Compensation Decision Making

Aug 15th, 2014
Business Finance
Price: $15 USD

Question description

From Yahoo: on Robin Williams' Death: Why No One is Immune to Depression,
create a 1-page analysis including the following sections:

  1. Author – List who wrote the article
  2. Title – List the title of the article
  3. Source – List the name of the article’s source as well as the date of the publication (e.g. New York Times, Aug. 3, 2005)
  4. Summary – This is a brief summary (1 paragraph) of the article
  5. Key Points – List at least 3 points that reflect how this article relates to the topic for the week.
  6. Reaction – This is a 1-2 paragraph analysis of what you learned from reading the article.


Author: Mark Landler of the New York Times

Title: Adidas to Buy Reebok for 3.8 Billion, Challenging Nike

Source: The New York Times, August 3, 2005.

Summary: This article is about the rivalry between the three major shoe companies. Adidas’s chief executive Hubert Hainer and Reebok’s chairman Paul B. Fireman struck a deal to merge their companies to compete with Nike’s dominance in the athletic-shoe market. The merger between Adidas and Reebok caused both of their stocks to rise dramatically, which confused many financial analysts. These analysts claim that even though Adidas and Reebok will catch up to Nike in the athletic-shoe market, the sales generated because of the merger will be meek. Mr. Hainer sees the merger more as two companies complementing each other, not for the sole purpose of money but for growth.

Key Points:

  1. The deal for Adidas to buy Reebok was worth $3.8 billion. For the first time in over a decade, Nike will now have real competition in the athletic-shoe market. Before the deal, media analysts compared Nike to its competitors as “Snow White and the three dwarves.” Mr. Hainer and Mr. Fireman both hope those kinds of comparison are over.
  2. Mr. Fireman will personally earn $650 million from the merger. He will remain the chairman of Reebok and own 17% of the newly formed company. Although the companies did merge, they will both still run as separate businesses. They will both keep their names and both stay in their current locations. Both companies stock soared aftr the deal was announced. Reeboks went up 29.5%, and Adidas went up 6.9%, confusing many financial analysts.
  3. Mr. Hainer hopes that the merger between Adidas and Reebok will have a dramatic effect on the global athletic-shoe market. Adidas, which hopes its sales in China by the year 2010 will exceed $1.2 billion, is counting on Reebok’s most popular Chinese’s basketball player, Yoa Ming, to generated millions in revenue. Adidas and Reebok both have their eye on the United States shoe market as well, which accounts for 50% of the global market.
  4. Adidas and Reebok believe that their marketing strategies will be vital for the success of their merger. They believe that icons such as Jay-Z, Allen Iverson, and 50 Cent, will help them compete with Nike’s present day dominance of the athletic-shoe market. Marketing makes or breaks shoe companies nowadays.

Reaction: I felt this article was very insightful and educational as a person who wants to be a manager of a company. I enjoyed how two competitors in the business world joined forces to compete with the leader in their particular market. Both managers of Adidas and Reebok saw that the only way to compete with Nike was to merge and become one. I believe to make the merger successful, Mr. Fireman and Mr. Hainer had to do careful planning before and after the merger finally went into effect. Without careful planning and decision making, the merger would have never taken place or been as successful. I also liked how Adidas recognized that there was a profit to be made in the global athletic-shoe market. They recognized the profitability of selling their product in China and have taken the necessary steps to sell their  product in that countries market.

Tutor Answer

(Top Tutor) Farrukh
School: New York University

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