MGMT 670 STRATEGIC MANAGEMENT - Essay Example

The acquisition of Salomon in the year 1998 was done with an aim, so that Adidas could get a market of the diversified type of sporting goods that were manufactured by Salomon. The restructuring of sporting goods of the Adidas Company was further done with the acquisition of the Reebok Company in 2006 by which, the company felt that it would get wider market coverage, since Reebok was specializing in the areas of the athletic footwear, golf equipments as well as the footwear and apparel markets. (Reuters) Adidas felt that by such a kind of restructuring process done by means of acquisition, the company could make a huge impact in its business, since it would be able to get the market shares, which are enjoyed by the companies that were acquired.

This would in turn help the company to face the threat of cutthroat competition from Nike and at the same time would increase its sales and help it to regain the top spot in the sporting goods business. This was the main idea behind the acquisitions and the Adidas management thought this to be the fitting reply to Nike. The corporate strategy of Adidas can be truly rated as a good one, since the European company had to get the market share of US which it had lost to its rival Nike. . (Reuters) The Acquisition of Salomon and its products Adidas acquired Salomon in the year 1998 since the company was manufacturing a variety of sports goods products.

This acquisition was done to make Adidas to overcome Nike and become the number one sports goods manufacturing company. But once the acquisition was underway the industry dealing with the winter sports was showing a decline, since it was becoming less attractive among individuals and this could really affect the prospects of Adidas. After the acquisition it was seen that, there were some difficulties that cropped up in integrating both the companies. It was only after a span of about five years from acquisition that, Adidas started to regain its share value in the sports market.

The Salomon business unit also contributed only very less to the total operating profits of Adidas and this was a further blow to the company, since it had expected a very good operating profit. As a result the overall financial performance of Adidas did not show any sort of improvement even after the acquisition. The golf division of the Taylor made Adidas products also struggled a lot to make profits initially ever since the acquisition. As a result of this Adidas divested almost all of its winter sports brands to the Amer sports corporation in the year 2005. (Mike) The Acquisition of Reebok and its products In the year 2006 Adidas acquired the Reebok Company with an idea to make its presence felt in the athletic footwear and apparel as well as the golf market.

The Reebok international company already was involved in the designing as well as the sales of the apparels, footwear as well as hockey equipments for Greg Norman, Rockport and CCM respectively. Thus through