implementing a strategy that minimizes the number of resources being utilized in the development phase (282). It is noteworthy that these initiatives generally vary across industries and companies, but the common factor is the development of products using constrained resources during manufacturing. The fashion and apparel sectors are a significant source of pollution through resource and waste pollution, and the reactive responses

by involved companies have caused further competition in the industry. Guo et al. argue that apparel organizations are competing using product greenness campaigns and initiatives (523). For instance, numerous companies have incorporated organic cotton in their production stages since its introduction, and this aspect can be utilized as a measure of product greenness. Rival companies such as Nike, Timberland, and Marks & Spencer employ organic cotton for more than a decade now, as shown in figure 1 (Guo et al. 534). Therefore, Adidas can be potentially affected by these trends if robust changes are not constituted to align with green business

expectations by customers. The impact of green trends affects the core areas of the Adidas Company, such as the use of chemicals, which cause pollution. In this regard, multi-level reforms have to be introduced to ensure the company retains a competitive edge over its rivals and to contribute to environmental sustainability. The figure below indicates some steps taken by competitors in green initiatives. Figure 1: Apparel Companies that compete in green trends (Guo et al. 534).

Adidas has to move swiftly to adopt a wide range of green initiatives, especially in the production phase. Green technology in manufacturing involves the regeneration of the processes and operation to provide environmental advantages. According to Agarwal et al. it is not possible to transform all manufacturing inputs, such as man, machine, and material, but the process can incorporate various practices that contribute to sustainability (1). The most feasible and economic step for Adidas is to focus on the production of items from recycled materials. The implications of this practice are extensive and cover fundamental aspects of green business initiatives. Firstly, the use of recycled materials helps to clean the environment and oceans, especially if plastics are collected from water bodies and other waste dumps and utilized in making textiles for clothing and shoes. Secondly, the initiative will help the company save substantial capital, usually directed in obtaining raw materials, and consequently, millions will be recovered in the manufacturing phase. Another benefit is that the collection of raw materials will be incorporated into the organization's CSR initiatives for protecting the communities from pollution, which will promote the brand image. Therefore, going green in the manufacturing phase is beneficial for the company by providing financial benefits and improving the reputation and brand loyalty. Green Logistics Supply chain reforms are also part of the initiatives that firms are upholding in recent years as a part of the transition to green business. According to Agyabeng-Mensah et al., activities involved

in the supply chain cause significant environmental pollution and contribute to climate change through greenhouse gas emission, inappropriate storage of explosive and hazardous material, and irresponsible waste management (1). In response to these effects, companies are gradually incorporating green practices in the supply chain to mitigate the impact on the ecosystem, improve societal safety, and achieve a competitive edge over rivals. These practices are mainly introduced to ensure the welfare of critical stakeholders, including consumers and employees, through minimal emission of carbon and reduction of wastes. Some of the most popular methods

of a green supply chain include eco-friendly transportation, reverse logistics channels, and the building of warehouses to minimize wastage and pollution. The employment of green supply chains has been adopted by numerous firms as part of the trends to improve sustainability in firms across the world. The figure below shows the various indicators of green business that many companies are currently adopting. Figure 2: Current trends in green business (Sangode

and Sujit 288). Adidas should also develop a sustainable supply chain and transportation system that aims to eliminate unnecessary wastes and protect the environment. Sangode and Sujit assert that green supply chain is an advancement of the current systems, whereby all activities are implemented in a fashion that least destroys the environment and promotes ecological balance (288). Therefore, Adidas can incorporate green operations in its whole supply chain by selecting suppliers and vendors who engage in sustainable activities. Existing suppliers should be motivated to develop their environmental programs and educated about the importance of cleaner technologies. Moreover, the process of procurement and information flow should be digitized to minimize paper usage and fasten the rate of movement to avoid delays. Adidas should also transform its transportation systems by investing in more efficient methods of moving goods across cities. For instance, the company should work with electric trains and hybrid trucks, which reduce environmental pollution through less carbon release and offer cheaper and faster alternatives. Traditional vehicles used to carry goods utilize Internal Combustion Engines (ICEs), which are the leading causes of atmospheric pollution through fossil fuel burning. In this regard, Adidas should take the initiative and become a leader in cleaner methods of transportation. The shift towards a green supply chain can provide significant environmental protection and save the company from delays and extra costs.

Green Marketing Another trend adopted by firms to promote environmental friendliness and resourcefulness is green marketing. This concept involves three main aspects, including processional thinking, holistic thinking, and environmental advantages. The first feature involves the different sub- processes that contribute to the ecological benefits while selling products (Vilkaite-Vaitone and Ilona 55). The second aspect implies that green marketing is a system comprising other elements such as consumption and disposal and the final feature affirms that direct benefits have to accrue from the efforts placed. In this regard, green marketing is multidimensional and has to be addressed from different angles. Many companies are adopting this trend because of the benefits such as cost reduction, brand reputation, competitive advantages, and customer relationships. Therefore, green marketing is one of the popular trends that firms have employed in green business adaptation to offer environmental friendliness and economic advantages. Adidas can incorporate several key features to promote marketing from an eco-friendly standpoint. In the current business environments, most consumers are careful and educated about the products they intend to buy. In this regard, Adidas should initiate a campaign to inform the public about their green strategies and utilize eco-friendly materials within this promotion. For instance, the company can employ sustainable or recyclable material in its posters and advertising billboards, which can demonstrate the commitment to these strategies. By educating the public about clean business and utilizing sustainable material, Adidas would win approval while saving the environment simultaneously. Conclusion Undoubtedly, green business is a promising trend that can help companies reinvent themselves and become a part of the efforts to secure the future of the planet. Many firms today are already developing new models to reduce wastage of resources and provide cleaner products and processes. Being one of the most renowned brands in the world, Adidas should set precedence by becoming the most sustainable and green organization. The benefits from shifting to these systems include the reduction in costs of raw materials and excessive resource wastage, which will save the company millions per year. Moreover, Adidas will enjoy a respectable reputation as many people prefer a brand that cares about society and the environment. Consequently, sales will increase and result in higher profits. The green initiatives also play a significant role in environmental protection by eliminating avenues of pollution and maintaining the ecosystem through the limited use of resources. In this regard, Adidas can benefit considerably in financial and sustainability aspects by developing a green business model, which can help to increase the competitive advantage.

Works Cited

Agarwal, Sucheta, Vivek Agrawal, and Jitendra Kumar Dixit. "Green Manufacturing: A MCDM Approach." Materials Today: Proceedings (2020).

Agyabeng-Mensah, Yaw, et al. "Green Warehousing, Logistics Optimization, Social Values and Ethics And Economic Performance: The Role Of Supply Chain Sustainability." The International Journal of Logistics Management, 2020. pp. 1-26.

Do Nguyen, Quyen, and Huyen Thu Thi Nguyen. "Do Green Business Initiatives Enhance Firm Performance? Evidence From An Emerging Market." International Journal of Social Science and Economics Invention vol.6 no.06, 2020. pp. 278-291.

Guo, Shu, Tsan-Ming Choi, and Bin Shen. "Green Product Development Under Competition: A Study Of The Fashion Apparel Industry." European Journal of Operational Research vol. 280. No.2, 2020. pp. 523-538.

Neher, Victoria. The Impact of Social Sustainability Publicity on The Share Prices of Companies in The Textile and Apparel Industry. University of Twente, 2020. pp. 1-11.

Sangode, Pallawi B. and Sujit G. Metre. "Green Supply Chain Practices For Environmental Sustainability: A Proposed Framework For Manufacturing Firms." International Journal of Mechanical and Production Engineering Research and Development (IJMPERD) vol. 9. No.2, 2019. pp. 287-298.

Vilkaite-Vaitone, Neringa, and Ilona Skackauskiene. "Green Marketing Orientation: Evolution, Conceptualization and Potential Benefits." Open Economics, vol. 2 no.1, 2019. pp. 53-62.

Zagel, Fabian, and Volodymyr Tarhonskyi. "How Do German Industrial Leaders Evolve Their Business Model Towards Sustainability: A Case Study of Adidas AG and Siemens AG." (2020). Halmstad University. pp. 1-96

Editor: Becca Rawiszer Date: 9/17/20 Grade: 80 3 things you did well:

1. Great evidence to support your points. There was clearly a lot of research. 2. You write in a concise and professional manner. 3. I thought your conclusion wrapped up and summarized your ideas very well.

3 things you need to improve on: 1. You have a lot of background in your intro 2. I would like to see your suggestions of action right off the bat. They are not very

clear from the intro. They should translate to your three body headings. 3. Even in your body paragraphs your suggestions get lost by a ton of background.

You should state your suggestions first and then support them with evidence.