Mergers and Acquisitions, shortly termed as M&A, generally refer to as the strategies that are followed in purchasing, selling or merging different companies by means of finance, strategies or management of the work force. The main theme of the mergers and acquisitions is to save the fainted companies and provide them with the financial aid or to capture the new business areas with the merging of companies in a same type of industry under the name of a single business entity. With the mergers and acquisitions, the combined companies' operations, work force, financial dealings, research & development facilities and the human resources will work as a single entity. In this ...view middle of the document...
The United States was the biggest market for the sports goods and apparels. Nearly 47% of the sports market is in the United States and the annual sales are growing year by year. Nike is the biggest player in the United States. In order to fight the competition with Nike, Adidas with the strategy of expansion of the business in the United States, merged with Reebok which is one of the biggest sports goods makers in the United States.
Advantages due to Adidas and Reebok Merger
The merger between Adidas and Reebok led to many advantages to both the companies. Though the brand names are not changed and made into single entity, both the brands as separate had many advantages due to the merger. Some of the important advantages which will change the face of the company in the next few years of the merger are:
a. Overlapping operations: The merger led to the overlapping operations in the areas of athletic goods like sportswear, apparel, sports goods etc. Thus both the companies can manufacture the goods and apparel with minimal fixed and variable costs. Also, the time for the manufacturing of the goods will be decreased drastically with the combination of the streamlined operations. Each company is proficient in the manufacturing techniques and hence it would be helpful for both the companies with different brands to produce wide variety of sports goods, equipment and apparel. Patents will be shared among the companies so that the upper and middle level products can be manufactured with the same patents.
b. Technology sharing: Both the companies are proficient in their own ways of manufacturing. Both the companies can exchange the technological expertise in the optimization of the manufacturing processes, operations, human resources management and financial transaction management. Adidas is good at the manufacturing of the sports apparel where as Reebok is proficient in the sports equipment making. Both can share the expertise in the designing process for the betterment of the operational processes.
c. Cost cutting strategies: The merger had brought many cost cutting strategies to both the companies. With the merger, the companies can share the common marketing strategies, manufacturing processes and financial operations. The employee exchange will be the most advantageous program of the merger through the companies can share the employee expertise and thus there will be lesser chance of hiring the new work force and reducing the costs.
d. Emerging markets: The market analysts were doubtful about the merger being a strategy to withstand the competition from the nearest rival, Nike. Nike is the world's largest sports goods, apparel and equipment maker. Nike had strong market share in the United States and the European Union. With the merger, Adidas with the support of Reebok can outstand in the performance and can reach the rival Nike in the regions of the United States and the European nations. Reebok which has very little presence in...