*Views expressed in this report are those of the authors

COMMGMT 3001
International Management III-2007
Group Assignment

The Adidas Group and Reebok: North America

Authors:
Elizabeth Ansara
Matthew Lovell
Patrick O’Neil
Peter Romeo
 Table of Contents

Executive Summary.......................................................................................3
Introduction....................................................................................................4
Differences and Similarities between Germany and the US.......................5
Government and Politics in Germany and the US ........................................5
Law in Germany and the US ........................................................................6
Economy in Germany and the US ................................................................6
Cultural Value in Germany and the US ........................................................7
Competitors....................................................................................................9
Nike Incorporated .........................................................................................9
Adidas ........................................................................................................10
Puma ..........................................................................................................10
Current Trends ...........................................................................................11
Structure and Operations of Reebok .........................................................12
Parent Strategy ..........................................................................................12
Organisational Structure.............................................................................12
Reebok’s Fit ...............................................................................................13
Strategy......................................................................................................14
Summary ....................................................................................................15
International Management Opportunities and Problems .........................16
Opportunities ..............................................................................................16
Problems ....................................................................................................17
Competitors ................................................................................................17
Product Differentiation................................................................................18
Cultural Differences....................................................................................18
Manufacturing.............................................................................................19
Social Responsibility ..................................................................................19
Staffing .......................................................................................................19
Recommendations.......................................................................................20
Possible Solutions ......................................................................................20
The integration process..............................................................................20
Solution for perishable product issue .........................................................21
Suggested solution for social responsibility issue.......................................21
Conclusion ...................................................................................................22
Reference List ..............................................................................................23

2
Executive Summary
The following report analyses the North American Reebok subsidiary, recently
acquired by the Adidas Group whose headquarters are located in Germany.
In assessing the Reebok subsidiary we found that the cultural differences
between Germany and the United States did not influence the operations and
management in Reeboks North American subsidiary as much as we first
expected. If the two organisations are to succeed in the years to come, the
cultural differences and similarities need to be considered and assessed for
cooperative decision making. The involved countries have comparable
characteristics in their political structures and subsequently it has not
adversely affected the two organisations since the acquisition.

As Reebok is the third largest sporting goods company in the world behind
Nike, combining Adidas and Reebok will prove to be a beneficial relationship.
Reebok and Adidas retain the second and third largest market shares in
footwear in the US. It was discovered that the acquisition was primarily
undertaken with the objective to obtain the largest market share over the
current US market leader, Nike.

Reebok adopts a decentralised Global Area/Geographic structure whereby

the North American subsidiary reports to the Reebok headquarters in Bolton,
England. The Adidas Group oversees the operations of the headquarters of
both Adidas and Reebok companies. The strategies of both companies were
aligned to utilise each other’s strengths to overcome each other’s
weaknesses. This strategy compliments the global area/geographic structure,
where Reebok and Adidas can pursue their individual goals while being
guided by a common strategic direction.

Thus, our recommendation following the acquisition is that Reebok should

balance their strong brand with Adidas’, each having separate identities and
ownership in different markets. The benefits of the merger should be focused
on areas such as distribution channels, economies of scale and
manufacturing networks. With the substantial savings generated by the
merger, Reebok should further diversify their markets and products.

3
Introduction

Reebok International Limited operates in the sportswear industry and is a

major producer of athletic footwear, apparel and accessories. Reebok was
founded in 1895, but was recently acquired in 2006 by another giant German
sporting company, The Adidas Group.

The following report analyses The Adidas Group’s acquisition of Reebok. The
first task in assessing the joining of corporations is to examine the many
differences and similarities among the United States and Germany. The report
will look at governmental, political, legal, economical and cultural
characteristics of the two companies. The next objective is to examine
Reebok’s top competitors in the sport’s apparel market. It is important to know
what other companies Reebok should be both watching out for and learning
from.

This report will then go on to the strengths and weaknesses of Reebok’s

organizational structure and operations. In addition a description of the Adidas
Group’s structure and operations is analysed. It is important to have
information about both the host corporation and its subsidiary for comparative
analysis.

The final component of this report discusses international management

opportunities and problems. Recommendations to resolve the issues
discussed.

4
Differences and Similarities between Germany and the US

Germany and the United States are two very different countries emphasised
by their dissimilarities in terms of geographics and population. Germany is
located in Europe and has a population of approximately 82.5 million people.
The United States has a population of over 301 million citizens and is
approximately 27.5 times larger in area than Germany (The World Factbook
2007). The Adidas Group began its operations with only offices in Germany.
However, overtime, the corporation expanded by acquiring Reebok. In
understanding how both of these organizations operate, it is first important to
analyse the differences and similarities between the United State’s and
Germany.

Government and Politics in Germany and the US

Despite their differences in geographical form and population, The United
States and Germany have some comparable characteristics. Germany is a
federal republic consisting of 16 states while the United States consists of 50.
Encyclopaedia Britannica online (2007) states that in Germany, “many of the
political structures were drawn from the models of the United States and other
federal governments.”

In both countries, each state has their own set of laws and government. Both
Germany and the United States are democracies with the formal head of
country being a president. In the United States, as well as having a president
there is also the senate consisting of 100 members and the House of
Representatives which has 435 members. In Germany, the Bundestag exists
which contains approximately 600 members, depending on the election
results (Encyclopaedia Britannica Online, 2007).

5
Law in Germany and the US
The legal aspects of the two countries have many similarities. The laws in the
United States are based on the constitution which was written in 1787.
Germany also had a constitution called the Grundgesetz. This took affect on
May 23, 1949 (Encyclopaedia Britannica Online, 2007).

Economy in Germany and the US

The economies existing in Germany and the United States are fairly different.
The US uses the dollar as their currency while Germany uses the Euro as its
formal currency. Currently, the Euro has a stronger exchange rate than the
US dollar. As of 3 May, 2007, on Yahoo! Finance (2007) one US dollar is
equivalent to 0.735 Euros. Therefore, what happens in the German economy
is crucial for both the rest of Europe and the entire world economy.
Throughout April, Germany’s economy has continued to improve.
Unemployment has declined a great deal and there are fewer than 4 million
Germans out work for the first time since October of 2002 (Moore, 2007).
There seems to be no big signs of future trouble within the German economy.

The US economy is the largest in the world. Countries like China and Japan
are continuing to gain economic recognition and the US seems to be playing a
smaller role as time goes on. Throughout the first quarter of 2007, the US
economy expanded at a slow 1.3 percent. This was the fourth quarter in a row
with economic growth that was just sub-par (NZ Herald, 2007). The German
economy seems to be growing in strength while the United State’s looks to be
slowing down.

6
Cultural Value in Germany and the US
The final component of analysis between the United States and Germany are
its cultural differences. Using Hofstede’s value dimensions, a better
understanding will be gained about the two cultures. The first dimension is
power distance which is essentially how willing the people in that culture are
in accepting a person that has a lot of power and influence over them. The
United States and Germany ranked 40 and 35 respectively (as shown in the
diagram below). Both counties ranked relatively low on this scale, meaning
that there is not a large gap between the people in charge and those that are
not.

Power Uncertainty Long term

Country Distance Individualism Avoidance Masculinity orientation
Germany 35 67 65 66 31
USA 40 91 46 62 29

The second value of Hofstede’s dimension is uncertainty avoidance. Germany

(65) is ranked higher in this characteristic than the US (46). This signifies that
Germany has a much higher desire for stability. Businesses in Germany are
likely to have stricter guidelines or rules for things that should be done than
those in the United States.

The third value is individualism verses collectivism. This compares people’s

preference to care for only themself and their immediate family, compared to
the notion that one’s identity is based on group membership. The United
States is much more individualistic than Germany, scoring 91 compared to 67.
This signifies that people in the US strongly believe that individual
achievement is ideal.

The final dimension is masculinity versus feminism. Germany (66) is only

slightly more masculine than the United States (62), meaning that in German
society, people are more likely to be assertive, materialistic and have less
concern for others. Due to the similarity in scores, Germany and USA are not
likely to have a great difference in behaviour based on this dimension.
(Deresky, 2006).

7
Also of importance is the comparison of the long term and short term
orientations of each country. Both countries’ scores were similar and low,
indicating that managers use short term incentives and rewards for
employees.

A second way to assess the different cultural aspects of Germany and the
United States is through Trompenaar’s value dimensions. Both countries are
very universalistic, which means they have a high sense of obligation. They
rely on laws, contracts and rules. When it comes to emotional orientation in
relationships, Germany is more neutral while the US is more affective. The
United States is also more specific when involved in relationships whereas
Germany is more diffusive. The final value is achievement versus ascription.
There are a greater percentage of women and minorities in the workplace in
the US than in Germany. Also, in Germany status is based less on
competency and achievements (Deresky, 2006).

Having a better understanding of the similarities and differences between

Germany and the United States is crucial in assessing the Adidas Group and
Reebok in North America. The location of the subsidiary plays a significant
role in the organization’s competitors, how it is structured, problems,
opportunities that occur and what kind of solutions could improve the
company. By carefully analysing or considering the differences in the
respective cultures, problems such as miscommunication in management
could be easily avoided.

8
Competitors
The three largest companies in the sportswear and sporting goods industry
are Nike, Adidas and Puma. Consequently, these companies also act as the
three strongest competitors to Reebok.

The chart below reinforces some of the arguments and analysis that will be
detailed.

Year End 2005 Adidas Reebok Nike

Employees 17,000 9,102 24,667

No. 2 global maker of No. 2 U.S. maker of No. 1 global maker

Major rankings sporting goods athletic shoes of athletic shoes

U.S. athletic shoe mkt.

share 8.90% 12.20% 36.30%

Global athletic shoe mkt.

share 15.40% 9.60% 33.20%

Annual revenue $7.9 billion $3.8 billion $13.7 billion

Annual net income $326.5 million $192.4 million $1.2 billion

Current market cap. $8.9 billion $2.6 billion $16 billion

$86.92, down 4%
Wed. stock price close NA $57.14, up 30% this year this year
Sources: Sporting Goods Intelligence, NPD Fashionworld, the companies, Reuters, USA TODAY research

Nike Incorporated
Nike is a major American supplier of athletic shoes (36.6%), apparel and
sports equipment with headquarters located in Beaverton, Oregon, USA. Nike
produces a wide range of sports equipment and is the largest sportswear
supplier in the world, with revenue for the 2006 financial year totalling $15
Billion. Nike has more than more than 26,000 employees working at over 500
factories, which are spread across 45 countries. Most of Nike’s factories are
located in the Asia. Nike has fierce competition form every sports brand due
to its large range of sporting goods. For a long time Nike had no direct
competitors because there was no single brand which could compete directly
with Nike’s range of sports and non-sports oriented gear until Reebok gained
market share in the 1980’s (Wikipedia).

9
Adidas
As discussed above Reebok is a subsidiary of Adidas. Adidas is a German
founded sportswear company that is part of the Adidas Group, consisting of
Reebok sportswear, Taylormade Golf Company, Maxfli golf balls, and Adidas
golf. It is the second biggest sportswear manufacturer in the world. Since its
formation in 1949, Adidas has been the official match ball supplier for every
FIFA World Cup and designs the official match ball for every edition of the
event. Adidas produces the kits of some of the biggest domestic and
international football teams including Real Madrid, AC Milan, Chelsea and
Liverpool, as well as 26 national teams. Adidas reported revenue of
$9.32billion for the 2006 financial year.

Puma
Another large competitor of Reebok in the sporting goods industry is Puma.
Puma is a German based multinational company that produces high end
athletic shoes and other sportswear (Wikipedia Encyclopaedia). Puma is the
third largest sportswear manufacturer in the world behind Nike and Adidas.
However, Puma does not compare to Nike in terms of employees with about
7,000 staff members compared to Nike’s 26,000. Since 1996 Puma has
expanded its operations in the United States. Puma is the main supplier of
racing shoes for Formula One and NASCAR and had the rights of sponsoring
the 2006 FIFA World Cup champions and the Italian national football team. In
February 2007, Puma reported that its profits had fallen by 26% to $43 million
during the final months of 2006. Most of the profit decline was from higher
costs linked to its expansion and consequently sales actually rose by more
than a third to $630m (http://news.bbc.co.uk/1/hi/business/6375175.stm).

10
Current Trends
The strongest sporting goods suppliers briefly described above are all
continuing to expand both production and sales internationally. It is important
to note that there are some risks associated with moving business to a global
level. The overseas markets in which all of the companies sell their products
are subject to the following risks which could have a negative impact on
financial position and business performance:
- changes in economic climate
- legal claims involving property rights
- negative impacts on product and corporate image due to the
occurrence of defective products
- unexpected changes in legal and regulatory systems
- terrorism, war, and other disruptions to the social climate
(ASICS Group, Summary of consolidated reports for the Fiscal year ending
March 31, 2006)

Working environments and conditions in overseas factories have become an

international issue, and sporting goods companies have been heavily
criticised in the past. Ever since the Nestle and Infant Formula scandal in the
1970’s there has been a growing increase corporations to be more socially
responsible and give back to the community (Rovenpor, 1996). By learning
about some of Reebok’s major competitors, trends and possible problems
with these trends, assessing and comparing the organization as a whole is
made much more effectively.

11
Structure and Operations of Reebok

Parent Strategy
The Adidas Group has a clearly defined corporate strategy. It states “Our goal
as a Group is to lead the sporting goods industry with brands built on a
passion for sports and a sporting lifestyle. We are focused on strengthening
and developing our brands to maximise the Group’s performance” (The
Adidas Group 2007). The development of this strategy can be clearly linked
to the corporation’s central group value, or in other words, its mission
statement to be the global leader in the sporting goods industry. They are
dedicated to sports and performance and are committed to using technology
and innovation to enhance this identity across their brands.

Organisational Structure
With a specifically stated Corporate Strategy, the company needs to ensure
that their organisational structure will allow for and be flexible to this strategy
being sought after. Their objectives outlined in the corporate strategy ensure
the mission statement will translate into action, while also guiding and
coordinating decisions. There is no purpose in having well thought out
strategic objectives, but no structure and cohesion to attain these objectives
(Melcrum publishing, 2006).

The Adidas Group comprises of a four person executive board, including one
Chief Executive Officer and three board members, each responsible for a
particular division. The company has also established a Supervisory Board,
consisting of six members representing the shareholders and six members
representing the staff. The Supervisory Board advises and supervises the
executive board in matters concerning the management of the company (The
Adidas Group 2007). It is the role of the supervisory board to ensure that the
pathway and vision determined by the executive board is forthrightly followed
by the rest of the organisation from the top, all the way down to those
entrusted with manufacturing their products.

12
The Reebok subsidiary utilises a Global Area/Geographic structure. The
Adidas group controls the Reebok headquarters in Bolton, England. As shown
in the diagram below, the North American, Asian and European subsidiaries
report to the headquarters in England. The North American subsidiary
consists of Canada, Mexico and the USA. Within each of these countries are
separate departments such as marketing, manufacturing, retail and design.

13
Reebok’s fit
Adidas has a clear mission “to be the leading sports brand in the world”
(Adidas Group, 2007).Adidas has always been primarily recognised as a
leading fashion brand compared to Reebok. This is highlighted with Adidas
establishing a Sport Style division directed at the fashion conscious consumer
(Anniss, E.; Carofano, J.; 2006). Reebok’s mission is to “always challenge
and lead through creativity”. Their strategic focus is to become a consumer-
driven brand, empowering individual achievement by supporting athletes and
consumers to realise their unique dreams and goals (Adidas Group 2007).

Reebok is an American-inspired global brand, not commonly linked to being

fashion savvy. They are built upon a strong authenticity in sports. Therefore,
with no effort of concealment, the Adidas Group openly states that the major
motive for purchasing Reebok was to help the company make inroads in the
US, a Nike dominated country. More than 50 percent of the Reebok business
is generated in North America. Reebok's products complement Adidas
traditional strength in sports such as soccer and give the German company
some big-name basketball player profiles (Norton, K.; Holmes, S.; 2006).

Strategy

The Reebok acquisition is an extension of a Growth/Expansion strategy. This

occurs when the purchased company (Reebok) is completely absorbed as a
subsidiary of the acquiring company (Adidas Group). The key role of the
Adidas Group management now is to use its knowledge of their organisation
and market to define and shape this expansion opportunity into a profitable
facet (Mishina, Y., Pollock, T., Porac, J., 2004). Furthermore with their
intention of tapping into the North American market, the Adidas Group’s use
of Reebok can be looked upon as a facet of a multi-domestic strategy. This is
purely for the fact that careful attention has been paid to customising their
product offerings and marketing in accordance with the local responsiveness
in North America.

14
Summary

The Adidas Group’s purchase of Reebok North America showed an obvious

attitude to ensuring that the Corporation’s overall objectives will be achieved.
With the acquisition, a focus on increasing the band’s apparel offerings and
sharpening the brand's image has been set. This will allow for an expansion of
global position and gaining a broader presence in key markets. To emphasize
this fact, Adidas has now replaced Reebok as the official apparel supplier to
the American National Basketball Association for the next 10 years. With the
two company’s combined strengths, an aim to widen the organisation’s overall
profile and global dominance is now more than ever possible (Kletter, M.,
Conti, S., 2006).

15
International Management Opportunities and Problems

The most important factor, in recent years, for Reebok’s success in their North
American subsidiary is the approval for the acquisition of Reebok by the
Adidas Group. This will result in numerous international management
opportunities and problems to be faced by Reebok North America.

Opportunities
Reebok retains the second largest market share in the US athletic shoe
market and integrated with Adidas, who retain the 3rd highest market share in
that industry, will prove a formidable competitor for market leader, Nike
(Howard T., Barry K., 2005). Significant opportunities exist in Reebok’s North
American subsidiary to further expand their operations, customer base and
market share through the diversification of their product lines and target
markets and the aggressive promotion of larger marketing campaigns. This is
feasible due to the substantial cost savings generated by the merger, which
can be re-invested into developing Reebok’s market presence. This
opportunity is reinforced by Adidas CEO, Herbert Hainer, who views the
merger as a way to fuel growth rather than to save money. Continued market
diversification and expansion into international markets will find new potential
customers (Olsson, J., 1996).

According to Reebok’s website, strategic and financial benefits of the merger

include an extended geographic reach, a broader portfolio of world-renowned
brands, enhanced Research & Development (R&D) capabilities and cutting
edge technology, strong operating cash flows and substantial operational
synergies.

Reebok’s mission is ‘to enrol global youth through sports, music and
technology,’ which complements Adidas’ mission, ‘to be the leading sports
brand in the world with a focus on performance and international presence.’
Herbert Hainer, CEO of Adidas, believes that the complementary nature of the

16
two businesses in various geographies, products and consumer segments
provides a significant opportunity for increased value creation.

Reebok North America can also benefit from sharing strengths with Adidas,
where Reebok has been quicker to seize on cultural trends, like hip-hop, but
Adidas has had a stronger tradition of design improvements. If utilized
effectively, Reebok can advance their existing products through design
improvements, and invest in developing new and market-leading innovative
products.

However, even though the combination of Adidas and Reebok looks great on
paper, the merger presents many potential problems, considering the
previous merger failures of Daimler-Benz and Chrysler, Quaker and Snapple
and HP and Compaq (Bliss J., 2005). Reebok North America faces a number
of problems in managing its new portfolio and executing its new products and
marketing plans that allow two big brands to complement each other rather
than duplicate efforts (Bhan, N., 2005).

Problems
Due to Reebok’s existing large global stature, their problems are mainly
limited to the threat from competition from rival companies and from
international managements’ perspectives of the company’s operations in
different geographical locations across countries (Jacob, L. & Herbig, P.,
1998).

Competitors
To keep-up with the competition's penetrating efforts will cost a lot of money
and put a lot of pressure on marketing and research and development
(Olsson, J., 1996). Reebok has to exhaust considerable financial resources in
developing products and developing marketing campaigns to attract new
customers and retain existing customers from competitors such as Nike and
Puma.

17
Product Differentiation
Reebok is continually striving to establish product differentiation in terms of
brand identification and the product itself from its rival competitors. One
problem for Reebok is the highly perishable nature of their products, in
particular their footwear, which have extremely short product life styles. This
may be addressed through further international diversification by manipulating
the marketing of different product niches in different nations (Olsson, J.,
1996). For example, if the sale of one Reebok product is declining in North
America, the same product may be launched in South East Asia.

Another issue facing Reebok is the integration of Adidas and Reebok brands.
At this stage, Adidas and Reebok will continue to have their own sales forces,
distribution channels, marketing campaigns and brands. However, according
to Steve Stoute from Translation Consulting and Brand Imaging, who is
involved in current Reebok campaigns, he identifies that there is a potential
problem if consumers see the lines as being blurred.

Cultural Differences
According to Jeffrey Bliss, president of Javelin Group (a sports marketing
firm), the German mentality of control, engineering and production, versus the
US market-driven culture, in reality, will contribute to the merger not ‘denting’
the market, as Nike is already too dominant (Kiley, D, 2005).

Although Adidas’ headquarters is in Herzogenaurach, Germany and Reebok’s

headquarters in Massachusetts, United States, both have continued its
operations since the merger. However, potential conflicts could arise in the
management of Reebok, now that influence can be exerted by Adidas’
executives. The cultural differences between Germany and North America
that were talked about earlier could harvest internal management disputes
and miscommunication.

18
Manufacturing
Reebok’s Hong Kong based manufacturer, Yue Yuen Industrial Holdings Pty
Ltd (0551.HK), also makes shoes for Adidas, and concern has been
expressed for the greater demand of economies of scale and possible decline
in orders.

Social Responsibility
The manner in which a company is perceived by the societies within which it
is based and operates plays a major part in determining whether that
company is welcomed or rejected by that society (Werther W. B., Chandler D.,
2005).

Unfortunately, Reebok has encountered public exposure to violations of

health and safety conditions in manufacturing factories, breaching human
rights and in the ignorance of environmental sustainability for many years.
In March 2006, one of Reebok’s bracelets was linked to a child’s lead
poisoning death and later that year, a massive recall was initiated following
revelations that Reebok’s children’s wind-suits were a choking hazard.
Despite a number of attempts to address such pressing issues, the efficacy
and outcomes of such attempts is still uncertain.

Staffing
Although it has been stated that Reebok did not “anticipate significant work
force reductions”, distribution in Reebok facilities in Memphis and Hebron will
cease in 2008 and facilities in Stoughton, Norwood and Spartanburg will
cease in 2009, which will affect approximately 375 staff (Conroy, E., 2007).
Further work force reductions could occur due to the integration of Adidas and
Reebok distribution systems.

19
Recommendations
From the above analysis, it is clear that substantial deficiencies may arise
following the acquisition of Reebok by the Adidas Group. There are however,
numerous steps that Reebok and the Adidas Group can make to alleviate
some of these problems. Seemingly, it is thought that enhancing Reebok’s
strengths with Adidas’s strengths will be the most beneficial recommendation
the company could undertake to increase its global position.

Possible Solutions
Reebok should continue to come up with innovative ideas for advertising,
including using high profile sporting athletes in the use of product
endorsement.

With such an acquisition, the process of further enhancing the Adidas brand’s
fashion image as well as their own sporting market power with that of the
already established Reebok will help in the attainment of Reebok’s mission
and goals.

The combination could be powerful in growing markets like China. Adidas is

well-established in China, having set a goal of generating $1.2 billion in sales
there by 2010. Reebok has the most sought-after Chinese athlete as a
spokesman: the basketball star Yao Ming. This is an example of how the
relationship between Reebok and Adidas can be mutually beneficial.

The integration process

Careful attention should be paid to the integration process of the two
companies. Volker Riehm, fund manager at Activest stated that it won't be
easy to integrate the businesses. Adidas' focus is on sport, but Reebok's is on
lifestyle. Consequently the Adidas Group cannot assume that Reebok and
Adidas customers will want the same types of products. Thus any move to
eliminate one style of product could result in a loss of customers and sales
revenue.

20
Solution for perishable product issue
By diversifying into multinational markets it may be possible to pro-long the
very short product life cycles. This is done by manipulating the marketing of
different product niches in different nations. For instance, if the sale of one
product-line is declining in the USA, the same product may be launched in
South East Asia. The financial strength of the company makes it possible for
Reebok to continue to ensure market leadership with effective research and
development strategies. We recommend that Reebok continue to invest in
developing and designing innovative products.

Suggested solution for social responsibility issue

Reebok must continue to promote and raise awareness of such issues to
maintain and continually improve their social perception and responsibility in
order to warrant loyalty from its customers, employees, suppliers and to
comply with legislative regulations.

Reebok has exhausted vast resources in the implementation of a number of

programs to promote environmental sustainability, ethical business operations
and minimise violations of human rights. Continued investment into the
development of such programs is recommended.

21
Conclusion
Reebok North American has a lot to offer the corporation. Though both Adidas
and Reebok offer its clients sports apparel, each brand has different
objectives, target customers and style. The merger or acquisition of any
company can be difficult, especially if those companies come from different
countries and are world-known multi-million dollar corporations. However, with
joint cultural understanding, realistic goals, and strong organization, Reebok
North America can continue to grow and profit for The Adidas Group, making
the corporation its most profitable subsidiary.

Following its acquisition by Adidas, Reebok is in a strong position to increase

its market share in North America and overtake market leader Nike. Through
effective strategic planning and the alignment of a compatible structure,
Reebok will be able to increase their global strength in the sporting goods
industry.

Reebok North America faces many opportunities for diversification, expansion

and increasing their market share, but the internal management of such
processes and future growth opportunities, and the resolution of the problems
mentioned above, will ultimately determine its long term success.

22
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Adidas Group, 9th May, 2007 [last update], Strategy,

http://www.adidas-group.com/en/overview/strategy/default.asp

Adidas Group, 9th May, 2007 [last update], Supervisory Board,

http://www.adidas-group.com/en/overview/supervisory_board/default.asp

Anniss, E., Carofano, J., April 2006, Adidas Group, Rocky Reebok Still a Big
Challenge for Adidas, Footwear News

Bhan, N., August 4, 2005, Business Strategy, Industrial Design, Innovation,

When Brands collide- Adidas eats Reebok

Columbia Encyclopaedia, The; Sixth Edition (2006) Germany

http://www.encyclopedia.com/doc/1E1-Germany.html. Accessed 03/05/2007.

Conroy, E., April 26 2007, Hopes high for employer to replace Reebok, The
Boston Globe

Deresky, H., 2006, International Management: Managing Across Borders and

Cultures, Pearson Education, Inc. New Jersey.

Encyclopaedia Britannica Online (2007) Germany

http://www.britannica.com/eb/article-233600/Germany. Accessed 03/05/2007.

Howard T., Barry, K., August 4 2005, How Adidas and Reebok stack up
against rival Nike, USA Today

Hunger, J. D., Wheelen, T. L. 2004, Strategic management and business

policy, 9th edition, Prentice Hall, New Jersey.

Jacobs, L. and Herbig, P. 1998, Japanese product development strategies,

Journal of Business and Industrial Marketing, vol. 13, no. 2, pp. 132-154.

Kate Norton, Stanley Holmes - Adidas: Stumbling over Reebok?

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