With Adidas And Reebok Combined,
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With adidas and Reebok Combined,
Will Nike Still Crush the Competition?
September 21, 2005
Letter of Transmittal
September 21, 2005
“Will adidas forthcoming takeover of Reebok help the new company achieve sustainable competitive advantage over industry leader Nike?” After researching the many aspects of this question, we were able to come to a conclusion. In order to address the full scope of the question our team evaluated the following areas:
Background Information
Corporate Culture
Market Shares and Manufacturing
SWOT Analyses
The combination of adidas and Reebok appears to be a step in the right direction. However, it is important to analyze the strategies behind the acquisition and to consider possible obstacles the company will face. Overall, each issue will need to be addressed so that adidas and Reebok can compete to the best of their advantage against Nike, but we dont foresee them taking Nikes spot as the industrys leader.
Executive Summary
The purpose of this report is to evaluate the impact of adidas pending acquisition of Reebok on the sporting goods industry in relationship to Nikes position. Evaluation of background information and corporate culture combined with SWOT analyses have helped form the arguments presented in this report and have assisted in answering the question, “Will adidas forthcoming takeover of Reebok help the new company achieve sustainable competitive advantage over industry leader Nike?” Nikes current position in the industry along with the strengths, weaknesses, opportunities, and threats concerning adidas acquisition of Reebok help convey the following arguments.
Arguments
Nikes Current Position
Strong brand recognition
Top endorsers
Global leader in athletic shoe market
adidas-Reebok Strengths
Complementary global strengths
Complementary brand identities and market segments
Shared R&D, patents, and technology
adidas-Reebok Weaknesses
Complexity of joining two corporate cultures
Differing values among management
adidas-Reebok Opportunities
Reduced costs
Decreased competition
Cross-over promotion
adidas-Reebok Threats
Nikes possible acquisition of Puma
It has been concluded that adidas-Reebok will have a greater ability to compete aggressively with industry leader Nike. However, while they are working out the finalities of the acquisition, Nike will be running at full speed. Therefore, Nike will remain in the top spot for the athletic shoe market, but adidas-Reebok should be a very close second.
Table of Contents
Letter of Transmittal
Executive Summary
Introduction
A Look at Competitive Advantage
The Big Three and Their Competitors
adidas-Salomon AG
Reebok International Inc
Competitors
Legal Issues
Corporate Culture
Market Shares and Manufacturing
Market Shares
Manufacturing
Brand Identities
Opportunities and Strengths of the Acquisition
Conclusion
Appendices:
Appendix A : Legal Information
Appendix B : Corporate Culture
Appendix C : Nike SWOT Analysis
Appendix D : adidas SWOT Analysis
Appendix E : Reebok SWOT Analysis
Appendix F : adidas-Reebok SWOT Analysis
References
Endnotes
Introduction
On August 3, 2005, adidas-Salomon AG announced its plans to buy all outstanding shares of Reebok International Ltd.s stock at $59.00 per share, for a total of $3.8 billion. Upon announcement, Reebok stock rose 30 percent while adidas climbed 7 percent. The negotiations are expected to close before the end of the first quarter of 2006. As stated by Herbert Hainer, CEO of adidas, “This is a once-in-a-lifetime opportunity to combine two of the most respected and well-known companies in the worldwide sporting goods industry. Together, we will expand our geographic reach, particularly in North America, and create a footwear, apparel and hardware offering that addresses a broader spectrum of consumers and demographics” (adidas.com). A primary goal of the acquisition has been to challenge industry leader Nike for a higher share of the