MASTER
FINANCE
MASTER´S FINAL WORK
INTERNSHIP REPORT
DIGITAL TRANSFORMATION OF FINANCIAL
ANALYSIS: THE CASE OF ADIDAS ITALY
ALESSANDRO MALATESTA
OCTOBER 2023
MASTER
FINANCE
MASTER´S FINAL WORK
INTERNSHIP REPORT
DIGITAL TRANSFORMATION OF FINANCIAL
ANALYSIS: THE CASE OF ADIDAS ITALY
ALESSANDRO MALATESTA
SUPERVISION:
Mariya Gubareva
Claudia Capodieci
OCTOBER 2023
ii
iii
ABSTRACT
This thesis delves into my internship experience as an FP&A (Financial Planning and Analysis)
intern at the Italian subsidiary of Adidas Spa, a prominent player in the footwear, apparel, and
sporting goods industry.
I chose Adidas to gain insights into the economic dynamics of a global company. My focus is
on understanding how the company coordinates its structure and manages its worldwide
production network. Key responsibilities include cost control, contributing to month-end
processes, and involvement in forecast activities. Additionally, I am engaged in implementing
a new Power BI reporting system, aligning with corporate digitization and Industry 4.0
initiatives.
This internship allows me to bridge theoretical knowledge in corporate finance and global
business with hands-on experience in a market leader. It also provides an opportunity to explore
the transformative aspects of digitalization within the corporate landscape.
Keywords: Digital transformation, Automation, Power BI, Financing Control, International
Finance Forecasting, Data analysis
JEL Classification: G32, F37, C81, O16
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Resumo
Esta tese aborda a minha experiência de estágio como estagiário de FP&A (Planeamento e
Análise Financeira) na filial italiana da Adidas Spa, uma empresa proeminente na indústria do
calçado, vestuário e artigos desportivos.
Escolhi a Adidas para obter informações sobre a dinâmica económica de uma empresa global.
O meu objetivo é compreender como a empresa coordena a sua estrutura e gere a sua rede de
produção mundial. As principais responsabilidades incluem o controlo de custos, a
contribuição para os processos de fim de mês e o envolvimento em actividades de previsão.
Além disso, estou a trabalhar na implementação de um novo sistema de relatórios Power BI,
alinhado com a digitalização da empresa e com as iniciativas da Indústria 4.0.
Este estágio permite-me fazer a ponte entre os conhecimentos teóricos em finanças
empresariais e negócios globais e a experiência prática num líder de mercado. Também
proporciona uma oportunidade para explorar os aspectos transformadores da digitalização no
panorama empresarial.
Palavras-chave: Transformação digital, Automatização, Power BI, Controlo financeiro,
Previsão financeira internacional, Análise de dados
Classificação JEL: G32, F37, C81, O16
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Table of Contents
Abstract ..................................................................................................................................... iii
List of Figures ........................................................................................................................... vi
List of Tables ............................................................................................................................ vii
List of bbreviations ................................................................................................................. viii
Acknowledgments ....................................................................................................................... 1
1. Introduction............................................................................................................................ 2
2. Literature review .................................................................................................................... 4
2.1 Defining Digital Transformation ...................................................................................................5
2.2 SAP S/4HANA suite and the CFIN ..............................................................................................8
2.2.1 ERP systems ......................................................................................................................8
2.2.2 SAP S/4HANA ..................................................................................................................9
2.3 Power BI ......................................................................................................................................12
3. Company Background .......................................................................................................... 15
3.1 The Group....................................................................................................................................15
3.2 The Italian branch........................................................................................................................18
3.3 The FP&A team...........................................................................................................................19
4. Scope of my Work within Adidas Italy ................................................................................. 21
4.1 The monthly closing ....................................................................................................................21
4.1.1 Marketing Expenses.........................................................................................................23
4.1.2 OOH costs........................................................................................................................24
4.2 The Forecast ................................................................................................................................25
4.3 The Sell-in Dashboard .................................................................................................................27
5.Discussion of the internship relevance for the master’s in finance ...................................... 31
5.1 Academic Relevance ...................................................................................................................31
5.1.1 Financial Analysis and Reporting....................................................................................31
5.1.2 Corporate Financing and Planning ..................................................................................32
5.1.3 Corporate Investment Appraisal ......................................................................................33
5.1.4 Financial Modelling in Excel...........................................................................................33
5.1.5 Fundamentals of Financial Economics ............................................................................34
5.2 Personal development and skills .................................................................................................35
6.CONCLUSION...................................................................................................................... 36
Bibliography ............................................................................................................................ 38
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LIST OF FIGURES
FIGURE 1- NUMBER OF PUBLICATIONS RELATED TO DIGITAL TRANSFORMATION IN BUSINESS. ... 6
FIGURE 2 - THE INTERNET OF EVERYTHING ................................................................................ 7
FIGURE 3 – ADIDAS’ DATA FOUNDATION REMODELLING........................................................... 11
FIGURE 4 – WORKLOAD SHIFT WITH AUTOMATION AND BI....................................................... 13
FIGURE 5 – THE BUSINESS INTELLIGENCE PROCESS.................................................................. 14
FIGURE 6 – ADIDAS’ SHARE PRICE EVOLUTION ......................................................................... 16
FIGURE 7 – ADIDAS’ GLOBAL SALES YOY (ADIDAS GROUP REPORT, 2022) ............................ 18
FIGURE 8 - ADIDAS ITALY BRANCH STRUCTURE........................................................................ 19
FIGURE 9 - MONTH-END PROCESS OVERVIEW .......................................................................... 22
FIGURE 10 - FORECAST PROCESS OVERVIEW ............................................................................ 27
FIGURE 11 – SELL-IN DASHBOARD TOTAL OVERVIEW. ........................................................... 30
FIGURE 12 – SS DASHBOARD FOR SPECIFIC CHANNEL: BLUE .................................................. 30
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LIST OF TABLES
TABLE 1 – ERP SYSTEMS EVOLUTION THORUGH THE DECADES .................................................. 9
TABLE 2 - INTERNSHIP RESPONSIBILITIES OVERVIEW ............................................................... 21
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LIST OF ABBREVIATIONS
AI – Artificial Intelligence
BDA – Big Data Analytics
BI – Business Intelligence
CEO – Chief Executive Officer
CFIN – Central Finance
CFP – Corporate Financing and Planning
CIA – Corporate Investment Appraisal
DAX - Data Analysis Expressions
EMEA – Europe and Middle East Asia
ERP - Enterprise resource planning
FAR – Financial Analysis and Reporting
FFE – Fundamentals of Financial Economics
FME - Financial Modeling in Excel
FIGC – Federazione Italiana Giuoco Calcio (Italian Football Federation)
FP&A - Financial planning and analysis
IFRS - International Financial Reporting Standards
IoE – Internet of Everything
KPI – Key Performance Indicator
LE – Latest Estimation
MRP - Material Requirements Planning
MWB – Marketing Working Budget
NPV – Net Present Value
OOH - Overhead costs
RFC – Rolling Forecast
RFCL – Rolling Forecast Light
SAP - Systems Applications and Products in Data Processing
SAP S/4HANA - SAP 4th generation Business Suite
SS – Spring Summer season
US GAAP - Generally Accepted Accounting Principles
YTD – Year to Date
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ACKNOWLEDGMENTS
Firstly, I would like to express my heartfelt gratitude to my university professors for providing
me with the invaluable opportunity to undertake this master's final work, which allowed me to
reflect on and apply the knowledge and skills acquired during my academic journey. Your
guidance, mentorship, and unwavering support have been instrumental in shaping the success
of this endeavor.
I extend my sincere appreciation to all the individuals I had the privilege of meeting and
learning from during my two-year academic journey which crossed many countries and
cultures. Your diverse perspectives, insights, and collaborative spirit have enriched my
educational experience in profound ways. To my dear friends, your unwavering support,
encouragement, and occasional study breaks were crucial in maintaining my motivation
throughout this journey. Your friendship has been a source of strength.
I am deeply thankful to Adidas, particularly the Italian branch, for hosting me during my
internship. The exposure to a dynamic corporate environment and the hands-on experience I
gained have been instrumental in my professional growth. I would like to acknowledge and
express my gratitude to the incredible team members at Adidas who welcomed me and
generously shared their knowledge and expertise. Your leadership and encouragement were
crucial in making my internship a truly enriching experience.
Lastly, but certainly not least, my heartfelt thanks go to my family. Your unwavering belief in
my abilities and your endless support have been my foundation. Your sacrifices and
encouragement have been the driving force behind my pursuit of higher education and personal
growth.
Thank you all for being an integral part of this transformative journey. Your contributions and
support have been pivotal in shaping my academic and professional aspirations, and I am
profoundly grateful for each one of you.
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1. INTRODUCTION
This report provides a detailed description and critical analysis of my six-month internship as
an FP&A analyst at the Italian branch of Adidas Spa in 2023. During the internship period, I
had the opportunity to be surrounded by an expert team that allowed me to look closely at the
entire process of financial planning and analysis. I chose the Adidas corporate setting because
I wanted to understand the dynamic and the mentality of a top-class company, and the way they
are approaching the new global challenges. Here I can integrate what I learned about corporate
finance with my passion and knowledge about sports. Also, the idea of working for a global
company intrigued me, allowing me to dive into the model of a business that knows no
horizons.
In the current post-Covid-19 landscape, Adidas is navigating a crisis and actively seeking
recovery through innovative ideas and technologies. To this end, the company has initiated a
strategic program named CFIN (Central Finance), utilizing the latest SAP version, SAP
S/4HANA (4th generation of SAP Business Suite). SAP, which stands for System Application
Products, is a software application designed to enhance organizational resource planning,
management control, and operational efficiency. By seamlessly integrating SAP with powerful
data management software like Power BI, Adidas is positioning itself at the forefront of the
Digital Transformation race. This initiative signifies a pioneering step towards the future that
all companies must embrace to stay competitive and thrive in the evolving business landscape.
In the contemporary business landscape, effective data analysis is a crucial undertaking for
comprehending market dynamics, planning future strategies, and promptly addressing
challenges. Companies of the future encompass all the perspectives where slow data analysis
processes are replaced by faster and more dynamic methods, helped by Business Intelligence
(BI) systems and incredibly better software (Ragazou, 2023). While Excel has traditionally
served as a linchpin for global business, its limitations become evident in the absence of
automatic generation of dynamic dashboards and reports. In stark contrast, the integration of
the new SAP with Power BI heralds the establishment of a fully digital business environment.
This integration eliminates time-consuming processes such as manual report downloads and
data input, automating data loading for streamlined analysis for trend identification. This
transformative system marks a decisive shift towards a more efficient and responsive era in
business analytics.
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My objective encompasses a dual focus. Firstly, I aim to assist the Adidas Spa team in
executing critical rolling activities, including month-end control, and forecasting processes.
Secondly, I aim to delve into the technological transformations underway at Adidas Spa and
identify practical applications for Power BI. In the course of my responsibilities, I am in charge
of enhancing Excel files, optimizing data flow systems, and leveraging Power BI for reporting
systems. This active involvement allows me to make substantive contributions to the team by
creating innovative reports and providing support for monthly activities.
Thanks to the master’s program, the corporate finance analysis and financial analysis classes
gave me a good base on where to start. The knowledge of accountability and reporting, as well
as a good understanding of all the areas of the Financial Statement, was fundamental.
The rest of the report is structured as follows. The literature review is presented in Chapter 2.
The Adidas company’s overview is provided in Chapter 3 where I also break down the FP&A
team and its structure. In Chapter 4 I explain the scope of my work at Adidas and the activities
I have devolved most of my time. Chapter 5 discusses the Internship relevance for the master’s
degree in finance. Chapter 6 concludes the internship report.
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2. LITERATURE REVIEW
Digital transformation is a major challenge faced by companies worldwide. Adopting new
digitally changed business models is no longer an option; it has become a necessity
(Cristina Bota-Avram, 2023).
In an era of rapid technological advancement, digital transformation has become imperative
for organizations seeking to thrive in a digitally driven world. As businesses embrace new
technologies to enhance efficiency, innovation, and customer experience, the role of
leadership has undergone a profound evolution (Rushikesh, 2023).
In Chapter 2, I present a critical analysis of the existing literature related to the topic of digital
transformation and its involvement in private industry. The literature review underscores the
imperative for the proposed change, elucidating both the challenges and merits it entails.
Delving into the advantages and hurdles lays the groundwork for a comprehensive discussion
of my contributions within the organizational context. Moreover, the conduct of a literature
review is one of my responsibilities during the internship at Adidas. I have presented the current
state of research in the business transformation to the Adidas steering committee to inform its
members about the relevant factors affecting the finance department, in particular, and the
entire corporate value chain, in general.
Chapter 2 provides an overview of the company's digital transformation process. This Chapter
is organized into three main sections to facilitate a coherent exploration of key aspects. The
first section is dedicated to defining digital transformation, providing a foundational
understanding of its significance within the organizational context. The second section delves
into the specifics of the technological infrastructure, with a focus on the SAP S/4HANA suite
and its integration with the Central Finance (CFIN) module. This exploration aims to elucidate
the technological backbone supporting digital transformation initiatives. The third section is
devoted to Power BI and its role in the digital transformation journey. It includes an
examination of how Power BI contributes to data visualization, analytics, and decision-making
within the evolving digital landscape.
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2.1 Defining Digital Transformation
Within this section, I articulate the essence of digital transformation, examining the significant
changes it is ushering in for organizations.
There are three stages of digital transformation: digitization, digitalization, and digital
transformation (Verhoef et al, 2021). The term "digitization" encompasses diverse phenomena,
spanning from crafting digital products to integrating digital technology into the new product
development process. Conversely, "digitalization" denotes processes involving data collection,
generation, and analysis, aiming to create value and drive innovation through the creation of
novel digital products and the integration of digital technology in the innovation process
(Gradillas, 2023).
Finally, while more precise definitions are yet to encompass all facets, Ivančić (2019) referred
to digital transformation as an ongoing process of advancing digital maturity. This
advancement involves the strategic utilization of digital technologies and organizational
practices to cultivate a digital culture. It involves a new approach to production based on the
introduction of information technology in the industry, the spread of Artificial Intelligence
(AI), and large-scale automation of business processes (Javaid, 2022).
The intriguing aspect of this progress lies in its tradeoff. Technology can swiftly elevate a
startup from modest garage origins to Fortune 100 stature in a timeframe shorter than that of a
typical IT upgrade project. It can also lead to a reduction in costs (45 percent less), as noted by
Bloch (2012).
Lately, a increasing attention paid by researchers, with an exponential increase in the years
during and post-Covid (2020–2021) has also been noted by Cristina Bota-Avram 2023 (Fig.
1). Figure 1 underscores the volume of academic publications on digital transformation over
the past two decades, with a discernible upswing in the last three years. This trend suggests that
the current juncture is opportune for the implementation of development methodologies
involving Artificial Intelligence and Business Intelligence.
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Figure 1- Number of publications related to digital transformation in business
(Source: Christina Bota-Avram, 2023).
Amankwah-Amoah (2021) argues that COVID-19 has acted as a great accelerator in fasttracking the existing global trend towards embracing modern emerging technologies ushering
in transformations in lifestyle, work patterns, and business strategies.
Anyway, the path that brings the companies to the next level of automation driven by Artificial
Intelligence and data clouds is not free of hurdles. According to Herbert (2017) the average
organization is stuck in its ways, isolated, slow to react, and bogged down by old processes. It
is locked in a state of slow decision-making, due to hierarchies that have enlarged over time,
creating internal silos of people and processes, with complex approval processes that make it
difficult to reach consensus, let alone pursue a collective goal. Real digital transformation is
about breaking down these barriers, leveraging technology to create new revenue streams, drive
down costs, and enhance the user experience. The digital transformation program is going to
have to tackle three critical areas of the organization: (i) the business model, (ii) the customer
experience, and (iii) the internal processes (Herbert, 2017).
In fact, digital transformation’s goal is the creation of a new environment where the intelligent
connection of people, processes, data, and things allows the delivery of the right information
to the right person (or machine) enabling intelligent decision-making. It is also called the
Internet of Everything (IoE) (Fig. 2) (Nagy - Stukovszky, 2023).
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Figure 2 - The Internet of Everything (Source: Nagy, & Stukovsky, 2023).
To create the IoE, Big Data Analytics (BDA) and Business Intelligence play a fundamental
role. BDA and BI within the context of smart manufacturing have garnered growing interest
due to their adaptability and significant impact on enhancing overall business performance, as
emphasized by Chen and Zhang (2014). These technologies encompass extensive, rapidly
generated, and diverse datasets, commonly known as big data, which surpass the capabilities
of traditional data management methods.
To conduct big data analysis through automation, companies require software and systems that
enable them to do so.
The next section therefore explains one way it is possible to create such an environment using
SAP S/4HANA, the system chosen by Adidas.
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2.2 SAP S/4HANA suite and the CFIN
In this section I define ERP systems, focusing on the one used by the Adidas company, SAP
S/4HANA, and how it is expected to change the conception of Corporate Finance through the
CFIN project.
2.2.1 ERP systems
As specified in the previous section, the transaction to the new industrial frontier should be
done through software and programs that help in business management. It involves the
establishment of a unified cloud infrastructure dedicated to the analysis and supervision of data
and trends. The software capable of doing so is called an ERP system, which stands for
Enterprise Resource Planning. ERP denotes a comprehensive software solution designed for
the efficient management and control of diverse activities within manufacturing or other
business sectors. Its functionalities encompass data capture, storage, product planning, parts
procurement, inventory control, purchasing, customer service, and order tracking. Moreover,
ERP integrates application modules dedicated to finance and human resources management.
(Swamidass, 2001).
ERP is not a new invention, but its potential changes with time and necessity. ERP systems
have evolved significantly since the 1960s, when computers were introduced (Jacobs &
Weston, 2007). Initially focused on inventory control, the 1970s saw the rise of material
requirements planning (MRP) to enable organizations to purchase, forecast, and schedule
production (Egdair, Rajemi, & Nadarajan, 2015). The late 1980s marked the emergence of the
primary ERP vendors, including SAP, IBM, and Oracle (Razzhivina, Yakimovich, &
Korshunov, 2015). In the 1990s, the term "ERP" was coined by the Gartner Group, encouraging
integration between operational and accounting areas (Bhuiyan, Chowdhury, & Ferdous,
2014). The 2010s introduced cloud computing, reducing IT overhead for firms. A 2016 ERP
Report indicated a 40% increase in cloud implementations compared to 2015 (Solutions, 2016)
(Tab. 1).
In the current landscape, ERP systems continue to play a central role in enabling interconnected
data exchange within Industry 4.0-oriented companies. By harnessing Internet-of-Everything
(IoE) platforms and advanced technologies to establish seamless connectivity over the Internet,
ERP systems enhance automation and communication within businesses. This capability
provides a real-time and comprehensive perspective on their processes (Tongsukai, &
Mathrani, 2020). Table 1 simplifies the ERP evolution through the decades.
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Table 1 – ERP systems evolution through the decades (Source: Goldston, J., 2020)
Adidas is actively seeking to align itself with the cohort of enterprises successfully navigating
the complexities of this digital transformation era, exemplified by its commitment to upgrade
its ERP system.
In a gesture of historical continuity, Adidas chose to continue its longstanding partnership with
SAP, the company whose software has been a consistent presence over the past decades. SAP
introduced the next-generation ERP suite, SAP S/4HANA, in 2015.
2.2.2 SAP S/4HANA
SAP S/4HANA represents the next generation and latest advance of SAP's leading application
platforms. The software brings innovations that are unquestionably great steps forward in the
process of automating and integrating AI into the enterprise (Denecken, 2015).
The key features and benefits of SAP S/4HANA include (Malakar, 2022):
-
Providing real-time reporting and a single source of truth: This is a fundamental
aspect since it leads to faster decision-making, increases accuracy, enhances
responsiveness, consequently, improves customer experience, and brings better
operational efficiency and competitive advantage.
-
Simplified data model: the data structure is more simplified and reduces the
complexity of managing and maintaining it.
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Improved user experience: this may seem trivial, but in fact, thanks to the new SAP
FIORI platform, it will also be easier to monitor the level of KPIs (Key Performance
Indicators) more quickly and intuitively. To date, on the other hand, the system is
much more cumbersome and time-consuming.
These benefits concern the whole business, but there are others that are more specific for
finance reporting and analysis. On the specific, SAP developed within SAP S/4HANA a subset
specifically dedicated to finance.
SAP S/4HANA Central Finance (CFIN) has a focus on financial and accounting solutions,
including financial planning, accounting, financial close, treasury, and finance operations.
On the technical side, the major functional changes of CFIN are (Maheshwari, 2018):
-
Universal Journal: It is the ultimate financial data hub. It uses a new data model to
blend various financial sources like Controlling, SAP ERP Financials, Asset
Accounting, SAP Material Ledger, Profitability Analysis, and more into a single
Universal Journal entry. It simplifies period-end reconciliations and financial
reporting because it provides real-time data from one place, saving a lot of time and
effort.
-
Accelerated month-end and year-end close: Switching from batch to event-based
processing means you can do period-end tasks every day or week. This gives you a
real-time look at your profit and loss, so you can spot trends early. It also lets you
act sooner when needed, instead of waiting for the end of the month. This speeds
up month-end tasks by reducing reliance on scheduled batch jobs and reconciliation
work.
-
SAP Cash Management: This is an alternative to SAP Cash and Liquidity
Management. It includes features like bank account management, short-term cash
reports, and real-time liquidity planning, all helping manage working capital better.
SAP Cash Management offers quick reporting for cash status and liquidity
forecasts.
-
SAP Smart Business KPI reporting with SAP Fiori: These are alternative options
for SAP's older drill down reports that can't be made much faster with SAP HANA
to provide real-time KPIs and important financial data.
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SAP S/4HANA gives a new data foundation to the enterprise by facilitating many processes
and expanding the possibilities for analysis with fewer intermediate steps and more
transparency of the data by simplifying the cloud where it is held (SAP Public Document,
2022). In Figure 3 this simplification can be seen. On the left, there is the structure of the old
data set. A sum of different sources being both part of the SAP universe and not were used to
create reports and check the company’s data. Now, thanks to the new environment created
through SAP S/4HANA, it is possible to track financial transactions thanks to an integration of
financial and non-financial data within the same landscape. This makes easier Operational and
Management Reporting as well as Financial Planning and Consolidation processes (Fig.3).
Figure 3 – Adidas’ data foundation remodelling (Source: Adidas internal report)
However, the process is not short and easy. On the contrary, a rigid process must be followed
to deploy CFIN in SAP S/4HANA and involve various data-related processes (Figueiredo,
2022):
-
Initial Data Load: This is the process of loading initial data into the Central Finance
system from source systems to establish a foundation for financial reporting and
operations.
-
Data Logging: Tracking and recording data changes and activities, ensuring a
comprehensive audit trail for financial transactions.
-
Real-Time Replication: Continuously replicating data in real-time from source
systems to the Central Finance system to keep financial information up to date.
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Business Mapping: Mapping and aligning data from different source systems to
ensure consistency and accuracy when presented in the Central Finance system.
-
Data Digitization: Converting analog or paper-based data into digital formats
suitable for processing and analysis within the Central Finance system.
-
Inbound Posting: Posting financial transactions and data received from source
systems into the Central Finance system for consolidation and reporting.
-
Error Correction: Identifying and rectifying errors or discrepancies in the financial
data during the replication and posting processes.
-
Data Reconciliation: The process of comparing and verifying data in the Central
Finance system with data in source systems to ensure accuracy and consistency in
financial reporting.
Due to the numerous steps needed, it takes a long time for SAP S/4HANA to come into
operation and replace the present process. At the time of writing, the company is still engaged
in the error correction phase, the last major step to be overcome for CFIN to go into operation,
expected by the end of the first half of 2024.
Digital transformation also includes the use of alternative platforms that enable a more granular
level of analysis, integrating artificial intelligence and business intelligence capabilities beyond
the scope of SAP. A prime example is Power BI, a Microsoft software introduced in 2015 that
is revolutionizing the creation and consumption of reports.
2.3 Power BI
Within the context of a digital transformation that hugs new tools, Power BI is another
important instrument that allows the company to create new and better reports.
Power BI is an interactive data visualization software product developed by Microsoft with a
primary focus on business intelligence. It replaces old programs that are no longer able to meet
the needs for dynamism and flexibility required by the digital enterprise.
The Business Intelligence process helps the user to create dashboards and easily share them
with stakeholders, allowing data to flow automatically and update without any human job. This
tool allows interested people to focus directly on the results and insights of the analysis, driving
also into the decision-making process (Bakhshi, 2023).
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Figure 4 shows how Power BI is changing the way to elaborate data. Passing from a situation
where most of the job is done manually to one completely automized in the process of data
modeling. In this way, the workload shifts, and more time can be spent on the understating of
the results instead of the creation of the reports itself. (Fig. 4)
Figure 4 – Workload shift with automation and BI (Source: Adidas internal report)
The BI process passes through 5 key steps that are the following (Larson, 2020) (Fig 5):
1. Data Collection and Cleaning: Gather data from various sources, clean it to remove
errors and inconsistencies, and align it with the rest of the dataset for a unified view.
2. Data Storage and Optimization: Store the cleaned data in a specialized data warehouse
or data mart designed for quick retrieval and efficient aggregation.
3. Data Modeling: Create a user-friendly data model that simplifies data presentation for
business users and serves as a central repository for complex calculations, making
reporting and analysis more efficient.
4. Data Visualization: Utilize the data model to generate charts, tables, and dashboards,
enabling data analysis and discovery for specific questions or broader insights.
5. Data Sharing and Security: Establish a secure platform for sharing visualized reports
and insights, ensuring that users can access only authorized data, and fostering efficient
data dissemination within the organization.
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Figure 5 – The Business Intelligence Process (Source: Larson, B. 2020).
Also, the automatic update is possible since Power BI has its own database to store all the
information. In this mode, all business logic resides in the semantic model and is accessible to
all reporting tools integrated with the connected Power BI dataset. Importantly, data and the
data model remain in their source, eliminating the need to import data into Power BI
(Majidimehr, 2023).
Using and testing this new reporting method within Adidas is one of the most important pieces
of work I am pursuing during my time as an intern, which I will present in more detail in
Chapter 4.
.
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3. COMPANY BACKGROUND
Chapter 3 provides a comprehensive overview of Adidas's business operations, delineating the
organizational structure from a global perspective and subsequently homing in on the
intricacies of the local Italian context. Following a concise retrospective analysis of its global
structure, emphasis is shifted towards the present, providing deeper insights into the factors
that render the digital transformation initiative a pivotal milestone for the company.
3.1 The Group
Since its inception in 1949, Adidas has emerged as one of the world's leading sportswear and
athletic footwear companies. Born out of the vision of its founder, Adolf Dassler, the company
has traversed decades, experiencing remarkable growth and success.
It was founded in Herzogenaurach (Germany), the current headquarters location, by Adi
Dassler. With a deep passion for sports and a dedication to creating innovative athletic
footwear, Dassler laid the foundation for a company that would leave an indelible mark on the
sporting world. In its early years, Adidas focused on manufacturing high-quality sports shoes
tailored to the specific needs of athletes, gaining a reputation for excellence and performance.
Adidas swiftly ascended to prominence in the athletic footwear market, prompting strategic
decisions in the 1950s to expand its product portfolio into diverse sports categories such as
basketball, tennis, running, and soccer. The partnership with the German football association
played a pivotal role, garnering global recognition after their victory in the World Cup. This
deliberate diversification not only broadened Adidas's customer appeal but also established it
as a comprehensive sportswear brand. Consequently, within half a century and as the new
millennium dawned, Adidas found itself propelled into the currents of globalization (Adidas
Group History, n.d.).
Adidas went public in 1995, and after only three years it already became among the most
valuable companies in Germany, earning de facto annexation to the DAX30, the most
important index listed in Frankfurt. Ever since the notorious brand has never ceased to be a
member of it. Adidas´s share price and Adidas reputation always seemed enough healthy to
attract investors, until the Covid-19 pandemic and other geopolitical tensions pointed out some
problems in its supply chain structure that could cost up to €500m in sales (Storbeck, 2021).
15
Indeed, one of the company's most complicated missions is to meet all the demand for the
product that comes from each country, with few exceptions. Adidas is present on every
continent, and in each of them, it is at least the second most important player, after the eternal
American rival, Nike. The complicated flow that allowed warehouses around the world to
receive goods produced primarily in Asia inevitably began to show signs of weakness with the
complicit world geopolitical balances. Chinese’s tariff war, the Ukrainian-Russian military
conflict, Covid-19 brought to light mostly strategic and planning problems. During the past
decade, the company had invested everything in the Chinese market, a risky move that still
marks the balance sheet in red (Van Wyk, 2022).
The value of Adidas has not rebounded since the 2020-21 biennium. By the end of 2022, the
Board made it known that an operating loss is expected, marking the first occurrence of such
an outcome in three decades. The response from shareholders was immediate. Namely, they
demanded a new strategy and a new Chief Executive Officer (CEO) that could turn around the
fortunes of the historic company. They were satisfied shortly afterward. Figure 6 below
demonstrates the evolution of Adidas price per share. Constantly growing for the last 15 years,
COVID-19 really brought fear to investors, which have seen the value of their shares nearly
halved.
Figure 6 – Adidas’ Share price evolution (Source: Yahoo Finance)
Bjorn Gulden, formerly at the helm of Puma, assumed the position of CEO on January 1, 2023.
With a wealth of industry expertise gained from leading Adidas's key competitor, Puma, his
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mandate is to restore Adidas to its former glory by reclaiming market share and revitalizing the
share price impacted by pandemic challenges. These challenges are mostly concerned with the
innovation of the business and the reorganization of the workforce to meet the new structure,
more technological and automatized.
To face innovation. Inheritances from the prior administration encompass key initiatives such
as the CFIN project and the adoption of SAP S/4HANA, as detailed in the literature review.
Ensuring seamless continuity for these projects, the Chief Financial Officer (CFO) persevered
as one of the few constant figures on the committee, even amid recent challenges. The adoption
of the new SAP platform emerges as an essential stride to address workload and speed issues
that previously led to client losses and financial setbacks. This transition equips the company
with novel tools, facilitates exploration of uncharted horizons, and enhances overall flexibility.
The other significant challenge lies in optimizing workforce organization for maximum
effectiveness. The impact of Covid-19 prompted companies to recognize the efficiency of
remote work, advocating for outsourcing tasks where feasible while maintaining direct
oversight of critical areas. While computers have facilitated swift information exchange and
nearly instantaneous communication, the flip side reveals the company's realization of the
potential for job cuts, relocating positions to regions with lower labor costs. Making the
strategic shift correctly underscores a strong necessity for coordination among diverse
branches, especially considering the complexities associated with transferring knowledge to
different locations.
Maintaining proximity between branches and headquarters around the world is not easy. The
company is divided and zoned itself according to geographic regions and similar markets.
Allowing for quick vertical and horizontal comparison across nations. But the business is very
fragmented between countries. In some regions, the profitability is dropping (see Asia and
North America) (Fig. 7), and in others is booming. America in fact has seen a plus 50%
operating margin year over year and that rightly represents the great growth potential that can
drive the business in the coming years. The European market, on the other hand, has long since
consolidated with just a plus 9% which makes it very susceptible to the geopolitical winds and
logistical difficulties that may fall upon each state. Digital transformation helps reduce the
potential losses that result from these risks.
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Figure 7 – Adidas’ Global Sales YoY (Source: Adidas Group report, 2022)
3.2 The Italian branch
Italy is part of the European and Middle East Asia (EMEA) cluster and thanks to long-standing
partnerships with various sports associations (Milan; Juventus; FIGC; AS Roma) the brand is
an integral part of national sports culture and beyond. To date, the Italian Adidas business
continues to confirm its contribution, albeit minimally, to global revenue generation. In Italy,
Adidas is the second national player, behind Nike (Petruzzi, 2022).
The need to host a headquarters in Italy arose with the new millennium. Until early 2000,
Adidas's products were distributed throughout Italy by the Monza-based firm Colmar Spa.
From 2003 on, the Italian subsidiary began to operate with great freedom of management and
control. The Italian CEO followed all departments and then communicated directly to
superiors. However, as faster communication tools consolidated, the need for a single reporting
figure disappeared, replaced by the possibility of eliminating this step to create a more
streamlined structure. In fact, the CEO today has been replaced by a committee consisting of
the five department directors (FINANCE, SALES, SUPPLY CHAIN, MARKETING,
HUMAN RESOURCES). Each one reports directly to their respective EMEA manager located
in Germany. This structure ensures more transparency in handling common global issues and
greater speed in materializing orders from the top.
Throughout the years many reorganizations happened, and as the financial situation started to
tighten, the company had to resort to staff cuts. By concentrating many more activities in the
headquarters, a third of the employees were laid off or moved elsewhere. Today the Italian
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branch counts around 150 people, and only 3 of them comprise the FP&A team. The Figure 8
below gives a generic view of the branch highlighting the departments and the most important
sub-divisions.
Figure 8 - Adidas Italy branch structure (Source: Author’s interpretation)
3.3 The FP&A team
The finance team was not exempted from the process of reorganization which went through
the company. In 2019 the company started to cut positions and the FP&A team which was once
composed of about 15 people, today is reduced to the essentials. Two people follow the two
parts of the balance sheet: Revenue and Cost control, and they report directly to the FP&A
Director. I had the opportunity to join the team in March 2023 and oversaw the analysis of
financial processes. My job is to follow cost management and perform revenue monitoring
activities.
The FP&A team's task is to monitor all the money coming in and out of the company through
analyses that have been consolidated over time and involve all departments of the Adidas Italy
company. In addition, every month deadlines are coming in from Europe for the submission of
Forecasts to help predict the production level and future costs. For this reason, there is
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continuous communication with the various managers from Germany who centrally monitor
the company's progress. The most important decisions, about which club to invest in or which
strategy to follow, are up to them. It is more up to the Italian branch to monitor and pay attention
to achieving the targets set for what concerns the sales level or the cost amount, highlighting
potential critical points where we are probably going out of budget. For instance, the Travel
and Expenses budget for the year is already exceeded in June 2023.
Italy is a constituent of the European cluster, segmented into distinct zones—North, Center,
and South—based on shared market characteristics or geographic proximity. This further
division aims to foster an international corporate culture by facilitating meetings among team
members to identify potential shared challenges within departments and engage in
collaborative discussions to develop solutions.
The FP&A team is currently the first invested in the digital revolution within the Italian branch,
being the first one to adopt SAP S/4HANA and Power BI for reports. My task as an intern
included helping with the tasks of the cost controller but also adopting Power BI to explain the
mechanics of the tool to the rest of the team.
In Chapter 4, I explain in more detail my tasks and my contribution to the FP&A team of
Adidas Italy.
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4. SCOPE OF MY WORK WITHIN ADIDAS ITALY
Within Adidas, my responsibilities are organized into two distinct spheres. Given the compact
size of the team, I am able to allocate time to both cost and revenue control. In the realm of
costs, my primary contributions involve supporting the team in the monthly closure and the
recurring forecasting process. As for revenue, my role extends to the creation of a dashboard
utilizing Power BI to seamlessly integrate analyses of sales and client data (Tab. 2).
Table 2 - Internship Responsibilities Overview (Source: Author’s interpretation)
Working on both revenues and costs is important for me to understand the business in its
completeness since I had the chance to talk with many people across the organization to
understand the full company’s process.
In this Chapter 4, I explain my three main activities during the internship: (i) the process of
month-end, (ii) the forecast of costs, and (iii) the creation of a new dashboard for sales control.
The first two tasks are concentrated on the first and fourth week of each month, which gives
me the time between one and another deadline to dedicate to Power BI.
4.1 The monthly closing
Every month as the last days of the month are approaching, I take charge of the calculations of
all those accruals that are part of other periods. My responsibility entails computing the
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accruals' value and subsequently communicating the results to the accounting team. This team
is tasked with processing the entries through the system and inputting them into SAP.
Accruals are fundamental corrections made to accurately match revenues and expenses to the
period in which they occurred, independent of the timing of cash flows. By ensuring that
financial statements accurately reflect the company's performance, they facilitate timely and
informed decision-making. Accruals also comply with accounting standards, promoting
transparency and compliance. Ultimately, they bridge the gap between the timing of
transactions and cash flows, improving the accuracy and reliability of financial reporting.
The costs are split into two sub-areas: the Marketing Working Budget (MWB) and the
Overhead Costs (OOH). In the first one, I find all the expenses concerning the partnerships
with Football clubs and athletes, as well as Activations and Brand Communications. This is the
part that moves the most amount of money and it is where managers look to understand how
money is allocated within the branch. The more the budget to spend the better it is and the
better the sales should perform. The OOH part is made of all those accounts that are necessary
for the business to maintain itself.
As the month-end deadline approaches the OOH and MWB are approached in separate ways
to calculate the accruals both with a similar procedure. The initial phase involves integrating
data from the enterprise software SAP and subsequently comparing it with the latest forecast.
This step aims to identify significant deviations or alignment with expectations. If notable
discrepancies are identified, an analysis of their nature follows, pinpointing the relevant
department for further investigation to ascertain if adjustments are needed to approach the
forecasted number by month-end, especially if it falls below expectations. The subsequent
stage involves the calculation of accruals utilizing dedicated Excel templates. Finally, the
determined values are communicated to the accounting team, which, through the system,
executes the necessary accounting entries into SAP (Fig. 9).
Figure 9 - Month-end process overview (Source: Author’s interpretation)
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4.1.1 Marketing Expenses
The marketing expense represents roughly seventy percent of the yearly budget. Within this
category, there are the big contracts in sports marketing that mainly concern soccer. AS Roma,
the FIGC (Italian Soccer Federation), and Juventus.
In addition to them, there are other smaller categories such as Branding and Communications,
and costs-related marketing campaigns' Activations.
Because of the complexities of the various contracts and the clauses within them, the most
complex tasks were the responsibilities connected with football teams.
Therefore, at the end of the month, I avail myself of the responsibility of calculating the
amounts for the period that ends. Retainer reversals, guaranteed minimum, royalties, and
shortfall analysis are essentials to track earnings. Each team—Juventus, AS Roma, and FIGC—
requires a team-specific Excel spreadsheet for the execution of the assigned tasks. The common
thread in each team's responsibilities involves the consistent task of updating values from the
previous month with the latest data. The retainer and guaranteed minimum, fixed values
dictated by the contract, are recalculated through updates to the worksheet. In contrast, the
computation of shortfalls and royalties involves extracting sales data from a designated
software, MicroStrategy. This data is then transferred to Excel, where the accruals are
automatically calculated using the VLOOKUP function. My responsibility encompasses
executing and validating this process to ensure accuracy, ultimately conveying the pertinent
numbers to the FP&A Director and the accounting team for entry into SAP.
The Retainer level is agreed upon in the contract and provides all clubs with an upfront
payment. This fixed annual payment is then distributed equally and proportionally throughout
the year. My job is to calculate and record through software the expenses concerning the
specific month. At the time of cost, I first record a debit prepaid expense. Over time, as the
benefit of the prepaid expense is realized, or the service is provided, I gradually recognize the
cost. Which decreases the prepaid expenses (credit) and increases the corresponding expenses
account (debit). This is not the only expense accrual I go into at the end of the month, there is
also the guaranteed minimum. The minimum guarantee helps ensure that the receiving party
obtains a minimum level of compensation or revenue, irrespective of actual performance or
sales. It applies a similar discourse to the retainer, and the entries I pass in the same template
conclude the first part devoted to partnerships, that of deferred expenses. In summary, this
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process allows for the matching of expenses with the periods in which they provide benefits or
are incurred, aligning with the accrual accounting principle.
The next step is to calculate the value of royalties and shortfall. Royalties are the costs arising
from the right to sell sports-branded products to clubs, which receive a percentage. The accrual
I do is to reclassify these expenses as part of the Cost of Sales, and thus consider them part of
production costs. The difference between the costs estimated in the budget and those realized
instead leads to the calculation of the shortfall. Usually, the difference is positive and so the
number represents a favorable variance cost saving. Like royalties, it is a negative entry which
implies that the company has recorded fewer expenses for the period than initially anticipated,
contributing to a higher profit.
All four accounting entries must be uploaded to the software which will begin a process of
approvals before seeing them uploaded to the system.
This multistep work should be done similarly for all clubs at d-2 or d-1 before or after the
overheads.
4.1.2 OOH costs
Overheads (OOH) are costs that are fundamental for the daily ongoing of the business. These
bookkeeping entries are easier and more predictable to calculate and the steps involved are less
than for the MWB ones.
After I reviewed the files. To calculate the accrual I must upload in the same Excel template
both a copy of the latest forecast and a copy of the actual OOH values which I download from
SAP. OOH accruals are calculated automatically by comparing the SAP discharge with the
values crossed from the last updated Forecast.
The file comparing these two worksheets uses a VLOOKUP formula to give me back the value
that must be recorded. After that, I send it through the dedicated template to the Accounting
team who checks and eventually approves the transaction.
Once all entries are submitted, the month-closing process is over. I generally check that the
deviation from the Forecast is not by much, otherwise, there may be errors. It is essential to
keep a good track of the activity by providing forecasts that are always up to date. Forecast
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activity is also the most complex and important performance that I am entrusted with monthly,
besides the one just described.
4.2 The Forecast
The branch must submit the official forecast for the upcoming year in October. Nevertheless,
a new forecast is required by the European control team at least once a month. This approach
is called "Rolling," and the main difference from the traditional one is that it does not remain
static throughout the whole year, but it is dynamic and is updated as much as possible to reflect
the best realistic scenario.
Therefore, the company requires 12 Forecast submissions during the year. Four of them are
Officials, while the other eight are called Lights. The template is the same, what differs between
the two is the time spent to perform the review of the expenditure which every department is
expected to realize by the end of the year. Rolling Forecast Light (RFCL) is simpler and less
meticulous. The review of the accounts and their component items is done in less detail, the
goal is to highlight only major shifts or issues. The official one, on the other hand, is more
complex and is required during the end-of-quarter months.
The company uses the Rolling Forecast approach because it contains numerous advantages in
planning, control, and analysis. First, a periodic update allows organizations to adapt to
circumstances and market situations more quickly and efficiently, helping the business to be
more agile and responsive. It allows the projection to be dynamically adjusted and integrated
with more accurate decisions as they become available. This makes it possible to make
informed decisions and adapt strategies based on new data rather than relying solely on
historical figures. In favor of the approach, there is also another feature. Through this type of
forecasting, it is also easier for the company to allocate resources more efficiently. Allowing a
better understanding of future cost expectations and driving decisions affecting staff and
investments in general. For Adidas is critical to have a forecast that is always as detailed and
up to date as possible to avoid overproduction of products that are not able to sell.
In general, nowadays a forecast system that is as dynamic and flexible as possible is crucial.
During Covid-19, for example, almost one forecast per week was being performed since there
was a continuous need to enter new information. In cases of global macro analysis, it is the
headquarters that sends us the new guidelines to reflect.
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In my case, I am wrapped up in cost forecasting, namely in the Light Forecasts. My duty is to
update the templates with any changes of which the budget owners give us knowledge.
The Official Forecast follows a mix of two approaches, top-down and bottom-up, which are
different but complement each other. Although they have different characteristics of
methodology, they can be integrated. Adidas uses a hybrid way that combines the qualities of
both. I initially receive top-down guidance, with a forecast that is driven by the company's
strategic goals and insights from executives. For example, how much budget the branch can
devote to each activity (partnerships, activations, etc.) This mode is helpful for some aspects
such as the possibility of direct control and quick decision-making, but it has limitations. For
example, it could lead to a potential lack of details that would create difficulties in allocating
resources, and there is a risk of a disconnect between operational reality and high-level
forecasting.
For these potential risks, I subsequently integrate the top-down info received with the bottomup feedback. The bottom-up process involves talks with the various department heads, teams,
and business units. They provide me with the most up-to-date forecasts of any deviations or
costs with suspicious variances, critical to having the most detailed granularity of data possible.
It also allows employees to be directly involved and have an active role in the planning that
affects them.
Thus, fostering collaboration between departments, teams at different levels work together to
reconcile the final forecast. Aligning assumptions and ensuring that targets coming from the
top are met. Through the proper use of this mixed approach, it is then possible to maintain a
balanced perspective between the company's upper and lower hierarchical ranks.
I must pay attention to each European communication that could affect us. Most of the time
these guidelines concern external shifts between countries of the European Cluster, following
strategies and targets. Positive shifts are warmly welcomed, while negative ones represent a
possible point of contention between the affected departments. To avoid creating internal
disagreements, the FP&A directors of the European clusters support talks with internal
discussions, trying to bring the parties together and figure out the priorities. In conclusion, I
respond to each top-down guideline with consultations at lower levels.
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Finally, I reflect the new information in the templates provided by Europe for collecting branch
data. In addition, to avoid a concentration of workload close to the deadline day, Adidas has
launched the Latest Estimations caution system.
The Latest Estimation (LE) process is made to incorporate the most up-to-date information into
the dynamic forecast. I usually have two deadlines per month of LE, one at d-15 and the other
at d-10. Again, I gather relevant data from various departments, either by downloading them
from SAP or by going and asking the right people. Thanks to this system I have more time to
reconsider the division of costs for the remaining months.
Figure 10 represents the Forecast process by highlighting its main points.
Figure 10 - Forecast process overview (Source: Author’s interpretation)
4.3 The Sell-in Dashboard
While improving my skills and knowledge of month-end and forecast techniques, I have the
opportunity to work in parallel on the company's new reporting system. Using Power BI, I take
the chance to break through the new world of enterprise 4.0 rebuilding part of the company's
reporting. The one I dedicate most of the time to creating is a dashboard highlighting the
company's sales for the Spring-Summer (SS) season of 2024. The first step is to replace the
previous software, MicroStrategy, with the more contemporary Power BI.
MicroStrategy is an analytical platform that enables dashboards and visualizations. The
constraint of batch processing, which does not allow for real-time data reading, and its
unintuitive design pushed toward choosing Microsoft's BI software. In addition, moving the
back office, i.e., the people who oversaw the updating of these visuals, to offices located in
Chennai, India, made the transfer of knowledge even more difficult.
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The Sell-in dashboard is the report that informs department heads and managers about the sales
situation concerning the following season. Given the complex geography of the company's
production facilities, the sales process begins almost a year in advance of the start of sales to
the end consumer. This is necessary to send the correct number of garments into production.
Avoiding waste of resources as well as predicting how the company will approach closing the
following year.
To help in this mission, I built the Dashboard for the 2024 summer season. Taking a cue from
the old one, I was able to expand it with new metrics, visuals, and analysis as well as, make it
easier to update.
For creation, I followed the process described in section 2.3 and presented in Figure 5 above. I
started by creating all the links between the various input files. The customer codes,
membership groups, and historical and target values it taken from a file located in the common
folder. Sales data to the current day, on the other hand, are imported from the Data Lake
launched in April in the Power BI online platform.
The second step is cleaning up the data, leaving only the necessary info and adjusting their
format to fit the visualization. The missing metrics needed to be recreated by writing a Data
Analysis Expressions (DAX) formula similar to those in Excel. The process was lengthy rather
than complicated. Once in possession of all the metrics I was able to build the dashboard
structure. The first page is a general overview and then specifically the sales of each channel
(Fig. 11).
Thanks to the interactive charts it was easier to highlight the KPIs that I had been asked about,
such as Gross Sales, Go-in-Margin, and Forecast To-go. To study the customers, to understand
which products are best by category bands and in which periods to push in one or the other.
Also, through the use of Power Automation, I have made sure that the data is automatically
updated so that every moment you open the dashboard the numbers and the division of
customers by channel are as recent as possible.
On the first slide of the report, there is an overview of the channels and their sales values Year
to Date (YTD) compared year over year. Furthermore, other metrics that I had to write allowed
me to go into a deeper analysis looking at the forecast to go, the forecast coverage, the number
of sales divided per category cluster, month, and gender (Fig. 11).
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Figure 11 – SELL-IN Dashboard total overview (Source: Author’s calculations)
Note: The numbers are of imagination for privacy reasons.
Then the same type of analysis was done for each type of channel, breaking down its clients
and the percentage of gender and product division of each of them by simply selecting one.
The images are an excerpt from the dashboard that nevertheless hides the long process of
processing data and modeling them that led to the result (Fig. 12).
Figure 12 – SS dashboard for specific Channel: BLUE (Source: Author’s calculations)
Note: The numbers are of imagination for privacy reasons.
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The result convinced the FP&A Director and all the people involved in the sales both from a
data quality standpoint, allowing for more accurate trend analysis than before, and for the
automatic refresh. In addition, it is possible to monitor any risks and opportunities more
quickly, including monitoring which products are in greatest demand by each customer, in each
category, and ensuring that these never fall below certain stocking volumes when trends show
growth in demand.
This report is just the first of many that the company needs to replicate on Power BI until the
entire reporting system is transported here.
From a financial point of view, such work allows for quicker intervention in the market and
thus saves time and money in finding solutions, as well as communicating more accurate
information to the various teams and Europe regarding sales levels, etc
To summarize, this Chapter 4 paints a general picture of the learning experience at Adidas
Italy. My inclusion in a sparse team allowed me to be involved in several analyses and to view
in detail almost all the items that make up the final P&L.
The insertion took place gradually, but the opportunity to work on completely new tool as
Power BI allowed me to get into the mechanism right away and get noticed in the weekly
meetings organized with sales leaders.
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5. DISCUSSION OF THE INTERNSHIP RELEVANCE FOR THE MASTER’S IN FINANCE
Chapter 5 explains the articulation of my 6-month internship at Adidas with the Master’s in
finance program at ISEG. This Chapter 5 relates to the tasks and responsibilities described in
the previous Chapter 4 "Scope of Work at Adidas Italy" and to the academic and personal
knowledge and experiences I have accumulated during the year of studying Finance at ISEG
and the six months at Universidad Adolfo Ibanez in Santiago de Chile. This connection
highlights how my internship is a natural extension of the skills and insights gained during my
academic journey.
5.1 Academic Relevance
This section 5.1 explains the connection between some of the academic courses I pursued
during the Master's and the Internship program.
It is important to highlight that since I have realized my internship in a corporate environment,
the main curricular units that have been relevant are those concerning corporate finance.
5.1.1 Financial Analysis and Reporting
In the "Financial Analysis and Reporting" (FAR) course unit, lectured by Professor Tiago
Gonçalves, students were formed with a thorough introduction to both International Financial
Reporting Standards (IFRS) and United States Generally Accepted Accounting Principles (US
GAAP). Additionally, the course delved deeply into the fundamental aspects of financial
statements.
It is by far the most important subject of which good knowledge is helpful to my path. As
described in the previous Chapter 4, most of my assignments required a good awareness of the
financial statement, especially general accounting applied to income statements and cash flow.
Giving me the chance to show off what I have learned during FAR classes.
In the initial weeks of my internship, a comprehensive examination of the Budget Manual was
undertaken. It involved a thorough understanding of the procedures for conducting month-end
analyses and forecasts. Leveraging my prior knowledge of IFRS standards proved crucial,
providing a foundational base that allowed me to navigate the intricacies of the tasks without
starting entirely from scratch.
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Each month, to rebuild the company's financial situation, I must analyze from the inside the
current liabilities and manage the accruals closely to highlight that everything is correct and
only the right amounts are registered for the current month. Diving into cost and revenue
analysis is very helpful to better understand the firm’s structure and its value chain in general.
The experience has undoubtedly given me more mental order about the subject matter and more
clarity in the reporting process when it comes to following IFRS guidelines.
5.1.2. Corporate Financing and Planning
The second most important course unit that contributes to the conduction of a successful
internship is the "Corporate Financing and Planning" (CFP) course, instructed by Professor
Ana Venâncio, students were introduced to Working Capital Management, cost management
impact, and risk mitigation.
As a Financial Cost Controller, I am responsible for tracking and managing various financial
aspects within the organization. Including overseeing accounts receivable and accounts
payable, which are key components of net working capital to maintain an efficient balance
between current assets and liabilities. Hence, I am able to deepen my knowledge of the subject
from many points of view, understanding better the way they are generated.
Effective working capital management, aligned with Net Working Capital theories, trying to
maintain a moderate approach and healthy liquidity. For example, jointly with my teammates,
I am involved in drawing up a plan to split the costs through the year following the revenue
trends. This plan allows us to always maintain a good level of cash availability and cover
eventual new risks. For instance, the collection of money is seasonal and there are periods when
revenues are much higher, in response we try to address whenever is possible more costs during
these months or we delay important payments such as consultancy services until we know there
are enough opportunities to cover them.
Moreover, inspired by my colleague's commitment to revenue controls, I am actively
participating in meetings with the supply chain. The objective is to assess the remaining
products from which we could collect revenue, engaging in discussions to determine the
optimal course of action—whether immediate realization or postponement yielded a more
favorable outcome.
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In conclusion, by applying my CFP knowledge during my internship at Adidas, I gain a better
understanding of companies' short-term needs. Moreover, I am able to apply the concept of
seasonality and recognize and face the risk of periods of negative cash flow shocks.
5.1.3 Corporate Investment Appraisal
Another relevant course that I am revising to better understand the dynamics of the firm is
“Corporate Investment Appraisal” (CIA). During this course unit Professor João Carvalho das
Neves introduced us to the foundations of corporate investments and corporate finance and
how to evaluate companies’ financial risk.
Within the corporate landscape of Adidas, I have the privilege to delve into the financial
viability of investments, specifically those entailing soccer teams. Notably, a substantial
undertaking centered around the initiation of a partnership with AS ROMA in July 2023. As
the commencement date approached, a meticulous examination of the Head of Terms became
imperative, encompassing pivotal figures pertaining to retainer and royalties. This
encompassed projecting the anticipated cash flow spanning a comprehensive five-year period
and scrutinizing the agreed-upon terms to forecast the agreement's profitability based on
projected sales and costs, followed by the calculation of its Net Present Value (NPV). The NPV
is subsequently updated with monthly royalty data to facilitate ongoing monitoring and
assessment of its progression.
The time spent at Adidas allowed me to apply my CIA knowledge in discussions about the
feasibility of investments and their profitability. This benefits me with a better understanding
of the real factors which affect investments.
5.1.4 Financial Modelling in Excel
The internship requires a high level of Excel skills to bring on analysis and elaborate files.
Pivot tables and VLOOKUP formulas are fundamental to speed up the data analysis. In
“Financial Modeling in Excel” (FME), Professor Filipe Caldeira explained the implications of
Microsoft Excel on financial analysis and its features to bring quality results.
While CFIN is not still available, all the month-end processes and calculations must be done
in Excel and while working I take the opportunity to enhance the files used to speed up the
process.
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Furthermore, good Excel knowledge is also essential to work on Power BI since many of the
input files are reworked Excel and so they are the structure of the reports. Power BI is also very
similar to Excel and the way to build queries and DAX formulas and queries is the same for
both software.
5.1.5 Fundamentals of Financial Economics
To understand the dimension of Adidas’ business the “Fundamentals of Financial Economics”
(FFE), lectured by Professor Teresa Garcia, gave me an important overview of international
economics as well as microeconomics, which allowed me to better understand the value chain
of the company.
During my time at the branch, I could study closely what we had only seen theoretically during
classes. The "theory of the firm" explaining business objectives such as profitability and risk
control are everyday topics.
In addition, working in a company like Adidas, expose me to global issues and close with the
needs of customers in large volumes. I entered into the microeconomic mindset by seeing with
my own eyes the importance of the consumer theory. Hence, to better understand the
microeconomic environment it is necessary to also understand the value chain from a
macroeconomic point of view which gave me the whole business concept and helped me to
create critical thinking on what can be the risks connected to the business.
Collaborating with the FP&A Director and the data analyst team, we undertake comprehensive
profitability and marginality analyses for the entire subsidiary. Employing Power BI, this
analysis is designed to accommodate various levels of depth, spanning diverse datasets. For
instance, in the SELL-IN Dashboard's initial overview (Fig. 8), we conduct an analysis based
on product division and gender age. Subsequently, the analysis extended across subsequent
slides, where we compute the average selling price and gross margin for each customer,
product, product division (footwear, apparel, and hardware), and gender, comparing the current
and previous year's data. The objective is to discern trends that can inform strategic business
decisions—such as product recommendations for specific categories, optimal investment
allocation for campaigns, and cost division considerations both before and during product
launch campaigns.
This analytical approach empowers us to establish guidelines for client engagement, enabling
us to effectively target and achieve our desired objectives.
34
5.2 Personal development and skills
Outside of delving into what I studied during my master's degree, the experience at Adidas
allows me to investigate a new world from which I am learning so much.
First, I got to join a company that is young in both mindset and ideas. I have the opportunity to
work with very helpful people who help me progressively enter into the various discourses. I
am then able to improve my communication and relational skills so that I can collaborate as
effectively as possible, understanding the importance of respect first and foremost. The group
work activity is also facilitated for me by the preparation offered by the university, which very
often accustomed us to group work. However, the biggest help from ISEG is the professional
mindset that I am able to bring into the company with important technical knowledge as well.
At ISEG I also learned to exchange views with colleagues of different nationalities allowing
me to broaden my own culture. This factor is very helpful when relating to managers from
other countries in the weekly meetings, but also in understanding the Adidas world from a
larger point of view than only delineated within the national border.
On a personal level I think I am growing a lot in the knowledge that I have good soft skills
which, however, I still need to improve. Especially about time management, I have realized the
importance of good organization and identifying priorities to which to devote more time.
At ISEG I had been able to train my problem-solving skills but during the internship, I am
seeing how to put them into practice, and I am learning even more about the importance of
flexibility by devoting more and more time to critical activities and adapting to needs.
Academic preparation is also critically important in coping with mental stress. Although there
is no comparison, without a tough but at the same time motivating and challenging preparation
like ISEG's I would find myself feeling more fragile on numerous occasions.
35
6. CONCLUSION
In conclusion, my six-month internship experience at the Italian subsidiary of Adidas as an
FP&A internship is a precious journey that gives me a deep understanding of the process of
digitalization and knowledge about cost control within a multinational company. During this
time, I have the privilege of working alongside a dynamic and talented team, gaining practical
hands-on experience, and applying the knowledge acquired during my academic studies to realworld financial scenarios.
My involvement in Adidas' CFIN and SAP S/4HANA project emphasizes the transformative
role of technology in modern finance. It makes me understand how companies can succeed in
a period full of hurdles and where information flows at the speed of light. I understand the
importance of data integration and real-time analytics in decision-making. In addition, the
integration of artificial intelligence into corporate finance is a promising trend, enabling the
automation of tasks, reduction of errors, and deriving insights from large datasets. This
experience highlights the central role of artificial intelligence in future financial management,
which is essential to remain competitive in the digital age.
During my tenure at Adidas, I am gaining valuable insights into the pivotal significance of
proficient cost management in attaining financial resilience and profitability. My role involves
hands-on engagement in the scrutiny and supervision of diverse cost elements. Encompassing
activities such as budget formulation, forward-looking financial predictions, meticulous
variance assessments, and the refinement of expenditure patterns. These responsibilities
provide me with the opportunity to cultivate a profound grasp of financial data interpretation,
intricate modeling methodologies, and the crucial need to harmonize financial tactics with
overarching corporate goals.
In addition, my internship allows me to work alongside professionals from a variety of fields,
cultivating an atmosphere that emphasizes continuing education and personal development. I
am privileged to delve into the intricacies of the sportswear industry, gaining a deeper
understanding of its challenges and potential benefits. The exposure to the corporate industry
not only broadens my knowledge base but also sharpens my adaptability and challenge-solving
skills, both indispensable qualities for achieving success in any professional endeavor.
One of the most profound insights I gained during my Adidas internship is the recognition that
cost control transcends its financial role, becoming a strategic necessity that impacts decision36
making across an organization's hierarchy. Through its role in optimizing resource allocation,
cost control becomes a driving force behind long-term sustainability and the cultivation of a
competitive edge.
My experience at Adidas would certainly not have been as interesting without the academic
contribution I received from ISEG and its professors. The knowledge of financial analysis and
accounting principles allowed me to quickly integrate myself into the corporate environment.
In summary, my internship at Adidas further ignited my enthusiasm for financial analysis and
equips me with the tangible expertise and wisdom required to thrive in a dynamic corporate
setting. I have full faith that the wisdom garnered through this internship will serve as a robust
cornerstone for my future pursuits in the realms of finance and business. I'm appreciative of
the chance to be a member of the Adidas team and eagerly anticipate applying the valuable
lessons I am acquiring.
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